We audited the City of Flint’s HOME Investment Partnerships Program.  We selected the City based upon our analysis of risk factors related to Program grantees in Region 5’s¹  jurisdiction.  Our objectives were to determine whether the City complied with Federal requirements and its own requirements in the administration of its Program.  This is the third of three audit reports on the City’s Program.

The City did not ensure that for a rental rehabilitation project, (1) Program funds were used in accordance with its contract with a subrecipient and (2) sufficient documentation was maintained to support the use of funds.  It also did not ensure that (1) Program funds were used for eligible costs within 15 days of being drawn down from its treasury account and (2) its subrecipient procured all housing rehabilitation services through full and open competition.  As a result, it (1) inappropriately used more than $190,000 in Program funds and (2) lacked assurance that an additional $90,000 was used for eligible costs.  Further, the U.S. Treasury paid nearly $5,000 in unnecessary interest on nearly $304,000²  in Program funds, which the City disbursed to its subrecipient that was not expended in the required timeframe.

The City did not reimburse its treasury account for Program funds drawn down and decommit additional funds for five owner-occupied rehabilitation projects that were later terminated.  It also did not (1) maintain sufficient documentation to support its use of Program funds for a project, (2) ensure that a subrecipient appropriately procured housing rehabilitation services for 14 projects, and (3) accurately report in HUD’s Integrated Disbursement and Information System the status of nine projects.  As a result, (1) nearly $103,000 in Program funds was not available for eligible activities and (2) the City lacked assurance that more than $17,000 was used appropriately.  Further, HUD and the City lacked assurance that the project accomplishments were accurately reported in HUD’s system.

We recommend that HUD require the City to (1) reimburse its Program or HUD, for transmission to the U.S. Department of the Treasury, from non-Federal funds more than $195,000; (2) provide sufficient supporting documentation or reimburse its Program from non-Federal funds more than $107,000; and (3) implement adequate procedures and controls to address the findings cited in this audit report.  We also recommend that HUD pursue the appropriate administrative actions for inappropriate certifications and ensure that nearly $103,000 in Program funds is used only for eligible Program costs.

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¹Region 5 includes the States of Indiana, Illinois, Ohio, Michigan, Minnesota, and Wisconsin.
²This amount is not a questioned cost.