We audited the City of South Gate’s Community Development Block Grant (CDBG) program. We selected the City based on our risk analysis of Los Angeles area grantees and prior monitoring concerns identified by the U.S. Department of Housing and Urban Development (HUD) with the City’s code enforcement activities. The objective of the audit was to determine whether the City administered its CDBG funds in accordance with HUD requirements, focusing on code enforcement and graffiti abatement activities.
The City did not administer CDBG funds in accordance with HUD requirements. Specifically, it (1) did not meet HUD’s code enforcement requirements and (2) did not ensure that code enforcement and graffiti abatement salary and benefits costs were adequately supported. This condition occurred because the City did not correctly interpret and implement code enforcement program requirements and did not have adequate policies and procedures to ensure that code enforcement and graffiti abatement salaries and benefits were accurately calculated and recorded. As a result, it used $811,325 in CDBG funds for unsupported code enforcement costs and $285,496 for unsupported graffiti removal costs.
We recommend that the Director of HUD’s Los Angeles Office of Community Planning and Development require the City to (1) provide documentation to support the eligibility of $811,325 in code enforcement costs and $285,496 in graffiti abatement costs or repay the program from non-Federal funds; (2) develop and implement policies and procedures to ensure that code enforcement and graffiti abatement salaries and benefits are accurately charged to CDBG grants; and (3) develop and implement a targeted code enforcement strategy that would specify deteriorating or deteriorated areas where code enforcement would be expected to arrest decline, including a description of public or private improvements, rehabilitation, or services that would help facilitate code enforcement.
Recommendations
Community Planning and Development
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Status2018-LA-1003-001-AOpenClosed$811,325.00Questioned 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.
Provide documentation to support the $811,325 in code enforcement costs (activities 591, 619, and 645), including meeting code enforcement and salary and benefit requirements,4 or repay the program from non-Federal funds.
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Status2018-LA-1003-001-BOpenClosed
Develop and implement a targeted code enforcement strategy that specifies deteriorating or deteriorated areas where code enforcement would be expected to arrest decline. The strategy should include a description of public or private improvements, rehabilitation, or services that would help facilitate code enforcement and also include performance metrics to track progress.
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Status2018-LA-1003-001-COpenClosed
Develop and implement policies and procedures to ensure that code enforcement salaries and benefits are charged and documented in accordance with program requirements.
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Status2018-LA-1003-002-AOpenClosed$285,496.00Questioned 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.
Provide documentation to support $285,496 in graffiti abatement expenditures or repay the program from non-Federal funds (appendix D).
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Status2018-LA-1003-002-BOpenClosed
Develop and implement procedures and controls to ensure that graffiti abatement expenditures, including salaries and benefits, are accurately charged to CDBG grants and properly supported.