We audited Monmouth County, NJ’s Community Development Block Grant (CDBG) program based on a risk assessment that considered grantee funding, the U.S. Department of Housing and Urban Development’s (HUD) risk analysis, and prior Office of Inspector General (OIG) audit coverage. The objective of the audit was to determine whether County officials established and implemented adequate controls to provide assurance that CDBG funds were expended for eligible activities in accordance with HUD regulations and program requirements.
Although County officials’ expended CDBG funds for eligible activities, several control weaknesses need to be strengthened. Specifically, salary costs of employees who worked on multiple programs were disbursed without adequate support for their allocation, disbursements recorded in County records did not always reconcile with those reported to HUD, accounting for program income was not adequate, housing rehabilitation assistance was not recovered from one recipient in accordance with the County’s policy, and a mortgage note on an assisted property was under recorded. These conditions occurred due to County officials’ unfamiliarity with HUD regulations, weaknesses in their accounting controls over salary allocations and program income, and a lack of oversight to ensure that the County met loan requirements.
We recommend that the Director of HUD’s Newark Office of Community Planning and Development instruct County officials to (1) support the salary allocation of $805,504 to the CDBG program or reimburse any unsupported amount, (2) reimburse the CDBG program for the ineligible cost of $1,090, (3) provide documents to support that the $133,453 was expended for eligible activities, (4) provide support that $122,150 in program income was expended in a timely manner, (5) strengthen controls to ensure that the County’s books reconcile with drawdowns reported to HUD, (6) provide support that the disbursement of $3,736 in program income was for eligible costs, (7) seek repayment of the ineligible $50,265 housing rehabilitation loan, and (8) increase by $4,355 a lien on an assisted property.