Ensure that borrowers develop and implement a financial management system in accordance with HUD requirements to ensure that program funds can be traced to a level that ensures that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes.

Ensure that all Section 108 loan proceeds deposited at commercial banks are properly collateralized with Government obligations.

Conduct monitoring reviews of all Section 108 projects and ensure that borrowers comply with all loan agreement provisions and HUD regulations.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs instruct City officials to provide documentation to justify the $183 million in unsupported salary and fringe benefits and associated expenses charged to the CDBG-DR program. If documentation provided does not support the costs, this amount should be repaid from non-Federal funds.

We recommend that the Director of HUD’s New York Office of Community Planning and Development instruct Palladia officials to provide documentation to justify that the $1,615,057 in unsupported costs is associated with eligible program activities. Any unsupported costs determined to be ineligible should be reimbursed from non-Federal funds.

We recommend that the Director of HUD’s New York Office of Community Planning and Development instruct Palladia officials to strengthen oversight controls over disbursements to ensure that adequate supporting documentation is maintained and complies with applicable regulations.

We recommend that the Director of HUD’s New York Office of Community Planning and Development instruct Palladia officials to follow its policies and procedures for record-keeping to maintain records that adequately identify the source and application of funds provided for financially assisted activities.

We recommend that the Director of HUD’s New York Office of Community Planning and Development instruct Palladia officials to provide records detailing the funding sources of the non-Federal cash match for the six grant activities reviewed.

We recommend that the Director of HUD’s New York Office of Community Planning and Development instruct Palladia officials to provide source documentation to substantiate that the $584,579 in required non-Federal cash matching funds for five of the six program projects reviewed were met.

We recommend that the Director of HUD’s New York Office of Community Planning and Development instruct Palladia officials to reconcile its accounting records to ensure that total revenues and expenditures in its general ledgers reconcile to the revenues and expenditures reported in its annual performance reports and LOCCS.

We recommend that the Director of HUD’s Buffalo Office of Community Planning and Development instruct City officials to provide documentation to support the reasonableness and eligibility of the administrative program delivery costs charged to the CDBG program, including $597,048 in program delivery costs that could have been allocated to the State program, and repay the CDBG program from non-Federal funds any amounts determined to be unreasonable or ineligible.

The OIG has determined that the contents of this recommendation would not be appropriate for public disclosure and has therefore limited its distribution to selected officials.

Provide all supporting documentation associated with the $10,838,880 (Footnote 13) Total disbursements of $10,876,095 were adjusted to consider $37,215 questioned in recommendation 1D. in State CDBG, Section 108, and program income proceeds disbursed for the development of the sports complex, if HUD determines the plan to be feasible (recommendation 1A). HUD must determine the eligibility, reasonableness, and allocability of the funds disbursed. OCMA must reimburse its State CDBG program from non-Federal funds any amount determined ineligible.

We recommend that the Director of HUD’s Buffalo Office of Community Planning and Development instruct City officials to expend or reprogram to other eligible program activities the $2,451,645 in CDBG program income maintained in the City’s community development bank accounts as of June 30, 2013, so the City can assure HUD that these funds have been put to better use.

We recommend that the Director of HUD’s Buffalo Office of Community Planning and Development instruct City officials to Provide documentation to justify the $177,923 unsupported difference between the City’s CDBG program income balance in IDIS and its bank account balances as of June 30, 2013. Any portion of the unsupported difference determined to be ineligible should be reimbursed from non-Federal funds.

Provide adequate supporting documentation for the $1,628,130 in unsupported salary and benefit costs or repay the CDBG program from non-Federal funds.

Reimburse its HOME program $1,595,113 from non-Federal funds for HOME funds that were inappropriately used on Section 8 housing assistance payments.

We recommend that the Director of HUD’s New York Office of Community Planning and Development instruct County officials to provide documentation to justify the $189,322 in unsupported administrative and planning costs that was disbursed for employee salaries and fringe benefits. Any unsupported costs determined to be ineligible should be reimbursed from non-Federal funds.

We recommend that the Director of HUD’s New York Office of Community Planning and Development instruct County officials to reimburse from non-Federal funds $78,530 for ineligible home-buyer rehabilitation and demolition costs charged to the HOME program.

We recommend that the Director of HUD’s New York Office of Community Planning and Development instruct County officials to terminate the contract between the County and the Village of Freeport to rehabilitate and construct single-family public housing units to be sold to low-income residents. The remaining contract balance of $31,470 should be put to better use by reprogramming it for other eligible purposes.