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Report Fraud, Waste and Abuse
April 08, 2011
2011-AT-1006
ig1141006.pdf

We audited the Municipality of Mayaguez (Municipality) HOME Investment Partnerships Program (HOME). We selected the Municipality for review as part of our strategic plan, based on the amount of HOME funds approved. The objectives of the audit were to determine whether the Municipality met program objectives in its HOME-funded activities and maintained its financial management system in compliance with U.S. Department of Housing and Urban Development (HUD) requirements.

The Municipality disbursed more than $4.4 million for two activities that did not meet HOME program objectives and more than $2.8 million for an additional activity for which it could not support its compliance with HOME program objectives. As a result, HUD had no assurance that funds were used solely for eligible purposes and that HOME program objectives were met.

The Municipality’s financial management system did not support the eligibility of $1.5 million in disbursements, and did not account for more than $23,000 in HOME receipts. In addition, the Municipality failed to disburse HOME funds in a timely manner and provided HUD with inaccurate information. As a result, HUD lacked assurance that funds were adequately accounted for, safeguarded, and used for authorized purposes.

We recommend HUD require the Municipality to repay more than $4.7 million for ineligible expenditures that did not result in benefits to the HOME program, provide supporting documentation to demonstrate the allocability and eligibility of more than $2.5 million in disbursements, and reprogram and put to better use more than $900,000 in unexpended funds for an activity that did not meet HOME program objectives. HUD should also require the Municipality to develop and implement an internal control plan to ensure that the HOME program has (1) a financial management system that complies with HUD requirements and (2) controls and procedures which ensure that HOME requirements are followed and accurate information is reported to HUD.