We audited the U.S. Department of Housing and Urban Development’s (HUD) oversight of funds covered under the Low-Income Housing Preservation and Resident Homeownership Act of 1990 in HUD’s Line of Credit Control System1 based on information obtained during our audit of Carmen-Marine Apartments (2015-CH-1010). The audit was part of the activities in our fiscal year 2016 annual audit plan. Our objective was to determine whether HUD had adequate oversight of funds covered under the Act to ensure that the balances in the projects’ grant accounts in HUD’s System were appropriate.
HUD did not ensure that (1) it remitted its share of the proceeds from initial sales associated with resident home-ownership program grants to the U.S. Treasury, (2) excess capital funds were deposited into the reserve for replacements accounts for the projects, and (3) authorized capital funds in the projects’ grant accounts did not exceed the capital grant agreement amounts. As a result, (1) the U.S. Treasury did not have more than $1.2 million available for other appropriations, (2) HUD could not sufficiently support the use of more than $341,000 in proceeds from initial sales, and (3) six grantees did not have nearly $368,000 in capital funds in their projects’ reserve for replacements accounts.
We recommend that the Acting Director of HUD’s Office of Multifamily Asset Management and Portfolio Oversight (1) coordinate with HUD’s Office of the Chief Financial Officer to ensure that the proceeds are remitted to the U.S. Treasury, (2) coordinate with the appropriate HUD offices to provide sufficient documentation to support what HUD did with proceeds from initial sales, (3) deposit capital funds into the reserve for replacements accounts for six projects, and (4) implement adequate procedures and controls to ensure that future proceeds from initial sales paid to HUD are remitted to the U.S. Treasury.
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1The System is HUD’s primary grant disbursement system for handling disbursements for the majority of HUD programs. Grant disbursements are facilitated via the Internet through the System.