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We audited the Municipality of Ponce’s HOME Investment Partnerships Program. We selected the Municipality for review as part of our strategic plan based on the large amount of HOME funds approved. Our objectives were to determine whether the Municipality maintained its financial management system in compliance with HUD requirements and met HOME program objectives.

The Municipality’s financial management system (1) did not properly identify the source and application of more than $3.5 million in HOME funds, (2) did not support the eligibility of more than $454,000 in program charges, and (3) failed to disburse HOME funds within HUD-established timeframes. As a result, HUD lacked assurance that funds were adequately accounted for, safeguarded, and used for requested and eligible purposes and in accordance with HOME requirements.

The Municipality disbursed more than $327,000 for an activity that showed signs of slow progress without assurance that the activity would generate the intended benefits. As a result, HUD had no assurance that funds were used solely for eligible purposes and that HOME-funded activities met program objectives and fully provided the intended benefits.

The Municipality reported to HUD more than $2.5 million in HOME commitments without executing a written agreement or identifying the property in accordance with HUD requirements. Further, it failed to report more than $11,000 in program income and recaptured funds. As a result, HUD had no assurance that the Municipality met HOME program objectives, commitments, and disbursement requirements.

We recommend that HUD (1) determine the eligibility of more than $3.8 million disbursed for unsupported HOME program costs and an activity that showed signs of slow progress and (2) deobligate and put to better use more than $286,000 in overstated obligations.

Recommendation Status Date Issued Summary
2013-AT-1001-001-A Abierta Noviembre 30, 2012 Develop and implement a financial management system in accordance with HUD requirements.