We audited the City of Elmira, NY’s administration of its Community Development Block Grant (CDBG) program based on our risk analysis and funding received by the City.  The objectives of the audit were to determine whether the City (1) ensured that program activities were adequately documented and administered in accordance with U.S. Department of Housing and Urban Development (HUD) regulations, and (2) expended CDBG funds for eligible activities.

City officials did not always (1) ensure that program activities were adequately documented and administered in accordance with HUD regulations, and (2) expend CDBG funds for eligible activities.  Specifically, the City charged costs to its CDBG program without adequate documentation to show that the costs met a national objective or benefited the CDBG program.  In addition, excessive administrative program delivery costs were charged to the CDBG program, including costs for administering a State program.  We also noted deficiencies in the City’s ability to safeguard assets and segregate duties.  These deficiencies occurred because City officials had not placed adequate emphasis on establishing and implementing the needed controls to ensure compliance with program requirements, including documenting compliance with national objectives, properly allocating costs to the programs receiving the benefit, and safeguarding assets and segregating duties.

We recommend that the Director of HUD’s Buffalo Office of Community Planning and Development instruct the City to (1) provide documentation regarding $200,000 in unsupported costs so that HUD can determine the eligibility of the costs; (2) repay $25,062 in ineligible costs; (3) provide supporting documentation for rehabilitation program delivery costs; and (4) establish and implement controls to ensure compliance with program requirements, that costs are charged to the benefiting programs, and that assets are properly safeguarded and duties are properly segregated.