We audited the Municipality of Carolina's (Municipality) Community Development Block Grant (Block Grant) program. We selected the Municipality for review as part of our strategic plan. The objective of the audit was to determine whether the Municipality complied with U.S. Department of Housing and Urban Development (HUD) regulations, procedures, and instructions related to the administration of the Block Grant program.

The Municipality generally complied with requirements of the Block Grant program. However, we found deficiencies associated with the procurement of its housing rehabilitation activities. The Municipality awarded 65 housing rehabilitation contracts totaling more than $400,000 without following HUD and its own procurement requirements. As a result, it obtained goods and services without full and open competition. In addition, the Municipality did not support the reasonableness of more than $81,000 in Block Grant disbursements.

We recommend HUD require the Municipality to provide support showing the eligibility and reasonableness of more than $81,000 or reimburse the Block Grant program from nonfederal funds. HUD should also require the Municipality to implement procurement procedures and controls that comply with HUD requirements to ensure that goods and services are obtained at the most advantageous terms and in a manner providing full and open competition.