We audited the City of Auburn, NY’s Community Development Block Grant (CDBG) program based on an Office of Inspector General risk analysis that considered the amount of funding the City had available to expend.  The objectives of the audit were to determine whether the City had (1) established and implemented the necessary controls to ensure that program activities were adequately documented and administered in accordance with U.S. Department of Housing and Urban Development (HUD) regulations, (2) expended CDBG funds for eligible activities, and (3) properly expended and accounted for program income.

City officials did not (1) adequately establish and implement the necessary controls to ensure that program activities were adequately documented and administered in accordance with HUD regulations, (2) always expend CDBG funds for eligible activities, and (3) adequately expend and account for program income. Specifically, City officials (1) were slow in expending the City’s revolving loan funds and maintained an excessive balance of program income, (2) made unnecessary draws from the City’s CDBG entitlement funding, (3) had weaknesses in accounting controls related to the City’s revolving loan program income accounts, and (4) did not report program income to HUD accurately or in a timely manner.  City officials also did not always ensure that the City’s CDBG-funded activities accomplished program objectives.  Specifically, City officials did not (1) maintain sufficient documentation to support that all CDBG-funded activities met their stated objectives and that costs were eligible, (2) perform adequate monitoring or oversight of the funded activities, and (3) fully use the available funds for program administration. 

We recommend that HUD instruct City officials to (1) expend more than $2.4 million in CDBG program income or reprogram the funds to other eligible program activities, (2) provide documentation to support the $177,923 shortage in program income or repay any unsupported amount from non-Federal funds, (3) provide documentation to justify the $949,064 in unsupported costs and repay any amount determined to be ineligible from non-Federal funds, and (4) establish and implement controls and procedures to ensure the proper administration of the program.