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Puerto Rico External Audit Reports
Audit Reports issued between 1995 and 2006 are available by request. Please contact your local field office for more information.
Issue Date: May 23, 2012
Audit Report No. 2012-AT-1009
Title: The Municipality of Bayamón, PR, Did Not Always Ensure Compliance With HOME Investment Partnerships Program Requirements
We audited the Municipality of Bayamón’s HOME Investment Partnerships Program. We selected the Municipality for review as part of our strategic plan based on the large amount of HOME funds approved. The objectives of the audit were to determine whether the Municipality maintained its financial management system in compliance with U.S. Department of Housing and Urban Development (HUD) requirements and met HOME program objectives.
The Municipality’s financial management system did not properly identify the source and application of more than $3.5 million in HOME funds, did not support the eligibility of more than $288,000 in program charges, and failed to disburse more than $420,000 in HOME funds within HUD-established timeframes. As a result, HUD lacked assurance that funds were adequately accounted for, safeguarded, and used in accordance with HUD requirements.
The Municipality disbursed $703,473 in HOME funds for two activities that showed signs of slow progress without assurance that the activities would generate the intended benefits. As a result, HUD had no assurance that funds were used solely for eligible purposes and that HOME-funded activities met program objectives and fully provided the intended benefits.
The Municipality reported to HUD more than $901,000 in HOME commitments without executing a written agreement or identifying the property in accordance with HUD requirements. It also failed to reprogram and put to better use more than $48,000 in unexpended obligations associated with two activities that were terminated. In addition, it did not report and put to better use more than $62,000 in program income and recaptured funds. As a result, HUD had no assurance that the Municipality met HOME program objectives, commitments, and disbursement requirements.
We recommend HUD require the Municipality to provide all supporting documentation to demonstrate the eligibility and allocability of more than $4 million in HOME program funds. HUD should require the Municipality to reprogram or return to its line of credit and put to better use more than $1.3 million in unexpended obligated funds and HOME funds maintained in its local bank account.
We also recommend HUD require the Municipality to develop and implement an internal control plan to ensure that (1) its financial management system complies with HUD requirements, (2) its HOME-funded activities meet the program objectives, and (3) accurate information is reported to HUD.
Issue Date: October 24, 2011
Audit Report No. 2012-AT-1001
Title: The Municipality of San Juan, PR, Generally Complied With Homelessness Prevention and Rapid Re-Housing Program Requirements
We audited the Municipality of San Juan Homelessness Prevention and Rapid Re-Housing Program. The audit was in accordance with our audit plan to review funds provided under the American Recovery and Reinvestment Act of 2009. We selected the Municipality based on the large amount of Program funds approved. Our objective was to determine whether the Municipality ensured that its Program complied with Recovery Act and U. S. Department of Housing and Urban Development (HUD) program expenditure and reporting requirements.
The Municipality generally administered its Program in accordance with HUD requirements. However, it did not correctly report the number of jobs created or retained with Program funds. As a result, the public was not provided with complete and accurate information about the jobs funded by the Recovery Act.
We recommend that HUD require the Municipality to review and correct any inaccurate information reported on the Federal reporting Web site and develop and implement procedures to ensure complete and accurate reporting in accordance with Section 1512 of the Recovery Act.
Issue Date: September 28, 2011
Audit Report No. 2011-AT-1018
Title: The Municipality of San Juan, PR, Did Not Properly Manage Its HOME Investment Partnerships Program
We audited the Municipality of San Juan’s HOME Investment Partnerships Program (HOME). We selected the Municipality for review as part of our strategic plan based on the large amount of HOME funds approved. The objectives of the audit were to determine whether the Municipality met HOME program objectives and its financial management system complied with U.S. Department of Housing and Urban Development (HUD) requirements.
The Municipality disbursed more than $3.48 million for four activities that showed signs of slow progress without assurance that the activities would generate the intended benefits. In addition, it failed to ensure that more than $2.49 million of a community housing development organization’s proceeds was used for housing efforts. The Municipality also disbursed more than $766,000 for two activities that were not carried out and failed to reprogram more than $1.14 million in unexpended HOME funds for these terminated activities. As a result, HUD had no assurance that funds were used solely for eligible purposes and that HOME program objectives were met.
The Municipality’s financial management system did not support the eligibility of more than $2.3 million in disbursements and allowed the use of more than $2.2 million for ineligible expenditures. In addition, it failed to disburse more than $2.8 million in HOME funds in a timely manner and did not account for $14,732 in HOME receipts. As a result, HUD lacked assurance that funds were adequately accounted for, safeguarded, and used for authorized purposes and in accordance with HUD requirements.
The Municipality did not monitor the accuracy of commitments and other information reported in HUD’s Integrated Disbursement and Information System. It reported to HUD more than $8.7 million in HOME commitments without executing written agreements and failed to reprogram and put to better use more than $1.6 million in unexpended HOME funds associated with terminated activities or for which additional disbursements were no longer needed. In addition, it provided inaccurate information on the amount of program income generated, amount of funding awarded, and program accomplishments. As a result, HUD had no assurance that the Municipality met HOME objectives, commitments, and disbursement requirements.
We recommend that HUD determine the eligibility of more than $4.8 million disbursed from HOME funds on activities that showed signs of slow progress and for unsupported program costs. HUD should require the Municipality to reimburse the HOME program more than $3 million for ineligible project costs and activities that failed to meet program objectives. HUD should also require the Municipality to recapture or reprogram and put to better use more than $11.3 million in unexpended obligated funds, overstated commitments, and unexpended HOME funds maintained in its local bank account.
We also recommend that HUD require the Municipality to develop and implement an internal control plan to ensure that (1) its HOME-funded activities meet the program objectives, (2) its HOME program has a financial management system that complies with HUD requirements, and (3) the program has controls and procedures which ensure that HOME requirements are followed and accurate information is reported to HUD. In addition, HUD should reassess the Municipality’s annual commitment compliance and recapture any amounts that have not been committed within HUD-established timeframes.
Issue Date: July 8, 2011
Audit Report No.: 2011-AT-1012
Title: The Office of the Commissioner for Municipal Affairs, San Juan, PR, Did Not Always Ensure Compliance With Block Grant Recovery Act Program Requirements
We audited the Office of the Commissioner for Municipal Affairs’ (OCAM) State Community Development Block Grant (Block Grant) funds that it received under the American Recovery and Reinvestment Act of 2009 (Recovery Act). We selected OCAM for review as part of our strategic plan, based on the amount of Block Grant Recovery Act funds allocated. The objectives of this audit were to determine whether OCAM (1) disbursed Block Grant Recovery Act funds in accordance with applicable requirements and for eligible purposes and (2) reported to HUD accurate and supported information on program accomplishments.
OCAM did not always charge the Block Grant Recovery Act program for supported disbursements or ensure that its funds were used in a timely manner in accordance with HUD regulations. In addition, it did not always report accurate and supported information on program accomplishments. HUD lacked assurance that more than $135,000 in Block Grant Recovery Act program expenditures was allowable and allocable, and more than $42,000 in drawdowns remained unexpended. In addition, OCAM reported inaccurate information to HUD when it overstated program expenditures by at least $450,000 and lacked support for the number of jobs created or retained. As a result, HUD lacked assurance that the expenditures were reasonable, allocable, and used for authorized purposes in a timely manner and that reported program accomplishments were accurate and complete.
We recommend that HUD require OCAM to submit documentation to adequately support the allowability and allocability of $135,445 charged to the Block Grant Recovery Act program associated with administrative costs expenditures. HUD should also require OCAM to ensure that $42,829 associated with unexpended drawdowns is used for the approved activity or reprogrammed for other eligible purposes.
HUD should also require OCAM to review all Block Grant Recovery Act spending and job information in the Federal reporting Web site and correct any inaccurate information. We further recommend that HUD require OCAM to establish adequate internal controls and procedures to ensure that all Block Grant Recovery Act expenditures are supported, disbursed in a timely manner, properly accounted for, and reconciled with HUD’s information system and that they comply with HUD requirements. In addition, HUD should require OCAM to establish and implement internal control measures to ensure that accurate and supported Block Grant Recovery Act data are reported.
Issue Date: April 8, 2011
Audit Report No.: 2011-AT-1006
Title: The Municipality of Mayaguez, PR, Did Not Ensure Compliance With HOME Program Objectives
We audited the Municipality of Mayaguez (Municipality) HOME Investment Partnerships Program (HOME). We selected the Municipality for review as part of our strategic plan, based on the amount of HOME funds approved. The objectives of the audit were to determine whether the Municipality met program objectives in its HOME-funded activities and maintained its financial management system in compliance with U.S. Department of Housing and Urban Development (HUD) requirements.
The Municipality disbursed more than $4.4 million for two activities that did not meet HOME program objectives and more than $2.8 million for an additional activity for which it could not support its compliance with HOME program objectives. As a result, HUD had no assurance that funds were used solely for eligible purposes and that HOME program objectives were met.
The Municipality’s financial management system did not support the eligibility of $1.5 million in disbursements, and did not account for more than $23,000 in HOME receipts. In addition, the Municipality failed to disburse HOME funds in a timely manner and provided HUD with inaccurate information. As a result, HUD lacked assurance that funds were adequately accounted for, safeguarded, and used for authorized purposes.
We recommend HUD require the Municipality to repay more than $4.7 million for ineligible expenditures that did not result in benefits to the HOME program, provide supporting documentation to demonstrate the allocability and eligibility of more than $2.5 million in disbursements, and reprogram and put to better use more than $900,000 in unexpended funds for an activity that did not meet HOME program objectives. HUD should also require the Municipality 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.
Audit Memorandum No.: 2011-AT-1802
Title: The Municipality of Arecibo, Arecibo, PR, Charged the HOME Program With Expenditures That Did Not Meet Program Objectives
HUD OIG audited the Municipality of Arecibo’s (Municipality) HOME Investment Partnerships Program (HOME). We selected the Municipality for review as part of our strategic plan based on the results of a previous audit of the Puerto Rico Department of Housing’s (Department) HOME program, which disclosed that the Department disbursed HOME funds for land acquisition that did not meet program requirements at a 288-unit housing project named Bello Monte. During the audit, we found documentation indicating that the Bello Monte project also received HOME funds from the Municipality. The objectives of this audit were to determine whether the Municipality committed and/or disbursed HOME funds for the Bello Monte housing project and whether it met program objectives.
The Municipality committed and disbursed more than $115,000 in HOME funds for the purchase of land that could not be used to provide housing for low- and very low-income families. The commitment and disbursement of HOME funds to acquire land not intended to provide affordable housing was not consistent with program requirements and was an ineligible use of program funds.
The Municipality disbursed more than $483,000 for the Bello Monte housing project, which reflected slow progress without assurance that the project was feasible. The Municipality executed an agreement in July 2006 with a CHDO for site acquisition and construction of the Bello Monte housing project. According to the agreement, the construction of the housing units should have started in July 2007, with a completion date of July 2011. However, as of November 2010, the construction had not started. According to HUD, the project had encountered problems in complying with environmental requirements from a local agency. The Municipality failed to ensure the timely completion of the activity. As a result, HUD had no assurance that this activity provided the intended benefits and met HOME objectives.
HUD’s system contained inaccurate information concerning the Bello Monte project. This information included incorrect funding amounts. The awarded amount shown in HUD’s system was incorrect, resulting in an overstatement of HOME commitments of more than $45,000. As a result, more than $45,000 in HOME funds was not available for use and to meet program objectives.
OIG recommended that HUD require the Municipality to repay more than $52,000 in ineligible expenditures, and reprogram and put to better use more than $108,000 in unexpended funds obligated for ineligible purposes or that were overstated. HUD should also determine the eligibility of the $431,489 disbursed for the Bello Monte housing project with signs of slow progress and reevaluate the feasibility of this activity.
Issue Date: August 25, 2010
Audit Report No.: 2010-AT-1011
Title: The Puerto Rico Department of Housing, San Juan, PR, Did Not Ensure Compliance With HOME Program Objectives
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 based on the results of a previous audit of the Department HOME program that disclosed instances of HOME-funded activities with slow progress. The objectives of this audit were to determine whether the Department HOME-funded activities met program objectives and whether the Department had adequate controls and procedures to ensure that HOME-funded activities met program objectives. This is the second of two reports on the Department HOME program.
The Department did not have adequate controls and procedures to ensure that HOME-funded activities met program objectives. It disbursed more than $4.4 million for ineligible expenditures and activities that failed to meet the HOME program objectives, disbursed more than $9 million for activities that reflected slow progress without assurance that the activities would generate the intended benefits, and failed to reprogram and put to better use more than $7.9 million in unexpended HOME funds for activities that were not carried out or terminated. As a result, HUD had no assurance that funds were used solely for eligible purposes and that HOME objectives were met.
We recommend the Director of the San Juan Office of Community Planning and Development require the Government of Puerto Rico or its designee to reimburse the HOME program more than $4.4 million for ineligible expenses and activities that failed to meet program objectives, and reprogram and put to better use more than $7.9 million in unexpended funds for activities that had not generated the intended benefits. The Director should also require the Government of Puerto Rico or its designee to establish and implement controls and procedures for its HOME program to ensure that HUD requirements and objectives are met.
We also recommend that the Director of the San Juan Office of Community Planning and Development determine the eligibility of more than $9 million disbursed for projects with signs of slow progress, reevaluate the feasibility of these activities, and recapture any shortfall generated by the closure and deobligation of funds associated with terminated activities that do not meet statutory requirements for the timely commitment and expenditure of funds.
Issue Date: August 13, 2010
Audit Report No.: 2010-AT-1009
Title: The Puerto Rico Public Housing Administration, San Juan, PR, Needs To Improve Its Procurement Procedures
We completed an audit of the Puerto Rico Public Housing Administration (authority) central office procurement system. We selected the authority for review as part of our strategic plan. The objectives of the audit were to determine (1) whether the authority procurement policies and procedures were in compliance with the U.S. Department of Housing and Urban Development (HUD) requirements, (2) whether it followed its policies and procedures and HUD procurement requirements, (3) whether it adequately supported the reasonableness of the cost of goods and services acquired, and (4) whether an electronic surveillance system installed at several of its public housing projects generated the intended benefits.
Generally, the authority complied with requirements for planning, soliciting, and awarding contracts and purchase orders. However, our review identified procurement deficiencies in two contracts and three purchase orders, which resulted in monetarily significant deficiencies. The authority used an improper procurement procedure, failed to perform required cost analyses, and paid for equipment that was not used or missing. It also awarded purchase orders for other than the lowest quoted price without justification and paid more than the contract price. In addition, the electronic surveillance system installed at several of its public housing projects did not generate the intended benefits. As a result, the authority did not support the reasonableness of more than $9.7 million in contracts, paid more than $3.57 million for equipment that did not provide the intended benefits, and paid more than $28,000 for excessive expenditures.
We recommend that the Director of the Office of Public and Indian Housing require the authority to provide support showing the eligibility and reasonableness of more than $9.7 million spent on contracts that were not awarded in accordance with HUD requirements or reimburse its programs from non-Federal funds. We also recommend that the Director require the authority to reimburse its public housing program more than $3.6 million paid for excessive costs and unused/missing equipment. In addition, we recommend that the Director evaluate the surveillance system installed throughout the authority public housing projects and determine whether it was implemented in an effective and efficient manner.
Issue Date: June 11, 2010
Audit Report No.: 2010-AT-1006
Title: The Puerto Rico Department Housing Failed To Properly Manage Its HOME Investment Partnerships Program
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 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 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 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 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 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 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 performance in the administration of its HOME program.
Issue Date: September 30, 2009
Audit Report No.: 2009-AT-1015
Title: The Puerto Rico Public Housing Administration, San Juan, Puerto Rico, Mismanaged Its Capital Fund Financing Program and Inappropriately Obligated $32 Million in Recovery Act Funds
We audited the Puerto Rico Public Housing Administration (authority) Capital Fund Financing Program (Financing Program) as part of the Office of Inspector General (OIG) strategic plan goals to improve the U.S. Department of Housing and Urban Development (HUD) fiscal accountability. The objectives of the audit were to determine whether the authority obligated and expended the 2003 Financing Program funds in accordance with HUD requirements, the authority financial management system complied with program requirements, the authority completed the proposed modernization activities under its 2003 Financing Program, and the authority had the capacity to administer additional funds under the American Recovery and Reinvestment Act (Recovery Act) of 2009.
The authority did not manage the 2003 Financing Program in an economical, efficient, and effective manner. It did not complete all of the proposed rehabilitation activities and did not expend all of the borrowed private capital. As a result, it did not meet its rehabilitation goals. In addition, the authority disbursed more than $57.4 million in capital funds to pay for interest charges on unused borrowed capital that did not provide the intended benefits to the public housing program or its residents.
The authority also could not account for more than $18.7 million in program income and did not use $50.3 million in program income to defray program costs. In addition, it did not maintain accurate and current accounting records and provided HUD inaccurate information on its Financing Program activities. As a result, its internal controls were not sufficient to safeguard assets or ensure that funds were used in accordance with applicable requirements, and HUD lacked assurance regarding program accomplishments.
The authority inappropriately obligated $32.12 million in Recovery Act funds to supplant expenditures from other nonfederal funds in violation of its annual contributions contract with HUD. This deficiency occurred because the authority substituted the obligations related to nonfederal funds with Recovery Act funds. As a result, the authority will use Recovery Act funds to pay for expenditures that were the responsibility of nonfederal sources.
We recommend HUD require the authority to reimburse more than $57.4 million in unallocable and ineligible Financing Program expenses, account for more than $18.7 million in unrecorded program income, and develop and implement an action plan to use $50.3 million in program income to defray program costs. We also recommend that the authority establish better controls to ensure that the Financing Program has (1) a financial management system that complies with HUD requirements and (2) procedures to ensure that program goals are achieved in a timely and efficient manner and avoid unreasonable/unnecessary expenses. In addition, we recommend HUD require the authority to properly account for its 2003 Financing Program receipts and disbursements.
HUD should also require the authority to deobligate more than $31 million in Recovery Act funds that were contracted before the authorized obligation start date and implement adequate procedures and controls to ensure that Recovery Act funds are used effectively, efficiently, and in accordance with applicable requirements.
Issue Date: September 25, 2009
Audit Report No.: 2009-AT-1012
Title: The Municipality of Rio Grande, Puerto Rico, Needs to Improve Administration of Its Community Development Block Grant Program and Its Recovery Act Funds
We audited the Municipality of Rio Grande (Municipality) Community Development Block Grant (Block Grant) program. We selected the Municipality for review as part of our strategic plan. The objectives of the audit were to determine whether the Municipality complied with U.S. Department of Housing and Urban Development (HUD) regulations, procedures, and instructions related to the administration of the Block Grant program and whether the Municipality had the capacity to administer additional funds allocated under the American Recovery and Reinvestment Act of 2009 (Recovery Act).
The Municipality awarded 110 contracts totaling more than $1 million without following HUD and local procurement requirements. As a result, it could not ensure that quality goods and services were obtained at the most advantageous terms. In addition, the Municipality did not support the reasonableness of more than $1 million in Block Grant contracts.
The Municipality financial management system did not fully comply with applicable HUD requirements. The system did not support the allowability of more than $57,000 in program disbursements; could not support the allocability of more than $218,000 in administrative costs charged to the Block Grant program; and did not maintain accurate, current, and complete accounting records.
The Municipality management controls over its housing rehabilitation activities were inadequate. The Municipality improperly used Block Grant funds for deficient housing rehabilitation work and new housing construction. In addition, it did not provide assistance to correct health and safety hazards. Therefore, the related program funds of more than $20,000 were ineligible, and more than $7,000 is considered unsupported pending an eligibility determination by HUD.
The Municipality lacked sufficient capacity to administer additional funds allocated under the Recovery Act. It had not developed and implemented adequate controls to ensure compliance with HUD financial management systems requirements and the purposes of the Recovery Act. As a result, HUD lacked assurance that Recovery Act funds would be adequately accounted for, safeguarded, and used for authorized purposes and in accordance with the Recovery Act and HUD requirements.
We recommend HUD require the Municipality to repay more than $20,000 in ineligible expenditures. HUD should also require the Municipality to provide all supporting documentation showing the reasonableness and eligibility of more than $1 million in Block Grant contracts and more than $276,000 in Block Grant disbursements. We also recommend HUD require the Municipality to develop and implement an internal control plan to ensure that the Block Grant program has (1) procurement procedures which ensure that goods and services are obtained at the most advantageous terms and in a manner providing full and open competition, (2) a financial management system that complies with HUD requirements, (3) controls and procedures which ensure that the housing rehabilitation activities meet the program objectives, and (4) policies and procedures to ensure that Recovery Act funds are effectively and efficiently used and in accordance with applicable requirements. In addition, we recommend HUD increase monitoring of the Municipality performance in the administration of its Block Grant and Recovery Act funds.
Issue Date: February 25, 2009
Audit Report No.: 2009-AT-1003
Title: The Puerto Rico Housing Finance Authority, San Juan, Puerto Rico, Generally Calculated Housing Assistance Correctly
As part of the U.S. Department of Housing and Urban Development (HUD), Office of the Inspector General's (OIG) strategic plan, we audited the Puerto Rico Housing Finance Authority's (Authority) Section 8 Housing Choice Voucher program. Our audit objectives were to determine whether the Authority properly determined housing assistance subsidies, properly determined the eligibility of tenants, and recertified tenants in a timely manner.
The Authority generally administered its Section 8 program in accordance with HUD requirements. It properly determined the eligibility of the tenants reviewed and recertified tenants in a timely manner. Our review identified minor errors in calculating the housing assistance of Section 8 tenants, but the errors were not monetarily significant. We discussed the deficiencies with Authority officials who implemented corrective action.
This report does not contain any recommendations as it contains no findings.
Issue Date: September
22, 2008
Audit Report No.: 2008-AT-1014
Title: Doral Bank, San Juan, Puerto Rico, Needs to Improve Controls over Its Mortgage-Backed Securities Program
We reviewed Doral Bank Puerto Rico (Doral), an approved issuer for the Government National Mortgage Association (Ginnie Mae). Our objective was to determine whether Doral complied with Ginnie Mae requirements associated with its mortgage-backed securities activities. The review was initiated in connection with the 2007 Ginnie Mae financial statement audit.
Doral did not fully comply with Ginnie Mae requirements because it maintained seven noninsured loans in Ginnie Mae pools. It also failed to ensure that data on its pooled loans were accurate. As a result, Doral retained defective loans with unpaid principal totaling $448,167 in its Ginnie Mae pools and reported inaccurate information to Ginnie Mae and HUD.
We recommend Ginnie Mae require Doral to take corrective measures to ensure that the defective loans identified during the review are reinsured or removed from the Ginnie Mae pools and that the loans reflect complete and accurate mortgage information. We also recommend that Ginnie Mae ensure that Doral establishes and implements adequate controls and procedures to periodically verify that all of its Ginnie Mae pooled loans are insured in accordance with Ginnie Mae requirements.
Issue Date: June 6, 2008
Audit Report No.: 2008-AT-1008
Title: The Municipality of Carolina, Puerto Rico, Needs to Improve Procurement of Its Housing Rehabilitation Activities
We audited the Municipality of Carolina's (Municipality) Community Development Block Grant (Block Grant) program. We selected the Municipality for review as part of our strategic plan. The objective of the audit was to determine whether the Municipality complied with U.S. Department of Housing and Urban Development (HUD) regulations, procedures, and instructions related to the administration of the Block Grant program.
The Municipality generally complied with requirements of the Block Grant program. However, we found deficiencies associated with the procurement of its housing rehabilitation activities. The Municipality awarded 65 housing rehabilitation contracts totaling more than $400,000 without following HUD and its own procurement requirements. As a result, it obtained goods and services without full and open competition. In addition, the Municipality did not support the reasonableness of more than $81,000 in Block Grant disbursements.
We recommend HUD require the Municipality to provide support showing the eligibility and reasonableness of more than $81,000 or reimburse the Block Grant program from nonfederal funds. HUD should also require the Municipality to implement procurement procedures and controls that comply with HUD requirements to ensure that goods and services are obtained at the most advantageous terms and in a manner providing full and open competition.
Issue Date: May 30, 2008
Audit Report No.: 2008-AT-1007
Title: The Municipality of Caguas, Puerto Rico, Needs to Improve Controls over Its Section 8 Program
As part of the U.S. Department of Housing and Urban Development (HUD), Office of the Inspector General's (OIG) strategic plan, we audited the Municipality of Caguas (authority) Section 8 Housing Choice Voucher program. Our audit objectives were to determine whether Section 8 units met housing quality standards in accordance with HUD requirements and whether the authority properly determined housing assistance subsidies.
Of the 10 units inspected, eight (80 percent) did not meet minimum housing quality standards, and three of those were in material noncompliance. The authority also failed to ensure that quality control inspections were performed in accordance with HUD requirements. As a result, the authority made housing assistance payments for units that did not meet standards.
The authority miscalculated Section 8 assistance, overhoused tenants, made duplicate payments, and did not abate rents. As a result, it made overpayments and underpayments totaling $14,074 and did not support $1,957 in assistance payments. We estimate that over the next year, the authority will disburse more than $6,800 in subsidy overpayments if it does not implement adequate controls.
We recommend that HUD require the authority to inspect the eight units that did not meet minimum housing quality standards to verify that the landlords took appropriate corrective actions to make the units decent, safe, and sanitary. If appropriate actions were not taken, the authority should abate the rents or terminate the housing assistance contracts. HUD should also require the authority to ensure that errors in tenant files are corrected and reimburse its program $13,086 and the tenants or landlords $988 for the identified errors that affected the assistance payments. We also recommend that HUD require the authority to submit supporting documentation that would justify the issuance of a voucher larger than the administrative plan allowed or reimburse its program $1,957 from nonfederal funds for the five unsupported vouchers. Additionally, we recommend that HUD require the authority to establish and implement controls to prevent $6,804 in overpayments because of incorrect payment standards.
Issue Date: November 15,
2007
Audit Report No.: 2008-AT-1002
Title: The Municipality of Canovanas, PR, Needs to Improve Administration of Its Community Development Block Grant Program
We audited the Municipality of Canovanas' (Municipality) Community Development Block Grant (Block Grant) program. We selected the Municipality for review as part of our strategic plan. The objective of the audit was to determine whether the Municipality complied with U.S. Department of Housing and Urban Development (HUD) regulations, procedures, and instructions related to the administration of the Block Grant program.
The Municipality's financial management system did not fully comply with applicable HUD requirements. The system did not support the allowability of more than $885,000 in program disbursements, could not account for more than $501,000 in Block Grant receipts, allowed the use of more than $23,000 for ineligible program expenditures, and did not disburse Block Grant program funds in a timely manner.
The Municipality's management controls over its housing rehabilitation activities were inadequate. It improperly used Block Grant funds for new housing construction, and lacked adequate documentation to support program accomplishments. Therefore, the related program expenditures of more than $36,000 are ineligible, and more than $324,000 are considered unsupported pending an eligibility determination by HUD.
The Municipality awarded six contracts totaling more than $1 million without following HUD procurement requirements. As a result, it cannot ensure that quality goods and services were obtained at the most advantageous terms. In addition, the Municipality did not support the reasonableness of more than $109,000 in Block Grant disbursements and paid more than $70,000 for excessive expenditures.
We recommend that HUD require the Municipality to repay more than $59,000 in ineligible expenditures and $70,374 in excessive costs. HUD should also require the Municipality to provide all supporting documentation showing the appropriateness and eligibility of more than $1.82 million in Block Grant disbursements. We also recommend that HUD require the Municipality to develop and implement an internal control plan to ensure that the Block Grant program has (1) a financial management system that complies with HUD requirements, (2) controls and procedures which ensure that the housing rehabilitation activities meet the program objectives, and (3) procurement procedures which ensure that goods and services are obtained at the most advantageous terms and in a manner providing full and open competition. In addition, we recommend that HUD require the Municipality to ensure that Block Grant expenditures are properly accounted for, reconciled with HUD's disbursement system, and in compliance with HUD requirements.
Issue Date: November 8, 2007
Audit Report No.: 2008-AT-1001
Title: The Municipality of Ponce, PR, Needs to Improve Controls over Section 8 Program
As part of the U.S. Department of Housing and Urban Development (HUD), Office of the Inspector General's (OIG) strategic plan, we audited the Municipality of Ponce (authority) Section 8 Housing Choice Voucher program. Our audit objectives were to determine whether Section 8 units met housing quality standards in accordance with HUD requirements and whether the authority properly paid program landlords and properly determined housing assistance subsidies.
Of the 54 units inspected, 39 (72 percent) did not meet minimum housing quality standards, and 12 of those were in material noncompliance. The authority also failed to ensure that annual housing quality inspections were performed in a timely manner. As a result, Section 8 program funds were not used to provide units that were decent, safe, and sanitary; and the authority made housing assistance payments for units that did not meet standards. We estimate that over the next year, the authority will disburse housing assistance payments of more than $190,000 for units in material noncompliance with housing quality standards if it does not implement adequate controls.
The authority did not pay program landlords in a timely manner. As a result, it owed landlords more than $185,000 in rental payments. The authority also did not apply utility allowances for tenant-supplied appliances. We estimate that over the next year, the authority will underpay more than $71,000 in housing assistance and/or utility allowance disbursements if it does not implement adequate procedures regarding its utility allowance policy.
We recommend that HUD require the authority to inspect all of the 39 units that did not meet minimum housing quality standards to verify that the landlords took appropriate corrective actions to make the units decent, safe, and sanitary. If appropriate actions were not taken, the authority should abate the rents or terminate the tenants' vouchers. HUD should also require the authority to establish and implement adequate procedures and controls to prevent $190,080 from being spent on units with material housing quality standards violations and for the timely disbursement of more than $185,000 in back payments to landlords. We also recommend HUD require the authority to develop a utility allowance schedule that complies with program requirements and recognizes the costs of tenant-supplied appliances to ensure that $71,232 in program funds is used in accordance with HUD requirements.
Issue Date: April 27, 2007
Audit Report No.: 2007-AT-1007
Title: The Municipality of Toa Baja, Puerto Rico, Needs to Improve Its Community Development Block Grant Program Administration
We audited the Municipality of Toa Baja's (Municipality) Community Development Block Grant (Block Grant) program. Our audit objective was to determine whether the Municipality complied with U.S. Department of Housing and Urban Development (HUD) regulations, procedures, and instructions related to the administration of the Block Grant program.
The Municipality improperly used Block Grant funds for ineligible new housing construction; did not ensure that units were adequate, safe, and sanitary; and lacked adequate documentation to support program accomplishments. Therefore, program expenditures of more than $77,000 are ineligible, and more than $1 million is considered unsupported pending an eligibility determination by HUD.
The Municipality's financial management system did not fully comply with applicable HUD requirements. The system did not properly allocate more than $297,000 in administrative expenditures, did not support the allowability for more than $107,000 in program disbursements, could not account for more than $84,000 in Block Grant receipts, and allowed the use of more than $12,000 for ineligible expenditures.
The Municipality awarded six contracts totaling more than $231,000 without following HUD procurement requirements. As a result, it cannot ensure that quality goods and services were obtained at the most advantageous terms. In addition, the Municipality did not support the reasonableness of more than $167,000 in Block Grant disbursements and paid more than $5,000 for excessive expenditures.
We recommend that HUD require the Municipality to repay more than $89,000 in ineligible expenditures and $5,190 in excessive costs. HUD should also require the Municipality to provide all supporting documentation showing the appropriateness and eligibility of more than $1.72 million in Block Grant disbursements. We also recommend that HUD require the Municipality to develop and implement an internal control plan to ensure that the Block Grant program has (1) controls and procedures which ensure that the housing rehabilitation activities meet the program objectives, (2) a financial management system that complies with HUD requirements, and (3) procurement procedures which ensure that goods and services are obtained at the most advantageous terms and in a manner providing full and open competition. In addition, we recommend that HUD require the Municipality to ensure that Block Grant expenditures are properly accounted for, reconciled with HUD's disbursement system, and in compliance with requirements.
Issue Date: March 29, 2007
Audit Report No.: 2007-AT-1005
Title: The Puerto Rico Department of Housing, San Juan, Puerto Rico, Did Not Effectively Administer Its Section 8 Housing Program
As part of the U.S. Department of Housing and Urban Development (HUD), Office of the Inspector General's (OIG) strategic plan, we audited the Puerto Rico Department of Housing (authority) Section 8 Housing Choice Voucher program. Our audit objectives were to determine whether Section 8 units met housing quality standards in accordance with HUD requirements and whether the authority properly determined housing assistance subsidies.
Of the 66 units inspected, 63 (95 percent) did not meet minimum housing quality standards, and 23 of those were in material noncompliance. As a result, Section 8 program funds were not used efficiently and effectively to provide units that were decent, safe, and sanitary; and the authority made housing assistance payments for units that did not meet standards. We estimate that over the next year, the authority will disburse housing assistance payments of more than $2.6 million for units in material noncompliance with housing quality standards if it does not implement adequate controls. The authority overhoused 29 tenants and miscalculated Section 8 assistance because it did not have effective controls in place to ensure that its staff assigned the correct voucher size and calculated the correct assistance payment. As a result, it made overpayments and underpayments totaling $5,767.
It is recommend that the director of the Office of Public Housing require the authority to inspect all of the 63 units that did not meet minimum housing quality standards to verify that the landlords took appropriate corrective actions to make the units decent, safe, and sanitary. If appropriate actions were not taken, the authority should abate the rents or terminate the tenants' vouchers. The director should also require the authority to ensure that the errors in tenant files are corrected and reimburse HUD $5,451 and the tenants $316 for the identified errors that affected the assistance payments. We also recommend that the director require the authority to establish and implement controls to ensure that it follows HUD requirements so that assistance payments are correct and to prevent an estimated $2.6 million from being spent on units that are in material noncompliance with standards.