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Report Fraud, Waste and Abuse
June 11, 2010
2010-AT-1006
ig1041006.pdf

We audited the Puerto Rico Department of Housing (Department) HOME Investment Partnerships Program (HOME). We selected the Department for review as part of our strategic plan. The objectives of the audit were to determine whether the Department (1) reimbursed HOME funds on terminated activities; (2) expended HOME funds within U.S. Department of Housing and Urban Development (HUD)-established timeframes; (3) administered program income, repayments, and recaptured funds in accordance with HOME requirements; (4) reported accurate and supported HOME commitments in HUD’s Integrated Disbursement and Information System (information system); and (5) maintained its financial management system in compliance with HUD requirements.

The Department did not reimburse the HOME program more than $2 million for three activities that were terminated and did not meet HOME objectives and generate the intended benefits. In addition, it failed to reprogram and put to better use more than $1.84 million in unexpended HOME funds assigned to one of the terminated activities. As a result, HUD had no assurance that funds were used solely for eligible purposes and that HOME objectives were met.

The Department did not always comply with HUD’s regulations in its disbursement of HOME funds that it drew down from its treasury account. It failed to disburse more than $1.43 million in 2002 HOME funds within HUD-required deadlines. As a result, more than $1.43 million in unexpended HOME funds was not recaptured in accordance with requirements.

The Department did not comply with HUD’s regulations in its administration of HOME loans and repayments. It failed to collect more than $1.26 million in overdue loans and did not return to the United States Treasury more than $275,000 in repayments. As a result, HOME funds were not available for other eligible activities.

The Department did not monitor the accuracy of commitments and other information entered into HUD’s information system. It reported to HUD more than $6.4 million in HOME commitments without executing written agreements. As a result, HUD had no assurance that the Department met HOME objectives and commitment requirements.

The Department’s financial management system did not account for more than $991,000 in HOME receipts, did not support the allocability of more than $301,000 in disbursements, and allowed the use of more than $151,000 for ineligible expenditures. In addition, the Department did not deposit in its bank account more than $137,000 in HOME receipts and failed to disburse funds in a timely manner. As a result, HUD lacked assurance that funds were adequately accounted for, safeguarded, and used for authorized purposes.

We recommend that the Director of the San Juan Office of Community Planning and Development require the Department to repay more than $3.58 million for ineligible expenditures associated with terminated activities, unexpended 2002 HOME funds, and unallowable administrative costs. The Director should also require the Department to collect and/or reprogram and put to better use more than $3.62 million for HOME funds for terminated activities, uncollected loans, repayment funds not remitted to its treasury account, receipts not deposited in its bank account, and unsupported commitments. The Department should also provide all supporting documentation to demonstrate the allocability and eligibility of more than $1.29 million in HOME disbursements.

The Director should also require the Department 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. We also recommend that the Director reassess the Department’s annual commitment requirement from prior years and recapture any shortfalls. In addition, the Director should impose sanctions against the Department in accordance with HUD requirements for its continued deficient performance and increase monitoring of the Department’s performance in the administration of its HOME program.