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REPORTAR FRAUDE, DESPERDICIO O ABUSO
Septiembre 25, 2009
  • Community Planning and Development
2009-AT-1012
2009-1012.pdf

We audited the Municipality of Rio Grande’s (Municipality) Community Development Block Grant (Block Grant) program. We selected the Municipality for review as part of our strategic plan. The objectives of the audit were 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 and whether the Municipality had the capacity to administer additional funds allocated under the American Recovery and Reinvestment Act of 2009 (Recovery Act).

The Municipality awarded 110 contracts totaling more than $1 million without following HUD and local procurement requirements. As a result, it could not 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 $1 million in Block Grant contracts.

The Municipality’s financial management system did not fully comply with applicable HUD requirements. The system did not support the allowability of more than $57,000 in program disbursements; could not support the allocability of more than $218,000 in administrative costs charged to the Block Grant program; and did not maintain accurate, current, and complete accounting records.

The Municipality’s management controls over its housing rehabilitation activities were inadequate. The Municipality improperly used Block Grant funds for deficient housing rehabilitation work and new housing construction. In addition, it did not provide assistance to correct health and safety hazards. Therefore, the related program funds of more than $20,000 were ineligible, and more than $7,000 is considered unsupported pending an eligibility determination by HUD.

The Municipality lacked sufficient capacity to administer additional funds allocated under the Recovery Act. It had not developed and implemented adequate controls to ensure compliance with HUD financial management systems requirements and the purposes of the Recovery Act. As a result, HUD lacked assurance that Recovery Act funds would be adequately accounted for, safeguarded, and used for authorized purposes and in accordance with the Recovery Act and HUD requirements.

We recommend HUD require the Municipality to repay more than $20,000 in ineligible expenditures. HUD should also require the Municipality to provide all supporting documentation showing the reasonableness and eligibility of more than $1 million in Block Grant contracts and more than $276,000 in Block Grant disbursements. We also recommend HUD require the Municipality to develop and implement an internal control plan to ensure that the Block Grant program has (1) procurement procedures which ensure that goods and services are obtained at the most advantageous terms and in a manner providing full and open competition, (2) a financial management system that complies with HUD requirements, (3) controls and procedures which ensure that the housing rehabilitation activities meet the program objectives, and (4) policies and procedures to ensure that Recovery Act funds are effectively and efficiently used and in accordance with applicable requirements. In addition, we recommend HUD increase monitoring of the Municipality’s performance in the administration of its Block Grant and Recovery Act funds.