oversight

The City of Erie, PA, Did Not Always Administer Its Code Enforcement and Community Policing Activities in Accordance With HUD and Federal Requirements

Published by the Department of Housing and Urban Development, Office of Inspector General on 2018-09-26.

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

                     The City of Erie, PA
        Community Development Block Grant Program




Office of Audit, Region 3       Audit Report Number: 2018-PH-1008
Philadelphia, PA                                September 26, 2018
To:            John E. Tolbert, Director, Office of Community Planning and Development,
               Pittsburgh Field Office, 3ED
               //signed//
From:          David E. Kasperowicz, Regional Inspector General for Audit, Philadelphia
               Region, 3AGA
Subject:       The City of Erie, PA, Did Not Always Administer Its Code Enforcement and
               Community Policing Activities in Accordance With HUD and Federal
               Requirements




Attached is the U.S. Department of Housing and Urban Development (HUD), Office of Inspector
General’s (OIG) final results of our review of the City of Erie’s Community Development Block
Grant program.
HUD Handbook 2000.06, REV-4, sets specific timeframes for management decisions on
recommended corrective actions. For each recommendation without a management decision,
please respond and provide status reports in accordance with the HUD Handbook. Please furnish
us copies of any correspondence or directives issued because of the audit.
The Inspector General Act, Title 5 United States Code, section 8M, requires that OIG post its
publicly available reports on the OIG website. Accordingly, this report will be posted at
http://www.hudoig.gov.
If you have any questions or comments about this report, please do not hesitate to call me at
215-430-6734.
                   Audit Report Number: 2018-PH-1008
                   Date: September 26, 2018

                   The City of Erie, PA, Did Not Always Administer Its Code Enforcement and
                   Community Policing Activities in Accordance With HUD and Federal
                   Requirements



Highlights

What We Audited and Why
We audited the City of Erie, PA’s Community Development Block Grant program. We audited
the City’s program because we received a complaint regarding its code enforcement program and
we had not audited the City’s program since 1997. The complaint alleged that the City targeted
low- to middle-income residents in certain neighborhoods requiring expensive repairs to their
homes and properties, which could result in legal actions and liens if the homeowners did not
make repairs by a deadline, generally 30 days. Our audit objective was to determine whether the
City properly used its Block Grant funds for its code enforcement and community policing
activities in accordance with U.S. Department of Housing and Urban Development (HUD) and
Federal requirements.

What We Found
The City did not always properly use its Block Grant funds for code enforcement and community
policing activities according to HUD and Federal requirements. The complaint was correct in
that the City conducted code enforcement inspections in areas where most residents were low-
and moderate-income. Block Grant funds are intended to benefit these residents. However, the
City did not maintain documentation to (1) show that it complied with program eligibility
requirements, and (2) support expenses. These conditions occurred because the City lacked
policies and procedures for its Block Grant-funded code enforcement and community policing
activities and misunderstood HUD requirements. As a result, the City’s use of nearly $1.7
million in program funds was unsupported.

What We Recommend
We recommend that the Director of HUD’s Pittsburgh Office of Community Planning and
Development require the City to (1) provide documentation to support $671,838 in code
enforcement costs or repay the program from non-Federal funds for any amount it cannot
support, (2) provide documentation to support $1 million in community policing costs or repay
the program from non-Federal funds for any amount it cannot support, and (3) develop and
implement policies and procedures to ensure that its code enforcement and community policing
activities costs comply with applicable program requirements, thereby ensuring that program
funds totaling $597,801 can be put to better use.
Table of Contents
Background and Objective......................................................................................3

Results of Audit ........................................................................................................5
         Finding: The City Did Not Use Its Block Grant Funds for Code Enforcement and
         Community Policing Activities in Accordance With Requirements ............................ 5

Scope and Methodology .........................................................................................10

Internal Controls ....................................................................................................12

Appendixes ..............................................................................................................13
         A. Schedule of Questioned Costs and Funds To Be Put to Better Use ...................... 13

         B. Auditee Comments and OIG’s Evaluation ............................................................. 14




                                                            2
Background and Objective
The City of Erie, PA, receives Community Development Block Grant funds annually from the U.S.
Department of Housing and Urban Development (HUD) as an entitlement grantee. The City uses
its annual Block Grant allocation to fund projects and activities to address housing and community
development needs of low- and moderate-income persons in Erie. Federal regulations at 24 CFR
(Code of Federal Regulations) 570.208 require that Block Grant funds be used for eligible activities
that meet one of the three national objectives, which include (1) benefiting low- and moderate-
income persons, (2) preventing or eliminating slums or blight, or (3) addressing a need with a
particular urgency because existing conditions pose a serious and immediate threat to the health or
welfare of the community.

The City operates under a mayor-council form of government. It is the responsibility of the mayor
and his or her cabinet to implement and administer laws based upon city council ordinances.
There are seven members of the council, who appoint a president from its members. The council
is empowered to confirm the mayor’s appointments to various City authorities. The City’s
Department of Economic and Community Development administers its Block Grant program.

The City obtains and draws program funds for activity costs through HUD’s Integrated
Disbursement and Information System. This system is the drawdown and reporting system for
HUD’s formula grant programs, which include the Block Grant program. HUD awarded the City
more than $8.4 million in Block Grant funds from fiscal years 2015 through 2017. The table below
provides details.


                                  Fiscal year         Grant amount

                                     2015              $2,806,751
                                     2016               2,804,599
                                     2017               2,791,421
                                     Total             8,402,771

We received a complaint alleging that the City used its code enforcement program to target low-
to middle-income residents in certain neighborhoods requiring expensive repairs to their homes
and properties, which could result in legal actions and liens if the homeowners did not make
repairs by a deadline, generally 30 days. Block Grant regulations allow the City to use funds for
code enforcement in deteriorated areas where at least 51 percent of the residents are low- and
moderate-income when it meets the area benefit national objective. For Block Grant program
purposes, code enforcement is defined as a process whereby local governments gain compliance
with ordinances and regulations regarding health and housing codes, land use and zoning
ordinances, sign standards, and uniform building and fire codes. Code enforcement may take
place in primarily residential, commercial, and industrial areas. HUD expects grantees to



                                                  3
emphasize health and safety issues in buildings. Additional efforts to address violations of codes
concerning vacant lots, signs, and motor vehicles are permitted in conjunction with efforts
regarding buildings but should form a minor part of the code enforcement program.

Our audit objective was to determine whether the City properly used its Block Grant funds for its
code enforcement and community policing activities in accordance with applicable HUD and
Federal requirements.




                                                 4
Results of Audit

Finding: The City Did Not Use Its Block Grant Funds for Code
Enforcement and Community Policing Activities in Accordance
With Requirements
The City used Block Grant funds for code enforcement and community policing activities that
did not meet HUD requirements. The City lacked documentation to show that code enforcement
activities met the national objective of benefiting low- and moderate-income persons because it
did not maintain documentation to show that repairs were made to correct the code violations at
properties it inspected. Also, salaries it paid totaling $671,838 were not supported with adequate
documentation for the work performed. For its community policing activities, the City lacked
documentation to show that community policing activities met the eligibility requirement of
being a new service or a quantifiable increase in the level of an existing service above that which
has been provided by or on behalf of the unit of general local government. Also payments for
salaries totaling $1 million were not properly supported. These conditions occurred because the
City lacked policies and procedures for its Block Grant-funded activities and misunderstood
HUD requirements. Unless the City develops and implements policies and procedures for both
activities, its use of $597,801 in funds not yet drawn from its 2017 code enforcement and
community policing activities will also lack documentation to show that they meet eligibility
requirements.

The City Could Not Show That It’s Code Enforcement Activities Met Eligibility
Requirements
The City could not show that the $671,838 it used to fund code enforcement activities met
eligibility requirements. The City lacked documentation to show that code enforcement
activities met the national objective of benefiting low- and moderate-income persons because it
did not maintain documentation to show that repairs were made to correct the code violations at
properties it inspected. Regulations at 24 CFR 570.202(c) make code enforcement an eligible
activity to meet a national objective when conducted in deteriorated or deteriorating areas and
where such code enforcement, together with public or private improvements, rehabilitation, or
other services to be provided, may be expected to arrest the decline of the area. The City had
programs to assist homeowners to make repairs to their homes. Regulations at 24 CFR 570.506
required the City to establish and maintain sufficient records to show that activities met program
requirements. The City did not perform adequate code enforcement inspections. Specifically,
for 15 files reviewed, 13 lacked documentation to show that violations identified during the code
enforcement inspections were corrected. The code enforcement inspections of these properties
occurred between August 2016 and June 2017. HUD’s Office of Community Planning and
Development (CPD) Notice CPD-14-016 states that grantees are expected to emphasize health
and safety issues in buildings. The costs of the code enforcement by themselves do not provide a
direct benefit to the homeowner. It is the correction of the code violations that provides the
benefit. The City’s code enforcement inspection policy required it to include photos and



                                                 5
documentation, including affidavits, in the case file and computer system to confirm compliance.
The following examples illustrate how files lacked documentation to support that violations were
corrected:

 •   Case 1 – West Bayfront Area – The property had an initial inspection on November 15,
     2016. The unit was reinspected twice; however, as of April 4, 2018, the case remained
     open. The inspection review showed that the inspector found that the owner needed to
     scrape and repaint all exterior peeling paint, but the file lacked documentation showing that
     the repairs were completed. We visually inspected the property with City officials on
     March 20, 2018, and determined that the items had not been repaired.

 •   Case 2 – West Bayfront Area – The property had an initial inspection on November 10,
     2016, and one reinspection; however, the case remained open. The inspector found that the
     stairs had to be rebuilt so the property needed a new handrail with proper spacing. The file
     lacked documentation showing that the repairs were made. We visually inspected the
     property with City officials on March 20, 2018, and determined that the repairs had not
     been completed.

 •   Case 3 – Pulaski-Lighthouse Area – The inspector received a complaint about the property
     and inspected the property on August 12, 2016. The inspector found that the owner needed
     to install gutters on the upper roof and downspouts on the porch roof. The inspector’s case
     notes showed that as of September 30, 2016, the case was closed. The file lacked
     documentation showing that the repairs were made. We visually inspected the property
     with City officials on March 20, 2018, and determined that the items had not been repaired.

The City agreed that its files did not always contain adequate documentation to show that repairs
were completed. It believed that as long as the code enforcement officer updated the case file to
say that the repairs were made and the case was closed, this was adequate support to show that
the code enforcement process was completed. It also explained that the system used to capture
code enforcement results was outdated and had limited function that did not allow all
information to be inserted for each case. Lastly, the City acknowledged a need to change the
timeframe in which the repairs should be completed because the code enforcement process took
longer than 120 days to complete.

The City’s Files Lacked Documentation To Support Salary Payments
The City paid salary and benefit costs totaling $671,838 for five code enforcement officers and a
manager that were not supported with adequate documentation, such as timesheets, showing that
inspections were performed in eligible targeted areas for work performed. HUD Notice CPD-14-
016, dated October 2014, allowed the City to use Block Grant funds to pay for salaries; related
benefits; and costs, such as uniforms, equipment, and vehicle use allowances, only for staff
responsible for conducting inspections in specific deteriorated target areas that met the low- and
moderate-income area benefit national objective. In addition, HUD regulations at 2 CFR
200.430 state that charges to Federal awards for salaries and wages must be based on records that
accurately reflect the work performed and must be supported by a system of internal control,
which provides reasonable assurance that the charges are accurate, allowable, and properly


                                                6
allocated. Additionally, program regulations at 24 CFR 570.506 required the City to establish
and maintain sufficient records to enable HUD to determine whether it has met program
requirements. During the audit period, the City paid the salaries of its four full-time Block Grant
code enforcement officers, the one part-time Block Grant code enforcement officer, and the
manager. Of the 283 timesheets reviewed,

     •   230 timesheets provided to support salaries totaling $568,963 lacked documentation,
         such as an inspection log, to show that each inspector performed inspections within one
         of the City’s seven designated deteriorated areas. In addition, 12 of the 230 timesheets
         were not signed by a supervisor. Although the timesheets showed that the hours were
         charged to the City’s community development activities, the timesheets should also be
         supported by documentation showing that the inspections were performed on buildings
         located in one of the seven designated deteriorated areas. Program regulations at 2 CFR
         200.430 required the City to maintain salary records based on records that accurately
         reflected the work performed and were supported by a system of internal control, which
         provided reasonable assurance that the charges were accurate, allowable, and properly
         allocated.

     •   53 timesheets provided to support salaries totaling $98,638 paid to the code enforcement
         manager were not supported with adequate documentation. The City used program
         funds to pay part of the code enforcement manager’s full-time salary, and the timesheets
         were not reviewed or signed by his supervisor. Regulations at 2 CFR 200.430 required
         the City to maintain salary records based on work performed. Further, HUD Notice
         CPD-14-016 allows direct costs of performing code enforcement inspections supported
         by time distribution records; however, any indirect time requires an indirect cost
         allocation plan prepared in accordance with applicable Federal cost principles. The City
         did not provide documentation to show that the manager performed inspections in
         eligible target areas or documentation of an allocation plan.

The City also incorrectly calculated salaries totaling $4,237, which resulted in its overcharging
the program. Regulations at 2 CFR 200.430 require salary payments to be accurate and
reasonable.

These conditions occurred because the City lacked policies and procedures for its Block Grant-
funded code enforcement activities and misunderstood HUD requirements. As a result, the
City’s use of 671,838 1 in program funds was unsupported. Regulations at 24 CFR 570.501(b)
made the City responsible for ensuring that Block Grant funds were used in accordance with all
program requirements. Regulations at 24 CFR 570.506 required the City to maintain
documentation and records to support program activities.




1
    $568,963 + $98,638 + $4,237 = $671,838



                                                 7
The City Could Not Show That Its Community Policing Activities Met Eligibility
Requirements
The City could not show that funds totaling $1 million used to pay salaries for its community
policing activities in program years 2015 and 2016 met eligibility requirements. Program
regulations at 24 CFR 570.201(e) allow crime prevention to be an eligible public service
program activity. To be eligible for Block Grant funds, the public service must be either a new
service or a quantifiable increase in the level of an existing service above that which has been
provided by or on behalf of the unit of general local government in the 12 calendar months
before the submission of the action plan. The City’s community policing program had been in
existence since 1994. However, the City could not provide documentation to show that the
community policing activities targeting areas of high crime were either a new service or a
quantifiable increase in the level of an existing service.

The City used the funds for these activities to pay the salaries of the 18 law enforcement officers
it assigned to its community policing activities. Regulations at 2 CFR 200.430 required the City
to maintain salary records based on records that accurately reflected the work performed and
were supported by a system of internal control, which provided reasonable assurance that the
charges were accurate, allowable, and properly allocated. The City maintained 278 activity logs
and other documentation to support its payments for salaries. However, 162 of the activity logs
did not comply with requirements. Specifically,

   •   96 logs were not signed by a supervisor and did not show daily hours worked by the
       officers;
   •   28 logs were not signed by the officer’s supervisor;
   •   18 logs did not show daily hours worked by the officers;
   •   11 logs were completed by a supervisor, and the supervisor approved his own activity log
       and did not show daily hours worked;
   •   7 logs were completed by a supervisor, and the supervisor approved his own activity log;
       and
   •   2 logs were not signed by the officer or the officer’s supervisor and did not show daily
       hours worked.

An April 2017 report of an internal monitoring review conducted by the City of its 2014, 2015,
and 2016 community policing activities resulted in eight findings, including that

   •   officers did not always complete activity logs,
   •   officers did not always use the same log to report activity,
   •   officers did not always report their daily work hours on the log,
   •   some activity logs contained math errors,
   •   the majority of logs lacked a supervisor’s signature to evidence approval, and
   •   a supervisor approved his own activity log.

These conditions occurred because the City lacked controls to ensure that it maintained
documentation to show that its community policing activities met HUD and Federal



                                                 8
requirements. Because the City lacked required documentation, disbursements totaling $1
million were unsupported. Regulations at 24 CFR 570.501(b) made the City responsible for
ensuring that Block Grant funds were used in accordance with all program requirements.
Regulations at 24 CFR 570.506 required the City to maintain documentation and records to
support program activities.

Conclusion
The City did not always properly use its Block Grant funds for its code enforcement and
community policing activities in accordance with HUD and Federal requirements. The City did
not maintain documentation to (1) show that it complied with eligibility requirements, and (2)
support expenses. These conditions occurred because the City lacked policies and procedures for
its Block Grant-funded activities and misunderstood HUD requirements. As a result, the City’s
use of nearly $1.7 million in program funds was unsupported. By implementing our
recommendations, the City will put to better use $597,801 in funds yet to be drawn from its 2017
code enforcement and community policing activities. 2

Recommendations
We recommend that the Director of HUD’s Pittsburgh Office of Community Planning and
Development require the City to

        1A.      Follow up on the 15 properties in our sample to ensure that the code enforcement
                 violations have been corrected, that the necessary documentation has been
                 gathered and retained in the code enforcement file for the property, and that the
                 code enforcement process has been completed.

        1B.      Provide documentation to support $671,838 in code enforcement costs or repay
                 the program from non-Federal funds for any amount that it cannot support.

        1C.      Develop and implement policies and procedures to ensure that its Block Grant-
                 funded code enforcement activities comply with HUD requirements, including
                 documentation requirements, thereby ensuring that funds totaling $301,866 can be
                 put to better use.

        1D.      Provide documentation to support $1 million in community policing salary costs
                 or repay the program from non-Federal funds for any amount that it cannot
                 support.

        1E.      Develop and implement policies and procedures to ensure that Block Grant-
                 funded community policing salaries and benefits comply with HUD requirements,
                 including documentation requirements, thereby ensuring that funds totaling
                 $295,935 are put to better use.




2
    $597,801 = $301,866 (code enforcement) + $295,935 (community policing)



                                                      9
Scope and Methodology
We conducted the audit from November 2017 through August 2018 at the City’s offices located
at 626 State Street, Erie, PA, and our offices located in Baltimore, MD, and Pittsburgh, PA. The
audit covered the period October 1, 2015, to September 30, 2017, but was expanded to include
the period July 1 to September 30, 2015, because the City’s program year begins on July 1.

To accomplish our objective, we reviewed

   •   HUD’s program requirements at 24 CFR Part 570 and 2 CFR Part 200, HUD Notice CPD
       14-016, and HUD’s Community Development Block Grant Guidebook.

   •   Summary reports of financial data and detailed drawdown reports for the City’s Block
       Grant activities maintained in HUD’ Integrated Disbursement and Information System.

   •   The City’s code enforcement and community policing program files; financial records;
       and annual audited financial statements for its calendar years ending 2014, 2015 and
       2016; approved city council resolutions; the City’s April 2017 report from its monitoring
       of its 2014, 2015, and 2016 community policing activities; and an organizational chart of
       the City’s Office of Economic and Community Development.

We also interviewed City staff, officials from HUD’s Pittsburgh Office of Community Planning
and Development, and officials from HUD headquarters.

To achieve our audit objective, we relied in part on computer-processed data in HUD’s
Integrated Disbursement and Information System. We used data from HUD’s system to identify
the universe of the City’s activities in order to select a sample of activities for review to
determine whether they complied with requirements. Although we did not perform a detailed
assessment of the reliability of the data, we did perform a minimal level of testing and found the
data to be adequate for our purposes.

As of September 30, 2017, the City had drawn more than $4.4 million for 33 Block Grant
activities for the period July 1, 2015, to September 30, 2017. Of the 33 activities, we selected 4
of the 6 activities with the largest amounts drawn, including the code enforcement activity
identified in the complaint. We did not review the other two high-dollar-value activities because
HUD had monitored them in October 2009 and did not identify any deficiencies. The chart
below provides details on the four activities we selected for review.




                                                 10
    Plan Activity                                     Funded          Drawn              Code     Community
                            Activity name
    year number                                       amount         amount           enforcement  policing
    2016     2103        Code enforcement            $371,788        $371,788          $371,788
    2016     2095       Community policing            500,000         500,000                      $500,000
    2015     2044        Code enforcement             300,429         300,429          300,429
    2015     2036       Community policing            500,000         500,000                      500,000
                      Totals                         1,672,217 1,672,217               672,217 3   1,000,000

The nearly $1.7 million that the City drew down for these four activities accounted for 38
percent of the funds drawn by the City during our audit period.

For the audit period, based on documentation provided by the City, its code enforcement officers
performed 5,926 inspections and charged the Block Grant program salary and benefit costs for
its officers to perform them. We narrowed our review of code enforcement inspections to those
related to the largest draw the City made for code enforcement salary and benefit costs during the
audit period, which was the period July 1 to December 11, 2016. The City performed
inspections on 756 buildings and structures during this period. We filtered the 756 associated
files to focus on inspections that involved health and safety issues related to structures. This left
us with a universe of 492 files. We used the random number generator feature in Microsoft
Excel and selected 15 of the 492 files for review to determine whether the City maintained
documentation to show (1) that the inspection was performed in a deteriorated area, (2) whether
other services were provided to arrest the decline of the area, and (3) whether repairs were made
to the property. We did not use a statistical sample, therefore our results were not projected. In
this case, the City had yet to draw $597,801 from its 2017 code enforcement and community
policing activities. 4 By implementing our recommendations, the City will develop and
implement policies and procedures to ensure that it spends the remaining funds in accordance
with HUD and Federal requirements and, as a result, put those funds to better use.

We reviewed all of the City’s draws for salaries for its code enforcement and community
policing activities.

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
objective(s). We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objective.




3
     Consists of $671,838 for salary and benefit costs and $379 for office supplies
4
     $597,801 = $301,866 (code enforcement) + $295,935 (community policing)



                                                            11
Internal Controls
Internal control is a process adopted by those charged with governance and management,
designed to provide reasonable assurance about the achievement of the organization’s mission,
goals, and objectives with regard to

•   effectiveness and efficiency of operations,
•   reliability of financial reporting, and
•   compliance with applicable laws and regulations.
Internal controls comprise the plans, policies, methods, and procedures used to meet the
organization’s mission, goals, and objectives. Internal controls 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 objective:

•   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 applicable laws and regulations – Policies and procedures that management
    has implemented to reasonably ensure that resource use is consistent with laws and
    regulations.
We assessed the relevant controls identified above.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, the
reasonable opportunity to prevent, detect, or correct (1) impairments to effectiveness or
efficiency of operations, (2) misstatements in financial or performance information, or (3)
violations of laws and regulations on a timely basis.
Significant Deficiency
Based on our review, we believe that the following item is a significant deficiency:

•   The City lacked policies and procedures for its Block Grant-funded code enforcement and
    community policing activities and misunderstood HUD requirements.




                                                  12
Appendixes

Appendix A


            Schedule of Questioned Costs and Funds To Be Put to Better Use
                Recommendation                       Funds to be put
                                    Unsupported 1/
                     number                          to better use 2/
                         1B                 $671,838
                         1C                                      $301,866
                         1D                 1,000,000
                         1E                                       295,935

                       Totals               1,671,838             597,801




1/   Unsupported costs are those costs charged to a HUD-financed or HUD-insured program
     or activity when we cannot determine eligibility at the time of the audit. Unsupported
     costs require a decision by HUD program officials. This decision, in addition to
     obtaining supporting documentation, might involve a legal interpretation or clarification
     of departmental policies and procedures.
2/   Recommendations that funds be put to better use are estimates of amounts that could be
     used more efficiently if an Office of Inspector General (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 this case, the funds to be put to better use represent the
     balances the City has yet to draw from its 2017 code enforcement and community
     policing activities. By implementing our recommendations, the City will develop and
     implement policies and procedures to ensure that it spends the remaining funds in
     accordance with HUD and Federal requirements.




                                                13
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




Comment 1




                               14
             Auditee Comments and OIG’s Evaluation




Ref to OIG    Auditee Comments
Evaluation




Comment 2




Comment 1


Comment 2




Comment 2




Comments 1
and 2




                               15
             Auditee Comments and OIG’s Evaluation




Ref to OIG    Auditee Comments
Evaluation




Comments 1
and 2




Comment 3




                               16
             Auditee Comments and OIG’s Evaluation




Ref to OIG    Auditee Comments
Evaluation




Comment 3




Comment 3




Comments 1
and 3




Comment 4




Comment 4

Comment 4




                               17
             Auditee Comments and OIG’s Evaluation




Ref to OIG    Auditee Comments
Evaluation




Comment 4




Comment 5

Comment 5


Comment 6




                               18
             Auditee Comments and OIG’s Evaluation




Ref to OIG    Auditee Comments
Evaluation




                               19
                         OIG Evaluation of Auditee Comments


Comment 1   The City stated that it does not agree with several findings in the audit report.
            Although it does not agree, we are encouraged that it is taking action to improve
            its program, such as exploring updates to its existing code enforcement software
            and researching other code enforcement software; updating its existing policies
            and procedures; and updating and implementing its policy for timesheets and
            record keeping for code enforcement officers. As part of the audit resolution
            process, HUD and OIG will agree on the action to be taken and the
            documentation to be provided by the City to show that its corrective actions
            satisfy the recommendations.

Comment 2   The City stated that it provided all available documentation to show how its code
            enforcement software documented and tracked its code enforcement actions and
            supplemented that with other documentation that it maintained in a digital filing
            system and hardcopy paper files. It stated that it was not aware that its process of
            documenting code enforcement actions was insufficient and that it was not
            provided any specific guidance describing or detailing additional documentation
            requirements. The City also stated that it can provide additional documentation to
            show that violations were corrected for the 15 cases reviewed by the auditor. In
            response to the audit findings, the City stated it was updating its existing policies
            and procedures.

            Although the City generated and provided reports from its code enforcement
            software and other documentation that it maintained outside of the automated
            system, collectively, the documentation was not adequate to show that its code
            enforcement activities met a national objective of benefiting low- and-moderate-
            income persons because it did not show that repairs were made. As stated in the
            audit report, the costs of the code enforcement by themselves do not provide a
            direct benefit to the homeowner. It is the correction of the code violations that
            provides the benefit.

            The City agreed that its computer software for tracking and documenting code
            enforcement activities was outdated and that it did not allow for some types of
            supporting documentation, such as photos, memos, and other documents to be
            uploaded in the system. It also acknowledged that prior to the audit, it was not
            aware that the documentation maintained in its current program was insufficient
            and that the documentation it maintained did not comply with program
            requirements. Program regulations at 24 CFR 570.506 required the City to
            maintain sufficient records to show that its activities met program requirements.
            HUD’s general standard for Block Grant record keeping is that records must be
            accurate, complete, and orderly. We are encouraged that the City is taking action
            to improve its program, such as exploring updates to its existing code
            enforcement software and researching other code enforcement software; updating



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            its existing policies and procedures; and updating and implementing its policy for
            timesheets and record keeping for code enforcement officers.

            As part of the audit resolution process, the City will have an opportunity to
            provide documentation to HUD to address the recommendations. HUD and OIG
            will agree on the action to be taken and the documentation to be provided by the
            City to show that its corrective actions satisfy the recommendations.

Comment 3   The City stated that all of the code enforcement officers whose salaries were
            funded with Block Grant funds carried out code enforcement activities only in its
            community development impact area. It stated that it provided detailed data from
            its community development impact study and various maps showing the location
            of the impact area and an analysis showing the property conditions in the impact
            area and documentation to show that the area had deteriorated or deteriorating
            conditions as described in CPD Notice 14-016. It stated that it provided
            documentation to support the timesheets of the code officers requested by the
            auditors. It also stated that since the audit, it has updated and implemented its
            policy for timesheets and record keeping. The City stated that it now requires
            each Block Grant-funded code officer’s timesheet to show where the code officer
            worked and verify that it was performed in the impact area. In addition, it now
            requires the code department manager to sign each Block Grant-funded officer’s
            timesheet.

            The City provided documentation to show that it designated an impact area as
            well as maps, legends, and other documentation. However, as stated in the audit
            report, the code enforcement officers’ timesheets lacked supporting
            documentation to show that the officers conducted inspections only in the eligible
            targeted areas. In addition, timesheets used to support the City’s use of Block
            Grant funds to pay part of the code enforcement manager’s salary were not
            reviewed and signed by a supervisor. The City did not provide any
            documentation to show that the manager performed inspections in eligible target
            areas or documentation of an allocation plan. Regulations at 2 CFR 200.430
            required the City to maintain salary records that accurately reflect work
            performed and provide reasonable assurance that the charges were accurate,
            allowable, and properly allocated.

            We are encouraged by the City’s statements that it has updated and implemented
            its policy for timesheets and record keeping and that it now requires (1) the Block
            Grant-funded code enforcement officers to show where they worked and verify
            that they performed inspections in the impact area, and (2) the code department
            manager to sign each Block Grant-funded officer’s timesheet. As part of the audit
            resolution process, HUD and OIG will agree on the action to be taken and the
            documentation to be provided by the City to show that its corrective actions
            satisfy the recommendations.




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Comment 4   The City stated that it reviewed its salary payments and found three data entry
            errors. It asserted that two of the three errors were corrected before the
            withdrawal of the final payment for that fiscal year. Considering these
            corrections, it believes that the actual overpayment was $962. It also asserted that
            in the audit report we raised concerns about what appeared to be a $395
            overpayment and it confirmed no such overpayment was made. It requested that
            we revise the report to reflect an overpayment of $962 instead of the overpayment
            totaling $4,237 stated in the audit report.

            The City did not provide documentation to support its assertions regarding the
            three data entry errors specifically that two errors were corrected and one error
            did not result in an overpayment. It provided three spreadsheets to show its
            calculations. However, the spreadsheets were not sufficient for us to revise the
            audit report because the City did not provide source documentation such as
            timesheets, drawdown documents, check registers, bank deposits, or adjusting
            entries to the general ledger to support its assertions or show that it corrected the
            payroll. As part of audit resolution, the City will have an opportunity to provide
            documentation to HUD to address the recommendation. HUD will review the
            documentation provided by the City, determine whether it satisfies the
            recommendation, and provide its determination and the documentation to OIG for
            review and concurrence.

Comment 5   The City stated that it provided copies of logs for fiscal years 2015 and 2016 that
            had information showing that community policing funds were used for the patrols
            in the City’s impact area and that there was an increase in the level of existing
            services.

            During the audit, we requested documentation from the City to show that the
            community policing activity was either a new service or a quantifiable increase in
            the level of an existing service above that which has been provided by or on
            behalf of the unit of general local government in the 12 calendar months before
            the submission of the action plan. The logs the City provided were not sufficient
            to show that the community policing activity met these requirements. As part of
            the audit resolution process, HUD and OIG will agree on the action to be taken
            and the documentation to be provided by the City to show that its corrective
            actions satisfy the recommendations.

Comment 6   The City agreed that, as stated in the audit report, it monitored its community
            policing activity and identified eight findings. It stated that as a result of its
            monitoring, the police department revised its Block Grant police activity log and
            went back to prior years and made corrections to address the monitoring findings.
            The City also stated that although it gave us a copy of the updated police activity
            log during the audit, we did not take it into consideration. It asserted that the
            updated logs addressed our findings and showed overall program compliance.
            The City requested that we remove the finding from the audit report.



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We reviewed all 278 community policing logs for the period July 1, 2015, to
March 31, 2017. The City’s monitoring effort involved a review of a sample of
53 logs from the period October 2014 through December 2016. Eighteen of the
53 logs were outside our audit period; therefore, we did not review them. We
reviewed the other 35 logs and found no issues. As stated in the audit report, 162
logs did not comply with requirements. The 162 logs did not include the 53 logs.
The finding is supported because the City could not show that the community
policing activity was either a new service or a quantifiable increase in the level of
an existing service above that which has been provided by or on behalf of the unit
of general local government in the 12 calendar months before the submission of
the action plan, and 162 of 278 activity logs (58 percent) related to the activity did
not comply with requirements. As part of the audit resolution process, HUD and
OIG will agree on the action to be taken and the documentation to be provided by
the City to show that its corrective actions satisfy the recommendations.




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