oversight

Adams County, Colorado Had Weaknesses That Could Significantly Affect Its Capacity to Administer Its Recovery Act Funding

Published by the Department of Housing and Urban Development, Office of Inspector General on 2009-09-24.

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

Telephone: (303) 672-5452      http://www.hud.gov/offices/oig/                         Fax: (303) 672-5006



                                                        U.S. Department of Housing and Urban Development
                                                        Office of Inspector General
                                                        Region VIII Office of Audit
                                                        UMB Plaza - 24th floor
                                                        1670 Broadway
                                                        Denver, Colorado 80202-4801



                                                        MEMORANDUM NO: 2009-DE-1801

September 24, 2009

MEMORANDUM FOR: LeRoy Brown, Director, Denver Office of Community Planning
                  and Development, 8AD

      //signed//
FROM: Ronald J. Hosking, Regional Inspector General for Audit, 8AGA

SUBJECT: Adams County, Colorado Had Weaknesses That Could Significantly Affect Its
           Capacity to Administer Its Recovery Act Funding

                                       INTRODUCTION

In accordance with our goal to review funds provided under the Housing and Economic Recovery
Act of 2008 (HERA) and the American Recovery and Reinvestment Act of 2009 (Recovery Act),
we conducted a capacity review of Adams County’s (County) operations. Our objective was to
determine whether there was evidence indicating that Adams County lacked the capacity to
adequately administer Recovery Act funding.

                              METHODOLOGY AND SCOPE

Our review was based on information reviewed and conclusions made about the County’s controls
during our audit of the County’s HOME Investment Partnerships Program (HOME) and our audit of
the County’s Community Development Block Grant (CDBG) program. The results of our HOME
review were issued on February 11, 2009, in audit report number 2009-DE-1001. The results of our
CDBG review were issued on September 17, 2009, in audit report number 2009-DE-1005. In
addition, we obtained an understanding of Recovery Act legislation and program guidance,
reviewed the County’s Recovery Act grant, and interviewed County staff.

We used the Internal Control – Integrated Framework, generally referred to as the Committee of
Sponsoring Organizations (COSO) report, as a framework to evaluate the County’s capacity to
administer its Recovery Act funding. The COSO report was published in September 1992 and
was a joint project of five organizations which formed the Committee of Sponsoring
Organizations of the Treadway Commission. The COSO report describes the five interrelated
components of internal control: control environment, risk assessment, control activities,
information and communication, and monitoring.
 Telephone: (303) 672-5452       http://www.hud.gov/oig/oigindex.html          Fax: (303) 672-5006

                                            BACKGROUND

Under the Recovery Act, the U.S. Department of Housing and Urban Development (HUD)
allocated more than $1.3 million in funding to the County. This amount included $836,047 in
Homelessness Prevention and Rapid Re-Housing Program funding and $546,776 in additional
CDBG funding. Additionally, the County received more than $4.6 million under HERA for the
Neighborhood Stabilization Program I.

For the Office of Community Planning and Development’s formula programs for fiscal years
2007 to 2009, HUD awarded the County more than $9.5 million. This amount included funding
under CDBG, HOME, and Emergency Shelter Grants (ESG). The chart below shows the
allocations per program per fiscal year.

                                                 HOME
         Fiscal year         CDBG              (includes                ESG      Total
                                                 ADDI*)
            2009             $2,044,403        $1,142,423           $89,627    $3,276,453  
            2008             $2,013,040        $1,038,321           $89,042    $3,140,403  
            2007             $2,066,399        $1,091,343                $0    $3,157,742  
                             $6,123,842        $3,272,087          $178,669    $9,574,598  

* ADDI = American Dream Downpayment Initiative

At the time of our prior audits of the County’s HOME and CDBG programs, the County
administered both programs through the Community and Economic Opportunity Department. On
July 8, 2009, after the completion of our on-site work, the County consolidated its Community and
Economic Opportunity Department with its Social Services Department to create a new Human
Services Department. It stated that one reason for the consolidation was to coordinate the expertise
and oversight of contracting and grant processes.

                                       RESULTS OF REVIEW

We found weaknesses that could significantly affect the County’s capacity to administer its
Recovery Act funding. In our report on the County’s HOME program, we reported that the County

    •   Lacked detailed written policies and procedures regarding the administration of HOME
        funds,
    •   Assigned nearly all of the roles and responsibilities related to the administration of HOME
        funds to its program manager, and
    •   Did not ensure that the program was consistently administered by knowledgeable and
        capable management staff.

In our report on the County’s CDBG program, we reported that the County did not

    •   Have written policies and procedures for the administration of its CDBG funds,
    •   Monitor the use of its CDBG funds,
    •   Maintain documentation showing that its activities met national objectives,


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 Telephone: (303) 672-5452      http://www.hud.gov/oig/oigindex.html          Fax: (303) 672-5006

    •   Compare disbursement requests to existing contracts to ensure that CDBG funds were
        spent in accordance with the contract, and
    •   Have a process in place to eliminate known conflicts of interest.

While the County had consolidated its departments in an effort to coordinate its expertise and
oversight of contracting and grant processes, the HOME and CDBG programs continued to be
administered by the same division as during our prior two audits. We recognize that management
from the new Human Services Department was learning the regulations for the HOME and CDBG
programs and developing written policies and procedures for these programs. However, until these
changes are made and placed into effect, the weaknesses found during both of our prior audits,
which could significantly affect the County’s capacity to administer its Recovery Act funding, will
continue to exist.

                                       AUDITEE RESPONSE

We provided Adams County the draft memorandum on September 17, 2009, and requested its
comments by September 24, 2009. In an email dated September 18, 2009, Adams County informed
our office that it chose not to provide written comments to the memorandum. However, Adams
County did state it takes the findings seriously and will continue to establish policies, procedures,
and oversight processes to prevent any further deficiencies or violations of regulations in the future.

                                      RECOMMENDATIONS

We recommend that the Director of the HUD Denver Office of Community Planning and
Development

1A. Increase monitoring and oversight of the County’s administration and disbursement of HERA
    and Recovery Act funds.

1B. Ensure that Adams County management and staff fully implement an acceptable internal
    control structure by preparing and implementing effective written policies and procedures for
    the administration of Recovery Act and HERA funding.




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