We completed an audit the Community Development Block Grant (CDBG) program administrated by the Township of South Orange Village (Township), a subgrantee of the Essex County Consortium (County). Our audit objectives were to determine whether the Township disbursed CDBG funds efficiently and effectively in accordance with its submission to the U.S. Department of Housing and Urban Development (HUD) and with applicable rules and regulations, had a financial management system in place to adequately safeguard the funds, and used CDBG funds to meet the national objectives of the program.

The Township did not always comply with HUD's rules and regulations while disbursing CDBG funds, spent $76,168 for activities related to fundraising, and paid $7,589 in legal fees related to the Township's other general activities. The Township also did not execute a subgrantee agreement with a non-profit entity and its contracts did not include the required federal contract provisions.

We recommended that the Director of HUD's New Jersey Office of Community Planning and Development instruct the County to require the Township to repay $83,757 related to the ineligible expenses from nonfederal funds, develop and execute an adequate subgrantee agreement, and develop and implement contracts containing all mandatory provisions when using federal funds.