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The U.S. Department of Housing and Urban Development's (HUD) Office of Inspector General audited the City of Dayton's (City) Community Development Block Grant program (program). The audit was part of the activities in our fiscal year 2008 annual audit plan. We selected the City based upon our increased emphasis on HUD's Office of Community Planning and Development's programs and a citizen's complaint. Our objectives were to determine whether program funds used to pay the City's former Division of Real Estate and Redevelopment's (Division) staff salaries were reasonable and necessary and associated with eligible program activities.

The City lacked sufficient documentation to support that it followed federal requirements when it used program funds to pay the Division's staff salaries from January through December 2003. As a result, it was unable to support its use of more than $550,000 in program funds.

We recommend that the Director of HUD's Columbus Office of Community Planning and Development require the City to provide documentation or reimburse its program from nonfederal funds for the unsupported salaries and implement adequate procedures and controls to address the finding cited in this audit report.