We completed an audit of the operations of the City of Buffalo, NY (City), pertaining to its administration of its Community Development Block Grant (CDBG) program. Our audit objectives were to determine whether the City (1) administered its CDBG program effectively, efficiently, and economically in accordance with applicable rules and regulations, and (2) expended CDBG funds for eligible activities that met a national objective of the program.
The City did not always follow applicable HUD regulations in its administration of the CDBG program. In addition, it did not always ensure that CDBG funds were expended for eligible activities that met a national objective of the program. Specifically, the City (1) disbursed CDBG program funds for questionable street improvement expenditures, (2) did not adequately monitor its subrecipient-administered economic development program, and (3) charged ineligible and unsupported costs for clean and seal program activities to the CDBG program. As a result, program funds were used for ineligible and unsupported expenses and the City’s ability to administer its CDBG program effectively and efficiently and ensure that the program’s objectives were met was diminished. Consequently, the City is not able to demonstrate that it made the best use of CDBG funds to meet the community’s needs.
We recommend that the Director of HUD’s Buffalo Office of Community Planning and Development instruct the City to (1) reimburse from non-Federal funds $467,429 for ineligible costs pertaining to street improvement projects not done and clean and seal code enforcement, (2) provide documentation to justify the more than $22.8 million in unsupported costs for previously incurred general City maintenance expenses, transactions charged to the CDBG program income account, and unsupported clean and seal program costs, (3) reprogram the more than $4.7 million in remaining economic development project funds if there is a lack of capacity, to ensure that these funds are put to better use for other eligible program activities, and (4) ensure that $744,479 in fiscal year 2010 clean and seal program funds will be put to better use by developing administrative control procedures that will ensure compliance with CDBG program requirements. Any costs determined to be ineligible should be reimbursed from non-Federal funds.
Further, we recommend that the Director of HUD’s Buffalo Office of Community Planning and Development require the City to suspend incurring costs and/or reimbursing itself for costs paid from the City’s municipal general expense account for public facilities, economic development, and clean and seal activities until HUD determines that the City has the capacity to carry out these activities in compliance with HUD regulations.
Recommendations
Community Planning and Development
-
Status2011-NY-1010-001-BOpenClosed$162,923.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
We recommend that the Director of HUD’s Buffalo Office of Community Planning and Development reimburse from non-Federal funds $162,923 ($134,711 $28,212) expended on ineligible costs pertaining to street improvement projects not done and a duplicate reimbursement.
-
Status2011-NY-1010-001-COpenClosed$1,982,988.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
We further recommend that the Director of HUD’s Buffalo Office of Community Planning and Development instruct the City to provide documentation to justify the $1,982,988 in unsupported costs associated with street improvement expenditures incurred between June 2007 and October 2009. Any unsupported costs determined to be ineligible should be reimbursed from non-Federal funds.
-
Status2011-NY-1010-002-BOpenClosed$20,143,219.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
We recommend that the Director of HUD’s Buffalo Office of Community Planning and Development instruct the City to provide documentation to justify the $20,143,219 ($4,902,754 $15,240,465) in unsupported transactions recorded in the CDBG program income account. Any receipts determined to be unrecorded program income should be returned to the CDBG program, and any expenditures determined to be ineligible should be reimbursed from non-Federal funds.
-
Status2011-NY-1010-003-BOpenClosed$609,012.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
We further recommend that the Director of HUD’s Buffalo Office of Community Planning and Development instruct the City to reimburse from non-Federal funds the $304,506 related to ineligible clean and seal code enforcement costs.
-
Status2011-NY-1010-003-COpenClosed$716,622.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
We further recommend that the Director of HUD’s Buffalo Office of Community Planning and Development instruct the City to provide documentation to justify the $716,622 ($545,607 $24,069 $146,946) in unsupported clean and seal costs incurred so that HUD can make an eligibility determination. Any costs determined to be ineligible should be reimbursed from non-Federal funds.