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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT CFDA 14.182 SECTION 8 NEW CONSTRUCTION AND SUBSTANTIAL
REHABILITATION Housing Authorities - Guidance for audits of Public and
Indian Housing (PIH) Authorities is contained in the "Public and
Indian Housing Compliance Supplement for Annual Audits of Public
Housing Agencies and Indian Housing Authorities by Independent Auditors"
(PIH Supplement). The PIH Supplement was developed by the HUD Office
of Public and Indian Housing and the Office of Inspector General.
It was originally issued in May 1995 and reissued in May 1996. For
audits of PIH Authorities under OMB Circular A-133, the agency program
requirements (which would otherwise be listed in Part 4 of this
Supplement) are provided in the PIH Supplement. This supplement
is currently available on the Internet at the HUD OIG home page
(http://www.hud.gov/oig/oigguide.html)
under the listing of "Audit Guides" or can be obtained by sending
a fax to 202-401-3963. I. PROGRAM OBJECTIVES The objective of the Section 8 rental assistance programs is to
help eligible low-income families or individuals obtain decent,
safe, and sanitary housing through a system of rental subsidies
(24 CFR sections 880.101, 881.101, 882.401, 882.801, 883.101, 887.1,
982.1, and 983.1). II. PROGRAM PROCEDURES Section 8 rental assistance programs are referred to as either tenant-based or project-based. The Section 8 rental voucher program provides tenant-based rental assistance, whereas the Section 8 certificate program offers both tenant-based and project-based assistance. Under the tenant-based program, assistance is tied to the individual or family. When the assisted family moves out of a leased unit, the assistance contract with the owner terminates and the family may move to another unit with continued assistance. Under the project-based program, assistance is tied to a specific unit and when a family moves from the unit, it has no right to continued assistance. Both project- and tenant-based assistance can be used to obtain existing housing for eligible persons or families. In addition, project-based assistance can be used to provide assisted housing by aiding in the construction of new housing, or the rehabilitation of existing housing (24 CFR sections 880.101, 881.101, 882.701, 883.101, and 982.1(b)). The Section 8 tenant-based programs and certain project-based programs
are administered by State, local governmental or Indian tribal organizations
called housing agencies (HAs). HUD enters into annual contributions
contracts with HAs which enter into housing assistance payments
(HAP) contracts with private owners. The owners rent housing to
eligible low-income families who typically pay rent which is the
highest of 30 percent of adjusted gross income, 10 percent of gross
income, or the portion of welfare assistance designated to meet
housing costs. The remaining portion of the rent for the unit is
paid to the owner by the HA or HUD through the HAP contract. The
HA is then reimbursed by HUD through the annual contributions contract.
HUD also provides funds for HA administration of the Section 8 programs
(24 CFR sections 880.101, 881.101, 883.101, 887.53, and 982.1).
In the tenant-based program, the HA determines a family's eligibility
then gives the family either a certificate or voucher. The family
has 60 days to locate a landlord willing to participate in the program.
The HA determines whether the unit meets housing quality standards.
If the HA approves a family's unit and lease, the HA contracts with
the owner to make rent subsidy payments on behalf of the family.
The HA may not approve a lease unless the rent is reasonable (24
CFR section 982.1(a)(2)). In the voucher program, the rental subsidy is determined by a formula,
and is not based on the actual rent of the leased unit. In the voucher
program, the subsidy for most families is the difference between
30 percent of adjusted monthly income and a "payment standard" that
is based on the HUD-published fair market rent. If the unit rent
is less than the payment standard, the family pays a smaller share
of the rent. If the unit is more than the payment standard, the
family pays a larger share of the rent (24 CFR section 982.1(a)(4)).
In the tenant-based and project-based certificate programs, the
rental subsidy is generally based on the actual rent of a unit leased
by the assisted family. Rent for the unit generally may not exceed
a HUD-published fair market rent for units in the local housing
market. For most families, the subsidy is the difference between
the unit rent and 30 percent of adjusted monthly income (24 CFR
section 982.1(a)(4)). Under the project-based certificate program, there are projects
in which HUD deals with the HA which deals directly with the project
owner (HA/private owner), projects in which HUD deals directly with
the HA who owns the project (HUD/HA), and projects in which HUD
deals directly with the private owner of the project (HUD/private-owner).
While the basic program operations are similar, there are some variations
in the way the programs are carried out. The HA is primarily responsible
for administration of the contract involving private-owner/HA projects
subject to review and audit by HUD. For private-owner/HUD and HA-owner/HUD
projects, HUD is responsible for contract administration. In a private-owner/HUD
project, HUD enters into a HAP contract directly with the owner
and the owner rents housing to eligible low-income families. The
contract sets forth the rights and duties of the owner with respect
to the housing and the housing assistance payments. The owner may
contract with another entity for marketing, management, and maintenance
(24 CFR sections 880.505 and 881.503). HAs are required to maintain a HAP contract register or similar
record in which to record the HA's obligation for monthly housing
assistance payments. This record shall provide information as to:
the name and address of the family, the name and address of the
owner, dwelling unit size, the effective and expiration dates of
the lease, the monthly contract rent payable to the owner, monthly
rent payable by the family; and the monthly housing assistance payment.
The record shall also provide data as to the date the family vacates
and the number of days the unit is vacant, if any. This requirement
is applicable to HAs that are administering Housing Assistance Payments
Program Projects pursuant to the provisions of Annual Contributions
Contracts. It is not applicable to Section 8 projects on which HUD
has executed a HAP contract directly with an owner or HA. Section 8 Housing Assistance Program regulations are found in 24
CFR parts 5, 880, 881, 882, 883, 886, 887, 888, 982, and 983. In the Section 8 programs, required program contracts and other
forms must be word-for-word in the form prescribed by HUD headquarters.
Any additions to or modifications of required program contracts
or other forms must be approved by HUD headquarters (24 CFR section
982.162). III. COMPLIANCE REQUIREMENTS In developing the audit procedures to test compliance with
the requirements for a Federal program, the auditor should first
look to Part 2, Matrix of Compliance Requirements, to identify which
of the 14 types of compliance requirements described in Part 3 are
applicable and then look to Parts 3 and 4 for the details of the
requirements. E. Eligibility 1. Eligibility for Individuals a. For all tenant-based and project-based Section 8 programs, the
HA or owner, as applicable, must: (1) Verify the eligibility of applicants by: (a) obtaining signed
applications that contain the information needed to determine eligibility
(including designation as elderly, handicapped, or homeless, if
applicable), income, rent and order of selection; (b) conducting
verifications of family income and other pertinent information (such
as assets, full time student and immigration status, and unusual
medical expenses) through third parties; (c) document inspections,
or tenant certifications, as appropriate; and, (d) determining that
tenant income did not exceed the maximum limit set by HUD for the
HA's jurisdiction, as shown in HUD's published notice transmitting
the Limits for Low-Income and Very Low-Income Families Under the
Housing Act of 1937 (24 CFR sections 880.603, 881.601, 833.701,
982.54, 982.153, and 982.554). (2) Determine the total tenant rent payment in accordance with
24 CFR section 5.613 for the certificate programs and 24 CFR section
887.353 for the voucher program. (3) Select participants from the waiting list in accordance with
the admission policies in its administrative plan and maintain documentation
which shows that, at the time of admission, the family actually
met the preference criteria that determined the family's place on
the waiting list (24 CFR sections 880.603, 881.603, 883.704, 883.714,
982.204-207, and 983.203(a)(4)). (4) Reexamine family income and composition at least once every
12 months and adjust the total rent payment and housing assistance
payment, as necessary (24 CFR sections 5.617, 880.603, 881.601,
882.212, 882.515, 883.701, 887.355, and 983.205). 2. Eligibility for Group of Individuals or Area of Service
Delivery - Not Applicable 3. Eligibility for Subrecipients - Not Applicable
L. Reporting 1. Financial Reporting a. SF-269, Financial Status Report - Not Applicable b. SF-270, Request for Advance or Reimbursement - Not Applicable c. SF-271, Outlay Report and Request for Reimbursement for Construction Program - Not Applicable d. SF-272, Federal Cash Transaction Report -
Not Applicable e. In lieu of the standard reports, the following reports are required
on Section 8 tenant-based voucher and certificate programs and project-based
certificate programs involving HA/private-owners and HUD/HA owners.
(1) HUD-52663, Requisition for Partial Payment of Annual Contributions
(OMB No. 2577-0149) - submitted quarterly; (2) HUD-52681, Voucher for Payment of Annual Contributions
and Operating Statement (OMB No. 2577-0149) - submitted annually;
(3) HUD-52595, Balance Sheet for Section 8 and Public Housing
(OMB No. 2577-0067) - submitted annually; (4) The reporting requirements for project-based certificate programs
involving HUD/private-owners are contained in the agreement between
HUD and the owner (OMB No. 2577-0149 and 2577-0067). 2. Performance Reporting - Not Applicable 3. Special Reporting - The following special
report is required on Section 8 tenant-based voucher and certificate
programs and project-based certificate programs involving HA/private-owners
and HUD/HA owners. - HUD-52683, Report on Program Utilization (OMB No. 2577-0169) - submitted annually when occupancy is at 90 percent or above, otherwise quarterly; N. Special Tests and Provisions 1. Contract Rents Compliance Requirement - The HA and project owner
must establish contract rents in the certificate program (or rent
standards in the voucher program) which fall within fair market
rent limitations, as established at 24 CFR part 888. For projects
involving new construction or rehabilitation, initial contract rents
are first established. The HA and project owner must certify to
the reasonableness of the contract rents and initial contract rents.
In certain situations, HUD approval of the rents must be obtained
(24 CFR sections 882.106, 882.714, 887.351, 982.1(a)(2)), 983.12
and 983.201). Audit Objective - Determine whether the rental
assistance being paid is based on contract rents and payment standards.
Suggested Audit Procedures a. Review the procedures for establishing contract rents or rent
payment standards. b. Verify that the rent reasonableness procedures include the use
of such things as telephone surveys, site visits after telephoning,
or more extensive market surveys of available rental units. c. Verify that the HA or owner established and currently maintains
a HAP contract register, or similar type of document, to record
information on contract rents, tenant rental payments, and rental
assistance payments and that this document is used to control the
payment or requisitioning of rental assistance. d. Select a sample of units from the HAP register and their related
tenant files for review and verify that the contract rents and rental
assistance payments were determined in accordance with procedures
as follows: (1) For selected units with certificates, examine copies of the
certifications of rent reasonableness. For units with vouchers,
examine the payment standard schedule prepared by the HA. (2) Verify that the contract rents in the certificate program fall
within fair market limitations as published in the Federal Register.
If not, determine that they were approved by HUD. (3) Verify that each payment standard amount on the schedule is
not less than 80 percent of the published fair market rents or more
than the fair market rent or the HUD-approved exception rent for
the unit size in effect when the payment standard amount was adopted.
(4) Verify that the rental assistance is based on the contract
rents shown in the HAP register and HAP contract. 2. Contract Rent Adjustments Compliance Requirement - The HA or owner applies
annual adjustments to contract rents and rent standards. Special
adjustments to contract rents may also be made to the extent deemed
necessary by the HA or HUD in the certificate program (24 CFR sections
880.609, 881.601, 882.108, 882.715, 887.351(c) and (d), 888, 983.13,
and 983.14, as applicable). Audit Objective - Determine whether contract rents
are being adjusted properly. Suggested Audit Procedures a. Review the procedures for handling special adjustment requests
and applying annual adjustment factors. b. Select a sample of units from the HAP register, or similar record,
and the related tenant files with annual and special rent adjustments
for review. c. Test the supporting data, financial statements and certifications
that were submitted to support special additional adjustments. d. Review the selected tenant files to verify that annual and special
adjustments were applied correctly and did not result in material
differences between the rents charged for assisted and comparable
unassisted units. 3. Tenant Utility Allowances Compliance Requirement - The HA or owner must
establish tenant utility allowances based on utility consumption
and rate data for various sized units, structure types and fuel
types and make an annual review of tenant utility allowances to
determine their reasonableness, and adjust the allowances, when
appropriate (24 CFR sections 880.610, 881.601, 882.214, 882.510
and 887.361). Audit Objective - Determine whether tenant utility
allowances are properly established. Suggested Audit Procedures a. Examine the procedures used to establish and annually review
utility allowances, handle adjustment requests, and notify tenants
of utility allowance adjustments. b. Select a sample of units with tenant utility allowances and
their related tenant files for review. c. Test owner requests, HA determinations, and supporting documentation
for utility determinations. d. Verify that the allowances were applied to tenants correctly.
4. Housing Quality Inspections Compliance Requirement - The HA or owner must
provide housing that is decent, safe, and sanitary. To achieve this
end, the HA must perform housing quality inspections at the time
of initial occupancy and at least annually thereafter to assure
that the units are decent, safe, and sanitary (24 CFR sections 880.612,
881.503, 882.109, 982.405, 983.104 and 983.204). Audit Objective - Determine whether the HA or
owner performs the required inspections to assure that units meet
housing quality standards. Suggested Audit Procedures a. Examine the procedures used by the HA or owner to identify those
units on which housing quality inspections are due. b. Select a sample of units on which HAP contracts were executed
and examine inspection reports. c. Examine records and ascertain that the HA or owner assures that
the inspections and any needed repairs are completed timely. d. Verify that the HA reviewed the evidence of completion submitted
by the owner on newly constructed or rehabilitated units accepted
for occupancy. 5. Vacant Units Compliance Requirement - The HA or owner must
reduce claims for assistance on vacant units under certain circumstances
(24 CFR sections 880.611, 881.601, 882.411, 882.808(f), 883.701,
982.311, 982.312, and 983.152(b) and (e)). Audit Objective - Determine whether payments to
owners are reduced for vacant units. Suggested Audit Procedures a. Examine the procedures used by the HA or owner to provide the
current occupancy status of the units receiving Section 8 assistance.
b. Select a sample of units that were vacated during the audit
period and verify that payments to owners were reduced, as prescribed.
6. Conflict of Interest Situations Compliance Requirement - An HA must avoid certain
conflict of interest situations involving its contractors, subcontractors,
and officials. Contractors and subcontractors are prohibited from
entering into contracts or agreements with officials identified
in 24 CFR section 982.161. Testing should be limited to the tenant-based
assistance programs. Audit Objective - Determine whether the HA entered
into contracts in which any of the classes of persons listed in
24 CFR section 982.161 had a conflict of interest as described in
24 CFR section 982.161. Suggested Audit Procedures Test contracts to ascertain if any officials (during their tenure or one year thereafter) identified in 24 CFR section 982.161 had any interest (direct or indirect) in connection with the tenant-based programs and, if so, ascertain if these interests were conflicts of interest under 24 CFR 982.161.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT CFDA 14.218 COMMUNITY DEVELOPMENT BLOCK GRANTS/ ENTITLEMENT
PROGRAM I. PROGRAM OBJECTIVES The primary objective of the Community Development Block Grant
(CDBG) Entitlement Program (large cities) (24 CFR part 570 subpart
D) and HUD-Administered Small Cities Programs (24 CFR part 570 subpart
F) is to develop viable urban communities by providing decent housing,
a suitable living environment and expanding economic opportunities,
principally for persons of low and moderate income. This objective
is to be achieved in two ways. First, a grantee can only use funds
to assist eligible activities that meet one or more of three national
objectives of the program; i.e., benefit low- and moderate-income
persons, aid in the prevention of slums and blight, or meet community
development needs having a particular urgency. Second, the grantee
must spend at least 70 percent of its funds, over a period of up
to three years as specified by the grantee in its certification,
for activities that address the national objective of benefiting
low- and moderate-income persons (24 CFR sections 570.1, 570.200,
and 570.420). II. PROGRAM PROCEDURES The CDBG Entitlement Program provides grants to metropolitan cities
and urban counties which must submit certain certifications and
a one-year action plan as to how they propose to use the funds for
community development activities. The grant amount is determined
by the higher of two formulas that consider a community's population,
poverty level, extent of overcrowded housing, age of housing, and
growth lag (24 CFR section 570.4). In the Entitlement Program, a non-Federal entity may use, with
certain limitations, undisbursed funds in its line of credit and
its CDBG program account that are budgeted in statements or action
plans for one or more other activities that do not need funds immediately.
This financing technique is commonly referred to as a float loan
and is used with the expectation that the activity temporarily financed
will generate sufficient income to fund the activity initially programmed.
Activities included on the grantee's performance and evaluation
report, but not on the action plan, may likely be financed using
float loans (24 CFR sections 570.301). Only the States of New York and Hawaii participate in HUD-Administered
Small Cities Program because those States have chosen to have HUD
administer the nonentitlement portion of their CDBG Programs. HUD
provides CDBG funds to nonentitlement units of general local government
in New York State on a competitive basis. In Hawaii, HUD provides
CDBG funds to nonentitlement units of general local government using
a formula described in 24 CFR section 570.429. The two programs
largely share regulatory requirements in the following areas: definitions,
eligible activities, grants administration, and performance reviews
(24 CFR 570.420, 570.421, and 570.429). III. COMPLIANCE REQUIREMENTS In developing the audit procedures to test compliance with
the requirements for a Federal program, the auditor should first
look to Part 2, Matrix of Compliance Requirements, to identify which
of the 14 types of compliance requirements described in Part 3 are
applicable and then look to Parts 3 and 4 for the details of the
requirements. A. Activities Allowed or Unallowed 1. Allowability of Specific Transactions and Activities
a. All activities undertaken must meet one of three national objectives
of the CDBG program, i.e., benefit low- and moderate-income persons,
eliminate slums or blight, or meet community development needs having
a particular urgency (24 CFR section 570.200). b. CDBG funds are to be used for the following activities: (1)
the acquisition of real property; (2) the acquisition, construction,
reconstruction, or installation of public works, facilities and
site, or other improvements, including removal of architectural
barriers that restrict accessibility of elderly or severely disabled
persons; (3) code enforcement in deteriorated or deteriorating areas;
(4) clearance, demolition, and removal of buildings and improvements;
(5) payments to housing owners for losses of rental income incurred
in temporarily holding housing for the relocated; (6) disposition
of real property acquired under this program; (7) provision of public
services (subject to limitations contained in the CDBG regulations);
(8) payment of the non-Federal share for another grant program that
is part of the assisted activities; (9) interim assistance where
immediate action is needed prior to permanent improvements or to
alleviate emergency conditions threatening public health and safety;
(10) payment to complete a Title 1 Federal Urban Renewal project;
(11) relocation assistance; (12) planning activities; (13) administrative
costs; (14) acquisition, construction, reconstruction, rehabilitation,
or installation of commercial or industrial buildings; (15) assistance
to community-based development organizations; (16) activities related
to privately-owned utilities; (17) assistance to private, for-profit
businesses, when appropriate to carry out an economic development
project; (18) construction of housing assisted under Section 17
of the United States Housing Act of 1937; (19) reconstruction of
properties; (20) direct homeownership assistance to facilitate and
expand homeownership; (21) technical assistance to public or private
entities for capacity building (exempt from the planning/ administration
cap); (22) housing services related to HOME funded activities; (23)
assistance to institutions of higher education to carry out eligible
activities; (24) assistance to public and private entities (including
for-profits) to assist micro-enterprises; and (25) payment for repairs
and operating expenses for acquired "in Rem" properties (i.e., certain
properties in New York City); and, (26) residential rehabilitation,
including code enforcement, lead-based paint hazard evaluation,
and removal (24 CFR sections 570.200 through 570.207). c. Each float funded activity must meet all of the same requirements
that apply to CDBG-assisted activities generally (24 CFR section
570.301). d. Entitlement grantees may have loans guaranteed by HUD under
Section 108 of the Housing and Community Development Act of 1974
(42 USC 5308). The guaranteed loan funds are to be used only for
the following activities: (1) acquisition of real property; (2)
housing rehabilitation; (3) rehabilitation of publicly-owned real
property; (4) eligible CDBG economic development activity; (5) relocation
payments, (6) clearance, demolition, and removal; (7) payment of
interest on Section 108 guaranteed obligations; (8) payment of issuance
and other costs associated with private sector financing under this
subpart; (9) site preparation related to redevelopment or use of
real property acquired or rehabilitated pursuant to this subpart
or for economic development purposes; (10) construction of housing
by non-profit organizations for homeownership under Section 17(d)
of the U.S. Housing Act of 1937 (12 USC 1715(l)) or Title VI of
the Housing and Community Development Act of 1987; (11) debt service
reserve; and, (12) acquisition, construction, reconstruction, rehabilitation
or installation of public works and site or other improvements which
serve "colonias" (as defined in Section 916 of the Housing Act of
1990 and amended by Section 810 of the Housing and Community Development
Act of 1992) (24 CFR sections 570.700 through 570.710). e. All the activities that a grantee undertakes during their CDBG
program year must be identified in an action plan (24 CFR sections
91.220 and 570.301). f. CDBG funding can only be used for special economic development
projects that meet the criteria in 24 CFR section 570.203. Grantees
must have data to support that assistance provided to carry out
special economic development projects is appropriate by meeting
the public benefit standards for job creation and provision of goods
and services described in 24 CFR section 570.209. g. When CDBG funds are used to finance rehabilitation, the rehabilitation
is to be limited to privately-owned buildings and improvements for
residential purposes, low income public housing and other publicly
owned residential buildings and improvements, publicly or privately
owned commercial or industrial buildings under certain circumstances,
as well as manufactured housing when it is used as part of the community's
permanent housing stock (24 CFR section 570.202). 2. Allowable Activities for Subrecipients
- See III.A.1 above for allowable activities as applicable
to subrecipients. G. Matching, Level of Effort, Earmarking 1. Matching - Not Applicable 2.1 Level of Effort - Maintenance of Effort
- Not Applicable 2.2 Level of Effort - Supplement Not Supplant
- Not Applicable 3. Earmarking a. Not less than 70 percent of the funds must be used over a period
of up to three years, as specified by the grantee in its certification,
for activities that benefit low- and moderate-income persons. In
determining low- and moderate-income benefits, the criteria set
forth in 24 CFR sections 570.200(a)(3) and 570.208(a) are used in
the Entitlement Program. The criteria set forth in 24 CFR sections
570.420(e) and 570.430(e) are used in the HUD-administered Small
Cities Program. b. Not more than 20 percent of the total grant, plus 20 percent
of program income received during a program year, may be obligated
during that year for activities that qualify as planning and administration
pursuant to 24 CFR sections 570.205 and 570.206 (24 CFR section
570.200(g)). c. The amount of CDBG funds obligated during the program year for
public services must not exceed 15 percent of the grant amount received
for that year plus 15 percent of the program income it received
during the preceding program year, except that a non-Federal entity
that obligated more CDBG funds for public services than 15 percent
of its grant funded from Federal Fiscal Years 1982 or 1983 appropriations
(excluding program income and any assistance received pursuant to
Public Law 98-8) may obligate more CDBG funds than 15 percent as
long as the amount obligated in any program year does not exceed
15 percent of the program income it received during the preceding
program year plus the percentage or amount obligated in Federal
Fiscal Year 1982 or 1983, whichever method of calculation yields
the higher amount (24 CFR section 570.201(e)). J. Program Income 1. The grantee must accurately account for any program income generated
from the use of CDBG funds and must treat such income as additional
CDBG funds which are subject to all program rules (24 CFR sections
570.426, 570.500, 570.504, and 570.506). 2. Making loans and collecting the payments on those loans can
be a significant source of program income for grantees. The use
of income derived from loan underwriting is subject to program requirements.
This carries with it the responsibility for grantees to have a loan
origination and servicing system in effect which assures that loans
are properly authorized, receivables are properly established, earned
income is properly recorded and used, and write-offs of uncollectible
amounts are properly authorized (24 CFR sections 570.500, 570.501,
570.504, 570.506, and 570.513). 3. In the HUD-administered Small Cities Program, any program income
received after closeout of the grant must be accounted for under
another grant if another grant was open at the time that the program
income was received (24 CFR sections 570.504 and 570.506). If the
grantee has another ongoing CDBG grant at the time of closeout,
the program income will be considered to be program income of the
ongoing grant. The grantee can choose which grant to credit the
program income to if it has multiple open CDBG grants (24 CFR section
570.426(b)). If the grantee has no ongoing grant at the time of
closeout, program income of less than $25,000 will not be considered
program income. Program income of $25,000 or more will be subject
to the terms of the closeout agreement (24 CFR section 570.426(c)).
L. Reporting 1. Financial Reporting a. SF-269, Financial Status Report - Not Applicable b. SF-270, Request for Advance or Reimbursement - Not Applicable c. SF-271, Outlay Report and Request for Reimbursement for Construction Program - Not Applicable d. SF-272, Federal Cash Transaction Report -
Not Applicable e. In the CDBG Entitlement Program, a Grantee Performance Report
(OMB No. 2506-0117) is due from each grantee 90 days after
the end of its program year. The Grantee Performance Report has
several parts that contain financial data (24 CFR section 91.520).
(1) HUD-4949.2, Summary of Activities Not Having Direct
Benefits (2) HUD-4949.2a, Summary of Activities Having Direct Benefits
(3) HUD-4949.3, Financial Summary (4) HUD-4949.5, Rehabilitation Summary f. Performance and Assessment Report (OMB No. 2506-0020) - For the HUD-administered Small Cities Program, this report is due no later than 12 months following grant award and annually thereafter on the date of the award until completion of all CDBG-funded activities. A report is also due no later than 90 days after completion of all CDBG-funded activities, unless waived by the HUD Manager. The auditor is only expected to test the financial data in this report (24 CFR section 570.507). 2. Performance Reporting - Not Applicable 3. Special Reporting - Not Applicable M. Subrecipient Monitoring Before disbursing any CDBG funds to a subrecipient, the recipient
shall sign a written agreement with the subrecipient. The agreement
shall include provisions concerning: the statement of work, records
and reports, program income and uniform administrative requirements
(24 CFR section 570.503). N. Special Tests and Provisions 1. Citizen Participation Compliance Requirement - Prior to the submission
to HUD for its annual grant, the grantee must certify to HUD that
it has met the citizen participation requirements in 24 CFR sections
91, 570.301 and 570.431, as applicable. Audit Objective - To determine whether the grantee
has developed and implemented a citizen's participation plan. Suggested Audit Procedures a. Verify that the grantee has a citizen's participation plan.
b. Review the plan to verify that it provides for public hearings,
publication, public comment, access to records, and consideration
of comments. c. Examine the grantee's records for evidence that the elements
of the citizen's participation plan were followed as the grantee
certified. 2. Required Certifications and HUD Approvals Compliance Requirement - CDBG funds (and local
funds to be repaid with CDBG funds) cannot be obligated or expended
before receipt of HUD's approval of a Request for Release of Funds
(RROF) and environmental certification, except for exempt activities
under 24 CFR section 58.34 and categorically excluded activities
under section 58.35 (24 CFR section 58.18). Audit Objective - To determine whether the grantee
is obligating and expending program funds only after HUD's approval
of the RROF. Suggested Audit Procedures a. Examine HUD's approval of the RROF and environmental certification and note dates. b. Review the expenditure and related records to ascertain if CDBG
funds and local funds, which were repaid with CDBG funds were first
obligated or expended and ascertain if any funds were obligated
or expended prior to HUD's approval of the RROF. 3. Environmental Reviews Compliance Requirement - Projects must have an
environmental review unless they meet criteria specified in the
regulations that would exempt or exclude them from RROF and environmental
certification requirements (24 CFR sections 58.1, 58.22, 58.34,
58.35, and 570.604). Audit Objective - To determine whether environmental
reviews are being conducted, when required. Suggested Audit Procedures a. Verify through a review of environmental review certifications
that the environmental reviews were made. b. Select a sample of projects where an environmental review was
not performed and ascertain if a written determination was made
that the review was not required. c. Test whether documentation exists that any determination not
to make an environmental review was made consistent with the criteria
contained in 24 CFR sections 58.34 and 58.35(b). 4. Rehabilitation Compliance Requirement - When CDBG funds are used
for rehabilitation, the grantee must assure that the work is properly
completed and meets local codes (24 CFR section 570.506). Audit Objective - To determine whether the grantee
assures rehabilitation work is properly completed. Suggested Audit Procedures a. Verify that pre-rehabilitation inspections are conducted describing
the deficiencies to be corrected. b. Ascertain that the deficiencies to be corrected are incorporated
into the rehabilitation contract. c. Verify through a review of documentation that the grantee inspects the rehabilitation work upon completion to assure that it is carried out in accordance with contract specifications and meets local codes (when applicable).
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT CFDA 14.228 COMMUNITY DEVELOPMENT BLOCK GRANTS/STATE'S
PROGRAM (State-Administered Small Cities Program) I. PROGRAM OBJECTIVES The primary objective of the Community Development Block Grant
(CDBG) State Program (State-Administered Small Cities Program) is
the development of viable communities by providing decent housing,
a suitable living environment and expanded economic opportunities,
principally for persons of low- and moderate-income. This objective
can be achieved in two ways. First, funds can only be used to assist
eligible activities that fulfill one or more of three national objectives.
Second, the grantee must spend at least 70 percent of its funds
over a period of up to three years, as specified by the grantee
in its certification, for activities that address the national objective
of benefiting low- and moderate-income persons (42 USC 5301(c)).
II. PROGRAM PROCEDURES Funds are provided, according to a statutory formula, to those
States that elect to administer their CDBG nonentitlement funds.
The States, in turn, distribute the funds to small units of general
local government (subrecipients) that do not qualify for grants
under the CDBG Entitlement Program (24 CFR section 570.480). In addition to Federal statutory requirements, each State has the
authority to issue rules consistent with Federal statutes and regulations.
The State rules should be reviewed before beginning the audit (24
CFR sections 570.480 and 570.481). III. COMPLIANCE REQUIREMENTS In developing the audit procedures to test compliance with
the requirements for a Federal program, the auditor should first
look to Part 2, Matrix of Compliance Requirements, to identify which
of the 14 types of compliance requirements described in Part 3 are
applicable and then look to Parts 3 and 4 for the details of the
requirements. A. Activities Allowed or Unallowed 1. Allowability of Specific Transactions and Activities
a. Section 105(a) of the Housing and Community Development Act
of 1974 lists the activities eligible under the CDBG State Program
(State administered small cities program) which include: (1) the
acquisition of real property; (2) the acquisition, construction,
reconstruction, or installation of public works, facilities and
site, or other improvements, including removal of architectural
barriers that restrict accessibility of elderly or severely disabled
persons; (3) code enforcement in deteriorated or deteriorating areas;
(4) clearance, demolition, and removal of buildings and improvements;
(5) payments to housing owners for losses of rental income incurred
in temporarily holding housing for the relocated; (6) disposition
of real property acquired under this program; (7) provision of public
services (subject to limitations contained in the CDBG regulations);
(8) payment of the non-Federal share for another grant program that
is part of the assisted activities; (9) interim assistance where
immediate action is needed prior to permanent improvements or to
alleviate emergency conditions threatening public health and safety;
(10) payment to complete a Title 1 Federal Urban Renewal project;
(11) relocation assistance; (12) planning activities; (13) administrative
costs; (14) acquisition, construction, reconstruction, rehabilitation,
or installation of commercial or industrial buildings; (15) assistance
to community-based development organizations; (16) activities related
to privately-owned utilities; (17) assistance to private, for-profit
businesses, when appropriate to carry out an economic development
project; (18) construction of housing assisted under Section 17
of the United States Housing Act of 1937; (19) reconstruction of
properties; (20) direct home ownership assistance to facilitate
and expand home ownership; (21) technical assistance to public or
private entities for capacity building (exempt from the planning/administration
cap); (22) housing services related to HOME funded activities; (23)
assistance to institutions of higher education to carry out eligible
activities; (24) assistance to public and private entities (including
for-profits) to assist micro-enterprises; and (25) payment for repairs
and operating expenses for acquired "in Rem" properties (i.e., certain
properties in New York City); and, (26) residential rehabilitation
including code enforcement, lead-based paint hazard evaluation,
and removal (24 CFR sections 570.200 through 570.207 and 570.482(a)
and 42 USC Section 5305). b. Each activity that the State funds must either benefit low-
and moderate-income families; aid in the prevention or elimination
of slums or blight; or meet other community development needs having
a particular urgency because existing conditions pose a serious
and immediate threat to the health or welfare of the community where
other financial resources are not available. The State must retain
documentation justifying its certifications (24 CFR section 570.484).
c. Nonentitlement local government grant recipients (subrecipients)
may have loans guaranteed by HUD under Section 108 of the Housing
and Community Development Act of 1974. Guaranteed loan funds may
be used only for the following activities: (1) acquisition of real
property; (2) housing rehabilitation; (3) rehabilitation of publicly
owned real property; (4) eligible CDBG economic development activity;
(5) related relocation, clearance, and site improvements; and, (6)
payment of interest and issuance costs (24 CFR sections 570.700
through 570.705). The local governments (subrecipients) are the
borrowers or applicants under the Section 108 Program, but to obtain
the HUD guarantee, applications for loan guarantee assistance must
be accompanied by a pledge of CDBG funds by the State (24 CFR section
570.704(a)(i)(C)). 2. Allowable Activities for Subrecipients - See
III.A.1 above for allowable activities as applicable to subrecipients.
G. Matching, Level of Effort, Earmarking 1. Matching - Not Applicable 2.1 Level of Effort - Maintenance of Effort
- Not Applicable 2.2 Level of Effort - Supplement Not Supplant
- Not Applicable 3. Earmarking a. The Housing and Community Development Act of 1974 requires the
State to certify that the aggregate use of the CDBG funds it receives,
over a period specified by the State not to exceed three years,
shall principally benefit low- and moderate-income persons. This
requirement means that not less than 70 percent of the funds must
be used in this manner (24 CFR section 570.483 and 42 USC 5304(b)(3)).
b. The State may use up to $100,000 of its grant funds for administrative
purposes. In addition to this amount, up to two percent of the grant
may be expended at the State level for administrative costs, provided
such funds are matched from State resources on a one-to-one basis.
Further, States may also use two percent of program income collected,
regardless of whether at the State or local government level, for
administrative costs. All administrative funds, including the State
matching funds, which may be in-kind contributions, must be used
to carry out the State's responsibilities (24 CFR section 570.489(a)(1)).
c. For planning and administration costs, the combined expenditures
of the State and units of general local governments may not exceed
20 percent of the State's total allocation plus 20 percent of any
program income for any given year (24 CFR section 570.489(a)(3)).
L. Reporting 1. Financial Reporting a. SF-269, Financial Status Report - Not Applicable b. SF-270, Request for Advance or Reimbursement - Not Applicable c. SF-271, Outlay Report and Request for Reimbursement for Construction Program - Not Applicable d. SF-272, Federal Cash Transaction Report -
Not Applicable e. Performance and Evaluation Report (OMB No. 2506-0117)
- This report is due from each grantee within 90 days after the
close of its program year in a format suggested by HUD. HUD encourages
the submission of the report in both paper and computerized formats.
Among other factors, the report is to include a description of the
use of funds during the program year and an assessment of the grantee's
use to the priorities and objectives identified in its plan. The
auditor is only expected to test the financial data in this report
(24 CFR section 91.520 (a and c)). 2. Performance Reporting - Not Applicable 3. Special Reporting - Not Applicable M. Subrecipient Monitoring Before disbursing any CDBG funds to a subrecipient, the recipient
shall sign a written agreement with the subrecipient. The agreement
shall include provisions concerning: the statement of work, records
and reports, program income, and uniform administrative requirements
(24 CFR section 570.503). N. Special Tests and Provisions 1. Environmental Oversight Compliance Requirement - The State must assume
the environmental oversight responsibilities and functions of HUD
under Section 104(g), Housing and Community Development (HCD) Act,
(42 USC 5304(g)). The State must: (a) require each of its general
local governments (subrecipients) to perform as a responsible Federal
official in carrying out all HUD environmental review requirements
under 24 CFR part 58, National Environmental Policy Act (NEPA),
and other applicable authorities; (b) review and approve each subrecipient's
Request for Release of Funds (RROF) in accordance with the procedures
provided under 24 CFR part 58 subpart J; (c) ensure that each subrecipient
observes the statutory requirement that funds cannot be expended
or obligated before the State approves its RROF and environmental
certification, except as otherwise provided specifically in regulation
or authorized by law; and (d) monitor and provide technical assistance
to its subrecipients to ensure compliance with the environmental
authorities (24 CFR part 58) and the adequacy of environmental reviews.
Audit Objective - Determine whether the State
carries out its environmental oversight responsibilities and functions.
Suggested Audit Procedures a. Examine the State's approval of the RROF and environmental certification,
and note dates. b. Verify that the State obtained certifications and that the State's
records provide evidence that the funds were obligated and expended
after the State's approval of the RROF and environmental certification.
2. Environmental Reviews Compliance Requirement - Projects must have an
environmental review unless they meet criteria specified in the
regulations that would exclude them from RROF and environmental
certification requirements (24 CFR sections 58.34 and 58.35). Audit Objective - Determine whether the required
environmental reviews were conducted. Suggested Audit Procedures a. Verify that the State obtained environmental review certifications
from the subrecipient and that the State records provide evidence
that the environmental reviews were made. b. For any project where an environmental review was not performed,
ascertain that a written determination was made that the review
was not required. c. Ascertain that documentation exists that any determination not
to make an environmental review was made consistent with the criteria
contained in 24 CFR sections 58.34 and 58.35. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT CFDA 14.231 EMERGENCY SHELTER GRANTS PROGRAM I. PROGRAM OBJECTIVES The Emergency Shelter Grants (ESG) Program is designed to help
improve the quality of existing emergency shelters for the homeless,
make available additional emergency shelters, and meet the costs
of operating emergency shelters and of providing essential social
services to homeless individuals so that these persons have access
not only to safe and sanitary shelters for the homeless but also
to the supportive services and other kinds of assistance they need
to improve their situations. The program is also intended to restrict
the increase of homelessness through the funding of preventive programs
and activities (24 CFR section 576.1(b)). II. PROGRAM PROCEDURES The ESG Program provides grants to States, metropolitan cities,
urban counties, and the territories according to a formula used
in the Community Development Block Grant Program. Funds are allocated
to Indian tribes and Alaskan native villages through a competitive
set-aside. States can further provide funds to "State recipients."
All grantees, except States, and State recipients may carry out
activities with ESG amounts. All of a State's formula allocation
must be made available: (1) to units of general local government
in the State, which include formula cities and counties, whether
or not such cities and counties receive grant amounts directly from
HUD; or (2) private non-profit organizations, if the unit of local
government in which the proposed activities are to be located certifies
that it approves each project. Units of general local government,
both grantees and State recipients, may distribute all or a part
of their grant amounts to non-profit recipients (subrecipients)
to be used for ESG activities. In addition, States may distribute
all or a portion of their grant amounts to non-profit recipients
(subrecipients) if the unit of general local government in which
the proposed activities are located certifies that it approves the
project (24 CFR section 576.25). III. COMPLIANCE REQUIREMENTS In developing the audit procedures to test compliance with
the requirements for a Federal program, the auditor should first
look to Part 2, Matrix of Compliance Requirements, to identify which
of the 14 types of compliance requirements described in Part 3 are
applicable and then look to Parts 3 and 4 for the details of the
requirements. A. Activities Allowed or Unallowed 1. Allowability of Specific Transactions and Activities
ESG amounts may be used for one or more of the activities provided
for in 24 CFR section 576.21, including the renovation, major rehabilitation,
or conversion of buildings for use as emergency shelters for the
homeless; provision of essential services to the homeless; payment
of costs associated with maintenance, operation (including administration
but excluding staff costs, rent, repair, security, fuels and equipment),
insurance, utilities, and furnishings; and development and implementation
of homeless prevention activities. This section also provides certain
limitations on the use of those funds by units of general local
government and State recipients. 24 CFR section 576.23 also provides
certain limitations on the use of ESG funds by primarily religious
organizations (24 CFR sections 576.21 and 576.23). 2. Allowable Activities for Subrecipients Subrecipients are limited to the allowable activities of recipients
and the additional limitations that 24 CFR section 576.23(b) places
on use of ESG funds by subrecipients for essential services. G. MATCHING, LEVEL OF EFFORT, EARMARKING 1. Matching Each grantee must match the funding provided by HUD under its ESG
Program with an equal amount from sources other than those provided
under the ESG Program. These funds must be provided after the date
of the grant award. A grantee may comply with this requirement by
providing the supplemental funds itself, or through supplemental
funds or voluntary efforts provided by any State recipient or non-profit
recipient (subrecipients) , as appropriate (24 CFR section 576.71).
2.1 Level of Effort - Maintenance of Effort
- Not Applicable 2.2 Level of Effort - Supplement Not Supplant
Grant amounts may be used to provide essential services to the
homeless only if the service is a new service, or is a quantifiable
increase in the level of service above that which the unit of general
local government provided with local funds during the 12 calendar
months immediately before it received initial grant amounts (24
CFR section 576.21(b)). 3. Earmarking a. Not more than 20 percent of the total of each grant amount provided
to a unit of local government can be used for essential services
for the homeless if the service is a new service (24 CFR section
576.21(b)). b. All of a State's formula allocation must be made available to
units of general local government in a State or private non-profit
organization as provided for in 24 CFR section 576.23. L. Reporting 1. Financial Reporting a. SF-269, Financial Status Report - Applicable
b. SF-270, Request for Advance or Reimbursement
- Applicable c. SF-271, Outlay Report and Request for Reimbursement for Construction Program - Applicable d. SF-272, Federal Cash Transaction Report - Applicable 2. Performance Reporting - Not Applicable 3. Special Reporting - Not Applicable N. Special Tests and Provisions 1. Maintenance of Homeless Shelters Compliance Requirement - Any building for which
ESG amounts are used for renovation, major rehabilitation, or conversion
for use as emergency shelters for the homeless as described in 24
CFR section 576.21(a)(1), must be maintained as a shelter for the
homeless for not less than a three year period or, if the grant
amounts are used for major rehabilitation or conversion of the building,
for not less than a ten-year period (24 CFR section 576.73). Audit Objective - Determine whether buildings
improved (i.e., renovated, rehabilitated, or converted for use as
an emergency shelter) with ESG funds during the audit period are
currently being used as an emergency shelters. Suggested Audit Procedures a. Ascertain if any buildings were improved with ESG funds during
the audit period. b. Verify the existence of the buildings improved with ESG funds
and their current use as a homeless shelter. c. Inquire of management whether any buildings improved with ESG
funds in prior years are no longer being used as shelters, and if
so, whether the prescribed three or ten year period had expired.
2. Funding Compliance Requirement - Within 65 days of the
date of the grant award by HUD, each State must make available to
its State recipients all ESG amounts that were allocated under 24
CFR section 576.43. State recipients, as well as cities, counties,
and territories that receive formula money, must have their grant
amounts obligated and expended within specified periods, as provided
for in 24 CFR section 576.55. Audit Objective - Determine whether funding was
allocated, obligated, and expended within HUD prescribed limits.
Suggested Audit Procedures a. Determine the time periods for which funds must be allocated,
obligated and expended for the selected entities. b. Review records to determine the dates funds were allocated, obligated and expended, as applicable.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT CFDA 14.235 SUPPORTIVE HOUSING PROGRAM I. PROGRAM OBJECTIVES The Supportive Housing Program is designed to promote the development
of supportive housing and supportive services, including innovative
approaches to assist homeless persons in the transition from homelessness,
and to promote the provision of supportive housing to homeless persons
so they can live as independently as possible (24 CFR section 583.1).
II. PROGRAM PROCEDURES Grants are provided to States, local governments, other governmental
entities, Indian tribes, private non-profit organizations, and community
mental health associations that are public non-profit organizations
(24 CFR section 583.5). Funds may be used for: (1) transitional
housing to facilitate the movement of homeless individuals and families
to permanent housing; (2) permanent housing that provides long-term
housing for homeless persons with disabilities; (3) housing that
is, or is part of, a particularly innovative project for, or alternative
methods of, meeting the immediate and long-term needs of homeless
persons; or (4) supportive services for homeless persons not provided
in conjunction with supportive housing (24 CFR section 583.1(b)).
III. COMPLIANCE REQUIREMENTS In developing the audit procedures to test compliance with
the requirements for a Federal program, the auditor should first
look to Part 2, Matrix of Compliance Requirements, to identify which
of the 14 types of compliance requirements described in Part 3 are
applicable and then look to Parts 3 and 4 for the details of the
requirements. A. Activities Allowed or Unallowed 1. Allowability of Specific Transactions or Activities
Grants may be used for acquiring structures, rehabilitating structures,
acquiring and rehabilitating structures, new construction, leasing,
operating costs for supportive housing, and supportive services.
Projects may have more than one type of assistance (24 CFR section
583.100). 2. Allowable Activities for Subrecipients - Not
Applicable E. ELIGIBILITY 1. Eligibility for Individuals a. To be eligible to receive assistance under this program an individual
must be homeless, as defined in 24 CFR section 583.5. The eligibility
of those tenants who were admitted to the program should be determined
by obtaining: (1) signed applications that contained all of the
information needed to determine eligibility, income, rent and order
of selection; and, (2) when appropriate, third party verifications
or documentation of expected income, assets, unusual medical expenses,
and any other pertinent information. b. Each resident in supportive housing may be required to pay as
rent an amount which may not exceed the highest of: (1) 30 percent
of the family's monthly adjusted income; (2) 10 percent of the family's
monthly income; or (3) if the family is receiving payments for welfare
assistance from a public agency and a part of the payments, adjusted
in accordance with the family's actual housing costs, is specifically
designated by the agency to meet the family's housing costs, the
portion of payments that is designated. In addition to resident
rent, non-Federal entities may charge residents reasonable fees
for services not paid with grant funds (24 CFR sections 583.315(a)
and (c)). 2. Eligibility for Group of Individuals or Area of Service
Delivery - Not Applicable 3. Eligibility for Subrecipients - Not Applicable
G. MATCHING, LEVEL OF EFFORT, EARMARKING 1. Matching a. The non-Federal entity must match the grant funds provided by
HUD for acquisition, rehabilitation, and new construction with an
equal amount of funds from other sources. The matching funds must
be cash resources provided to the project by one or more of the
following: the non-Federal entity, the Federal Government, State
and local governments, and private sources (24 CFR section 583.145).
b. HUD may provide grants to pay for a portion of the actual operating
costs of supportive housing for up to five years. Assistance for
operating costs will be initially available for up to 75 percent
of the total cost for two years and up to 50 percent of the total
cost for the next three years. The non-Federal entity must pay the
percentage of the actual operating costs not funded by HUD with
its own funds. At the end of each operating year, the non-Federal
entity must demonstrate that it has met its share of the costs for
that year (24 CFR section 583.125). 2.1 Level of Effort - Maintenance of Effort
- Not Applicable 2.2 Level of Effort - Supplement not Supplant
No assistance provided under this program, or any State or local
government funds used to supplement this assistance, may be used
to replace State or local funds previously used, or designated for
use, to assist homeless persons (24 CFR section 583.150(a)). 3. Earmarking No more than five percent of any grant awarded may be used for
paying the costs of administering the assistance. Administrative
costs include the costs associated with accounting for the use of
grant funds, preparing reports for submission to HUD, obtaining
program audits, and similar costs related to administering the grant
after award. The administrative costs do not include the cost of
carrying out eligible activities under 24 CFR sections 583.105 through
583.125 (24 CFR section 583.135). J. Program Income Income from resident rent payments may be used in the operation
of the project or may be reserved, in whole or in part, to assist
residents of transitional housing in moving to permanent housing
(24 CFR section 583.315(b)). L. Reporting 1. Financial Reporting a. SF-269, Financial Status Report - Not Applicable b. SF-270, Request for Advance or Reimbursement - Not Applicable c. SF-271, Outlay Report and Request for Reimbursement for Construction Program - Not Applicable d. SF-272, Federal Cash Transaction Report - Not Applicable e. HUD-40118, Grantee Annual Report (OMB No. 2506-0145)
- This report is due from each grantee 60 days after its operating
year. Separate reports are required for each grant received (24
CFR section 583.300 (g)). The auditor is expected to test the financial
data in: (1) Part I - Exhibit 3 (Supportive Services) (2) Part II - Exhibit 7 (Supportive Housing Operating Cost and
Share Report) (3) Part II - Exhibit 8 (Supportive Housing Acquisition, Rehabilitation,
and New Construction Expenditures and Match Report) 2. Performance Reporting - Not Applicable 3. Subrecipient Reporting - Not Applicable N. Special Tests and Provisions 1. Reasonable Rental Rates Compliance Requirement - Where grants are used
to pay for rent for all or a part of a structure, the rent paid
must be reasonable in relation to rents being charged in the area
for comparable space. In addition, the rent may not exceed rents
currently being charged by the same owner for comparable space (24
CFR section 583.115(b)(1)). Where grants are used to pay rent for individual housing units,
the rent paid must be reasonable in relation to rents being charged
for comparable units taking into account relevant features. In addition,
the rents may not exceed rents currently being charged by the same
owner for comparable unassisted units, and the portion of rents
paid with grant funds may not exceed HUD-determined fair market
rents. non-Federal entities may use grant funds in an amount up
to one month's rent to pay the non-recipient landlord for any damages
to leased units by homeless participants (24 CFR section 583.115(b)(2)).
Audit Objective - Determine reasonableness of
the rents being paid by the non-Federal entity. Suggested Audit Procedures a. Determine the acceptability of the manner in which the non-Federal
entity establishes rent reasonableness and the rents charged by
the owner for comparable unassisted units. Ascertain through an
examination of documentation that telephone surveys, site visits
after telephoning, more extensive market surveys of available rental
units, or similar tools, were used to assess the reasonableness
of rents being charged. b. Verify by a review of the rental records that the contract rents
being paid are comparable with those paid for unassisted units,
no more than one month's rent is paid for tenant damages, and that
the portion of rents paid with grant funds do not exceed fair market
rents. 2. Use of Property Compliance Requirement - All non-Federal entity's
assistance for acquisition, rehabilitation, or new construction
must agree to operate the supportive housing or provide supportive
services for a term of at least 20 years from the date of initial
occupancy or the date of initial service provision. If HUD determines
that a project is no longer needed for use as supportive housing
or to provide supportive services and approves the use of the project
for the direct benefit of low-income persons pursuant to a request
for such use by the non-Federal entity operating the project, HUD
may authorize the non-Federal entity to convert the project to such
use (24 CFR section 583.305). Audit Objective - Determine whether there are valid agreements for the provision of supportive housing or supportive services when assistance is provided for acquisition, rehabilitation, or new construction. Suggested Audit Procedures Verify that a binding agreement exists between the non-Federal
entity and owner of the structure, if other than the non-Federal
entity, covering the provision of supportive housing or supportive
services for 20 years if the grant assistance involves acquisition,
rehabilitation, or new construction. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT CFDA 14.238 SHELTER PLUS CARE I. PROGRAM OBJECTIVES The Shelter Plus Care Program is designed to link rental assistance
to supportive services for hard to serve homeless persons with disabilities
(primarily those who have a serious mental illness; have chronic
problems with alcohol, drugs, or both; or have acquired immunodeficiency
syndrome (AIDS) and related diseases) and their families if they
are also homeless (24 CFR section 582.1). II. PROGRAM PROCEDURES The program provides grants to States, units of general local government,
Indian tribes, or public housing agencies (PHAs). The grants are
to be used to provide rental assistance so homeless persons with
disabilities can obtain permanent housing. Rental assistance grants
must be matched in the aggregate by supportive services that are
equal in value to the amount of rental assistance and appropriate
to the needs of the population to be served. Non-Federal entities
are chosen on a competitive basis nationwide (24 CFR section 582.1).
Rental assistance is provided through the four components described
in 24 CFR section 582.100: (1) tenant-based rental assistance (TRA);
(2) project-based rental assistance (PRA); (3) sponsor-based rental
assistance (SRA); and (4) moderate rehabilitation for single room
occupancy (SRO) dwellings. Applicants may apply for assistance under
any one, or a combination, of the four components. This Supplement's
section relating to CFDA 14.856, beginning on page 4-14.182-1, should
be used in auditing the moderate rehabilitation program for SRO
dwellings (24 CFR section 582.1). The grant amount is based on the number and size of units to be
assisted by the applicant over the grant period. It is calculated
by multiplying the number of units to be assisted by their fair
market rents for the term of the grant in months. The amount determined
will be reserved for rental assistance over the grant period (24
CFR section 582.105(b)). III. COMPLIANCE REQUIREMENTS In developing the audit procedures to test compliance with
the requirements for a Federal program, the auditor should first
look to Part 2, Matrix of Compliance Requirements, to identify which
of the 14 types of compliance requirements described in Part 3 are
applicable and then look to Parts 3 and 4 for the details of the
requirements. A. Activities Allowed or Unallowed 1. Allowability of Specific Transactions and Activities
a. Shelter Plus Care grants may be used to provide rental assistance
for housing occupied by eligible persons and to pay for the costs
of administering the housing, except that the housing may not be
receiving Federal funds for rental assistance or operating costs
under any other HUD program. Non-Federal entities may design a housing
program that includes a range of housing types and different levels
of supportive services. Rental assistance may include security deposits
on units amounting to one month's rent (24 CFR section 582.105(a)).
b. The eight percent administrative allowance for housing assistance
(see III.G.3 below) does not include the cost of administering the
supportive services or the grant (e.g., costs of preparing the application,
reports or audits required by HUD), which are not eligible activities
under a Shelter Plus Care grant. Non-Federal entities may contract
with another entity approved by HUD to administer the housing assistance.
Eligible administrative activities include processing rental payments
to landlords, examining participant income and family composition,
providing housing information, inspecting housing units for compliance
with housing quality standards, and receiving new participants into
the program (24 CFR section 582.105(e)). 2. Allowable Activities for Subrecipients - Not
Applicable E. Eligibility 1. Eligibility for Individuals a. To be eligible for assistance under this program, a person must
be homeless, of very low-income and have disabilities, as defined
in 24 CFR section 582.5. Low-income persons may be assisted under
the SRO component, in accordance with 24 CFR section 5.607. The
eligibility of tenants admitted to the program should be determined
by: (1) obtaining signed applications that contained the information
needed to determine eligibility, income, and rent; and, when appropriate,
(2) obtaining third party verifications or documentation of expected
income, assets, unusual medical expenses, and any other pertinent
information. Tenant income should not exceed the maximum limit set
by HUD for the PHAs jurisdiction, as provided in the notice transmitting
Income Limits for Low and Very Low-Income Families Under the Housing
Act of 1937. b. Each person must pay rent which is the highest of: (1) 30 percent
of the family's monthly adjusted income; (2) 10 percent of the family's
monthly income; or (3) if the family is receiving payments for welfare
assistance from a public agency and a part of the payments, adjusted
in accordance with the family's actual housing costs, is specifically
designated by the agency to meet the family's housing costs, the
portion of payments that is so designated (24 CFR section 582.310(a)).
2. Eligibility for Group of Individuals or Area of Service
Delivery - Not Applicable 3. Eligibility for Subrecipients - Not Applicable
G. Matching, Level of Effort, Earmarking 1. Matching A grantee must provide or ensure the provision of supportive services
that are at least equal in value to the aggregate amount of rental
assistance funded by HUD. This includes funding the services itself
if the planned resources do not become available for any reason,
appropriate to the needs of the population being served. The supportive
services may be newly created for the program or existing, and may
be provided or funded by other Federal, State, local, or private
programs. Only services that are provided after the execution of
the grant agreement may count toward the match. The manner in which
the value of supportive services is calculated is contained in 24
CFR section 582.110(c)). 2.1 Level of Effort - Maintenance of Effort
- Not Applicable 2.2 Level of Effort - Supplement not Supplant
No assistance received under this program (or any State or local
government funds used to supplement this assistance) may be used
to replace funds provided under any State or local government assistance
programs previously used, or designated for use, to assist homeless
persons with disabilities (24 CFR section 582.115(d)). 3. Earmarking Up to eight percent of the grant amount (see the limitation in
III.A.1.b) may be used to pay the costs of administering the housing
assistance, subject to the limits noted in III.A.1.b above (24 CFR
section 582.105(e)). L. Reporting 1. Financial Reporting a. SF-269, Financial Status Report - Not Applicable b. SF-270, Request for Advance or Reimbursement - Not Applicable c. SF-271, Outlay Report and Request for Reimbursement for Construction Program - Not Applicable d. SF-272, Federal Cash Transaction Report - Not Applicable e. HUD-40118, Annual Progress Report (OMB No. 2506-0145)
- This report is due from each grant non-Federal entity (and separately
for each component funded) within 90 days after the end of its operating
year (24 CFR section 582.300 (d)). The auditor is expected to test the financial
data in: (1) Part I - Exhibit 3 (Supportive Services) (2) Part II - Exhibit 7 (Supportive Housing Operating Cost and
Share Report) (3) Part II - Exhibit 8 (Supportive Housing Acquisition, Rehabilitation,
and New Construction Expenditures and Match Report) 2. Performance Reporting - Not Applicable 3. Special Reporting - Not Applicable N. Special Tests and Provisions 1. Rent Reasonableness Compliance Requirement - HUD will only provide
assistance for a unit for which the rent is reasonable. For TRA,
PRA, and SRA, it is the responsibility of the non-Federal entity
to determine whether the rent charged for the unit receiving assistance
is reasonable in relation to rents being charged for comparable
unassisted units. For SRO units, rents are calculated in accordance
with 24 CFR section 882.805(d) (24 CFR section 582.305(b)). Audit Objective - Determine reasonableness of
the rents being paid by the grantee. Suggested Audit Procedures a. Determine the manner in which the non-Federal entity establishes
rent reasonableness, and if such tools as telephone surveys, site
visits after telephoning, or more extensive market surveys of available
rental units were conducted in order to assess the reasonableness
of rents being charged. b. Verify that the contract rents being paid are not in excess
of the established reasonable rate. 2. Housing Quality Standards Compliance Requirement - Housing assisted under
the Shelter Plus Care Program must meet applicable housing quality
standards under 24 CFR section 882.109 and, for the SRO component,
under 24 CFR section 882.803(b). Before any assistance is provided
on behalf of a participant, the non-Federal entity, or another entity
acting on behalf of the non-Federal entity (other than the owner
of the housing), must physically inspect each unit to assure that
the unit meets housing quality standards. Non-Federal entities must
also inspect all units annually during the grant period to ensure
that units continue to meet housing quality standards (24 CFR section
582.305(a)). Audit Objective - Determine whether the grantee
performs the required inspections to assure that units meet housing
quality standards. Suggested Audit Procedures a. Verify through a review of documentation that the non-Federal
entity identifies those units on which housing quality inspections
are due. b. Verify through a review of documentation that the non-Federal
entity performed inspections of units and that any needed repairs
were completed timely. 3. Project-based Rental Assistance Compliance Requirement - Project-based rental
assistance provides grants for rental assistance to the owner of
an existing structure, where the owner agrees to lease the subsidized
units to participants. Participants do not retain rental assistance
if they move. Rental subsidies are provided to the owner for a period
of either five or ten years. To qualify for ten years of rental
subsidies, the owner must complete at least $3000 of eligible rehabilitation
work for each unit (including the prorated share of work to be accomplished
on common areas or systems), to make the structure decent, safe,
and sanitary (24 CFR section 582.100(b)). Audit Objective - Determine whether project-based
assistance is being paid in accordance with agreements. Suggested Audit Procedures a. Examine the existing agreement between the owner and the non-Federal
entity to determine whether the agreement is for either five or
ten years. b. If the agreement is for ten years, verify through a review of
documentation that the required rehabilitation of at least $3000
were performed. c. Examine the billings from the owner and verify that the assistance payments are for units occupied or ready for occupancy.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT CFDA 14.239 HOME INVESTMENT PARTNERSHIPS PROGRAM
I. PROGRAM OBJECTIVES The objectives of the HOME Program include: expanding the supply
of decent and affordable housing, particularly housing for low-
and very low-income Americans; strengthening the abilities of State
and local governments to design and implement strategies for achieving
adequate supplies of decent, affordable housing; providing financial
and technical assistance to participating jurisdictions, including
the development of model programs for affordable low-income housing;
and extending and strengthening partnerships among all levels of
government and the private sector, including for-profit and non-profit
organizations, in the production and operation of affordable housing
(24 CFR section 92.1). II. PROGRAM PROCEDURES The program is conducted by jurisdictions (States, cities, urban
counties, and consortia) which receive an allocation of funds. Participating
jurisdictions must submit a description of how they propose to use
the funds for housing activities, together with certifications.
The funding amount is based on a formula of six factors established
to reflect a jurisdiction's need for an increased supply of affordable
housing for low- and very low-income families (24 CFR section 92.1).
A State may carry out its own HOME program without active participation
of units of general local government or may distribute HOME funds
to units of general local government to carry out HOME programs
in which both the State and all or some of the units of general
local government perform specified functions. A unit of general
local government designated by a State to receive HOME funds from
a State is a "State recipient." Before disbursing funds to an entity,
each participating jurisdiction is required to enter into written
agreements with the entity. The contents of the agreement may vary
depending on the role which the entity is asked to assume or the
type of project undertaken. However, there must be certain minimum
provisions depending on whether the entity is a State recipient;
subrecipient; for-profit or non-profit housing owner; contractor;
as well as a home buyer, homeowner, or tenant receiving tenant-based
rental or security deposit assistance (24 CFR section 92.504). III. COMPLIANCE REQUIREMENTS In developing the audit procedures to test compliance with
the requirements for a Federal program, the auditor should first
look to Part 2, Matrix of Compliance Requirements, to identify which
of the 14 types of compliance requirements described in Part 3 are
applicable and then look to Parts 3 and 4 for the details of the
requirements. A. Activities Allowed or Unallowed 1. Allowability of Specific Transactions or Activities
a. HOME funds (including program income generated by activities
carried out with HOME funds) may be used by participating jurisdictions
to provide for: (1) incentives to develop and support affordable
rental housing and homeownership affordability through the acquisition,
new construction, reconstruction, or rehabilitation of non-luxury
housing with suitable amenities, including real property acquisition,
site improvements, conversion, demolition, and other expenses, including
financing costs, relocation expenses of any displaced persons, families,
businesses, or organizations; (2) the payment of reasonable administrative
and planning costs; and, (3) the payment of operating expenses of
community housing development organizations (CHDOs). The housing
must be permanent or transitional. The acquisition of vacant land
or demolition can only be undertaken with respect to a particular
housing project intended to provide affordable housing. Conversion
of an existing structure to affordable housing is rehabilitation
unless certain circumstances exist. Manufactured housing may be
purchased or rehabilitated and the land upon which it is built may
be purchased with HOME funds. HOME funds may be used to pay for
development construction costs, refinancing costs, acquisition costs,
related soft costs, CHDO costs, relocation costs, and costs related
to the repayment of loans (24 CFR sections 92.205(a) and 92.206).
b. A participating jurisdiction may use or "invest" HOME funds
as equity investments, interest-bearing loans or advances, noninterest-bearing
loans or advances, interest subsidies, deferred payment loans, grants,
or other forms of assistance approved by HUD. A participating jurisdiction
may invest HOME funds to guarantee loans made by lenders and, if
required, the participating jurisdiction may establish a loan guarantee
account with HOME funds. The amount of the loan guarantee account
must be based on a reasonable estimate of the default rate on the
guaranteed loans but under no circumstances, may the amount on deposit
exceed 20 percent of the total outstanding principal amount guaranteed,
except that the account may include a reasonable minimum balance.
While loan funds guaranteed with HOME funds are subject to all HOME
requirements, funds which are used to repay the guaranteed loans
are not (24 CFR section 92.205(b)). c. Generally, HOME funds may not be used for: project reserve accounts,
tenant-based rental assistance for the special purpose of the Section
8 program, non-Federal matching contributions under any other non-Federal
program, annual contributions for the operation of public housing,
public housing modernization, assistance to prepay low income housing
mortgages, assistance to a project previously assisted with HOME
funds during the period of affordability (i.e., the period for which
the non-Federal entity must maintain subsidized housing), and the
acquisition of property by the participating jurisdiction. Participating
jurisdictions may not charge monitoring, servicing, and origination
fees in HOME-assisted projects (24 CFR section 92.214). E. Eligibility 1. Eligibility for Individuals a. The HOME Program has income targeting requirements. Only low-income
or very low-income persons, as defined in 24 CFR section 92.2, can
receive housing assistance (24 CFR section 92.1). Therefore, the
participating jurisdiction must determine if each family is income
eligible by determining the family's annual income, as provided
for in 24 CFR section 92.203. Participating jurisdictions must maintain
records for each family assisted (24 CFR section 92.508). b. HOME-assisted units in a rental housing project must be occupied
only by households that are eligible as low-income families and
must meet certain limits on the rents that can be charged. The requirements
also apply to the HOME-assisted non-owner-occupied single-family
housing purchased with HOME funds. The maximum HOME rents are the
lesser of: the fair market rent for comparable units in the area,
as established by HUD under 24 CFR section 888.111, or a rent that
does not exceed 30 percent of the adjusted income of a family whose
annual income equals 65 percent of the median income for the area
as determined by HUD with adjustments for the number of bedroom
units. In rental projects with five or more units there are additional
rent limitations. Twenty (20) percent of the HOME-assisted units
must be occupied by very low-income families and meet one of the
following rent requirements: (1) the rent does not exceed 30 percent
of the annual income of a family whose income equals 50 percent
of the median income for the area, as determined by HUD, with adjustments
for larger or smaller families; or (2) the rent does not exceed
30 percent of the families adjusted income (24 CFR section 92.252).
c. A participating jurisdiction may use HOME funds for tenant-based
rental assistance, as provided for in 24 CFR section 92.209(b).
The participating jurisdiction must select families in accordance
with policies and criteria consistent with those provided in 24
CFR section 92.209(c). 2. Eligibility for Group of Individuals or Area of Service
Delivery - Not Applicable 3. Eligibility for Subrecipients - Not Applicable
G. Matching, Level of Effort, Earmarking 1. Matching Except for funds allocated in Fiscal Year 1992, each participating
jurisdiction must provide eligible matching contributions of 25
percent of HOME funds drawn down during the fiscal year. The match
must be provided by the end of the fiscal year. Some participating
jurisdictions are eligible for a reduction in the required match
based upon meeting standards of distress. The jurisdictions which
are eligible for the reduction are identified by notice published
in the Federal Register, or a notice issued by HUD. Jurisdictions
may also receive reductions if they are in Presidentially-declared
disaster areas. Participating jurisdictions are required to maintain
records, including individual project records, and a running log,
demonstrating compliance with the matching requirements, including
the type and amount of contributions by project. Matching information
is provided on the HOME Match Report (form HUD-40107-A) (24 CFR
sections 92.218 through 92.220, 92.222, and 92.508). 2.1 Level of Effort - Maintenance of Effort
- Not Applicable 2.2 Level of Effort - Supplement not Supplant
- Not Applicable 3. Earmarking a. Each participating jurisdiction must invest HOME funds made
available during a fiscal year so that, with respect to tenant-based
rental assistance and rental units not less than 90 percent of (a)
the families receiving assistance are families whose annual income
do not exceed 60 percent of the median family income for the area,
as determined and made available by HUD, with adjustments for smaller
and larger families at the time of occupancy or at the time funds
are invested, whichever is later, or (b) the dwelling units assisted
with such funds are occupied by families having such incomes (24
CFR section 92.216). b. Each participating jurisdiction must invest HOME funds made
available during a fiscal year so that with respect to homeownership
assistance, 100 percent of these funds are invested in dwelling
units that are occupied by households that qualify as low-income
families at the time of occupancy or at the time funds are invested,
whichever is later (24 CFR section 92.217). c. Each participating jurisdiction must invest at least 15 percent
of each year's HOME allocation in projects which are owned, developed,
or sponsored by special non-profit organizations called CHDOs. If
during the first 24 months of its participation in the HOME Program
a participating jurisdiction cannot identify a sufficient number
of capable CHDOs, then up to 20 percent of the minimum set-aside
(but not more than $150,000 during the 24 month period) may be made
available to develop the capacity of CHDOs in the jurisdiction (24
CFR section 92.300). d. A participating jurisdiction may expend for its HOME administrative
and planning costs an amount of HOME funds that is not more than
ten percent of the fiscal year HOME basic formula allocation plus
any funds received in accordance with 24 CFR section 92.102(b) to
meet or exceed threshold requirements that fiscal year. A participating
jurisdiction may also use up to ten percent of any return of the
HOME investment, as defined in 24 CFR section 92.503, calculated
at the time of deposit in its HOME account, for administrative and
planning costs (24 CFR section 92.207). L. Reporting 1. Financial Reporting a. SF-269, Financial Status Report - Not Applicable b. SF-270, Request for Advance or Reimbursement - Not Applicable c. SF-271, Outlay Report and Request for Reimbursement for Construction Program - Not Applicable d. SF-272, Federal Cash Transaction Report -
Not Applicable e. An annual performance report (APR) consisting of narrative statements
and several forms is to be submitted to HUD within 90 days after
the close of the jurisdictions program year. This APR has several
parts that contain financial data (24 CFR section 91.520 and 92.509).
(1) HUD-40107, APR HOME Program (OMB No. 2501-0013) (2) HUD 40107A, HOME Match Report (OMB No. 2501-0013)
2. Performance Reporting - Not applicable 3. Special Reporting - Not applicable M. Subrecipient Monitoring Each participating State is responsible for distributing HOME funds
throughout the State according to the State's assessment of the
geographical distribution of housing need within the State. A State
may carry out its own HOME Program without active participation
of units of general local government or may distribute HOME funds
to units of general local government to carry out HOME Programs
in which both the State and all or some of the units of general
local government perform specified program functions. A State that
uses State recipients to perform program functions shall ensure
that the State recipients use HOME funds in accordance with applicable
laws and requirements. A State shall include in its written agreements
with its State recipients such additional provisions as may be appropriate
to ensure compliance and to enable the State to carry out its responsibilities
under the HOME Program. The State is to conduct such reviews and
audits of its State recipients as may be necessary or appropriate
to determine whether the State recipient has committed and expended
the HOME funds, as required by 24 CFR section 92.500, and has met
HOME Program requirements particularly as they relate to eligible
activities, income targeting, affordability, and matching contribution
requirement (24 CFR section 92.201(b)). Before disbursing funds to a subrecipient, each participating jurisdiction
is required to enter into written agreements with the entity which
includes provisions dealing with: the use of HOME funds, program
income, uniform administrative requirements, other program requirements,
affirmative marketing, requests for disbursement of funds, reversion
of assets, records and reports, and enforcement of the agreement.
Further, if the subrecipient provides HOME funds to for-profit owners
or developers, non-profit organizations, subrecipients, homeowners,
homebuyers, tenants receiving tenant-based rental assistance, or
contractors, the subrecipient must have a written agreements which
contain the provisions in 24 CFR section 92.504. N. Special Tests and Provisions 1. Maximum Per Unit Subsidy Compliance Requirement - The per unit investment
of HOME funds may not exceed the FHA mortgage limits in Subsection
221(d)(3) of the National Housing Act, including any area-wide high
cost exceptions approved by HUD. This information should be available
from the grantee or the local HUD field office. In mixed-income
or mixed use projects, the average per unit investment in HOME-assisted
units may not exceed the applicable Subsection 221(d)(3) limit.
Participating jurisdictions are required to evaluate each housing
project in accordance with guidelines that it adopts to ensure that
the combination of Federal assistance to the project is not any
more than is necessary to provide affordable housing (24 CFR section
92.250). Audit Objective - Determine whether the HOME subsidies
being provided are not more than necessary to provide affordable
housing and are properly supported. Suggested Audit Procedures a. Review a sample of projects as reported in the CMIS to verify
that the HOME subsidy amounts are supported by the participating
jurisdiction's records. b. Review participating jurisdiction records to verify that each
housing project was evaluated in accordance with its guidelines
to ensure that the combination of Federal assistance to the project
is not any more than is the FHA mortgage limits in Subsection 221(d)(3)
of the National Housing Act necessary to provide affordable housing.
2. Drawdowns of HOME Funds Compliance Requirement - The Integrated Disbursement
and Information System is used both to collect information on compliance
with program requirements and to disburse HOME funds. Participating
jurisdictions (or their authorized representatives) are required
to have different staffs setting up projects and drawing down funds.
Participating jurisdictions must maintain payment certifications
each time a drawdown of funds is made (24 CFR section 92.502). Audit Objective - Determine whether the required
separation of duties is maintained over the drawdown of HOME funds.
Suggested Audit Procedures a. Verify that the persons setting up projects in CMIS are not
the same as the person drawing down funds. b. Verify that HOME payment certification amounts match the amount
of disbursements made by the CMIS. 3. On-site Inspections Compliance Requirement - During the period of
affordability (i.e., the period for which the non-Federal entity
must maintain subsidized housing) for HOME assisted rental housing,
the participating jurisdiction must perform on-site inspections
to determine compliance with property standards and verify the information
submitted by the owners no less than: (a) every three years for
projects containing 1 to 4 units, (b) every two years for projects
containing 5 to 25 units, and (c) every year for projects containing
26 or more units. The participating jurisdiction must perform on-site
inspections of rental housing occupied by tenants receiving HOME-assisted
tenant-based rental assistance to determine compliance with housing
quality standards (24 CFR sections 92.251, 92.252, and 92.504(b)).
Audit Objective - Determine whether the grantee
performs the required inspections to assure that property standards
are met. Suggested Audit Procedures a. Verify through a review of documentation that the non-Federal
entity identifies those units on which housing quality inspections
are due. b. Verify through a review of documentation that the non-Federal entity performs inspections of units and that any needed repairs are completed timely.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT CFDA 14.241 HOUSING OPPORTUNITIES FOR PERSONS WITH AIDS
I. PROGRAM OBJECTIVES The Housing Opportunities for Persons with AIDS (HOPWA) Program
is designed to provide States and localities with resources and
incentives to devise long term strategies for meeting the housing
needs of persons with acquired immunodeficiency syndrome (AIDS)
or related diseases and their families (24 CFR section 574.3). II. PROGRAM PROCEDURES The Department of Housing and Urban Development (HUD) awards funds
appropriated for the program in any fiscal year through both a formula
allocation and competitive grant process. Ninety percent of the
funds are awarded through formula grants and ten percent through
competitive grants. HUD allocates formula funds based on the number
of cases of AIDS reported to and confirmed by the Centers for Disease
Control and on population data furnished by the U.S. Bureau of the
Census (24 CFR section 574.130). Competitively-awarded funds are available for special projects
of national significance and other projects submitted by States
and localities that do not qualify for formula grants. All States,
units of general local government, and non-profit organizations
may apply for grants for projects of national significance. Only
those States and units of general local government that do not qualify
for formula awards may apply for grants for other projects. Except
for grants involving projects of national significance, non-profit
organizations are not eligible to apply directly to HUD for a grant,
but may receive funding as a project sponsor (subrecipient) under
a contract with a grantee (24 CFR section 574.210). III. COMPLIANCE REQUIREMENTS In developing the audit procedures to test compliance with
the requirements for a Federal program, the auditor should first
look to Part 2, Matrix of Compliance Requirements, to identify which
of the 14 types of compliance requirements described in Part 3 are
applicable and then look to Parts 3 and 4 for the details of the
requirements. A. Activities Allowed or Unallowed 1. Allowability of Specific Transactions and Activities
HOPWA funds may be used to assist all forms of housing designed
to prevent homelessness, including emergency housing, shared housing
arrangements, apartments, single room occupancy (SRO) dwellings,
and community residences. Appropriate supportive services must be
provided as part of any HOPWA assisted housing, but HOPWA funds
may also be used to provide services independently of any housing
activity. The following activities may be carried out with HOPWA
funds: housing information services; resource identification to
establish, coordinate and develop housing assistance resources for
eligible persons; acquisition, rehabilitation, conversion, lease,
and repair of facilities to provide housing and services; new construction
for SRO and community residences only; project- or tenant-based
rental assistance, including assistance for shared housing arrangements;
short-term rent, mortgage and utility payments to prevent the homelessness
of the tenant or the mortgagor of a dwelling; supportive services;
operating costs for housing; technical assistance in establishing
and operating a community residence; administrative expenses; and,
for competitive grants only, any other activity proposed by the
applicant and approved by HUD (24 CFR section 574.300). 2. Allowable Activities for Subrecipients - Not
Applicable E. Eligibility 1. Eligibility for Individuals a. A person eligible for assistance under this program means one
with AIDS or a related disease who is a low-income individual, as
defined in 24 CFR section 574.3, and the person's family. The eligibility
of those tenants who were admitted to the program should be determined
by: (1) obtaining signed applications that contained all the information
needed to determine eligibility, income, rent and order of selection;
and (2) obtaining third party verifications or documentation of
expected income, assets, unusual medical expenses, and any other
pertinent information. b. Except for persons in short-term supportive housing, each person
receiving rental assistance under the HOPWA Program must pay as
rent the higher of: (1) 30 percent of the family's monthly adjusted
gross income; (2) 10 percent of the family's monthly gross income;
or (3) the portion of the payments that is designated if the family
is receiving payments for welfare assistance from a public agency
and a part of the payments, adjusted in accordance with the family's
actual housing costs, is specifically designated by the agency to
meet the family's housing costs (24 CFR section 574.310). c. If grant funds are used to provide rental assistance, the amount
of grant funds used to pay monthly assistance for an eligible person
may not exceed the difference between the lower of the rent standard
or reasonable rent for the unit and the resident's rent payment
calculated in accordance with 24 CFR section 574.310 (24 CFR section
574.320). Allowable assistance can be determined by telephone surveys,
site visits after telephoning, or more extensive market surveys
of available rental units to assess the reasonableness of rents
being charged. d. A short-term supported housing facility may not provide residence
to any individual for more than 60 days during any six month period.
Rent, mortgage and utility payments to prevent the homelessness
of the tenant or the mortgagor of a dwelling may not be provided
to such an individual for costs accruing over a period of more than
21 weeks in any 52 week period. Further a short-term supported facility
may not provide shelter or housing at any single time for more than
50 families or individuals (24 CFR section 574.330). 2. Eligibility for Group of Individuals or Area of Service
Delivery - Not Applicable 3. Eligibility for Subrecipients - Not Applicable
G. Matching, Level of Effort, Earmarking 1. Matching - Not Applicable 2.1 Level of Effort - Maintenance of Effort
- Not Applicable 2.2 Level of Effort - Supplement not Supplant
The amounts received from grants under this program may not be
used to replace other amounts made available or designated by State
or local governments through appropriations to be used to carry
out the purposes of this program (24 CFR section 574.400). 3. Earmarking Each grantee may use not more than three percent of the grant amount
for its own administrative costs relating to administering grant
amounts and allocating such amounts to project sponsors (subrecipients).
Each project sponsor receiving amounts from grants made under this
program may not use more than seven percent of the amounts for administrative
costs (24 CFR section 574.300(b)(10)(i)-(ii)). L. Reporting 1. Financial Reporting a. SF-269, Financial Status Report - Not Applicable b. SF-270, Request for Advance or Reimbursement - Not Applicable c. SF-271, Outlay Report and Request for Reimbursement for Construction Program - Not Applicable d. SF-272, Federal Cash Transaction Report -
Not Applicable e. HUD-40110, Annual Progress Report (OMB No. 2506-0133)
- This report is due from each grantee within 90 days after the
close of its program year. Separate reports are required for formula
and competitive grants. Reports contain three basic parts. The auditor
is only expected to test the financial data which is found in part
3, Program Expenditures and Housing Provided (24 CFR section 574.520
and 24 CFR part 91). 2. Performance Reporting - Not Applicable 3. Special Reporting - Not Applicable N. Special Tests and Provisions 1. Maintenance of Structures Compliance Requirement - Project-based rental
assistance provides grants for rental assistance to the owners of
existing structures, where the owner agrees to lease the subsidized
units to participants. Participants do not retain rental assistance
if they move. Unless waived by HUD, any building or structure assisted
with funds under HOPWA must be maintained as a facility to provide
housing or assistance for individuals with AIDS or related diseases:
(1) for a period of not less than ten years, in the case of assistance
provided under an activity eligible under 24 CFR section 574.300(b)(3)
- (4) involving new construction, substantial rehabilitation, or
acquisition of a building or structure; or (2) for a period of not
less than three years in cases involving nonsubstantial rehabilitation
or repair of a building or structure (24 CFR section 574.310(c)(1)
- (2)). Audit Objective - Determine whether the project
sponsor is receiving the proper amount of assistance and is maintaining
the assisted buildings and structures for participants for the stipulated
periods. Suggested Audit Procedures a. Identify the buildings or structures assisted with HOPWA funds
and verify their use. b. Examine related agreements to verify that the structures are
to provide housing or assistance for the stipulated number of years
when new construction, substantial rehabilitation, acquisition,
or nonsubstantial rehabilitation was involved. c. Verify from documentation or by observation that the required
rehabilitation was performed if the project was accepted for occupancy
during the audit period. 2. Health Services Compliance Requirement - Grantees must assure
that grant funds will not be used to make payments for health services
for any item or service to the extent that payment was made, or
can reasonably be expected to be made, with respect to any item
or service: (1) under any State compensation program, under an insurance
policy, or under any Federal or State health benefits program; or
(2) by an entity that provides health services on a prepaid basis,
as provided for in 24 CFR section 574.310(a)(2). Supportive services
includes such items as alcohol abuse treatment and counseling, day
care, and nutritional services (24 CFR section 574.300(b)(7)). Audit Objective - Determine whether grant funds
are being used to pay for health items or services that will or
can be reimbursed in other ways. Suggested Audit Procedures a. Identify what procedures are used by the grantee and sponsor
(subrecipient) to identify possible sources of reimbursement for
the services being offered through the HOPWA Program. b. Verify that HOPWA funds are not used to pay for items or services
for which reimbursement will be obtained from the previously mentioned
sources. 3. Housing Quality Standards Compliance Requirement - All housing that involves
acquisition, rehabilitation, conversion, lease, repair of facilities,
new construction, project- or tenant-based rental assistance (including
assistance for shared housing arrangements), and operating costs
must meet various housing quality standards listed in 24 CFR section
574.310(b)(1)-(2). Audit Objective - Determine whether the grantee
performs the required inspections to assure that units meet housing
quality standards. Suggested Audit Procedures a. Verify by a review of documentation that the grantee's system
identifies those units on which housing quality inspections are
due. b. Verify by a review of documentation that the grantees performs
inspections of these units and that any needed repairs were completed
timely. 4. Community Residences Compliance Requirement - A community residence
is a multi-unit residence designed for eligible persons to provide
a lower cost residential alternative to institutional care, to prevent
or delay the need for such care, to provide a permanent or transitional
residential setting with appropriate services to enhance the quality
of life for those who are unable to live independently, and to enable
those persons to participate as fully as possible in community life.
If grant funds are used to provide a community residence (except
for planning and other preliminary expense), the grantee must, prior
to the expenditure of such funds, obtain and keep on file certifications
relating to the services to be provided, the adequacy of funding
and the capabilities of the grantee, project sponsor, or service
provider (24 CFR section 574.340). Audit Objective - Determine whether the required
certifications are being maintained and supported. Suggested Audit Procedures a. Review the grantees files to verify that the required certifications
are maintained. b. Verify that there is evidence on file to support the certifications that were made.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT CFDA 14.862 INDIAN COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
I. PROGRAM OBJECTIVES The primary objective of the Indian Community Development Block
Grant (CDBG) program is the development of viable Indian and Alaskan
native communities, including decent housing, a suitable living
environment, and expanded economic opportunities, principally for
persons of low- and moderate-income. Indian CDBG assistance may
not be used to reduce substantially the amount of local financial
support for community development activities below the level of
support prior to the availability of the assistance (24 CFR section
953.2). II. PROGRAM PROCEDURES Two types of grants are eligible under the Indian CDBG program.
Single purpose grants provide funds for one or more single purpose
projects which consist of an activity or set of activities designed
to meet a specific community development need. This type of grant
is awarded through competition with other single purpose projects.
Imminent threat grants alleviate an imminent threat to public health
or safety that requires immediate resolution. This type of grant
is awarded only after a HUD field office determines that such conditions
exist and that funds are available for such grants (24 CFR section
953.100). The selection of single purpose grantees under subpart B of 24
CFR section 953 is competitive. HUD's selection of eligible applicants
reflects consideration of the relative adequacy of applications
in addressing locally-determined need. Selection of grantees under
subpart E - Imminent Threat Grants - is not competitive; eligible
projects are funded on a first-come, first-served basis, subject
to the availability of funds. Applicants for funding must have the
administrative capacity to undertake the community development activities
proposed, including the systems necessary to administer the activities
without fraud, waste, or mismanagement. III. COMPLIANCE REQUIREMENTS In developing the audit procedures to test compliance with
the requirements for a Federal program, the auditor should first
look to Part 2, Matrix of Compliance Requirements, to identify which
of the 14 types of compliance requirements described in Part 3 are
applicable and then look to Parts 3 and 4 for the details of the
requirements. A. Activities Allowed or Unallowed 1. Allowability of Specific Transactions and Activities
Indian CDBG funds (including program income generated by activities
carried out with grant funds) may only be used for the following
activities: (1) the acquisition of real property; (2) the acquisition,
construction, reconstruction, or installation of public works, facilities,
and site, or other improvements; (3) code enforcement in deteriorated
or deteriorating areas; (4) clearance, demolition, removal, and
rehabilitation of buildings and improvements; (5) special projects
for removal of material and architectural barriers that restrict
accessibility by elderly and handicapped individuals; (6) payments
to housing owners for losses of rental income incurred in temporarily
holding housing for the relocated; (7) disposition of real property
acquired under this program; (8) provision of public services (subject
to limitations contained in regulations and to certain HUD determinations);
(9) payment of the non-Federal share for a grant program that is
part of the assisted activities; (10) payment to complete a Title
1 Federal Urban Renewal project; (11) relocation assistance; (12)
planning activities; (13) administrative costs; (14) acquisition,
construction, reconstruction, rehabilitation, or installation of
commercial or industrial buildings; (15) assistance to community-based
development organizations; (16) activities related to energy use;
(17) assistance to private, for-profit business, when appropriate
to carry out an economic development project; (18) substantial reconstruction
of housing owned and occupied by low- and moderate-income persons
(subject to certain HUD determinations); (19) direct assistance
to facilitate and expand homeownership; (20) technical assistance
to public or private entities for capacity building (exempt from
planning/administration cap); (21) housing counseling and housing
activity delivery costs under Indian CDBG and Indian HOME; (22)
assistance to colleges and universities to carry out eligible activities;
and, (23) assistance to public and private entities (including for-profits)
to assist micro-enterprises (24 CFR sections 953.200 through 953.207).
2. Allowable Activities for Subrecipients - Not
Applicable G. Matching, Level of Effort, Earmarking 1. Matching - Not Applicable 2.1 Level of Effort - Maintenance of Effort
- Not Applicable 2.2 Level of Effort - Supplement not Supplant
- Not Applicable 3. Earmarking a. To be eligible under the Indian CDBG program, a single purpose
grant activity must benefit low- and moderate-income persons. To
meet this requirement, not less than 70 percent of the funds of
each single purpose grant must be used for activities that benefit
low-and moderate-income persons under the criteria set forth in
24 CFR sections 953.208(a), (b), (c), or (d). In determining the
percentage of funds used for such activities, the provisions of
24 CFR section 953.208(e)(4) apply. b. No more that 20 percent of the total grant plus program income
received during a program year may be obligated during that year
for activities that qualify as planning and administration pursuant
to 24 CFR sections 570.205 and 570.206 (24 CFR section 570.200(g)).
Technical assistance costs associated with developing the capacity
to undertake a specific funded program activity are not considered
administrative costs and are not included in the 20 percent limitation
on planning and administration costs (24 CFR section 953.206). c. Public service activities may comprise no more than 15 percent
of the total grant award 24 CFR section 953.201(e). J. Program Income Program income received before grant closeout may be retained by
the non-Federal entity if the income is treated as additional Indian
CDBG funds subject to all the applicable requirements governing
the use of Indian CDBG funds. However, as noted in 24 CFR section
953.503(b)(4), program income does not include the first $25,000
in program income received by the grantee and all of its subrecipients
in any single year if the total amount of such income does not exceed
$25,000 (24 CFR section 953.503). L. Reporting 1. Financial Reporting a. SF-269, Financial Status Report - Not Applicable b. SF-270, Request for Advance or Reimbursement - Not Applicable c. SF-271, Outlay Report and Request for Reimbursement for Construction Program - Not Applicable d. SF-272, Federal Cash Transaction Report -
Not Applicable e. The grantee must submit a status and evaluation report on previously
funded open grants 45 days after the end of the Federal fiscal year
and at the time of grant closeout. The report should be in narrative
form and must address program progress and the expenditure of funds
by major project activity or category. The auditor should verify
the expenditure data (24 CFR section 953.506) (OMB No. 2577-0191).
2. Performance Reporting - Not Applicable 3. Special Reporting - Not Applicable M. Subrecipient Monitoring Before disbursing any CDBG funds to a subrecipient, the recipient
shall sign a written agreement with the subrecipient. The agreement
shall include provisions concerning: the statement of work, records
and reports, program income, uniform administrative requirements,
and reversion of assets (24 CFR section 953.502). N. Special Tests and Provisions 1. Environmental Assessments Compliance Requirement - An environmental assessment
must be prepared for a project unless the grantee determined that
it met a criterion specified in the regulations that would exempt
or exclude it from Request for Release of Funds (RROF) and environmental
certification requirements (24 CFR section 58.34 and 58.35). Exempt
activities do not require an environmental review; activities which
are potential exclusions require an environmental review to determine
if an exclusion is applicable. If not applicable, an assessment
must be done. Audit Objective - Determine whether the required
environmental reviews are being performed. Suggested Audit Procedures a. Select a sample of projects for which expenditures were made
and verify that environmental certifications exist. b. Ascertain that the certifications were supported by an environmental
assessment. c. For any project where an environmental assessment was not performed,
ascertain that a written determination was made that the assessment
was not required. d. Ascertain whether documentation exists that any determination
not to do an environmental assessment was made consistent with the
criteria contained in 24 CFR sections 58.34 and 58.35. 2. Release of Funds Compliance Requirement - Indian CDBG funds (and
local funds to be repaid with Indian CDBG funds) cannot be obligated
or expended before receipt of HUD's approval of a RROF and environmental
certification, except for exempt activities under 24 CFR section
58.34 or activities found to be categorically excluded under 24
CFR section 58.35 (24 CFR sections 58.22, 58.33-35, and 953.605).
Audit Objective - Determine whether funds were
obligated or expended before HUD's approval of the RROF and environmental
certification. Suggested Audit Procedures a. Examine HUD's approval of the RROF and environmental certification
and note receipt dates. b. Review the expenditure and related records and determine the
dates the funds were obligated or expended. c. Determine that funds, including other than Indian CDBG funds that were subsequently reimbursed by Indian CDBG funds, were obligated or expended subsequent to RROF and environmental certification approval by HUD. |
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