|
Puerto Rico Could Not Support Disaster Recovery Expenses for Non-Federal Match Payments
As part of our mission to safeguard the U.S. Department of Housing and Urban Development’s (HUD) programs from fraud, waste, and abuse, and to identify opportunities for HUD programs to progress and succeed, we selected Puerto Rico for a review of potential improper payments. Our audit objective was to determine whether Puerto Rico made improper non-Federal match activity payments. We also assessed whether the Office of Community Planning and Development’s Office of Disaster Recovery (CPD ODR) had sufficient and adequate controls to prevent improper match payments.
Puerto Rico could not support its expenses for 49 of 74 (66 percent) of the non-Federal match HUD payments related to two Hurricane Irma and Maria disaster recovery grants that we tested. Its HUD payment support was duplicative, incomplete, and inaccurate as its support did not equal or reconcile to the non-Federal match amounts paid with disaster recovery funds. These unsupported HUD payments occurred because Puerto Rico did not have adequate internal controls to properly classify, allocate, and track its disaster recovery funded non-Federal match expenses. As a result, Puerto Rico could not show that it properly allocated expenses and supported payments which totaled more than $47.8 million. Further, projecting the results of our statistical sample to the audit universe showed that Puerto Rico may have submitted expenses for unsupported HUD payments totaling $54.8 million. In addition, Puerto Rico comingled its CPD non-Federal match expenses with other CPD disaster recovery expenses for 26 of the 74 (35 percent) HUD payments tested. The other CPD disaster recovery expenses were not FEMA Public Assistance Program expenses and should not have been reported as such. These improper HUD payments occurred because Puerto Rico and CPD did not establish financial or payment controls as CPD did not require that grantees separately report non-Federal match expenses. As a result, Puerto Rico did not transparently report the amounts it spent on non-Federal match activities versus more than $2.8 million on other eligible CPD disaster recovery expenses. Projecting the results of our testing to the universe, this amounts to at least $7.17 million in HUD payments that are not related to FEMA non-Federal match expenses. Puerto Rico’s action led it to overreport the amount HUD reimbursed for FEMA Public Assistance Program non-Federal match activities, which increased the risk of potential improper payments. Due to the overreported amounts, HUD and its stakeholders cannot use DRGR system to ensure that Puerto Rico properly used its disaster recovery funds to meet the non-Federal match portion of FEMA’s Public Assistance projects.
|
|
|
|
