We audited the Puerto Rico Department of Housing (PRDOH) in accordance with the U.S. Department of Housing and Urban Development, Office of Inspector General’s (HUD OIG) goal to review disaster funding and based on a congressional request for HUD OIG to conduct capacity reviews for Hurricanes Harvey, Irma, and Maria grantees. Our audit objectives were to determine whether the PRDOH had the capacity to (1) administer its Community Development Block Grant Disaster Recovery (CDBG-DR) grants in accordance with applicable regulations and requirements and (2) whether it had in place financial and procurement policies and procedures that promote the expenditure of funds and the acquisition of goods and services in accordance with Federal requirements.
The PRDOH should strengthen its financial and procurement capacity to administer its CDBG-DR grants in accordance with applicable regulations and requirements. Specifically, it could strengthen its capacity by (1) improving its financial controls, (2) improving its processes for preventing duplication of benefits, (3) improving its procurement controls, and (4) continuing to increase its staffing. Strengthening its capacity would help ensure that the PRDOH properly administers more than $19 billion in CDBG-DR funds in accordance with applicable requirements.
The PRDOH did not follow Federal and its own procurement requirements when it acquired goods and services. As a result, HUD had no assurance that purchases totaling $416,511 were reasonable, necessary, and allowable.
We recommend that HUD require the PRDOH to (1) develop adequate procedures outlining steps for tracking monthly grant expenditures and reprogramming funds and program income and develop and implement a financial management system for its 2008 CDBG-DR grant, (2) review and update its policies and procedures to prevent duplication of benefits, (3) review and update its procurement policies and procedures, and (4) continue to fill its vacancies. In addition, HUD should require the PRDOH to submit supporting documentation showing compliance with procurement requirements and that $416,511 were reasonable and necessary costs or reimburse the program $55,010 from non-Federal funds and cancel $361,501 of CDBG-DR obligations.