Issue Date
September 15, 2005
Audit Case Number
2005-AT-1013
TO: Jose R. Rivera, Director, Community Planning and Development, San Juan Field
Office, 4ND
FROM: James D. McKay
Regional Inspector General for Audit, 4AGA
SUBJECT: Corporación para el Fomento Económico de la Ciudad Capital,
San Juan, Puerto Rico, Did Not Administer Its Independent Capital Fund in
Accordance with HUD Requirements
HIGHLIGHTS
What We Audited and Why
We completed an audit of the Corporación para el Fomento Económico de la
Ciudad Capital (Corporation) independent capital fund. The review was initiated
in response to a request from the Department of Housing and Urban
Development’s (HUD) San Juan Office of Community Planning and
Development, which was not satisfied with the Corporation’s overall performance
in administering its independent capital fund. HUD’s concerns stemmed from the
results of a monitoring review conducted by the Municipality of San Juan
(Municipality) and included concern over the Corporation’s use of program
income funds for ineligible purposes. The objective of our audit was to determine
whether the Corporation administered the independent capital fund in accordance
with HUD requirements.
Table of Contents
What We Found
The Corporation did not follow HUD requirements in the administration of its
independent capital fund. Contrary to HUD requirements, the Corporation
retained more than $1.48 million in interest earned from its Community
Development Block Grant (Block Grant) revolving fund account.
The Corporation’s financial management system did not fully comply with
applicable HUD requirements. The system did not properly identify the
application of more than $1 million in administrative fees charged, allowed the
use of $463,618 for ineligible expenditures, did not account for all program
income, and maintained a high balance in its Block Grant fund account.
In four loans reviewed, the Corporation did not maintain adequate records to
demonstrate that activities met at least one of the three Block Grant national
objectives. Therefore, the related expenditures of four loans totaling $631,195 are
considered unsupported pending an eligibility determination by HUD.
What We Recommend
We recommend the director of the San Juan Office of Community Planning and
Development require the Municipality to repay $1.48 million in interest earned
from the Block Grant revolving fund and repay $463,618 in ineligible
expenditures. The director should also require the Municipality to provide all
supporting documentation and determine the appropriateness and eligibility of
$1.64 million in Block Grant disbursements. We also recommend that the
director require the Municipality to develop and implement an internal control
plan to ensure the independent capital fund has a financial management system
that complies with HUD requirements and that funds are used in a timely manner.
For each recommendation without a management decision, please respond and
provide status reports in accordance with HUD Handbook 2000.06, REV-3.
Please furnish us copies of any correspondence or directive issued because of the
audit.
Auditee’s Response
We discussed the findings with the Municipality and the Corporation during the
audit and with the Municipality at the exit conference on August 11, 2005. The
Municipality provided its written comments to our draft report on August 26,
2005. In its response, the Municipality generally agreed with the findings.
The complete text of the Municipality’s response, along with our evaluation of
that response, can be found in appendix B of this report.
Table of Contents 2
TABLE OF CONTENTS
Background and Objectives 4
Results of Audit
Finding 1: The Corporation Did Not Remit HUD Interest Earned from 5
Revolving Fund
Finding 2: The Corporation’s Financial Management System Did Not Fully 7
Comply with HUD Requirements
Finding 3: The Corporation Did Not Demonstrate Compliance with National 11
Objectives
Scope and Methodology 13
Internal Controls 14
Appendixes
A. Schedule of Questioned Costs and Funds to Be Put to Better Use 15
B. Auditee Comments and OIG’s Evaluation 16
C. Criteria 21
3
BACKGROUND AND OBJECTIVES
The Municipality of San Juan (Municipality) implemented an economic development program
that was carried out through its subgrantee, the Corporación para el Fomento Económico de la
Ciudad Capital (Corporation). The Corporation, a nonprofit subgrantee, was incorporated in
June 1982 and was established to promote economic development and housing activities within
San Juan, Puerto Rico. Between 1983 and 1992, the Municipality assigned more than $5.9
million in Community Development Block Grant (Block Grant) funds and delegated the
administration of $20.4 million in Urban Development Action Grant (Action Grant) loans to the
Corporation. Proceeds from Block Grant and Action Grant funds were used to establish the
independent capital fund, a revolving fund program to promote economic development loans.
The Corporation used the proceeds from loan repayments to generate new economic
development loans, and to pay for administrative expenditures of the program. The Municipality
has not approved new funding to the Corporation since 1992.
The Municipality is responsible for monitoring the Corporation’s performance and to ensure that
all aspects of HUD funded activities are carried out in accordance with applicable laws and
regulations. During 2002, the Municipality completed a monitoring review of the Corporation’s
independent capital fund. The Municipality concluded the Corporation did not comply with
Department of Housing and Urban Development (HUD) requirements and decided to regain
control over all assets associated with the independent capital fund. In April 2002, the
Municipality notified the Corporation of its decision to discontinue approving the use of Block
Grant funds. Therefore, the use of Block Grant funds for economic development loans was
halted. No new loans have been approved since then.
In a letter, dated May 30, 2003, the Municipality requested the Corporation to transfer all assets
associated with the independent capital fund to the Municipality. The Corporation did not agree
with the Municipality’s determination and retained control of the independent capital fund. As a
result, the Municipality took the matter to federal court to regain control of the independent
capital fund. The matter remains unresolved.
The objective of our audit was to determine whether the Corporation administered the
independent capital fund in accordance with HUD requirements. The compliance requirements
include the expenditure of HUD funds for eligible, necessary, and reasonable project costs,
maintaining adequate financial controls over funded activities, and maintaining adequate
documentation showing compliance with national objectives.
Table of Contents
4
RESULTS OF AUDIT
Finding 1: The Corporation Did Not Remit HUD Interest Earned from
Revolving Fund
The Corporation did not follow HUD requirements in the administration of its independent
capital fund. Contrary to HUD requirements, the Corporation retained more than $1.48 million
in interest earned from its Block Grant revolving fund account. The deficiencies occurred
because Corporation officials believed they were entitled to the earnings. In addition, the
Municipality had not established and implemented adequate controls to ensure the Corporation
complied with applicable requirements. Thus, the Corporation improperly retained and used
monies belonging to the federal government to finance its operations.
Interest Earned on Revolving
Fund
Our review disclosed the Block Grant revolving fund accounts generated more
than $1.48 million in interest income. For example, the Corporation placed more
than $2.31 million in eight certificates of deposit with a local financial institution
between September 2001 and February 2003. As of April 2005, the certificates
had accumulated at least $341,756 in interest.
Interest Certificate Interest
Issue date Maturity date rate face value accrued
Certificate A Sept. 11, 2001 Sept. 11, 2006 5.50% $ 300,000 $ 65,193
Certificate B Sept. 11, 2001 Sept. 11, 2006 5.50% 300,000 65,193
Certificate C Aug. 20, 2002 Aug. 20, 2007 4.75% 316,922 42,735
Certificate D Aug. 20, 2002 Aug. 20, 2007 4.75% 316,922 42,735
Certificate E Aug. 20, 2002 Aug. 20, 2007 4.75% 264,102 35,613
Certificate F Aug. 20, 2002 Aug. 20, 2007 4.75% 316,922 42,735
Certificate G Feb. 25, 2003 Feb. 25, 2008 4.25% 250,000 23,776
Certificate H Feb. 25, 2003 Feb. 25, 2008 4.25% 250,000 23,776
Total $2,314,868 $ 341,756
The Corporation also placed additional monies from the Block Grant revolving
fund in certificates of deposit that generated a substantial amount of interest
income in prior years. According to Corporation records, the income generated
from these additional certificates exceeded $1 million.
Table of Contents
5
Fiscal Interest
year earned
1995-1996 $107,787
1996-1997 $149,128
1997-1998 $179,702
1998-1999 $185,646
1999-2000 $230,241
2000-2001 $190,977
Total $1,043,481
Corporation officials informed us that it has been their policy to invest funds and
use the income generated to finance their operations. None of the interest earned
from the revolving fund accounts was remitted to HUD or the Municipality
because the Corporation believed it was entitled to the earnings. This policy is in
violation of HUD requirements contained in 24 CFR [Code of Federal
Regulations] 570.500(b). Grantees and subgrantees are required to remit interest
earned on revolving fund accounts to HUD for transmittal to the U.S. Department
of the Treasury.
The Block Grant revolving fund earned an additional $96,497 from its checking
account and other investments. Therefore, the Block Grant revolving fund
account generated at least $1.48 million that was not remitted to HUD for
transmittal to the U.S. Department of the Treasury. The Municipality raised
concern about this practice in the March 2002 monitoring review. In September
2003, the San Juan Office of Community Planning and Development informed the
Municipality that any interest earned on the revolving fund accounts must be
returned to the U.S. Department of the Treasury.
Recommendations
We recommend the director of the San Juan Office of Community Planning and
Development
1A. Require the Municipality to remit to HUD from nonfederal funds
$1,481,734 in interest earned on Block Grant revolving fund accounts
improperly retained by the Corporation.
1B. Take appropriate monitoring measures to ensure the Municipality remits
future interest earned on revolving fund accounts to HUD in a timely
manner for transmittal to the U.S. Department of the Treasury.
Table of Contents
6
Finding 2: The Corporation’s Financial Management System
Did Not Fully Comply with HUD Requirements
The Corporation’s financial management system did not fully comply with applicable HUD
requirements. The system did not properly identify the application of more than $1 million in
administrative fees charged, allowed the use of $463,618 for ineligible expenditures, did not
account for all program income, and maintained a high balance in its Block Grant fund account.
Consequently, the Corporation’s internal controls were not sufficient to safeguard assets or
assure their use for authorized purposes and in accordance with HUD requirements. This
occurred because the Corporation did not develop and implement policies and procedures to
ensure compliance with financial requirements of HUD programs.
Unsupported Administrative
Fees
The Block Grant program allows disbursements for reasonable expenditures
associated with the planning and execution of community development activities
provided these are supported by source documentation. Our review disclosed the
Corporation charged the Block Grant revolving fund more than $1 million in
administrative fees between July 1997 and April 2005.
Fiscal Fees Approved Block
Year charged Grant loans
1997-1998 $ 131,540 0
1998-1999 137,311 0
1999-2000 127,228 0
2000-2001 58,236 13
2001-2002 141,754 10
2002-2003 191,740 0
2003-2004 125,024 0
2004-2005 98,968 0
Total $1,011,801 23
Corporation officials could not provide us documentation to support the $1
million in administrative expenses. A Corporation official explained the
administrative fees charged correspond to 20 percent of loan repayments received
that were periodically transferred to the Corporation’s administrative account and
used for administrative expenses of the Corporation. The official added that the
administrative fees transferred could not be associated with a specific expenditure
or invoice. Therefore, the accounting records do not reflect accurate, current, and
complete disclosure of program expenditures. HUD has no assurance of the
reasonableness, allowability, and allocability of the expenditures.
Table of Contents 7
Unrelated Program
Disbursements
We found the Corporation used more than $449,000 in Block Grant monies for
expenditures not related to the independent capital fund. The funds were used to
meet requirements imposed by the Small Business Administration in the
implementation of its micro-loan program. This included $423,440 to cover loan
loss reserves and $25,773 in matching funds for loans awarded outside the city of
San Juan. The Corporation had reimbursed some costs, and its accounting records
reflected a remaining account receivable from the Corporation for $393,104 as of
February 2005.
The Corporation’s accounting records reflected another account receivable from
the micro-loan program for $70,514. Corporation officials informed us the
account receivable was also associated with the matching requirements imposed
by the Small Business Administration and that corresponding support would be
provided for our review. However, no support was provided showing the nature
of the receivable.
The Block Grant program only allows disbursements for reasonable expenditures
associated with the planning and execution of community development activities
provided these are supported by source documentation.
Program Income Not Recorded
HUD requires that receipt and expenditures of program income shall be recorded
as part of the financial transactions of the grant program and are subject to all
applicable requirements governing the use of Block Grant funds. Our review
found the Corporation charged late fees to participants that did not repay loans in
a timely manner. However, the Corporation did not record the late fees as part of
the financial transactions of the independent capital fund. Instead, it has been the
Corporation’s practice to use late fee proceeds to finance its operations.
Therefore, the Corporation cannot ensure that program income generated was
used in accordance with HUD requirements. The Corporation’s records showed
that between July 1999 and April 2005, the proceeds from late fees amounted to
$60,016.
Table of Contents
8
High Block Grant Fund
Balance
The Corporation was passive in its use of Block Grant funds, allowing the
accumulation of a significant amount of cash in the revolving fund accounts. As a
result, funds were not used in a timely manner, diminishing the objectives and
accomplishments of the Block Grant program. Our review found that between
July 1997 and April 2005, the Corporation only approved 23 loans. However, the
balance of the Block Grant revolving fund accounts remained consistently high
during the same period. The Block Grant revolving fund maintained a year-end
average balance of $3.58 million.
Block Grant account balance and loans awarded
$4.50
$4.00
$3.50
$3.00
$2.50
Million
$2.00 10
loans
13
$1.50 loans
$1.00
$0.50
$-
Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Apr-05
Fiscal year end
CDBG account balance Approved loans value
A Corporation official attributed the slow progress or use of the Block Grant
funds to the Municipality’s advice. The official explained that a former
consultant of the Municipality recommended that the Corporation use Action
Grant funds instead of Block Grant funds to award loans because there were
fewer program restrictions. Therefore, the Corporation awarded loans only using
Action Grant funds until the monies were almost depleted. This was not an
acceptable explanation for not performing an integral component of its Block
Grant loan program responsibilities. Also, the Corporation improperly invested
the unused funds and retained the interest proceeds to finance its operations (see
Table of Contents 9
finding 1). Further, the related benefits to low- and moderate-income persons
were unduly delayed or not realized for more than three years, when no Block
Grant loans were awarded.
In April 2002, the Municipality notified the Corporation of its decision to
discontinue approving the release of Block Grant funds. 1 Therefore, the use of
Block Grant funds for economic development loans was halted. No new loans
have been approved since then. As a result, the balance of the Block Grant
revolving fund continued to increase. As of April 2005, the revolving fund
balance exceeded $4.47 million, but the funds are not being used for their
intended purpose.
Recommendations
We recommend the director of the San Juan Office of Community Planning and
Development
2A. Require the Municipality to obtain and submit all supporting documentation
and HUD determine the eligibility and propriety of $1,011,801 in
administrative costs the Corporation charged to the Block Grant revolving
fund. Any amounts determined ineligible must be reimbursed to the Block
Grant program from nonfederal funds.
2B. Require the Municipality to reimburse the Block Grant program from
nonfederal funds $463,618 for ineligible expenditures pertaining to the
Corporation’s Small Business Administration micro-loan program.
2C. Take appropriate monitoring measures to ensure the Block Grant revolving
fund has in place a financial management system that complies with HUD
requirements and the Municipality develops and implements a control plan
so that Block Grant funds of $4,099,501 are put to better use. 2 At a
minimum, the system should ensure that fiscal controls and accounting
procedures are sufficient to permit the tracing of funds, including program
income, to a level that ensures such funds have not been used in violation of
the restrictions and prohibitions of applicable statutes.
1
This action was as a result of the March 2002 monitoring review performed by the Municipality that found
deficiencies in the administration of the Block Grant revolving loan fund.
2
The revolving fund balance of $4.47 million was adjusted to consider interest income disallowed in finding 1.
Table of Contents 10
Finding 3: The Corporation Did Not Demonstrate Compliance with
National Objectives
In four loans reviewed, the Corporation did not maintain adequate records to demonstrate that
activities met at least one of the three Block Grant national objectives. This occurred because
the Corporation had inadequate management controls and was not familiar with applicable Block
Grant regulations. Therefore, the related expenditures of four loans totaling $631,195 are
considered unsupported pending an eligibility determination by HUD.
Inadequate Documents
Our examination of 4 out of 11 outstanding Block Grant loans disclosed the
Corporation did not take steps to ensure they met at least one of the three Block
Grant national objectives required by 24 CFR [Code of Federal Regulations]
570.200(a). 3 Grantees and subgrantees must carry out activities that benefit low-
and moderate-income persons, aid in the prevention or elimination of slum and
blight, or meet community development needs having a particular urgency.
Corporation officials informed us the majority of the loans approved met the
national objective of benefiting low- and moderate-income persons based on the
creation of jobs. Further, some loans may address other national objectives, such
as the prevention or elimination of slum and blight. Although Corporation
officials stated they properly evaluated each loan to ensure compliance with
HUD’s national objectives, we did not find adequate support in the four loan files.
Number of low/medium-
Loan Loan closing income jobs to be Loan
number date created per agreement amount
9-0099-01 Nov. 16, 2001 5 $ 185,000
9-0102-01 Jan. 4, 2002 5 180,000
9-0089-01 July 24, 2001 5 161,195
9-0088-01 Dec. 6, 2000 3 105,000
Total $ 631,195
Specific examples of poor efforts to support national objectives compliance
include
Benefit to low- and moderate-income persons job creation. In all four
loans, the Corporation executed written agreements with loan recipients,
3
The Corporation approved 23 Block Grant loans during fiscal years 2001 and 2002. Eleven of the loans were
outstanding as of May 2005. These eleven loans had a total value of $1,060,695.
Table of Contents 11
which specified the number of permanent jobs to be created for low-and
moderate-income persons. However, the Corporation did not
o Maintain documentation showing the income limits applied,
o Maintain documentation showing the size and annual income of the
person’s family before the low- or moderate-income person was hired for
the job, or
o Ensure the written agreement with the loan recipient included a listing by
job title of the permanent jobs to be created.
Prevention or elimination of slum and blight. In January 2005, the
Corporation certified that loan number 9-0102-01 was an eligible activity and
that it met the national objective of preventing or eliminating slum and blight
because of its location on Ponce de Leon Avenue. However, the loan file did
not contain a description of the conditions that qualified the activity as one to
aid in the prevention or elimination of slum or blight. Further, the
Corporation did not provide information showing the activity was in an area
that met a definition of a slum, blighted, deteriorated, or deteriorating area
under state or local law.
The file deficiencies demonstrate the Corporation lacked adequate management
controls and unfamiliarity with Block Grant regulations. Therefore, the intended
benefits of the four loans and compliance with the Block Grant national objectives
were not supported.
Recommendations
We recommend the director of the San Juan Office of Community Planning and
Development
3A. Require the Municipality to obtain and submit all supporting documentation
and HUD determine the eligibility and compliance with national objectives
of the $631,195 the Corporation disbursed for the four loans. Any amounts
determined ineligible must be reimbursed to the Block Grant program from
nonfederal funds.
3B. Take appropriate monitoring measures and require the Municipality to
establish and implement policies and procedures to ensure future loans meet
a Block Grant national objective.
Table of Contents
12
SCOPE AND METHODOLOGY
Our audit objective was to determine whether the Corporation administered the independent
capital fund in accordance with HUD requirements. To accomplish our objectives, we
Obtained and reviewed relevant HUD regulations and Corporation guidelines.
Interviewed HUD, Municipality, and Corporation officials and reviewed monitoring
reports.
Reviewed the Corporation’s files and records, including financial statements, and general
ledgers.
Reviewed a sample of four Block Grant loan files.
Reviewed the Corporation’s controls related to the administration of its independent capital
fund.
We obtained a list of Block Grant loans the Corporation awarded during fiscal years 2001 and
2002. The Corporation awarded 23 loans, of which 11 totaling $1.06 million were outstanding
as of May 2005. We selected and reviewed a sample of four outstanding Block Grant loans
totaling $631,195. The loans reviewed were those approved by the Corporation with a value
greater than $100,000. We reviewed each loan file to determine whether the activity met one of
the three national objectives of the Block Grant program.
To achieve our audit objectives, we relied in part on computer-processes data contained in the
Corporation’s database. Although we did not perform a detailed assessment of the reliability of
the data, we did perform a minimal level of testing and found it to be adequate for our purposes.
The audit generally covered the period of July 2003 through March 2005, and we extended the
period as needed to accomplish our objectives. Due to the nature of some of the deficiencies, we
extended the period back to July 1995. We conducted our fieldwork from March through June
2005 at the Corporation’s offices in San Juan, Puerto Rico.
We conducted the audit in accordance with generally accepted government auditing standards.
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13
INTERNAL CONTROLS
Internal control is an integral component of an organization’s management that provides
reasonable assurance that the following objectives are being achieved:
• Effectiveness and efficiency of operations,
• Reliability of financial reporting, and
• Compliance with applicable laws and regulations.
Internal controls relate to management’s plans, methods, and procedures used to meet its
mission, goals, and objectives. Internal controls include the processes and procedures for
planning, organizing, directing, and controlling program operations. They include the systems
for measuring, reporting, and monitoring program performance.
Relevant Internal Controls
We determined the following internal controls were relevant to our audit objectives:
• Compliance with laws, regulations, policies, and procedures that management has
implemented to reasonably assure that resource use is consistent with laws and
regulations.
• Policies and procedures that management has implemented to reasonably assure that
resources are safeguarded against waste, loss, and misuse.
We assessed the relevant controls identified above.
A significant weakness exists if management controls do not provide reasonable assurance that the
process for planning, organizing, directing, and controlling program operations will meet the
organization’s objectives.
Significant Weaknesses
Based on our review, we believe the following items are significant weaknesses:
• The Corporation did not remit to HUD more than $1.48 million on interest earned from
the Block Grant revolving fund (see finding 1).
• The Corporation’s financial management system did not fully comply with HUD
requirements (see finding 2).
• The Corporation did not demonstrate loans complied with national objectives of the
Block Grant program (see finding 3).
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14
APPENDIXES
Appendix A
SCHEDULE OF QUESTIONED COSTS
AND FUNDS TO BE PUT TO BETTER USE
Recommendation Ineligible 1/ Unsupported 2/ Funds to be put
number to better use 3/
1A $1,481,734
2A $1,011,801
2B 463,618
2C $4,099,501
3A 631,195
Total $1,945,352 $1,642,996 $4,099,501
1/ Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity
that the auditor believes are not allowable by law; contract; or federal, state, or local
polices or regulations.
2/ Unsupported costs are those costs charged to a HUD-financed or HUD-insured program
or activity when we cannot determine eligibility at the time of audit. Unsupported costs
require a decision by HUD program officials. This decision, in addition to obtaining
supporting documentation, might involve a legal interpretation or clarification of
departmental policies and procedures.
3/ “Funds to be put to better use” are quantifiable savings that are anticipated to occur if an
Office of Inspector General (OIG) recommendation is implemented, resulting in reduced
expenditures at a later time for the activities in question. This includes costs not incurred,
deobligation of funds, withdrawal of interest, reductions in outlays, avoidance of
unnecessary expenditures, loans and guarantees not made, and other savings.
Table of Contents
15
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
Table of Contents
16
Comment 1
Table of Contents
17
Comment 2
Comment 3
Table of Contents
18
Comment 4
Table of Contents
19
OIG Evaluation of Auditee Comments
Comment 1 We agree with the Municipality on the seriousness and magnitude of the
deficiency and that remedial action is required. However, the cited
violation was not of a recent origin. Further, we are not aware the
Municipality made attempts to prevent or remedy the situation prior to the
2002 monitoring review. We attribute the deficiency to the inadequate
controls of the Municipality and the Corporation’s incorrect belief that they
could retain the interest. The Municipality is ultimately responsible for the
actions and accomplishments of its subgrantee, and must ensure that HUD
requirements are followed at all times. Therefore, the Municipality must
reimburse HUD the interest improperly retained by the Corporation.
Comment 2 Our objective was to determine if the Corporation’s financial management
system provides a complete disclosure of Block Grant receipts and
expenditures as required by HUD. We found the financial management
system for the Block Grant fund needs to be improved.
Comment 3 We are not suggesting that the Corporation is a new subgrantee or it has
not been exposed to federal programs. Our conclusion and statements were
based on the documents and responses we obtained from the Corporation’s
staff responsible for the review and/or monitoring of Block Grant activities.
Comment 4 We acknowledge the efforts taken by the Municipality during its 2002
monitoring review. However, the deficiencies included in the report are
attributed to the inadequate controls of the Municipality and the
Corporation. The Municipality is the direct recipient of Block Grant funds
and must ensure that all the funds are used in accordance with applicable
requirements. This includes Block Grant activities undertaken by its
subgrantee. We are not suggesting that violations included in the audit
report are all inclusive. We recommend discussing with HUD any other
concerns the Municipality might have that were not addressed in the audit
report.
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20
APPENDIX C
CRITERIA
24 CFR [Code of Federal Regulations] 84.21
Standards for financial management systems require recipients’ financial management systems to
provide for the following:
Records that identify adequately the source and application of funds for federally
sponsored activities. These records shall contain information pertaining to federal
awards, authorizations, obligations, unobligated balances, assets, outlays, income, and
interest.
Effective control over and accountability for all funds, property, and other assets.
Recipients shall adequately safeguard all such assets and assure they are used solely for
authorized purposes.
Accounting records, including cost accounting records, that are supported by source
documentation.
24 CFR [Code of Federal Regulations] 570.200 (a) (2)
Each recipient under the Entitlement and HUD-administered Small Cities programs must ensure
and maintain evidence that each of its activities assisted with Block Grant funds meets one of the
three national objectives as contained in its certification.
24 CFR [Code of Federal Regulations] 570.500 (b)
Each revolving loan fund’s cash balance must be held in an interest-bearing account, and any
interest paid on Block Grant funds held in this account shall be considered interest earned on
grant advances and must be remitted to HUD for transmittal to the U.S. Department of the
Treasury no less frequently than annually.
24 CFR [Code of Federal Regulations] 570.504 (a)
The receipt and expenditure of program income as defined in § 570.500(a) shall be recorded as
part of the financial transactions of the grant program.
24 CFR [Code of Federal Regulations] 570.506 (b)
This subpart provides minimum records the recipient shall establish and maintain to demonstrate
that each Block Grant-assisted activity complies with one or more of the national objectives.
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21
Corporaci�n para el Fomento Econ�mico de la Ciudad Capital, San Juan, Puerto Rico
Published by the Department of Housing and Urban Development, Office of Inspector General on 2005-09-15.
Below is a raw (and likely hideous) rendition of the original report. (PDF)