oversight

The Office of Affordable Housing Programs' Oversight of HOME Investment Partnerships Program Income Was Inadequate

Published by the Department of Housing and Urban Development, Office of Inspector General on 2009-08-28.

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

                                                                Issue Date
                                                                         August 28, 2009
                                                                Audit Report Number
                                                                         2009-CH-0002




TO:        Nelson R. Bregón, General Deputy Assistant Secretary for Community Planning
             and Development, D

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

SUBJECT: The Office of Affordable Housing Programs’ Oversight of HOME Investment
           Partnerships Program Income Was Inadequate

                                   HIGHLIGHTS

 What We Audited and Why

             We audited the U.S. Department of Housing and Urban Development’s (HUD)
             Office of Affordable Housing Programs’ (Office) oversight of HOME Investment
             Partnerships Program (Program) income (including recaptured Program funds).
             The audit was part of the activities in our fiscal year 2009 annual audit plan to
             contribute to improving HUD’s execution and accountability of its fiscal
             responsibilities and our strategic plan to help HUD resolve its major management
             challenges. Our objectives were to determine whether HUD’s Office had
             adequate oversight of Program income to ensure that participating jurisdictions
             disbursed Program income before drawing down Program funds and reported
             Program income in HUD’s Integrated Disbursement and Information System
             (System) accurately and in a timely manner.

 What We Found

             HUD’s Office did not ensure that participating jurisdictions complied with HUD’s
             requirements in their use of Program income and properly reported Program
             income in HUD’s System.
           At least 29 of the 45 participating jurisdictions selected for review inappropriately
           drew down more than $79.4 million in Program funds from their HOME trust
           fund treasury accounts (treasury account) from January 1, 2007, through
           December 31, 2008, when they had available Program income. Of the 29
           participating jurisdictions, 26 had more than $39.6 million in available Program
           income as of December 31, 2008, associated with their inappropriate drawdowns
           of Program funds. In addition, at least 38 of the participating jurisdictions did not
           report Program income in HUD’s System accurately and/or in a timely manner
           from January 1, 2007, through December 31, 2008.

What We Recommend

           We recommend that HUD’s General Deputy Assistant Secretary for Community
           Planning and Development require the Office to ensure that the 26 participating
           jurisdictions disburse the more than $39.6 million in available Program income as
           of December 31, 2008, for eligible housing activities and/or administrative costs
           before drawing down Program funds from their treasury accounts, as appropriate,
           and implement adequate procedures and controls to address the findings cited in
           this audit report.

           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 and directives issued because of
           the audit.

Auditee’s Response

           We provided our discussion draft audit report to HUD’s General Deputy Assistant
           Secretary for Community Planning and Development during the audit. We held an
           exit conference with HUD’s Director of Affordable Housing Programs on July 9,
           2009.

           We asked the General Deputy Assistant Secretary to provide comments on our
           discussion draft audit report by July 23, 2009. The General Deputy Assistant
           Secretary provided written comments, dated July 23, 2009. The General Deputy
           Assistant Secretary agreed with our findings and recommendations. The complete
           text of HUD’s written comments, along with our evaluation of that response, can be
           found in appendix B of this report.




                                             2
                               TABLE OF CONTENTS

Background and Objectives                                                                  4

Results of Audit
        Finding 1: The Office Lacked Adequate Controls over Participating
                   Jurisdictions’ Use of Program Income                                    6

        Finding 2: The Office’s Controls over Participating Jurisdictions’ Reporting of
                   Program Income in HUD’s System Were Inadequate                         11

Scope and Methodology                                                                     14

Internal Controls                                                                         16

Appendixes
   A.   Schedule of Funds to Be Put to Better Use                                         18
   B.   Auditee Comments and OIG’s Evaluation                                             19
   C.   HUD’s Requirements                                                                23
   D.   Participating Jurisdictions’ Use of Program Income                                25
   E.   Participating Jurisdictions’ Reporting of Program Income                          36




                                                3
                      BACKGROUND AND OBJECTIVES

The Program. Authorized under Title II of the Cranston-Gonzalez National Affordable Housing
Act, as amended, the HOME Investment Partnerships Program (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 U.S. Department of Housing and Urban Development (HUD) allocated more than $1.6 billion
in Program funds annually to 629 participating jurisdictions that received an allocation of Program
funds for Program years 2004 through 2008. The following table shows the amount of Program
funds HUD awarded the 629 participating jurisdictions for Program years 2004 through 2008.

                                   Program          Program
                                     year             funds
                                     2004         $1,856,532,781
                                     2005          1,814,006,597
                                     2006          1,700,962,471
                                     2007          1,695,704,021
                                     2008          1,645,276,390
                                    Total         $8,712,482,260

As of December, 31, 2008, the 629 participating jurisdictions had balances of Program income
(including recaptured Program funds) in HUD’s Integrated Disbursement and Information System
(System) totaling nearly $75 million.

HUD’s Office of Affordable Housing Programs (Office) has oversight responsibility for the
Program. Before 2000, HUD’s Office of Community Planning and Development removed an
automated control in HUD’s System which ensured participating jurisdictions used available
Program income before drawing down Program funds from their HOME trust fund treasury
accounts (treasury accounts). The automated control was removed due to participating
jurisdictions not reporting Program income retained by subrecipients because the automated
control applied the Program income retained by subrecipients to the next voucher for any
activity. Since 2000, HUD’s Office relied on HUD’s Office of Community Planning and
Development field offices’ monitoring activities to ensure that participating jurisdictions
complied with HUD’s Program income requirements. HUD’s Director of Systems Development
and Evaluation Division stated that HUD’s Office of Community Planning and Development
obtained a cost estimate, dated March 30, 2001, that stated it would cost approximately $1
million to update the Program income controls in HUD’s System. HUD’s Deputy Assistant
Secretary for Operations said that the Office of Community Planning and Development did not
have the funds to update HUD’s System. However, the Office of Community Planning and
Development could not provide documentation to support that it had requested additional funds
to update HUD’s System as of April 1, 2009.




                                                 4
Our objectives were to determine whether HUD’s Office had adequate oversight of Program
income to ensure that participating jurisdictions disbursed Program income before drawing down
Program funds and reported Program income in HUD’s System accurately and in a timely
manner.




                                              5
                                RESULTS OF AUDIT

Finding 1: The Office Lacked Adequate Controls over Participating
                Jurisdictions’ Use of Program Income
HUD’s Office did not ensure that participating jurisdictions complied with HUD’s requirements
in their use of available Program income. At least 29 of the 45 participating jurisdictions
selected for review inappropriately drew down more than $79.4 million in Program funds from
their treasury accounts from January 1, 2007, through December 31, 2008, when they had
available Program income because HUD lacked adequate procedures and controls to ensure that
participating jurisdictions followed HUD’s requirements. As a result, 26 of the 29 participating
jurisdictions had more than $39.6 million in available Program income as of December 31, 2008,
associated with their inappropriate drawdowns of Program funds.



 HUD’s Office Did Not Ensure
 That Participating Jurisdictions
 Disbursed Program Income
 before Drawing Down More
 Than $79.4 Million in Program
 Funds

              HUD’s Office did not ensure that participating jurisdictions disbursed available
              Program income in accordance with HUD’s requirements. HUD’s regulations at
              24 CFR [Code of Federal Regulations] 92.502(c)(3) state that a participating
              jurisdiction must disburse Program income in its HOME trust fund local account
              (local account) before requesting Program funds from its treasury account.
              HUD’s regulations at 24 CFR 92.503 allow a participating jurisdiction’s
              subrecipient to retain Program income for additional Program projects. However,
              HUD’s Office of Community Planning and Development Notice 97-9 requires
              Program income retained by a subrecipient to be disbursed before it receives
              additional Program funds.

              We selected for review 45 participating jurisdictions to determine whether the
              participating jurisdictions disbursed Program income before drawing down
              Program funds. Contrary to HUD’s requirements, at least 29 of the 45
              participating jurisdictions drew down Program funds from their treasury accounts
              from January 1, 2007, through December 31, 2008, when they had available
              Program income. The 29 participating jurisdictions inappropriately made at least
              3,900 drawdowns from their treasury accounts during the period. The drawdowns
              totaled more than $79.4 million in Program funds.




                                               6
As of December 31, 2008, 26 of the 29 participating jurisdictions had nearly $42
million in available Program income. The nearly $42 million included more than
$39.6 million associated with the participating jurisdictions’ inappropriate
drawdowns of Program funds. The following table shows each of the 26
participating jurisdictions’ available Program income as of December 31, 2008,
associated with the inappropriate drawdowns of Program funds.

                    Participating jurisdiction                Balance
        City of Phoenix, Arizona                              $6,825,395
        San Bernardino County, California, Consortium          5,937,115
        City of Inglewood, California                          5,342,831
        Essex County, New Jersey, Consortium                   4,668,075
        City of Bakersfield, California                        2,340,852
        Sacramento County, California, Consortium              1,906,830
        City of Pomona, California                             1,883,335
        City of Hartford, Connecticut                          1,544,545
        Greenville County, South Carolina                      1,079,783
        City of Kenosha, Wisconsin                             1,002,443
        Hudson County, New Jersey, Consortium                    917,676
        Amherst, New York, Consortium                            839,808
        City of Madison, Wisconsin                               768,369
        City of Austin, Texas                                    751,441
        City of San Diego, California                            634,481
        Mercer County, New Jersey, Consortium                    623,041
        City of Atlanta, Georgia                                 611,713
        San Joaquin County, California                           593,149
        City of Fort Lauderdale, Florida                         537,120
        City of Newark, New Jersey                               362,800
        Escambia County, Florida, Consortium                     125,621
        City of Elizabeth, New Jersey                             91,375
        State of South Dakota                                     85,001
        U.S. Territory of Guam                                    60,066
        City of Jackson, Tennessee                                52,109
        City of Oakland, California                               26,402
                              Total                          $39,611,376

Middlesex County, New Jersey, Consortium and Palm Beach County, Florida, had
minimal (less than $40) and no Program income available as of December 31, 2008,
respectively. In addition, we did not include the Cook County, Illinois, Consortium
as one of the participating jurisdictions that had available Program income as of
December 31, 2008, since we addressed this issue in a previous audit report (Office
of Inspector General (OIG) audit report number 2008-CH-1009, issued June 7,
2008); as of December 31, 2008, the Consortium had not drawn down Program
funds from its treasury account since December 22, 2007, and the Consortium



                                 7
           disbursed at least $6.2 million in Program income from its local account without
           drawing down any Program funds from its treasury account.

           In addition, we could not determine whether seven of the participating jurisdictions
           appropriately disbursed available Program income before drawing down Program
           funds from their treasury accounts due to the participating jurisdictions inability to
           provide their balances of Program income in their local accounts as of January 1,
           2007, and/or December 31, 2008, and not tracking their disbursements of Program
           income outside of HUD’s System and/or separate from Program funds.

           We included in appendix D of this report the specific details on the participating
           jurisdictions that inappropriately drew down Program funds from their treasury
           accounts when they had available Program income or could not provide sufficient
           documentation to determine whether the participating jurisdictions appropriately
           disbursed available Program income before drawing down Program funds from their
           treasury accounts.

HUD’s Office Lacked Adequate
Procedures and Controls

           The weaknesses regarding the participating jurisdictions drawing down Program
           funds from their treasury accounts when they had available Program income
           occurred because HUD’s Office lacked adequate procedures and controls to
           ensure that participating jurisdictions appropriately followed HUD’s
           requirements.

           HUD’s System did not allow the participating jurisdictions to apply Program
           income to activities that were initially set up as administrative or community
           housing development organization activities. HUD’s System only allowed
           participating jurisdictions to apply Program income to activities set up with
           Program income and/or entitlement funds. Further, HUD’s System did not
           prevent participating jurisdictions from drawing down Program funds from their
           treasury accounts when they had available Program income in HUD’s System. In
           addition, HUD’s Office lacked adequate procedures and controls to ensure that
           participating jurisdictions reported all Program income in HUD’s System
           accurately and in a timely manner (see finding 2 of this audit report).

           Since 2000, HUD’s Office relied on HUD’s Office of Community Planning and
           Development field offices’ monitoring activities to ensure that participating
           jurisdictions complied with HUD’s Program income requirements. However, the
           Office’s staff said that HUD’s Office of Community Planning and Development
           field office staff generally lacked the analytical skills necessary to determine
           whether participating jurisdictions appropriately disbursed Program income.




                                              8
             HUD’s Director of Affordable Housing Programs said that the Office of
             Community Planning and Development released fiscal year 2009 funding and he
             anticipated that funding would be available to update HUD’s System. However,
             the Office cannot update HUD’s System until it transitions to the System’s new
             operation platform, which is not scheduled to be completed until September 2009.

             The Office’s staff said that they were developing a quarterly participating
             jurisdiction analysis report (quarterly report) from data in HUD’s System to assist
             HUD’s Office of Community Planning and Development field offices in
             monitoring participating jurisdictions. The quarterly report will include the
             participating jurisdictions’ balances of Program income and flag those
             jurisdictions with high balances of Program income. The Office plans to
             determine the threshold for high balances of Program income and have the
             quarterly report operational by the end of June 2009.

             In addition, HUD did not require participating jurisdictions to certify that they did
             not have available Program income when they drew down Program funds.

Conclusion

             HUD’s Office did not ensure that participating jurisdictions disbursed available
             Program income before drawing down Program funds from their treasury accounts.
             As previously mentioned, at least 29 of the 45 participating jurisdictions drew down
             more than $79.4 million in Program funds from their treasury accounts from January
             1, 2007, through December 31, 2008, when they had available Program income. As
             a result, 26 of the 29 participating jurisdictions had more than $39.6 million in
             available Program income as of December 31, 2008, associated with their
             inappropriate drawdowns of Program funds.

             We could not determine whether seven of the participating jurisdictions
             appropriately disbursed available Program income before drawing down Program
             funds from their treasury accounts.

Recommendations

             We recommend that HUD’s General Deputy Assistant Secretary for Community
             Planning and Development require the Office to

             1A.    Require the 26 participating jurisdictions to disburse the $39,611,376 in
                    available Program income as of December 31, 2008, for eligible housing
                    activities and/or administrative costs before drawing down Program funds
                    from their treasury accounts as appropriate.




                                               9
1B.   Implement adequate procedures and controls to ensure that participating
      jurisdictions disburse available Program income for eligible housing
      activities and/or administration costs before drawing down Program funds
      from their treasury accounts as appropriate. The procedures and controls
      should include but not be limited to updating HUD’s System to prevent
      participating jurisdictions from drawing down Program funds from their
      treasury accounts when they have available Program income and requiring
      participating jurisdictions to certify that they do not have available
      Program income when they drawdown Program funds. In addition, the
      Office may need to implement interim procedures and controls until
      HUD’s System can be updated.




                              10
Finding 2: The Office’s Controls over Participating Jurisdictions’
   Reporting of Program Income in HUD’s System Were Inadequate
HUD’s Office did not ensure that participating jurisdictions properly reported Program income in
HUD’s System. At least 38 of the 45 participating jurisdictions selected for review did not
report Program income in HUD’s System accurately and/or in a timely manner from January 1,
2007, through December 31, 2008, because HUD lacked adequate procedures and controls to
ensure that participating jurisdictions appropriately reported Program income in HUD’s System.
As a result, HUD and the participating jurisdictions lacked assurance regarding the amount of
Program income each participating jurisdiction had available that needed to be disbursed before
drawing down Program funds from its treasury account.



 HUD’s Office Did Not Ensure
 That Participating Jurisdictions
 Properly Reported Program
 Income in HUD’s System

              HUD’s Office did not ensure that participating jurisdictions reported Program
              income in HUD’s System accurately and/or in a timely manner. HUD’s Office of
              Community Planning and Development Notice 97-9 requires participating
              jurisdictions to determine and record their Program income in HUD’s System in
              periodic intervals not to exceed 30 days.

              We selected for review 45 participating jurisdictions to determine whether they
              reported Program income in HUD’s System accurately and in a timely manner.
              Contrary to HUD’s requirements, at least 38 of the 45 participating jurisdictions
              did not report Program income in HUD’s System accurately and/or in a timely
              manner from January 1, 2007, through December 31, 2008.

              In addition, we could not determine whether one of the participating jurisdictions
              properly reported Program income in HUD’s System due to the participating
              jurisdictions inability to provide sufficient documentation to accurately support the
              amounts of Program income earned from January 1, 2007, through December 31,
              2008.

              We included in appendix E of this report the specific details on the participating
              jurisdictions that inappropriately reported Program income in HUD’s System or
              could not provide sufficient documentation to determine whether the participating
              jurisdictions properly reported Program income in HUD’s System.




                                                11
HUD Lacked Adequate
Procedures and Controls

             The weaknesses regarding the participating jurisdictions not properly reporting
             Program income in HUD’s System occurred because HUD’s Office lacked
             adequate procedures and controls to ensure that participating jurisdictions
             reported Program income in HUD’s System accurately and in a timely manner.

             HUD’s Office had not issued updated guidance for participating jurisdictions to
             follow in reporting Program income in HUD’s System as of June 18, 2009.
             HUD’s Office drafted updated guidance in October 2005 and April 2008, but did
             not issue it due to its complexity and because it established that HUD’s System
             did not allow participating jurisdictions to process Program income in accordance
             with HUD’s regulations. For example, HUD’s System did not allow participating
             jurisdictions to apply Program income to activities that the jurisdicitons initially
             set up as administrative or community housing development organization
             activities.

             HUD’s Office of Community Planning and Development field office staff did not
             consistently monitor participating jurisdictions’ Programs to determine whether
             the participating jurisdictions properly reported Program income in HUD’s
             System.

Conclusion

             HUD’s Office did not ensure that participating jurisdictions reported Program
             income in HUD’s System accurately and/or in a timely manner. As previously
             mentioned, at least 38 of the 45 participating jurisdictions did not report Program
             income in HUD’s System accurately and/or in a timely manner from January 1,
             2007, through December 31, 2008. As a result, HUD and the participating
             jurisdictions lacked assurance regarding the amount of Program income each
             participating jurisdiction had available that must be disbursed before drawing
             down Program funds from its treasury account.

             We could not determine whether one of the participating jurisdictions properly
             reported Program income in HUD’s System.

Recommendation

             We recommend that HUD’s General Deputy Assistant Secretary for Community
             Planning and Development require the Office to




                                              12
2A.   Implement adequate procedures and controls to ensure that participating
      jurisdictions report Program income in HUD’s System accurately and in a
      timely manner. The procedures and controls should include but not be
      limited to creating a report from HUD’s System to identify participating
      jurisdictions that may not be reporting all Program income in HUD’s
      System.




                              13
                         SCOPE AND METHODOLOGY

To accomplish our objectives, we reviewed

           •   Applicable laws; HUD’s regulations at 24 CFR Parts 85 and 92; HUD’s Office of
               Community Planning and Development Notice 97-9; HUD’s Office of Community
               Planning and Development’s field offices’ Program risk analyses and on-site
               monitoring review letters for the 45 participating jurisdictions as applicable; HUD’s
               System LIVE newsletters; HUD’s draft guidance for Program income; OIG
               Audit-Related Memorandum number 00-DP-166-0804; HUD’s response to OIG
               Audit-Related Memorandum number 00-DP-166-0804, dated December 6, 2000;
               and OIG audit report numbers 2007-DE-1006, issued August 10, 2007, 2008-LA-
               1001, issued November 1, 2007, 2008-CH-1009, issued June 7, 2008, and 2008-
               CH-1014, issued September 26, 2008.

           •   Financial and Program data from HUD’s System and the 45 participating
               jurisdictions.

In addition, we interviewed HUD’s staff and the participating jurisdictions’ employees.

Findings 1 and 2

We selected 45 of the 629 participating jurisdictions that received an allocation of Program funds
for Program years 2004 through 2008 to determine whether the participating jurisdictions
disbursed Program income before drawing down Program funds and reported Program income in
HUD’s System accurately and in a timely manner. We selected 32 of the 45 participating
jurisdictions based on their balances of Program income in HUD’s System of more than
$630,000 as of October 31, 2008. We selected the remaining 13 participating jurisdictions based
on their average annual allocations of Program funds for Program years 2004 through 2008 of
more than $1 million that either reported zero or had not reported on Program income in HUD’s
System, as of October 31, 2008.

We determined the participating jurisdictions’ available Program income, including their
balances as of December 31, 2008, using documentation, such as general ledgers, Program
income tracking logs, and bank account statements, provided by the participating jurisdictions
and obtained their drawdowns of Program funds from HUD’s System. We then determined
whether participating jurisdictions drew down Program funds from their treasury accounts when
they had available Program income by comparing the participating jurisdictions’ drawdowns to
their balance of available Program income for the month prior to each drawdown. Our analysis
took into consideration Program income retained by subrecipients and state recipients as
appropriate. In addition, we were conservative in our approach. We did not include Program
income participating jurisdictions earned in the month they made each drawdown.




                                                14
We performed our audit work from October 2008 through June 2009 at HUD’s Headquarters and
HUD’s Chicago regional office. The audit covered the period October 2006 through September
2008 and was expanded as determined necessary.

We conducted the audit in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence
to provide a reasonable basis for our findings and conclusions based on our audit objectives. We
believe that the evidence obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.




                                                 15
                              INTERNAL CONTROLS

Internal control is an integral component of an organization’s management that provides
reasonable assurance that the following objectives are achieved:

   •   Effectiveness and efficiency of operations,
   •   Reliability of financial reporting,
   •   Compliance with applicable laws and regulations, and
   •   Safeguarding resources.

Internal controls relate to management’s plans, methods, and procedures used to meet its
mission, goals, and objectives. They include the processes and procedures for planning,
organizing, directing, and controlling program operations as well as the systems for measuring,
reporting, and monitoring program performance.



 Relevant Internal Controls

              We determined that the following internal controls were relevant to our audit
              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 management controls do not provide reasonable
              assurance that the process for planning, organizing, directing, and controlling
              program operations will meet the organization’s objectives.




                                               16
Significant Weakness

           Based on our audit, we believe that the following item is a significant weakness:

           •   HUD’s Office lacked adequate procedures and controls to ensure that
               participating jurisdictions disbursed available Program income appropriately
               and reported Program income in HUD’s System accurately and/or in a timely
               manner (see findings 1 and 2).




                                           17
                                    APPENDIXES

Appendix A

                         SCHEDULE OF
                 FUNDS TO BE PUT TO BETTER USE

                           Recommendation         Funds to be put
                               number             to better use 1/
                                   1A                 $39,611,376
                                  Total               $39,611,376


1/   Recommendations that funds be put to better use are estimates of amounts that could be
     used more efficiently if an OIG recommendation is implemented. These amounts include
     reductions in outlays, deobligation of funds, withdrawal of interest, costs not incurred by
     implementing recommended improvements, avoidance of unnecessary expenditures
     noted in preaward reviews, and any other savings that are specifically identified. In these
     instances, if HUD implements our recommendation, the 26 participating jurisdictions will
     disburse available Program income before drawing down Program funds from their
     treasury accounts.




                                             18
Appendix B

        AUDITEE COMMENTS AND OIG’s EVALUATION

Ref to OIG Evaluation   Auditee Comments




                         19
Ref to OIG Evaluation   Auditee Comments




Comment 1



Comment 1




Comment 1




                         20
Ref to OIG Evaluation   Auditee Comments




Comment 1




                         21
                        OIG’s Evaluation of Auditee Comments

Comment 1   HUD’s Office’s commitment to develop adequate procedures and controls to
            ensure that participating jurisdictions disburse available Program income for
            eligible housing activities and/or administration costs before drawing down
            Program funds from their treasury accounts as appropriate and report Program
            income in HUD’s System accurately and in a timely manner, if fully
            implemented, should improve the Office’s oversight of Program income.




                                           22
Appendix C

                             HUD’S REQUIREMENTS

Findings 1 and 2
HUD’s regulations at 24 CFR 92.2 define program income as gross income received by a
participating jurisdiction directly generated from the use of Program funds or matching
contributions. Program income also includes interest earned on program income pending its
disposition.

HUD’s regulations at 24 CFR 92.502(c)(3) state that a participating jurisdiction must disburse
Program funds, including program income and recaptured Program funds, in its local account
before requesting Program funds from its treasury account.

HUD’s regulations at 24 CFR 92.505 state that 24 CFR 85.20 applies to participating
jurisdictions receiving Program funds.

HUD’s regulations at 24 CFR 92.508(a)(5) state that a participating jurisdiction must establish
and maintain sufficient records to enable HUD to determine whether the participating
jurisdiction has met the requirements of 24 CFR Part 92. The participating jurisdiction must
maintain records identifying the source and application of Program income and recaptured
Program funds.

HUD’s Office of Community Planning and Development Notice 97-9, issued September 12,
1997, requires

•   Available Program income to be determined and recorded in HUD’s System in periodic
    intervals not to exceed 30 days;
•   Participating jurisdictions to maintain records which adequately identify the source and
    application of Program income as part of the financial transactions of their Program,
    consistent with 24 CFR 85.20;
•   Participating jurisdictions to be able to identify which projects generated Program income
    and which projects received Program income, including the amount; and
•   Participating jurisdictions to report recaptured Program funds in HUD’s System as additions
    to Program income in the same manner as Program income is reported.

The Notice also states that HUD’s System is designed to record the receipt and use of Program
income.

Finding 1
HUD’s regulations at 24 CFR 85.20(b)(2) state that grantees and subgrantees must maintain
records which adequately identify the source and application of funds provided for financially


                                               23
assisted activities. These records must contain information pertaining to grant or subgrant
awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays and
expenditures, and income.

HUD’s regulations at 24 CFR 92.207 state that a participating jurisdiction may expend, for
payment of reasonable administrative and planning costs of the Program, a sum up to 10 percent
of the Program income deposited into its local account or received and reported by its state
recipients or subrecipients during the program year. A participating jurisdiction may expend
such funds directly or may authorize its state recipients or subrecipients, if any, to expend all or a
portion of such funds, provided total expenditures for planning and administrative costs do not
exceed the maximum allowable amount.

HUD’s regulations at 24 CFR 92.503 state that a participating jurisdiction must deposit program
income and recaptured Program funds in its local account unless the participating jurisdiction
permits its state recipient, subrecipient, or community housing development organization to
retain the Program income and recaptured Program funds for additional Program projects.

HUD’s Office of Community Planning and Development Notice 97-9, issued September 12,
1997, requires Program income retained by a subrecipient or state recipient to be disbursed by
that subrecipient or state recipient before it receives additional Program funds. The Notice also
states that the Program does not permit the establishment of revolving loan funds.

Finding 2
HUD’s regulations at 24 CFR 85.20(b)(1) state that accurate, current, and complete disclosure of
the financial results of financially assisted activities must be made in accordance with the
financial reporting requirements of the grant or subgrant.




                                                 24
Appendix D

                      PARTICIPATING JURISDICTIONS
                        USE OF PROGRAM INCOME

Amherst, New York, Consortium
The Consortium did not comply with HUD’s requirements in its use of Program income. The
Consortium tracked its receipts and disbursements of Program income in its local account
through one main account, which only included Program income, and five working accounts,
which included Program income and Program funds. In April 2007, the City transferred more
than $1.2 million in Program income from its main account to its five working accounts.
However, the Consortium could not provide sufficient documentation to support all of its
receipts and disbursements of Program income in the working accounts to determine the
balances of Program income in the working accounts for the period January 1, 2007, through
December 31, 2008. During this period, the Consortium made 233 drawdowns from its treasury
account totaling more than $1.5 million in Program funds, when it had at least $331,000 of
Program income in its local account. As of December 31, 2008, the Consortium’s balance of
Program income in its local account was at least $839,000. Although HUD’s Buffalo Office of
Community Planning and Development rated the Consortium’s Program income as high risk in
its fiscal years 2008 and 2009 risk analyses of the Consortium’s Program, it did not conduct a
monitoring review of the Consortium’s Program from January 1, 2007, through December 31,
2008.

City of Atlanta, Georgia
The City did not comply with HUD’s requirements in its use of Program income. The City did
not track its disbursements of Program income outside of HUD’s System. Therefore, we could
not determine whether the City complied with HUD’s requirements in its use of Program income
from January 1, 2007, through December 31, 2008. However, from December 17 through 19,
2008, the City made 48 drawdowns from its treasury account totaling nearly $549,000 in
Program funds, when it had at least $601,000 of Program income in its local account. As of
December 31, 2008, the City’s balance of Program income in its local account was nearly
$612,000. HUD’s Atlanta Office of Community Planning and Development rated the City’s
Program income as moderate and high risk in its fiscal years 2007 and 2008 risk analyses of the
City’s Program, respectively. HUD’s Atlanta Office of Community Planning and
Development’s on-site monitoring review letter, dated September 27, 2007, stated that the City
failed to disburse Program income in HUD’s System in a timely manner. However, it did not
specifically make a finding on the City’s use of Program income.

City of Austin, Texas
The City did not comply with HUD’s requirements in its use of Program income. From January
1, 2007, through December 31, 2008, the City made 1,094 drawdowns from its treasury account
totaling nearly $7.1 million in Program funds for subrecipient costs, when its subrecipient had at
least $120,000 in available Program income. The City maintained a spreadsheet that separately
tracked all of the City’s Program income and all of the Program income generated by its



                                                25
subrecipient. The City’s community development administrator said that since the subrecipient
was responsible for administering the City’s entire housing program, the Program income
receipts and disbursements for the two schedules should have been the same. However, the
receipts, disbursements, and balances of Program income in the two schedules varied
significantly and as of December 31, 2008, the City’s balance of Program income was more than
$751,000, while the balance of Program income generated by the subrecipient was nearly
$934,000. The $120,000 in available Program income was the minimum balance of Program
income in the two schedules during the period. The community development administrator said
that the subrecipient’s balance of available Program income as of December 31, 2008, was more
than $751,000 in the schedule that tracked all of the City’s Program income. Further, the City
did not allocate interest earned on Program income as Program income. However, the City could
not provide sufficient documentation to support the amount of interest earned on Program
income.

HUD’s San Antonio Office of Community Planning and Development rated the City’s Program
income as a low and high risk in its fiscal years 2007 and 2008 risk analyses of the City’s
Program, respectively, and its March 2007 on-site monitoring review did not result in any
findings regarding the City’s use of Program income. However, the review included a concern
that the City’s subrecipient agreement did not include a provision that required the subrecipient
to use its retained Program income before requesting additional Program funds from the City’s
treasury account and that HUD’s San Antonio Office of Community Planning and Development
could not readily determine whether the City used Program income before requesting additional
Program funds from its treasury account. HUD’s San Antonio Office of Community Planning
and Development requested that the City include the provision in its next subrecipient
agreement, but did not require further action regarding the inability to readily determine whether
the City used Program income before requesting additional Program funds from its treasury
account. In response to the request, the City revised its subrecipient agreement, effective
October 1, 2008, to require all Program income earned under the agreement, as well as all
previous subrecipient agreements, to be remitted to the City and used before Program funds were
drawn down from its treasury account. However, as of December 31, 2008, the subrecipient had
not remitted any of its Program income to the City since the City revised the subrecipient
agreement.

City of Bakersfield, California
The City did not comply with HUD’s requirements in its use of Program income. From January
1, 2007, through December 31, 2008, the City made 77 drawdowns from its treasury account
totaling nearly $3.9 million in Program funds, when it had less than $2.1 million in Program
income in its local account. As of December 31, 2008, the City’s balance of Program income in
its local account was more than $2.3 million. HUD’s Los Angeles Office of Community
Planning and Development rated the City’s Program income as low risk in its fiscal years 2008
and 2009 risk analyses of the City’s Program and did not conduct a monitoring review of the
City’s Program from January 1, 2007, through December 31, 2008.

Baltimore County, Maryland
The County did not consistently comply with HUD’s requirements in its use of Program income
from January 1, 2007, through December 31, 2008. On February 9 and March 12, 2009, the



                                               26
County’s Office of Community Conservation’s HOME program coordinator and Office of
Budget and Finance’s accountant, respectively, said that the County had drawn down Program
funds when it had Program income available in its local account. However, the County could not
provide its balance of Program income in its local account as of January 1, 2007, and did not
track its disbursements of Program income outside of HUD’s System. Therefore, we could not
determine whether the County complied with HUD’s requirements in its use of Program income.
HUD’s Baltimore Office of Community Planning and Development rated the County’s Program
income as low risk in its fiscal years 2007 and 2008 risk analyses of the County’s Program and
did not include the County’s use of Program income in its March 2007 on-site monitoring
review.

City of Clearwater, Florida
The City could not provide its balance of Program income in its local account as of January 1,
2007, and did not track its disbursements of Program income outside of HUD’s System. Further,
HUD’s System did not contain any disbursements of Program income as of December 31, 2008.
Therefore, we could not determine whether the City complied with HUD’s requirements in its
use of Program income. HUD’s Jacksonville Office of Community Planning and Development
rated the City’s Program income as low risk in its fiscal years 2007 and 2008 risk analyses of the
City’s Program and did not conduct a monitoring review of the City’s Program from January 1,
2007, through December 31, 2008.

Cook County, Illinois, Consortium
The Consortium did not comply with HUD’s requirements in its use of Program income.
Through a previous audit of the Consortium’s Program, we identified that the Consortium had
drawn down more than $48.3 million in Program funds from its treasury account since October
1999, when it had more than $2 million of Program income in its local account (OIG audit report
number 2008-CH-1009). In addition, the Consortium did not allocate nearly $642,000 in interest
earned from Program income as Program income. As of December 31, 2008, the Consortium’s
last drawdown of Program funds from its treasury account was on December 22, 2007. From
December 27, 2007, through December 31, 2008, the Consortium disbursed at least $6.2 million
in Program income from its local account without drawing down any Program funds from its
treasury account. HUD’s Chicago Office of Community Planning and Development rated the
Consortium’s Program income as low risk in its fiscal years 2007 and 2008 risk analyses of the
Consortium’s Program and did not conduct a monitoring review of the Consortium’s Program
from January 1, 2007, through December 31, 2008.

City of Daytona Beach, Florida
The City could not provide its balance of Program income in its local account as of January 1,
2007, and did not track its disbursements of Program income outside of HUD’s System.
Therefore, we could not determine whether the City complied with HUD’s requirements in its
use of Program income. HUD’s Jacksonville Office of Community Planning and Development
rated the City’s Program income as low risk in its fiscal years 2007 and 2008 risk analyses of the
City’s Program and did not conduct a monitoring review of the City’s Program from January 1,
2007, through December 31, 2008.




                                                27
District of Columbia
The District could not provide its balance of Program income in its local account as of January 1,
2007, and did not track its disbursements of Program income outside of HUD’s System.
Therefore, we could not determine whether the District complied with HUD’s requirements in its
use of Program income. HUD’s District of Columbia Office of Community Planning and
Development rated the District’s Program income as low risk in its fiscal years 2007 and 2008
risk analyses of the District’s Program and did not include the District’s use of Program income
in its July 2008 on-site monitoring review.

City of El Monte, California
The City could not provide its balance of Program income in its local account as of January 1,
2007, and did not track its disbursements of Program income separate from Program funds.
Therefore, we could not determine whether the City complied with HUD’s requirements in its
use of Program income. Although HUD’s Los Angeles Office of Community Planning and
Development rated the City’s Program income as high and low risk in its fiscal years 2007 and
2008 risk analyses of the City’s Program, respectively, it did not include the City’s use of
Program income in its July 2007 on-site monitoring review.

City of Elizabeth, New Jersey
The City did not comply with HUD’s requirements in its use of Program income. From January
1, 2007, through December 31, 2008, the City made 57 drawdowns from its treasury account
totaling nearly $3.2 million in Program funds, when it had more than $18,000 of Program
income in its local account. As of December 31, 2008, the City’s balance of Program income in
its local account was more than $91,000. Although HUD’s Newark Office of Community
Planning and Development rated the City’s Program income as high risk in its fiscal years 2006
and 2007 risk analyses of the City’s Program, it did not include the City’s use of Program
income in its May 2007 on-site monitoring review.

Escambia County, Florida, Consortium
The Consortium did not comply with HUD’s requirements in its use of Program income. From
January 1, 2007, through December 31, 2008, the Consortium made 56 drawdowns from its
treasury account totaling nearly $1.5 million in Program funds, when it had more than $101,000
of Program income in its local account. As of December 31, 2008, the Consortium’s balance of
Program income in its local account was nearly $126,000. HUD’s Jacksonville Office of
Community Planning and Development rated the Consortium’s Program income as low risk in
its fiscal years 2008 and 2009 risk analyses of the Consortium’s Program and did not conduct a
monitoring review of the Consortium’s Program from January 1, 2007, through December 31,
2008.

Essex County, New Jersey, Consortium
The Consortium did not comply with HUD’s requirements in its use of Program income. From
January 1, 2007, through December 31, 2008, the Consortium made 37 drawdowns from its
treasury account totaling nearly $755,000 in Program funds, when it had more than $4.5 million
of Program income in its local account. As of December 31, 2008, the Consortium’s balance of
Program income in its local account was nearly $4.7 million. HUD’s Newark Office of
Community Planning and Development rated the Consortium’s Program income as low risk in



                                               28
its fiscal years 2007 and 2008 risk analyses of the Consortium’s Program and did not conduct a
monitoring review of the Consortium’s Program from January 1, 2007, through December 31,
2008.

State of Florida
The State could not provide its balance of Program income in its local account as of January 1,
2007, and did not track its disbursements of Program income outside of HUD’s System.
Therefore, we could not determine whether the State complied with HUD’s requirements in its
use of Program income. HUD’s Jacksonville Office of Community Planning and Development
rated the State’s Program income as low risk in its fiscal years 2007 and 2008 risk analyses of
the State’s Program and did not conduct a monitoring review of the State’s Program from
January 1, 2007, through December 31, 2008.

City of Fort Lauderdale, Florida
The City did not comply with HUD’s requirements in its use of Program income. From January
1, 2007, through December 31, 2008, the City made 189 drawdowns from its treasury account
totaling more than $1.4 million in Program funds, when it had nearly $223,000 of Program
income in its local account. As of December 31, 2008, the City’s balance of Program income in
its local account was more than $537,000. HUD’s Miami Office of Community Planning and
Development rated the City’s Program income as low risk in its fiscal years 2007 and 2008 risk
analyses of the City’s Program and did not include the City’s use of Program income in its May
2007 on-site monitoring review.

Greenville County, South Carolina
The County did not comply with HUD’s requirements in its use of Program income. From
January 1, 2007, through December 31, 2008, the County made 216 drawdowns from its treasury
account totaling nearly $2.2 million in Program funds, when it had more than $986,000 in
Program income in its local account. As of December 31, 2008, the County’s balance of
Program income in its local account was nearly $1.1 million. Although HUD’s Columbia Office
of Community Planning and Development rated the County’s Program income as moderate and
high risk in its fiscal years 2007 and 2008 risk analyses of the County’s Program, respectively, it
did not conduct a monitoring review of the County’s Program from January 1, 2007, through
December 31, 2008.

U.S. Territory of Guam
The Territory did not comply with HUD’s requirements in its use of Program income. From
January 1, 2007, through December 31, 2008, the Territory made 151 drawdowns from its
treasury account totaling more than $3.6 million in Program funds, when it had nearly $24,000 of
Program income in its local account. As of December 31, 2008, the Territory’s balance of
Program income in its local account was more than $60,000. Although HUD’s Honolulu Office
of Community Planning and Development rated the Territory’s Program income as high risk in
its fiscal years 2008 and 2009 risk analyses of the Territory’s Program, it did not conduct a
monitoring review of the Territory’s Program from January 1, 2007, through December 31,
2008.




                                                29
City of Hartford, Connecticut
The City did not comply with HUD’s requirements in its use of Program income. From January
1, 2007, through December 31, 2008, the City made 34 drawdowns from its treasury account
totaling nearly $1.7 million in Program funds, when it had more than $1.1 million of Program
income in its local account. As of December 31, 2008, the City’s balance of Program income in
its local account was more than $1.5 million. Although HUD’s Hartford Office of Community
Planning and Development rated the City’s Program income as high risk in its fiscal years 2007
and 2008 risk analyses of the City’s Program, it did not conduct a monitoring review of the
City’s Program from January 1, 2007, through December 31, 2008. In April 2008, HUD’s
Hartford Office of Community Planning and Development informed the City that its reporting of
Program income in HUD’s System annually was inappropriate. In an electronic mail, dated June
18, 2008, HUD’s Hartford Office of Community Planning and Development stated that the City
should report Program income in HUD’s System monthly, but did not object to the City
reporting Program income quarterly as long as the City considered how reporting Program
income quarterly would impact the City’s use of Program funds. HUD’s Hartford Office of
Community Planning and Development also stated that HUD’s regulations require the City to
disburse Program income before drawing down Program funds from its treasury account.
However, from July 16 through November 19, 2008, the City made seven drawdowns from its
treasury account totaling more than $1.1 million in Program funds, when it had more than $1.2
million of Program income in its local account.

Hudson County, New Jersey, Consortium
The Consortium did not comply with HUD’s requirements in its use of Program income. From
January 1, 2007, through December 31, 2008, the Consortium made 56 drawdowns from its
treasury account totaling nearly $2.3 million in Program funds, when it had nearly $1.1 million
of Program income in its local account. As of December 31, 2008, the Consortium’s balance of
Program income in its local account was nearly $918,000. HUD’s Newark Office of Community
Planning and Development rated the Consortium’s Program income as low risk in its fiscal years
2007 and 2008 risk analyses of the Consortium’s Program and did not conduct a monitoring
review of the Consortium’s Program from January 1, 2007, through December 31, 2008.

City of Inglewood, California
The City did not comply with HUD’s requirements in its use of Program income. From January
1, 2007, through December 31, 2008, the City made nine drawdowns from its treasury account
totaling nearly $2 million in Program funds, when it had more than $4.3 million of Program
income in its local account. As of December 31, 2008, the City’s balance of Program income in
its local account was more than $5.3 million. Although HUD’s Los Angeles Office of
Community Planning and Development rated the City’s Program income as high risk in its fiscal
years 2008 and 2009 risk analyses of the City’s Program, it did not include the City’s use of
Program income in its September 2008 on-site monitoring review.

City of Jackson, Tennessee
The City did not comply with HUD’s requirements in its use of Program income. From January
1, 2007, through December 31, 2008, the City made 39 drawdowns from its treasury account
totaling more than $508,000 in Program funds, when it had more than $26,000 of Program
income in its local account. In addition, the City inappropriately set the Program income aside



                                              30
for a revolving loan fund. As of December 31, 2008, the City’s balance of Program income in its
local account was more than $52,000. HUD’s Knoxville Office of Community Planning and
Development rated the City’s Program income as low risk in its fiscal years 2007 and 2008 risk
analyses of the City’s Program and did not conduct a monitoring review of the City’s Program
from January 1, 2007, through December 31, 2008.

City of Kenosha, Wisconsin
The City did not comply with HUD’s requirements in its use of Program income. From January
1, 2007, through December 31, 2008, the City made 182 drawdowns from its treasury account
totaling nearly $245,000 in Program funds, when it had nearly $479,000 of Program income in
its local account. As of December 31, 2008, the City’s balance of Program income in its local
account was more than $1 million. HUD’s Milwaukee Office of Community Planning and
Development rated the City’s Program income as low risk in its fiscal years 2007 and 2008 risk
analyses of the City’s Program and did not conduct a monitoring review of the City’s Program
from January 1, 2007, through December 31, 2008.

City of Madison, Wisconsin
The City did not comply with HUD’s requirements in its use of Program income. From January
1, 2007, through December 31, 2008, the City made 224 drawdowns from its treasury account
totaling nearly $2.3 million in Program funds, when it had more than $768,000 of Program
income in its local account. As of December 31, 2008, the City’s balance of Program income in
its local account was more than $768,000. HUD’s Milwaukee Office of Community Planning
and Development rated the City’s Program income as low risk in its fiscal years 2007 and 2008
risk analyses of the City’s Program and did not include the City’s use of Program income in its
July 2007 on-site monitoring review.

Mercer County, New Jersey, Consortium
The Consortium did not comply with HUD’s requirements in its use of Program income. From
January 1, 2007, through December 31, 2008, the Consortium made 63 drawdowns from its
treasury account totaling nearly $720,000 in Program funds, when it had nearly $534,000 of
Program income in its local account. As of December 31, 2008, the Consortium’s balance of
Program income in its local account was more than $623,000. HUD’s Newark Office of
Community Planning and Development rated the Consortium’s Program income as low risk in
its fiscal years 2007 and 2008 risk analyses of the Consortium’s Program. However, in its on-
site monitoring review letter, dated May 21, 2008, HUD’s Newark Office of Community
Planning and Development stated that the Consortium did not use Program income in lieu of
drawing down Program funds from its treasury account. However, the Consortium continued to
draw down Program funds from its treasury account when it had Program income available in its
local account. Specifically, from July 24 through November 4, 2008, the Consortium made 16
drawdowns from its treasury account totaling more than $349,000 in Program funds, when it had
nearly $626,000 of Program income in its local account.

Middlesex County, New Jersey, Consortium
The Consortium did not comply with HUD’s requirements in its use of Program income. From
January 1, 2007, through December 31, 2008, the Consortium made 232 drawdowns from its
treasury account totaling nearly $2.1 million in Program funds, when it had Program income



                                              31
available in its local account. Although the Consortium made 131 drawdowns from its treasury
account totaling nearly $1.1 million in Program funds, when its balance of Program income in its
local account was less than $10,000, it also made 101 drawdowns from its treasury account
totaling nearly $1 million in Program funds, when its balance of Program income in its local
account was at least $13,000. However, as of December 31, 2008, the Consortium’s balance of
Program income in its local account was less than $37. HUD’s Newark Office of Community
Planning and Development rated the Consortium’s Program income as low risk in its fiscal years
2007 and 2008 risk analyses of the Consortium’s Program and did not conduct a monitoring
review of the Consortium’s Program from January 1, 2007, through December 31, 2008.

City of Newark, New Jersey
The City did not comply with HUD’s requirements in its use of Program income. From January
1, 2007, through December 31, 2008, the City made 185 drawdowns from its treasury account
totaling nearly $7.1 million in Program funds, when it had nearly $313,000 of Program income
in its local account. As of December 31, 2008, the City’s balance of Program income in its local
account was nearly $363,000. Although HUD’s Newark Office of Community Planning and
Development rated the City’s Program income as high risk in its fiscal years 2006 and 2007 risk
analyses of the City’s Program, it did not include the City’s use of Program income in its July
2007 on-site monitoring review.

City of Oakland, California
The City did not always comply with HUD’s requirements in its use of Program income from
January 1, 2007, through December 31, 2008. From January 1, 2007, through December 23,
2008, the City disbursed nearly $4.6 million in Program income from its local account before
drawing down Program funds from its treasury account. However, on December 24, 2008, the
City made 38 drawdowns from its treasury account totaling nearly $2.2 million in Program
funds, when it had more than $26,000 of Program income in its local account. As of December
31, 2008, the City’s balance of Program income in its local account was more than $26,000.
HUD’s San Francisco Office of Community Planning and Development rated the City’s Program
income as low risk in its fiscal years 2007 and 2008 risk analyses of the City’s Program and did
not include the City’s use of Program income in its August 2008 on-site monitoring review.

Palm Beach County, Florida
The County did not consistently comply with HUD’s requirements in its use of Program income.
From January 1 through October 24, 2007, the County made 49 drawdowns from its treasury
account totaling nearly $2.8 million in Program funds, when it had more than $1.1 million of
Program income in its local account. However, as of December 31, 2008, the County’s balance
of Program income in its local account had been completely disbursed. Although HUD’s Miami
Office of Community Planning and Development rated the County’s Program income as high
and low risk in its fiscal years 2007 and 2008 risk analyses of the County’s Program,
respectively, it did not include the County’s use of Program income in its June 2007 on-site
monitoring review.




                                               32
City of Phoenix, Arizona
The City did not comply with HUD’s requirements in its use of Program income. From January
1, 2007, through December 31, 2008, the City made 267 drawdowns from its treasury account
totaling nearly $8.5 million in Program funds, when it had more than $6.2 million of Program
income in its local account. As of December 31, 2008, the City’s balance of Program income in
its local account was more than $6.8 million. HUD’s San Francisco Office of Community
Planning and Development rated the City’s Program income as moderate and high risk in its
fiscal years 2007 and 2008 risk analyses of the City’s Program, respectively. However, the
August 2007 on-site monitoring review performed by HUD’s Phoenix Office of Community
Planning and Development, which is under HUD’s San Francisco Office of Community
Planning and Development, did not identify any issues with the City’s use of Program income.
HUD’s Phoenix Office of Community Planning and Development’s on-site monitoring review
letter, dated October 17, 2007, stated that the City generated Program income, reported Program
income in HUD’s System, and used Program income for activities before drawing down Program
funds from its treasury account.

City of Pomona, California
The City did not comply with HUD’s requirements in its use of Program income. From January
1, 2007, through December 31, 2008, the City made 52 drawdowns from its treasury account
totaling more than $848,000 in Program funds, when it had nearly $1.9 million of Program
income in its local account. As of December 31, 2008, the City’s balance of Program income in
its local account was nearly $1.9 million. HUD’s Los Angeles Office of Community Planning
and Development rated the City’s Program income as low risk in its fiscal years 2008 and 2009
risk analyses of the City’s Program and did not conduct a monitoring review of the City’s
Program from January 1, 2007, through December 31, 2008.

Sacramento County, California, Consortium
The Consortium did not comply with HUD’s requirements in its use of Program income. From
January 1, 2007, through December 31, 2008, the Consortium made 42 drawdowns from its
treasury account totaling more than $1.1 million in Program funds, when it had more than $1.9
million of Program income in its local account. As of December 31, 2008, the Consortium’s
balance of Program income in its local account was more than $1.9 million. HUD’s San
Francisco Office of Community Planning and Development rated the Consortium’s Program
income as low risk in its fiscal years 2008 and 2009 Program risk analysis and did not include
the Consortium’s use of Program income in its August 2007 on-site monitoring review.

City of San Antonio, Texas
The City did not comply with HUD’s requirements in its use of Program income. However,
HUD’s San Antonio Office of Community Planning and Development’s assessment of the City’s
consolidated annual performance and evaluation report (consolidated report) for Program year
2007 included a finding that the City drew down Program funds from its treasury account when
it had Program income in its local account. HUD’s San Antonio Office of Community Planning
and Development’s assessment letter, dated February 27, 2009, stated that although the City
reported nearly $2.3 million in Program income in HUD’s System from October 1, 2007,
through September 30, 2008, it disbursed less than $238,000 of the Program income while it
continued to draw down Program funds from its treasury account during the period. Although



                                              33
HUD’s San Antonio Office of Community Planning and Development rated the City’s Program
income as moderate and high risk in its fiscal years 2007 and 2008 risk analyses of the City’s
Program, respectively, it did not conduct a monitoring review of the City’s Program from
January 1, 2007, through December 31, 2008. We did not include the City in finding 1 as one of
the participating jurisdictions that drew down Program funds from its treasury account from
January 1, 2007, through December 31, 2008, when it had available Program income, since the
issue had been identified by HUD’s San Antonio Office of Community Planning and
Development and action had been taken.

San Bernardino County, California, Consortium
The Consortium did not comply with HUD’s requirements in its use of Program income. From
January 1, 2007, through December 31, 2008, the Consortium made 84 drawdowns from its
treasury account totaling more than $3.3 million in Program funds, when it had nearly $4.2
million of Program income in its local account. As of December 31, 2008, the Consortium’s
balance of Program income in its local account was more than $5.9 million. Although HUD’s
Los Angeles Office of Community Planning and Development rated the Consortium’s Program
income as moderate and high risk in its fiscal years 2007 and 2008 risk analyses of the
Consortium’s Program, respectively, it did not include the Consortium’s use of Program income
in its July 2007 on-site monitoring review.

City of San Diego, California
The City did not consistently comply with HUD’s requirements in its use of Program income.
From June 19, 2007, through January 31, 2008, the City made 13 drawdowns from its treasury
account totaling nearly $5.4 million in Program funds, when it had more than $143,000 of
Program income in its local account. On June 14, 2008, the City made an additional nine
drawdowns from its treasury account totaling more than $389,000 in Program funds, when it had
more than $174,000 of Program income in its local account. From July 1 through December 31,
2008, the City disbursed available Program income from its local account before drawing down
Program funds from its treasury account. The disbursements totaled nearly $3.9 million in
Program income. On August 31, 2008, the City received nearly $5 million in Program income.
As of December 31, 2008, the City’s balance of Program income in its local account was more
than $2.1 million.

In addition, the City did not comply with HUD’s requirements in its use of Program income for
administrative and planning costs. On October 18, 2007, the City made three drawdowns from
its treasury account for administrative and planning costs totaling nearly $944,000, when it had
nearly $2.1 million of Program income in its local account for administrative and planning costs.
On June 30, 2008, the City disbursed nearly $1.7 million of Program income in its local account
for eligible administrative and planning costs. As of December 31, 2008, the City’s balance of
Program income in its local account for eligible administrative and planning costs was more than
$634,000.

HUD’s Los Angeles Office of Community Planning and Development rated the City’s Program
income as low risk in its fiscal years 2007 and 2008 risk analyses of the City’s Program and did
not conduct a monitoring review of the City’s Program from January 1, 2007, through December
31, 2008.



                                               34
San Joaquin County, California
The County did not comply with HUD’s requirements in its use of Program income. From
January 1, 2007, through December 31, 2008, the County made 33 drawdowns from its treasury
account totaling nearly $1.7 million in Program funds, when it had more than $590,000 of
Program income in its local account. As of December 31, 2008, the County’s balance of
Program income in its local account was more than $593,000. Although HUD’s San Francisco
Office of Community Planning and Development rated the County’s Program income as low and
high risk in its fiscal years 2007 and 2008 risk analyses of the County’s Program, respectively, it
did not conduct a monitoring review of the County’s Program from January 1, 2007, through
December 31, 2008.

State of South Dakota
The State did not consistently comply with HUD’s requirements in its use of Program income.
From January 1, 2007, through December 31, 2008, the State made 144 drawdowns from its
treasury account totaling more than $4.3 million in Program funds, when it had at least $82,000
of Program income in its local account from Program funds for disaster areas. As of December
31, 2008, the State’s balance of Program income in its local account from Program funds for
disaster areas was more than $85,000. A finance and administration accountant with the South
Dakota Housing Development Authority stated that the State intended to use the Program
income from Program funds for disaster areas for an eligible Program activity once sufficient
funds were available. Although HUD’s Denver Office of Community Planning and
Development was aware of the issue, it did not inform the State that it was not complying with
HUD’s requirements. From January 1, 2007, through December 31, 2008, the State generally
disbursed available Program income, excluding HOME flood program income, from its local
account before drawing down Program funds from its treasury account. The disbursements
totaled more than $2.8 million in Program income. HUD’s Denver Office of Community
Planning and Development rated the State’s Program income as low risk in its fiscal years 2007
and 2008 risk analyses of the State’s Program and did not conduct a monitoring review of the
State’s Program from January 1, 2007, through December 31, 2008.

State of Utah
The State of Utah could not provide its balance of Program income in its local account as of
January 1, 2007. Therefore, we could not determine whether the State complied with HUD’s
requirements in its use of Program income. HUD’s Denver Office of Community Planning and
Development rated the State’s Program income as moderate and high risk in its fiscal years 2007
and 2008 risk analyses of the State’s Program, respectively. However, it did not identify any
issues with the State’s use of Program income in its April 2007 on-site monitoring review.




                                                35
Appendix E

                    PARTICIPATING JURISDICTIONS
                   REPORTING OF PROGRAM INCOME

Amherst, New York, Consortium
The Consortium did not properly report Program income in HUD’s System. As of December 31,
2008, the Consortium’s balance of Program income in its local account was at least $839,000,
while its balance of Program income reported in HUD’s System was less than $498,000. From
January 1, 2007, through December 31, 2008, the Consortium received more than $799,000 in
Program income. The Consortium reported more than $1.9 million of Program income in
HUD’s System during the period. However, the Consortium did not report Program income in
HUD’s System after November 2007. From December 27, 2007, through November 30, 2008,
the Consortium received nearly $688,000 in Program income. Although the receipts occurred in
every month during the period, the Consortium did not report any Program income in HUD’s
System from December 27, 2007, through December 31, 2008. Although HUD’s Buffalo Office
of Community Planning and Development rated the Consortium’s Program income as high risk
in its fiscal years 2008 and 2009 risk analyses of the Consortium’s Program, it did not conduct a
monitoring review of the Consortium’s Program from January 1, 2007, through December 31,
2008.

City of Atlanta, Georgia
The City did not properly report Program income in HUD’s System. From January 1, 2007,
through December 31, 2008, the City received nearly $759,000 in Program income. The City
reported more than $634,000 of Program income in HUD’s System during the period. However,
the City did not consistently report Program income in HUD’s System in a timely manner. For
example, from January 1 through July 12, 2007, the City received nearly $392,000 in Program
income. Although the receipts occurred in every month, the City did not report Program income
in HUD’s System for the period until August 14, 2007. HUD’s Atlanta Office of Community
Planning and Development rated the City’s Program income as moderate and high risk in its
fiscal years 2007 and 2008 risk analyses of the City’s Program, respectively. HUD’s Atlanta
Office of Community Planning and Development’s on-site monitoring review letter, dated
September 27, 2007, stated that the City failed to disburse Program income in HUD’s System in
a timely manner and did not report Program income in HUD’s System within a reasonable
timeframe. From July 16 through November 30, 2008, the City received nearly $62,000 in
Program income. The receipts occurred in every month during the period. However, the City
had not reported the Program income in HUD’s System as of December 31, 2008.

City of Austin, Texas
The City could not provide sufficient documentation to accurately support the amount of
Program income deposited in its local account from January 1, 2007, through December 31,
2008. Therefore, we could not determine whether the City properly reported Program income in
HUD’s System. HUD’s San Antonio Office of Community Planning and Development rated the
City’s Program income as low and high risk in its fiscal years 2007 and 2008 risk analyses of the



                                               36
City’s Program, respectively, and did not include the City’s reporting of Program income in its
March 2007 on-site monitoring review.

City of Bakersfield, California
The City did not properly report Program income in HUD’s System. Although the City’s
December 31, 2008, balance of more than $2.3 million of Program income in its local account
was nearly identical to its balance of Program income reported in HUD’s System, the City did
not consistently report Program income in HUD’s System in a timely manner. For example, the
City received nearly $126,000 in Program income from August 30 through December 31, 2007.
The receipts occurred in every month during the period. However, the City did not report
Program income in HUD’s System for the period until January 31, 2008. Further, the City
reported less than $76,000. HUD’s Los Angeles Office of Community Planning and
Development rated the City’s Program income as low risk in its fiscal years 2008 and 2009 risk
analyses of the City’s Program and did not conduct a monitoring review of the City’s Program
from January 1, 2007, through December 31, 2008.

Baltimore County, Maryland
The County did not properly report Program income in HUD’s System. From January 1, 2007,
through December 31, 2008, the County received nearly $1.1 million in Program income. The
County reported nearly $1.3 million of Program income in HUD’s System during the period.
However, the County did not consistently report Program income in HUD’s System in a timely
manner. For example, from July 14 through October 30, 2008, the County received nearly
$88,000 in Program income. Although the receipts occurred in every month, the County did not
report the Program income in HUD’s System for the period until December 18, 2008. HUD’s
Baltimore Office of Community Planning and Development rated the County’s Program income
as low risk in its fiscal years 2007 and 2008 risk analyses of the County’s Program and did not
include the County’s reporting of Program income in its March 2007 on-site monitoring review.

City of Clearwater, Florida
The City did not properly report Program income in HUD’s System. From January 1, 2007,
through November 30, 2008, the City received more than $73,000 in Program income.
However, the City did not report any Program income in HUD’s System from January 1, 2007,
through December 31, 2008. HUD’s Jacksonville Office of Community Planning and
Development rated the City’s Program income as low risk in its fiscal years 2007 and 2008 risk
analyses of the City’s Program and did not conduct a monitoring review of the City’s Program
from January 1, 2007, through December 31, 2008.

Cook County, Illinois, Consortium
The Consortium did not properly report Program income in HUD’s System. Through a previous
audit of the Consortium’s Program, we identified that the Consortium underreported at least $2.7
million in Program income, including nearly $2.1 million in Program income earned before
October 1999 and nearly $642,000 in interest earned on Program income, in HUD’s System as of
March 2008 (OIG audit report number 2008-CH-1009). In addition, on October 6, 2008, the
Consortium received more than $276,000 in Program income. However, as of December 31,
2008, the Consortium had not reported the Program income in HUD’s System. HUD’s Chicago
Office of Community Planning and Development rated the Consortium’s Program income as low



                                               37
risk in its fiscal years 2007 and 2008 risk analyses of the Consortium’s Program and did not
conduct a monitoring review of the Consortium’s Program from January 1, 2007, through
December 31, 2008.

City of Daytona Beach, Florida
The City did not properly report Program income in HUD’s System. From January 1, 2007,
through December 31, 2008, the City received nearly $420,000 in Program income. The City
reported slightly more than $286,000 in Program income in HUD’s System during the period.
However, the City did not consistently report Program income in HUD’s System in a timely
manner. For example, from January 14 through November 30, 2008, the City received more
than $70,000 in Program income. The receipts occurred every month during the period.
However, the City did not report any Program income in HUD’s System from January 14
through December 31, 2008. HUD’s Jacksonville Office of Community Planning and
Development rated the City’s Program income as low risk in its fiscal years 2007 and 2008 risk
analyses of the City’s Program and did not conduct a monitoring review of the City’s Program
from January 1, 2007, through December 31, 2008.

District of Columbia
The District did not properly report Program income in HUD’s System. From January 1, 2007,
through December 31, 2008, the District received nearly $4.8 million in Program income. The
District reported less than $4.7 million of Program income in HUD’s System during the period.
However, the District did not consistently report Program income in HUD’s System in a timely
manner. For example, on September 29, 2008, the District received more than $58,000 in
Program income. However, the District had not reported the Program income in HUD’s System
as of December 31, 2008. HUD’s District of Columbia Office of Community Planning and
Development rated the District’s Program income as low risk in its fiscal years 2007 and 2008
risk analyses of the District’s Program. However, in its on-site monitoring review letter, dated
September 30, 2008, HUD’s District of Columbia Office of Community Planning and
Development stated that the District did not report Program income in HUD’s System at least
quarterly and required the District to report Program income in HUD’s System when received to
ensure that its financial records match HUD’s System at all times.

City of El Monte, California
The City did not report its Program income in HUD’s System. From January 1, 2007, through
November 30, 2008, the City received nearly $520,000 in Program income. As of December 31,
2008, the City had not reported any of its Program income in HUD’s System. Although HUD’s
Los Angeles Office of Community Planning and Development rated the City’s Program income
as high and low risk in its fiscal years 2007 and 2008 risk analyses of the City’s Program,
respectively, it did not include the City’s reporting of Program income in its July 2007 on-site
monitoring review.

City of Elizabeth, New Jersey
The City did not properly report Program income in HUD’s System. As of December 31, 2008,
the City’s balance of Program income in its local account was more than $91,000, while its
balance of Program income reported in HUD’s System was less than $16,000. However, the
City did not consistently report Program income in HUD’s System in a timely manner. For



                                               38
example, from July 3, 2007, through May 27, 2008, the City received nearly $108,000 in
Program income. The receipts occurred in July and October 2007 and May 2008. However, the
City did not report Program income in HUD’s System for the period until November 25, 2008.
Although HUD’s Newark Office of Community Planning and Development rated the City’s
Program income as high risk in its fiscal years 2006 and 2007 risk analyses of the City’s
Program, it did not include the City’s reporting of Program income in its May 2007 on-site
monitoring review.

Escambia County, Florida, Consortium
The Consortium did not report its Program income in HUD’s System. As of December 31, 2008,
the Consortium’s balance of Program income in its local account was nearly $126,000. From
January 1, 2007, through November 30, 2008, the Consortium received more than $24,000 in
Program income. However, the Consortium had not reported any Program income in HUD’s
System as of December 31, 2008. HUD’s Jacksonville Office of Community Planning and
Development rated the Consortium’s Program income as low risk in its fiscal years 2008 and
2009 risk analyses of the Consortium’s Program and did not conduct a monitoring review of the
Consortium’s Program from January 1, 2007, through December 31, 2008.

Essex County, New Jersey, Consortium
The Consortium did not properly report Program income in HUD’s System. As of December 31,
2008, the Consortium’s balance of Program income in its local account was nearly $4.7 million,
while its balance of Program income reported in HUD’s System was more than $2.8 million.
From January 1, 2007, through November 30, 2008, the Consortium received nearly $930,000 in
Program income. However, the Consortium did not report any Program income in HUD’s
System from January 1, 2007, through December 31, 2008. HUD’s Newark Office of
Community Planning and Development rated the Consortium’s Program income as low risk in
its fiscal years 2007 and 2008 risk analyses of the Consortium’s Program and did not conduct a
monitoring review of the Consortium’s Program from January 1, 2007, through December 31,
2008.

State of Florida
The State did not properly report Program income in HUD’s System. From January 1, 2007,
through December 31, 2008, the State received nearly $13.2 million in Program income. The
State reported more than $14.5 million of Program income in HUD’s System during the period.
However, the State did not consistently report Program income in HUD’s System in a timely
manner. For example, from August 13 through October 31, 2008, the State received nearly $2
million in Program income. Although the receipts occurred every month, the State did not report
Program income in HUD’s System for the period until December 16, 2008. Further, the State
reported less than $1.8 million in Program income. HUD’s Jacksonville Office of Community
Planning and Development rated the State’s Program income as low risk in its fiscal years 2007
and 2008 risk analyses of the State’s Program and did not conduct a monitoring review of the
State’s Program from January 1, 2007, through December 31, 2008.

City of Fort Lauderdale, Florida
The City did not properly report Program income in HUD’s System. Although the City’s
December 31, 2008, balance of more than $537,000 of Program income in its local account was



                                              39
nearly identical to its balance of Program income reported in HUD’s System, the City did not
consistently report Program income in HUD’s System in a timely manner. For example, the City
received more than $521,000 in Program income from August 5 through August 22, 2008.
However, the City did not report Program income in HUD’s System for the period until
December 6, 2008. HUD’s Miami Office of Community Planning and Development rated the
City’s Program income as low risk in its fiscal years 2007 and 2008 risk analyses of the City’s
Program and did not include the City’s reporting of Program income in its May 2007 on-site
monitoring review.

Greenville County, South Carolina
The County did not properly report Program income in HUD’s System. As of December 31,
2008, the County’s balance of Program income in its local account was less than $1.1 million,
while its balance of Program income reported in HUD’s System was nearly $2.3 million. From
January 1, 2007, through December 31, 2008, the County received more than $2.6 million in
Program income. The County reported more than $2.6 million of Program income in HUD’s
System during the period. However, the County did not consistently report Program income in
HUD’s System in a timely manner. For example, from May 31 through October 6, 2008, the
County received less than $337,000 in Program income. The receipts occurred every month
during the period. However, the County did not report Program income in HUD’s System for
the period until November 17, 2008. Further, the County only reported more than $261,000.
Although HUD’s Columbia Office of Community Planning and Development rated the County’s
Program income as moderate and high risk in its fiscal years 2007 and 2008 risk analyses of the
County’s Program, respectively, it did not conduct a monitoring review of the County’s Program
from January 1, 2007, through December 31, 2008.

U.S. Territory of Guam
The Territory did not properly report Program income in HUD’s System. As of December 31,
2008, the Territory’s balance of Program income in its local account was more than $60,000,
while its balance of Program income reported in HUD’s System was nearly $1.2 million. From
January 1, 2007, through November 30, 2008, the Territory received more than $698,000 in
Program income. The receipts occurred every month during the period. However, the Territory
did not report any Program income in HUD’s System from January 1, 2007, through December
31, 2008. Although HUD’s Honolulu Office of Community Planning and Development rated the
Territory’s Program income as high risk in its fiscal years 2008 and 2009 risk analyses of the
Territory’s Program, it did not conduct a monitoring review of the Territory’s Program from
January 1, 2007, through December 31, 2008.

City of Hartford, Connecticut
The City did not properly report Program income in HUD’s System. As of December 31, 2008,
the City’s balance of Program income in its local account was more than $1.5 million, while its
balance of Program income reported in HUD’s System was around $1 million. From January 1,
2007, through December 31, 2008, the City received more than $1.7 million in Program income.
The City reported less than $1.1 million in Program income in HUD’s System during the period.
However, the City did not consistently report Program income in HUD’s System in a timely
manner. For example, the City received more than $44,000 of Program income in November
2008. However, it did not report this Program income in HUD’s System as of December 31,



                                              40
2008. Although HUD’s Hartford Office of Community Planning and Development rated the
City’s Program income as high risk in its fiscal years 2007 and 2008 risk analyses of the City’s
Program, it did not conduct a monitoring review of the City’s Program from January 1, 2007,
through December 31, 2008. In April 2008, HUD’s Hartford Office of Community Planning and
Development informed the City that its reporting of Program income in HUD’s System annually
was inappropriate. In an electronic mail, dated June 18, 2008, HUD’s Hartford Office of
Community Planning and Development stated that the City should report Program income in
HUD’s System monthly, but did not object to the City reporting Program income quarterly as
long as the City considered how reporting Program income quarterly would impact the City’s use
of Program funds. HUD’s Hartford Office of Community Planning and Development also stated
that HUD’s regulations require the City to disburse Program income before drawing down
Program funds from its treasury account.

Hudson County, New Jersey, Consortium
The Consortium did not properly report Program income in HUD’s System. As of December 31,
2008, the Consortium’s balance of Program income in its local account was less than $918,000,
while its balance of Program income reported in HUD’s System was negative. The Consortium
was aware of and working with HUD as of December 31, 2008, to correct issues related to more
than $800,000 incorrectly reported in HUD’s System as Program income in 2003 and more than
$900,000 that should have been reported in HUD’s System as Program income in 2002. From
January 1, 2007, through December 31, 2008, the Consortium received nearly $198,000 in
Program income. The Consortium reported slightly more than $157,000 of Program income in
HUD’s System during the period. In addition, the Consortium did not consistently report
Program income in HUD’s System in a timely manner. For example, from May 16, 2007,
through May 7, 2008, the Consortium received nearly $119,000 in Program income. The
receipts occurred in every month during the period. However, the Consortium did not report
Program income in HUD’s System for the period until June 17, 2008. Further, the Consortium
only reported slightly more than $68,000. HUD’s Newark Office of Community Planning and
Development rated the Consortium’s Program income as low risk in its fiscal years 2007 and
2008 risk analyses of the Consortium’s Program and did not conduct a monitoring review of the
Consortium’s Program from January 1, 2007, through December 31, 2008.

City of Inglewood, California
The City did not properly report Program income in HUD’s System. As of December 31, 2008,
the City’s balance of Program income in its local account was more than $5.3 million, while its
balance of Program income reported in HUD’s System was more than $3.5 million. From
January 1, 2007, through July 24, 2008, the City received more than $815,000 in Program
income. However, the City only reported slightly more than $631,000 of Program income in
HUD’s System on September 22, 2008. In addition, the City received nearly $238,000 in
Program income on November 19, 2008. However, the City did not report the Program income
in HUD’s System as of December 31, 2008. Although HUD’s Los Angeles Office of
Community Planning and Development rated the City’s Program income as high risk in its fiscal
years 2008 and 2009 risk analyses of the City’s Program, it did not include the City’s reporting
of Program income in its September 2008 on-site monitoring review.




                                               41
City of Jackson, Tennessee
The City did not report its Program income in HUD’s System. As of November 30, 2008, the
City’s balance of Program income in its local account was less than $51,000. From January 1,
2007, through November 30, 2008, the City received more than $24,000 in Program income.
However, the City had not reported any of its less than $51,000 balance of Program income in
HUD’s System as of December 31, 2008. HUD’s Knoxville Office of Community Planning and
Development rated the City’s Program income as low risk in its fiscal years 2007 and 2008 risk
analyses of the City’s Program and did not conduct a monitoring review of the City’s Program
from January 1, 2007, through December 31, 2008.

City of Kenosha, Wisconsin
The City did not properly report Program income in HUD’s System. As of December 31, 2008,
the City’s balance of Program income in its local account was more than $1 million, while its
balance of Program income reported in HUD’s System was nearly $1.2 million. From January 1,
2007, through December 31, 2008, the City received more than $1.2 million in Program income.
The City reported more than $1.2 million of Program income in HUD’s System during the
period. However, the City did not consistently report Program income in HUD’s System in a
timely manner. For example, the City received nearly $33,000 in Program income on October
31, 2007, and more than $136,000 in Program income on December 7, 2007. However, the City
did not report the more than $169,000 of Program income in HUD’s System until March 6, 2008.
HUD’s Milwaukee Office of Community Planning and Development rated the City’s Program
income as low risk in its fiscal years 2007 and 2008 risk analyses of the City’s Program and did
not conduct a monitoring review of the City’s Program from January 1, 2007, through December
31, 2008.

City of Madison, Wisconsin
The City did not properly report Program income in HUD’s System. As of December 31, 2008,
the City’s balance of Program income in its local account was more than $768,000, while its
balance of Program income reported in HUD’s System was less than $513,000. From January 1,
2007, through December 31, 2008, the City received at least $1.3 million in Program income.
The City reported nearly $2.3 million of Program income in HUD’s System during the period.
However, the City did not consistently report Program income in HUD’s System in a timely
manner. For example, from January 1 through April 20, 2007, the City received at least
$285,000 in Program income. The receipts occurred every month during the period. However,
the City did not report Program income in HUD’s System for the period until May 21, 2007.
Further, the City only reported $200,000. HUD’s Milwaukee Office of Community Planning
and Development rated the City’s Program income as low risk in its fiscal years 2007 and 2008
risk analyses of the City’s Program and did not include the City’s reporting of Program income
in its July 2007 on-site monitoring review.

Mercer County, New Jersey, Consortium
The Consortium did not properly report Program income in HUD’s System. Although the
Consortium’s December 31, 2008, balance of more than $623,000 of Program income in its local
account was nearly identical to its balance of Program income reported in HUD’s System, the
Consortium did not consistently report Program income in HUD’s System in a timely manner.
For example, from January 1, 2007, through May 9, 2008, the Consortium received nearly



                                              42
$98,000 in Program income. However, the Consortium did not report Program income in
HUD’s System for the period until October 16, 2008. Further, the Consortium reported less than
$632,000. HUD’s Newark Office of Community Planning and Development rated the
Consortium’s Program income as low risk in its fiscal years 2007 and 2008 risk analyses of the
Consortium’s Program. However, in its on-site monitoring review letter, dated May 21, 2008,
HUD’s Newark Office of Community Planning and Development stated that the Consortium was
not reporting Program income in HUD’s System and required the Consortium to report its full
amount of Program income in HUD’s System. On October 1, 2008, the Consortium received
nearly $3,900 in Program income. However, the Consortium had not reported the Program
income in HUD’s System as of December 31, 2008.

Middlesex County, New Jersey, Consortium
The Consortium did not report its Program income in HUD’s System. From January 1, 2007,
through November 30, 2008, the Consortium received more than $144,000 in Program income.
As of December 31, 2008, the Consortium had not reported any of its Program income in HUD’s
System. HUD’s Newark Office of Community Planning and Development rated the
Consortium’s Program income as low risk in its fiscal years 2007 and 2008 risk analyses of the
Consortium’s Program and did not conduct a monitoring review of the Consortium’s Program
from January 1, 2007, through December 31, 2008.

Nassau County, New York
The County did not report its Program income in HUD’s System. From January 1, 2007,
through November 30, 2008, the County’s subrecipients generated at least $240,000 in Program
income. However, the County had not reported any Program income in HUD’s System as of
December 31, 2008. HUD’s New York Office of Community Planning and Development rated
the County’s Program income as low risk in its fiscal years 2007 and 2008 risk analyses of the
County’s Program and did not include the County’s reporting of Program income in its June
2007 on-site monitoring review.

State of Nebraska
The State did not report its Program income in HUD’s System. As of January 1, 2007, and
December 31, 2008, the State’s recipients had a cumulative balance of Program income of at
least $616,000 and $565,000, respectively. However, the State had not reported any Program
income in HUD’s System as of December 31, 2008. HUD’s Omaha Office of Community
Planning and Development rated the State’s Program income as low risk in its fiscal years 2007
and 2008 risk analyses of the State’s Program and did not include the State’s reporting of
Program income in its August 2007 on-site monitoring review.

City of Newark, New Jersey
The City did not report its Program income in HUD’s System. As of December 31, 2008, the
City’s balance of Program income in its local account was nearly $363,000. From January 1,
2007, through November 30, 2008, the City received $50,000 in Program income. However, the
City had not reported any Program income in HUD’s System as of December 31, 2008.
Although HUD’s Newark Office of Community Planning and Development rated the City’s
Program income as high risk in its fiscal years 2006 and 2007 risk analyses of the City’s




                                              43
Program, it did not include the City’s reporting of Program income in its July 2007 on-site
monitoring review.

City of Oakland, California
The City did not properly report Program income in HUD’s System. As of December 31, 2008,
the City’s balance of Program income in its local account was more than $26,000, while its
balance of Program income reported in HUD’s System was zero. However, the City did not
consistently report Program income in HUD’s System in a timely manner. For example, from
July 24, 2007, through April 10, 2008, the City received nearly $406,000 in Program income.
However, the City did not report Program income in HUD’s System for the period until October
1, 2008. Further, the City reported less than $174,000. HUD’s San Francisco Office of
Community Planning and Development rated the City’s Program income as low risk in its fiscal
years 2007 and 2008 risk analyses of the City’s Program and did not include the City’s reporting
of Program income in its August 2008 on-site monitoring review.

Palm Beach County, Florida
The County did not report its Program income in HUD’s System. From January 1, 2007,
through November 30, 2008, the County received more than $649,000 in Program income. In
addition, the County had a balance of Program income in its local account of nearly $2.4 million
on January 1, 2007. However, as of December 31, 2008, the County had not reported any of its
Program income in HUD’s System. Although HUD’s Miami Office of Community Planning and
Development rated the County’s Program income as high and low risk in its fiscal years 2007
and 2008 risk analyses of the County’s Program, respectively, it did not include the County’s
reporting of Program income in its June 2007 on-site monitoring review.

City of Phoenix, Arizona
The City did not properly report Program income in HUD’s System. As of December 31, 2008,
the City’s balance of Program income in its local account was more than $6.8 million, while its
balance of Program income reported in HUD’s System was less than $1.2 million. From January
1, 2007, through December 31, 2008, the City received more than $2.4 million in Program
income. The City reported more than $4 million of Program income in HUD’s System during
the period. However, the City did not consistently report its Program income in HUD’s System
in a timely manner. For example, from January 3 through November 30, 2008, the City received
nearly $879,000 in Program income. Although the receipts occurred in every month, the City
had not reported Program income in HUD’s System for the period as of December 31, 2008.

Further, the City accurately reported balances of more than $8.3 million and more than $6.2
million of Program income in its consolidated report to HUD for the periods ending June 30,
2007, and June 30, 2008, respectively. Although HUD’s Phoenix Office of Community
Planning and Development received the City’s consolidated reports, it did not use the
consolidated reports to determine that the City had not been reporting all of its Program income
in HUD’s System.

HUD’s San Francisco Office of Community Planning and Development rated the City’s Program
income as moderate and high risk in its fiscal years 2007 and 2008 risk analyses of the City’s
Program, respectively. Further, in an on-site monitoring review letter, dated October 17, 2007,



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HUD’s Phoenix Office of Community Planning and Development stated that the City generated
Program income, reported Program income in HUD’s System, and used Program income for
activities before drawing down Program funds from its treasury account.

City of Pomona, California
The City did not properly report Program income in HUD’s System. Although the City’s
December 31, 2008, balance of nearly $1.9 million of Program income in its local account was
nearly identical to its balance of Program income reported in HUD’s System, the City did not
consistently report Program income in HUD’s System in a timely manner. For example, the City
received nearly $304,000 in Program income from August 10, 2007, through June 16, 2008.
Although the receipts occurred in every month, the City did not report Program income in
HUD’s System for the period until August 6, 2008. Further, the City reported more than
$393,000. HUD’s Los Angeles Office of Community Planning and Development rated the
City’s Program income as low risk in its fiscal years 2008 and 2009 risk analyses of the City’s
Program and did not conduct a monitoring review of the City’s Program from January 1, 2007,
through December 31, 2008.

Sacramento County, California, Consortium
The Consortium did not properly report Program income in HUD’s System. As of December 31,
2008, the Consortium’s balance of Program income in its local account was more than $1.9
million, while its balance of Program income reported in HUD’s System was less than $801,000.
From January 1, 2007, through December 31, 2008, the Consortium received more than $1.4
million in Program income. The Consortium reported more than $2 million of Program income
in HUD’s System during the period. However, the Consortium did not consistently report
Program income in HUD’s System in a timely manner. For example, the Consortium received
more than $553,000 in Program income from January 16 through November 26, 2007. The
receipts occurred in every month during the period. However, the Consortium did not report
Program income in HUD’s System for the period until January 16, 2008. HUD’s San Francisco
Office of Community Planning and Development rated the Consortium’s Program income as low
risk in its fiscal years 2008 and 2009 Program risk analysis and did not include the Consortium’s
reporting of Program income in its August 2007 on-site monitoring review.

City of San Antonio, Texas
The City did not properly report Program income in HUD’s System. From January 1, 2007,
through December 31, 2008, the City received nearly $1.9 million in Program income. The City
reported nearly $2.3 million of Program income in HUD’s System during the period. However,
the City did not consistently report Program income in HUD’s System in a timely manner. For
example, from March 26, 2007, through January 11, 2008, the City received less than $1.3
million in Program income. Although the receipts occurred in every month, the City did not
report Program income in HUD’s System for the period until February 13, 2008. Further, the
City only reported less than $749,000. The City’s Department of Grants Monitoring and
Administration’s interim director said that the City did not report in HUD’s System any Program
income maintained by its subrecipients before December 31, 2008. Although HUD’s San
Antonio Office of Community Planning and Development rated the City’s Program income as
moderate and high risk in its fiscal years 2007 and 2008 risk analyses of the City’s Program,




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respectively, it did not conduct a monitoring review of the City’s Program from January 1, 2007,
through December 31, 2008.

San Bernardino County, California, Consortium
The Consortium did not properly report Program income in HUD’s System. As of December 31,
2008, the Consortium’s balance of Program income in its local account was more than $5.9
million, while its balance of Program income reported in HUD’s System was around $952,000.
From January 1, 2007, through November 30, 2008, the Consortium received more than $6.9
million in Program income. However, the Consortium reported less than $637,000 of Program
income in HUD’s System from January 1, 2007, through December 31, 2008. Although HUD’s
Los Angeles Office of Community Planning and Development rated the Consortium’s Program
income as moderate and high risk in its fiscal years 2007 and 2008 risk analyses of the
Consortium’s Program, respectively, it did not include the Consortium’s reporting of Program
income in its July 2007 on-site monitoring review.

City of San Diego, California
The City did not properly report Program income in HUD’s System. As of December 31, 2008,
the City’s balance of Program income in its local account was less than $2.8 million, while its
balance of Program income reported in HUD’s System was nearly $4.2 million. From January 1,
2007, through December 31, 2008, the City received more than $8.7 million in Program income.
The City reported more than $9 million of Program income in HUD’s System during the period.
However, the City did not consistently report Program income in HUD’s System in a timely
manner. For example, from January 5 through May 14, 2007, the City received more than
$406,000 in Program income. Although the receipts occurred in every month, the City did not
report the Program income in HUD’s System for the period until June 14, 2007. Further, the
City reported nearly $1.1 million in Program income. HUD’s Los Angeles Office of Community
Planning and Development rated the City’s Program income as low risk in its fiscal years 2007
and 2008 risk analyses of the City’s Program and did not conduct a monitoring review of the
City’s Program from January 1, 2007, through December 31, 2008.

San Joaquin County, California
The County did not properly report Program income in HUD’s System. As of December 31,
2008, the County’s balance of Program income in its local account was around $593,000, while
its balance of Program income reported in HUD’s System was more than $881,000. From
January 1, 2007, through December 31, 2008, the County received more than $1.5 million in
Program income. The County reported more than $3.7 million of Program income in HUD’s
System during the period. However, the County did not consistently report Program income in
HUD’s System in a timely manner. For example, from January 16 through September 3, 2008,
the County received nearly $307,000 in Program income. Although the receipts occurred in
every month, the County did not report Program income in HUD’s System for the period until
October 6, 2008. Further, the County reported nearly $638,000. HUD’s San Francisco Office of
Community Planning and Development rated the County’s Program income as low and high risk
in its fiscal years 2007 and 2008 risk analyses of the County’s Program, respectively. However,
it did not conduct a monitoring review of the County’s Program from January 1, 2007, through
December 31, 2008.




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State of South Dakota
The State did not properly report all of its Program income in HUD’s System. As of December
31, 2008, the State’s balance of Program income in its local account was nearly $315,000, while
its balance of Program income reported in HUD’s System was less than $230,000. As of
November 30, 2008, the State received nearly $85,000 in Program income from Program funds
for disaster areas. However, the State had not reported in HUD’s System any of the nearly
$85,000 in Program income from Program funds for disaster areas as of December 31, 2008.
HUD’s Denver Office of Community Planning and Development rated the State’s Program
income as low risk in its fiscal years 2007 and 2008 risk analyses of the State’s Program and did
not conduct a monitoring review of the State’s Program from January 1, 2007, through
December 31, 2008.

State of Utah
The State did not properly report Program income in HUD’s System. From January 1, 2007,
through December 31, 2008, the State received nearly $5.6 million in Program income. The
State reported around $5.2 million in Program income in HUD’s System during the period.
However, the State did not consistently report Program income in HUD’s System in a timely
manner. For example, from June 1 through September 30, 2007, the State received more than
$684,000 in Program income. Although the receipts occurred in every month, the State did not
report the Program income in HUD’s System for the period until November 30, 2007. HUD’s
Denver Office of Community Planning and Development rated the State’s Program income as
moderate and high risk in its fiscal years 2007 and 2008 risk analyses of the State’s Program,
respectively. However, it did not identify any issues with the State’s reporting of Program
income in its April 2007 on-site monitoring review. HUD’s Denver Office of Community
Planning and Development stated that the State properly recorded Program income in HUD’s
System. In addition, through a previous audit of the State’s Program, we identified that the State
did not report in HUD’s System Program income received from July through November 2006
until February 2007 (OIG audit report number 2007-DE-1006).




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