What We Audited and Why

We audited the Commonwealth of Virginia's (Commonwealth) HOME Investment Partnerships program (HOME as part of our fiscal year 2006 annual audit plan. Our audit objective was to determine whether the Commonwealth's Department of Housing and Community Development was properly administering its HOME program.

What We Found

The Commonwealth did not ensure that HOME funds were disbursed and used in accordance with federal regulations. We reviewed project funds disbursed through the Commonwealth's Affordable Housing and Preservation program, operating assistance grants awarded to community housing development organizations, and downpayment and closing cost assistance provided through the Commonwealth's Single Family Regional Loan Fund. The Commonwealth did not always comply with federal regulations and/or its own requirements in its disbursements and administration of HOME funds for various purposes. These problems occurred because it did not develop and document critical risk assessments and implement an adequate monitoring program to ensure that it properly administered the HOME program. As a result, HOME funds totaling $183,706 were used for ineligible expenses or activities and $527,060 in expenses were unsupported. The Commonwealth also accumulated more than $3.2 million in administrative funds that should have been used to improve its administration of its HOME program and to fund additional eligible HOME projects. Doing so would have enabled the Commonwealth's HOME program to better meet its main goal of providing affordable housing for low-income households.

What We Recommend

We recommend that the director of the Richmond Office of Community Planning and Development require the Commonwealth to recover $183,706 it spent on ineligible expenses and provide support for $527,060 in expenses or repay the amount to the HOME program. In addition, the Commonwealth should use the accumulated $3.2 million in administrative funds to improve its monitoring program and recommit any excess funds to eligible HOME projects. Lastly, we recommend that the Commonwealth create and implement procedures to ensure that HOME funds are disbursed and used in compliance with applicable regulations.

For each recommendation without a management decision, please respond and provide status reports in accordance with HUD Handbook 2000.06, REV-3.

Please furnish us copies of any correspondence or directives issued because of the audit.