oversight

The City of Decatur �s Neighborhood Renewal Program; Decatur, IL; The City Generally Followed HUD�s Requirements

Published by the Department of Housing and Urban Development, Office of Inspector General on 2005-03-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

            AUDIT REPORT




              CITY OF DECATUR
       NEIGHBORHOOD RENEWAL PROGRAM

             DECATUR, ILLINOIS

                 2005-CH-1008

               MARCH 30, 2005




            OFFICE OF AUDIT, REGION V
                CHICAGO, ILLINOIS




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                                                                Issue Date
                                                                        March 30, 2005
                                                                Audit Report Number
                                                                         2005-CH-1008




TO:        Ray E. Willis, Director of Community Planning and Development, 5AD


FROM:      Heath Wolfe, Regional Inspector General for Audit, 5AGA

SUBJECT: The City of Decatur’s Neighborhood Renewal Program; Decatur, IL; The City
           Generally Followed HUD’s Requirements

                                  HIGHLIGHTS

 What We Audited and Why

            We reviewed the City of Decatur’s (City) Neighborhood Renewal Program. We
            initiated the review based on a citizen’s complaint to our office. The complainant
            alleged the contractor who did the housing rehabilitation work at 327 East Stuart
            Avenue charged for work not within the final contract work specifications.
            Additionally, the complainant alleged the City paid for work that was improperly
            performed or that was not provided, and did not follow proper procurement
            practices.

            Our review objectives were to determine whether the complainant’s allegations
            were substantiated and whether the U.S. Department of Housing and Urban
            Development’s (HUD) requirements were followed. Since there were
            deficiencies with the housing rehabilitation work at 327 East Stuart Avenue and
            the work was completed in 1999, we expanded our review objectives to determine
            whether the City followed HUD’s requirements for housing rehabilitation work
            completed between August 1, 2002, and July 31, 2004. Further, the City’s
            audited financial statements for fiscal years 2001, 2002, and 2003 included
            findings on the City’s Community Development Block Grant (Block Grant) and
            HOME Investment Partnership (HOME) Programs. Based on these findings, we
            included in our review objectives to determine whether the City: reported
            program income to HUD and spent the income prior to drawing down additional
            HOME funds; conducted on-site monitoring visits of community housing
            development organization sub-recipients; reviewed original appraisals prepared




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           prior to the purchase of real property with Block Grant funds; and conducted desk
           reviews and on-site monitoring visits on Block Grant sub-recipients.

What We Found


           We determined the City generally complied with HUD’s requirements. However,
           we informed the City’s Manager of Neighborhood Renewal of the Department of
           Economic and Urban Development and HUD’s Director of the Chicago Regional
           Office of Community Planning and Development of minor deficiencies through a
           memorandum dated March 29, 2005.

What We Recommend


           Since the City generally complied with HUD’s requirements, we did not
           recommend any corrective action.

Auditee’s Response


           We did not request a response from the City since it generally complied with HUD’s
           requirements. We held an exit conference with City’s Assistant Director of
           Economic and Urban Development and its Assistant City Manager on January 13,
           2005.




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                        TABLE OF CONTENTS

Background and Objectives                   4

Scope and Methodology                       5

Internal Controls                           6




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                     BACKGROUND AND OBJECTIVES

The Community Development Block Grant Program. Under Title I of the Housing and
Community Development Act of 1974, the U.S. Department of Housing and Urban Development
(HUD) provides funding for the Community Development Block Grant (Block Grant) Program.
The primary purpose of the Block Grant Program is to develop and maintain viable communities
that provide decent housing, a suitable living environment, and expanding economic
opportunities for low- and moderate-income persons. The Block Grant Program provides a
flexible local decision making tool for assisting local governments in meeting identified needs
through innovative and comprehensive approaches to improve the physical, economic, and social
conditions throughout the community.

The HOME Investment Partnerships Program. Authorized under Title II of the Cranston-
Gonzales National Affordable Housing Act, as amended, the HOME Investment Partnerships
(HOME) Program is funded for the purpose of increasing the supply of affordable standard rental
housing; improving substandard housing for existing homeowners; assisting new homebuyers
through acquisition, construction, and rehabilitation of housing; and providing tenant-based
rental assistance.

The City of Decatur. Organized under the laws of the State of Illinois, the City of Decatur is
governed by a Mayor and a seven-member City Council. The City’s Mayor is Paul Osborne.
The City’s Economic and Urban Development Department administers the City’s Neighborhood
Renewal Program (Program). The Program is funded with $1,772,000 in Block Grant and
$601,699 in HOME funds for fiscal year 2004. The Program’s records are maintained at the
Decatur Civic Center. The Civic Center is located at 1 Gary K. Anderson Plaza, Decatur, IL.

Our review objectives were to determine whether the complainant’s allegations were
substantiated and whether the U.S. Department of Housing and Urban Development’s (HUD)
requirements were followed. Since there were deficiencies with the housing rehabilitation work
at 327 East Stuart Avenue and the work was completed in 1999, we expanded our review
objectives to determine whether the City followed HUD’s requirements for housing
rehabilitation work completed between August 1, 2002, and July 31, 2004. Further, the City’s
audited financial statements for fiscal years 2001, 2002, and 2003 included findings on the City’s
Community Development Block Grant (Block Grant) and HOME Investment Partnership
(HOME) Programs. Based on these findings, we included in our review objectives to determine
whether the City: reported program income to HUD and spent the income prior to drawing down
additional HOME funds; conducted on-site monitoring visits of community housing
development organization sub-recipients; reviewed original appraisals prepared prior to the
purchase of real property with Block Grant funds; and conducted desk reviews and on-site
monitoring visits on Block Grant sub-recipients.




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                         SCOPE AND METHODOLOGY

We performed our review at HUD’s Chicago Regional Office and the City’s Civic Center from
July through October 2004. To accomplish our audit objectives, we interviewed HUD’s staff,
the City’s employees, the complainant, the contractor who did the rehabilitation work at 327 East
Stuart Avenue, and Neighborhood Renewal Program recipients.

To determine whether the complainant’s allegations were substantiated and whether HUD’s
requirements were followed, we reviewed HUD’s

   •   Block Grant and HOME files for the City,
   •   Consolidated Annual Performance and Evaluation Reports information related to the
       City, and
   •   Integrated Disbursement and Information System information related to the City;

We also reviewed the City’s

   •   Block Grant and HOME Grant Agreements with HUD,
   •   Housing Rehabilitation Program Manuals,
   •   Five Year Consolidated Plan (2000 - 2004),
   •   Annual audited financial statements for the fiscal years ending April 30, 2000, through
       April 30, 2003,
   •   Financial records,
   •   Neighborhood Renewal Program recipients’ files, and
   •   Monitoring documentation for Block Grant and HOME funds.

We also reviewed 24 Code of Federal Regulations, parts 85, 92, and 570; Office of Management
and Budget Circulars A-87 and A-122; and HUD Handbook 2000.6, REV 3.

The review covered the period from May 1, 2001, through April 30, 2004. This period was
adjusted as necessary. We performed our review in accordance with generally accepted
government auditing standards.




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                             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 review
              objectives:

                  •   Program Operations – Policies and procedures that management has
                      implemented to reasonably ensure that a program meets its objectives.

                  •   Validity and Reliability of Data – Policies and procedures that management
                      has implemented to reasonably ensure that valid and reliable data are
                      obtained, maintained, and fairly disclosed in reports.

                  •   Compliance with Laws and Regulations – Policies and procedures that
                      management has implemented to reasonably ensure that resource use is
                      consistent with laws and regulations.

                  •   Safeguarding Resources – Policies and procedures that management has
                      implemented to reasonably ensure that resources are safeguarded against
                      waste, loss, and misuse.

              We assessed the relevant controls identified above.

              A significant weakness exists if internal controls do not provide reasonable
              assurance that the process for planning, organizing, directing, and controlling
              program operations will meet the organization’s objectives. We noted no significant
              weaknesses in the City’s current internal controls.




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