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Línea Directa

REPORTAR FRAUDE, DESPERDICIO O ABUSO
Noviembre 14, 2007
  • Community Planning and Development
2008-AT-1002
2008-1002.pdf

We audited the Municipality of Canovanas' (Municipality) Community Development Block Grant (Block Grant) program. We selected the Municipality for review as part of our strategic plan. The objective of the audit was to determine whether the Municipality complied with U.S. Department of Housing and Urban Development (HUD) regulations, procedures, and instructions related to the administration of the Block Grant program.

The Municipality's financial management system did not fully comply with applicable HUD requirements. The system did not support the allowability of more than $885,000 in program disbursements, could not account for more than $501,000 in Block Grant receipts, allowed the use of more than $23,000 for ineligible program expenditures, and did not disburse Block Grant program funds in a timely manner.

The Municipality's management controls over its housing rehabilitation activities were inadequate. It improperly used Block Grant funds for new housing construction, and lacked adequate documentation to support program accomplishments. Therefore, the related program expenditures of more than $36,000 are ineligible, and more than $324,000 are considered unsupported pending an eligibility determination by HUD.

The Municipality awarded six contracts totaling more than $1 million without following HUD procurement requirements. As a result, it cannot ensure that quality goods and services were obtained at the most advantageous terms. In addition, the Municipality did not support the reasonableness of more than $109,000 in Block Grant disbursements and paid more than $70,000 for excessive expenditures.

We recommend that HUD require the Municipality to repay more than $59,000 in ineligible expenditures and $70,374 in excessive costs. HUD should also require the Municipality to provide all supporting documentation showing the appropriateness and eligibility of more than $1.82 million in Block Grant disbursements. We also recommend that HUD require the Municipality to develop and implement an internal control plan to ensure that the Block Grant program has (1) a financial management system that complies with HUD requirements, (2) controls and procedures which ensure that the housing rehabilitation activities meet the program objectives, and (3) procurement procedures which ensure that goods and services are obtained at the most advantageous terms and in a manner providing full and open competition. In addition, we recommend that HUD require the Municipality to ensure that Block Grant expenditures are properly accounted for, reconciled with HUD's disbursement system, and in compliance with HUD requirements.