We audited the North Carolina Department of Commerce’s Small Cities Community Development Block Grant as part of the activities in our annual audit plan.  Our audit objectives were to determine whether the Department of Commerce (1) awarded funds to local governments that met a CDBG national objective, (2) spent funds only for activities that were eligible and supported, and (3) included all methods of distribution in its action plan.

The Department of Commerce generally administered its Small Cities CDBG funds in accordance with HUD regulations.  It ensured that each activity reviewed met its national objective and was eligible and that funds were supported and used for eligible expenses.  However, it did not include the Main Street Revitalization grant program as a part of its 2015 annual action plan method of distribution as required.  As a result, the Department of Commerce was not transparent to the public and did not consistently allow citizens an opportunity to provide input on the distribution of Federal funds.

We recommend that the HUD Director of the Greensboro Office of Community Planning and Development require the North Carolina Department of Commerce to (1) amend its 2015 annual action plan to include the Main Street Revitalization program and (2) implement controls and procedures to ensure that all future action plans include all methods of distributing grant funds or amend the plan as required if programs are added after approval.