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.
Recommendations
Community Planning and Development
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Status2020-AT-1002-001-AOpenClosedClosed on November 06, 2020
Develop adequate procedures outlining steps for tracking monthly grant expenditures, reprogramming funds for stalled activities, managing program income, and allocating costs as required by Federal Register Notice 83 FR 5844 and the grant agreement with HUD.
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Status2020-AT-1002-001-BOpenClosedClosed on November 06, 2020
Ensure that the financial management system for the 2017 CDBG-DR grant is capable of providing information by activity type and grant number.
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Status2020-AT-1002-001-COpenClosedClosed on September 27, 2023
Develop and implement a financial management system for its 2008 CDBG-DR grant and ensure that it tracks program funds to a level that supports compliance with HUD requirements. At a minimum, the accounting system must reflect disbursements by grant, activity, and activity type and properly account for assets, liabilities, and program income.
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Status2020-AT-1002-001-DOpenClosedClosed on December 29, 2020
Review and update its 2017 CDBG-DR policies and procedures to prevent duplication of benefits and ensure that these are comprehensive and all applicable activities are included, including but not limited to the Small Business Financing Program and the Construction and Commercial Revolving Loan program.
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Status2020-AT-1002-001-EOpenClosedClosed on June 16, 2021
Negotiate with the SBA, within 30 days of the issuance of this audit report, to extend its data-sharing agreements for the term of the expenditure requirements set forth in public laws or the Federal Register in relation to the 2017 and 2008 disasters.
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Status2020-AT-1002-001-FOpenClosedClosed on August 18, 2022
Negotiate with Puerto Rico’s Insurance Commissioner and with other CDBG-DR grantees, within 30 days of the issuance of this audit report, to establish data-sharing agreements for the 2017 CDBG-DR grant disaster, any open disaster recovery grants, and future disasters.
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Status2020-AT-1002-001-GOpenClosed
Complete, within 30 days of the issuance of this audit report, the review for preventing duplication of benefits associated with its 2008 CDBG-DR grant and pursue appropriate remedies for any instances of noncompliance found.
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Status2020-AT-1002-001-HOpenClosedClosed on November 06, 2020
Review and update its procurement policy for the 2017 CDBG-DR grant to address weaknesses identified, including but not limited to required contract clauses, processes for soliciting and accepting noncompetitive proposals, and performing cost or price analyses before receiving bids or quotations, among other issues.
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Status2020-AT-1002-001-IOpenClosedClosed on September 23, 2020
Ensure that the 2017 CDBG-DR procurement policy addresses the establishment of a contract register that, at a minimum, contains the procurement information specified in section 3.8 of HUD’s Buying Right Guide regarding the PRDOH’s acquisitions of goods and services, as well as of its subrecipients and partners.
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Status2020-AT-1002-001-JOpenClosedClosed on September 30, 2024
Establish procurement policies and procedures for the 2008 CDBG-DR grant to ensure compliance with 2 CFR 200.318-326, including but not limited to procedures to ensure full and open competition, supporting independent cost estimates, properly documenting the procurement history, and including required clauses in contracts, among other issues.
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Status2020-AT-1002-001-KOpenClosedClosed on July 29, 2021
Continue to fill its vacancies with qualified and trained staff, thus ensuring that staffing levels remain adequate to administer the 2017 and 2008 CDBG-DR grant funds.
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Status2020-AT-1002-001-LOpenClosedClosed on December 30, 2021
Structure the internal audit division within a framework that can ensure its organizational independence and allow the internal audit activity to fulfill its responsibilities.
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Status2020-AT-1002-001-MOpenClosedClosed on September 23, 2020
Provide additional training and technical assistance to the PRDOH on the development of policies and procedures to ensure that procedures comply with applicable Federal and grant requirements.
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Status2020-AT-1002-002-AOpenClosed$55,010.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Submit supporting documentation showing that contracts and purchase orders complied with Federal and its own procurement requirements and that these were reasonable and necessary costs or reimburse the CDBG-DR program $55,010 from non-Federal funds.
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Status2020-AT-1002-002-BOpenClosed$361,501.00Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
Submit supporting documentation showing that contracts and purchase orders complied with Federal and its own procurement requirements and that these were reasonable and necessary costs or cancel the $361,501 in unpaid obligations related to CDBG-DR funds.
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Status2020-AT-1002-002-COpenClosedClosed on November 06, 2020
Revise and finalize the procurement procedures to ensure compliance with applicable Federal requirements, including but not limited to procedures to ensure full and open competition, supporting independent cost estimates, properly documenting the procurement history, and including required clauses in contracts, among other issues.