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We audited the City of Jersey City, NJ’s HOME Investment Partnerships Program based on a risk assessment that considered the amount of funding, the risk score assigned to it by the U.S. Department of Housing and Urban Development (HUD), and general congressional interest in the HOME program.  The objective of the audit was to determine whether City officials had established and implemented adequate controls to ensure that the HOME program was administered in compliance with program requirments and Federal regulations.

The City’s HOME program was not always administered in compliance with program requirements. HOME funds were not always properly committed, expended, or reported in compliance with program requirements due to the City’s inadequate controls over recording and reconciling of its commitment and expenditure of funds. Therefore, more than $1.5 million was not committed and expended in a timely manner and more than $1.48 million of ineligible commitments were made.  HOME funds were expended on ineligible and unsupported costs due to inadequate monitoring of the City’s subgrantees. Therefore, $566,873 was not available for eligible activities and there is no assurance that $949,362 was expended for eligible HOME activities.

HOME match contributions were not always eligible or adequately supported.  This was due to untimely updating and tracking of HOME match contributions reported to HUD and control weaknesses over monitoring HOME match agreements. Therefore, $4.36 million in ineligible match contribution was reported and HOME rent limits were not established for properties assisted with more than $1.28 million in HOME match funds.

HOME program income was not properly reported and used before entitlement funds.  We attribute this to incorrectly setting up activities in IDIS, and lack of knowledge for reporting program income in IDIS.  Therefore, $803,710 in program income was not recorded in IDIS and used before entitlement funds, and the use of $289,858 in program income was not recorded in IDIS.

We recommend that HUD recapture $1.5 million in uncommitted and unexpended funds; and instruct City officials to deobligate a commitment of more than $1.48 million for a canceled project; reimburse $566,873 expended for an ineligible use and provide documentation to support that $949,362 was expended for eligible activities; remove $4.36 million in ineligible HOME match funds from the City’s match report; and record in HUD’s Integrated Disbursement and Information System (IDIS) the receipt of $803,710 and the use of $289,858 in program income.