We audited the City of West Covina’s Community Development Block Grant program because of a news article 1 raising concerns about the City’s financial policies and past spending practices that included the mismanagement of funds. The review was also the first time that the Office of Inspector General had conducted a review of the City. Our objective was to determine whether the City administered its program in accordance with U.S. Department of Housing and Urban Development (HUD) rules and requirements. Specifically, we wanted to determine whether the City ensured that expenditures were supported and eligible.
The City did not operate its program in accordance with HUD rules and requirements. The City drew down $218,324 in program funds without supporting documentation. It also made a substantial change order to a contract without following appropriate HUD requirements. The problem occurred because the City did not have program policies and procedures in place until December 2014. As a result, it incurred $218,324 in unsupported program expenses that may not have been used to further its program national objective to benefit low- and moderate-income persons.
The City also did not comply with program timeliness spending requirements. It attributed this noncompliance to understaffing, staff turnover, and a changing census tract. As a result, the City had more than $1.7 million in unspent program funds that had not been used toward meeting its program national objectives. However, the Los Angeles Office of Community Planning and Development was working with the City to address this issue.
1 San Gabriel Valley Tribune: Local, state officials call for state controller’s audit of West Covina posted on April 27, 2014.