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Report Fraud, Waste and Abuse
June 11, 2008
2008-CH-1010
2008-ch-1010.pdf

The U.S. Department of Housing and Urban Development's (HUD) Office of Inspector General audited the City of Cincinnati's (City) HOME Investment Partnerships Program (Program). The audit was part of the activities in our fiscal year 2007 annual audit plan. We selected the City based upon a request from HUD's Columbus Office of Community Planning and Development and our analysis of risk factors relating to Program grantees in Region V's jurisdiction. Our audit objectives were to determine whether the City effectively administered its reporting of Program activity (activity) data in HUD's Integrated Disbursement and Information System (System) and followed HUD's and its requirements. This is the second of three audit reports on the City's Program.

The City did not effectively administer its reporting of activity data in HUD's System and failed to follow HUD's and its requirements. It did not comply with HUD's requirements in its reporting of activity data into HUD's System. As a result, it did not decommit more than $114,000 in Program funds accurately and in a timely manner, and obligated more than $816,000 and drew down and disbursed nearly $442,000 in Program funds for an activity without entering into a written agreement or contract with the owner or developer of the property or having a current specified plan for how the property would be used to provide affordable housing to low- and moderate-income individuals.

The City did not comply with HUD's regulations and its rental rehabilitation program manual (manual) in providing housing rehabilitation assistance for rental rehabilitation projects (projects). As a result, it provided more than $397,000 in Program funds to assist 11 units in three projects that did not qualify as affordable housing, was unable to support that it used more than $590,000 in Program funds for appropriate projects, and did not ensure that it sufficiently protected more than $561,000 in Program funds.

We informed the director of the City's Department of Community Development and Planning (Department) and the Director of HUD's Columbus Office of Community Planning and Development of minor deficiencies through a memorandum, dated May 12, 2008.

We recommend that the Director of HUD's Columbus Office of Community Planning and Development ensure that the Program funds the City decommitted as a result of our audit are committed and used for eligible activities. We also recommend that the Director require the City to decommit Program funds for completed activities, move forward on providing housing for an activity or reimburse its Program from nonfederal funds and decommit Program funds remaining for the activity, reimburse the appropriate parties from nonfederal funds for the overpayment of rents or reimburse its Program from nonfederal funds, provide support or reimburse its Program from nonfederal funds for the unsupported payments, ensure that projects' owners obtain title insurance naming the City as coinsured for the projects or reimburse its Program from nonfederal funds, and implement adequate procedures and controls to address the findings cited in this audit report. These procedures and controls should help ensure that nearly $304,000 in Program funds is appropriately used over the next year.