We reviewed the City of Niagara Falls’ Community Development Block Grant (CDBG) program. We selected this auditee based on our risk assessment of CDBG grantees administered through the Buffalo, NY, field office, which considered the City’s funding, HUD’s risk assessment of the City, and prior Office of Inspector General (OIG) audits. The City received more than $2.2 million in each of its program years 2013 and 2014; was ranked medium risk in HUD’s risk assessment for 2014 and 2015, with a score of 38 and 45, respectively; and had not recently been audited by OIG.
City officials committed and spent CDBG funds for eligible activities but did not establish sufficient controls to ensure that subgrantee expenditures were always adequately supported; program income was administered in compliance with HUD regulations; and subgrants were properly awarded, executed, and monitored. As a result, City officials disbursed $220,538 for unsupported costs, used $113,733 in CDBG funds when program income was available, executed subgrants without receiving required documentation and after the start of the subgrant term, and did not ensure that services costing $2,516 were received during the subgrant period.
We recommend that the Director of HUD’s Buffalo Office of Community Planning and Development instruct City officials to (1) provide adequate documentation to support the eligibility of unsupported disbursements and obligations of $70,538 and $150,000, respectively; (2) implement monitoring procedures for CDBG-funded subgrantees to ensure compliance with program requirements; (3) ensure that $2,516 in unexpended funds is reprogrammed for other eligible CDBG activities; (4) ensure that program income of $113,733 is spent on eligible CDBG activities before additional CDBG entitlement funds are drawn down; (5) strengthen procedures to ensure that program income received by grantees is properly reported to HUD and spent before funds are drawn down from the U.S. Treasury; and (6) strengthen subgrant procedures to ensure that all required documents are received, explanations are obtained when prior performance does not meet goals, and subgrants are executed in a timely manner.
Recommendations
Community Planning and Development
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Status2016-NY-1002-001-AOpenClosed$220,538.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
We recommend that the Director of the HUD's Buffalo Office of Community Planning and Development instruct City officials to provide documentation to adequately support that $70,538 disbursed and $150,000 obligated were for eligible costs. Any costs determined to be ineligible should be reimbursed from non-Federal funds.
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Status2016-NY-1002-001-BOpenClosed
We recommend that the Director of the HUD's Buffalo Office of Community Planning and Development instruct City officials to strengthen monitoring procedures for CDBG-funded subgrantees to ensure compliance with program requirements.
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Status2016-NY-1002-001-COpenClosed$2,516.00Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
We recommend that the Director of the HUD's Buffalo Office of Community Planning and Development instruct City officials to reprogram unexpended funds of $2,516 on a subgrantee agreement that expired June 30, 2015, for use by other eligible CDBG activities so that these funds are put to better use.
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Status2016-NY-1002-001-DOpenClosed$113,733.00Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
We recommend that the Director of the HUD's Buffalo Office of Community Planning and Development instruct City officials to spend program income of $113,733 on eligible CDBG activities before drawing down additional CDBG entitlement funds, thus ensuring that these funds are put to better use.
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Status2016-NY-1002-001-EOpenClosed
We recommend that the Director of the HUD's Buffalo Office of Community Planning and Development instruct City officials to implement procedures to ensure that program income received by subgrantees is properly reported in HUD's integrated Disbursement and Information System and spent before funds are drawn down from the U.S. Treasury.
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Status2016-NY-1002-001-FOpenClosed
We recommend that the Director of the HUD's Buffalo Office of Community Planning and Development instruct City officials to strengthen subgrant procedures to ensure that all required documents are received, explanations are obtained when prior performance does not meet goals, and subgrants are executed in a timely manner.