DEPARTMENT
OF HOUSING AND URBAN DEVELOPMENT
CFDA 14.157 SUPPORTIVE
HOUSING FOR THE ELDERLY (SECTION 202)
I. PROGRAM OBJECTIVES
The objective of
Supportive Housing for the Elderly is to provide Federal capital advances
and project rental assistance under Section 202 of the National Housing
Act of 1959 for development of housing projects serving elderly households.
II. PROGRAM PROCEDURES
Prior to 1991 - Elderly
and Disabled
Loans
Prior to 19, the
Department of Housing and Urban Development (HUD) provided direct loans
to finance the construction or rehabilitation of supportive housing for
the elderly and disabled, including the cost of real property acquisition,
conversion, demolition, relocation, and other related expenses.
Assistance
The project-based
rental assistance is provided under Section 8 (not part of this CFDA 14.157)
and is the calculation of project operating costs including debt servicing.
Hence, the rental assistance includes payments to principle and interest
on the direct loan. The Fair Market Rent (FMR) is used as an upper limit
constraint on the amount of rental assistance. Generally, the rental assistance
may not exceed FMR; unless the project obtains HUD approval to apply a
factor of up to 120 percent of gross rent.
The borrower receives
assistance from HUD on vacant rental assistance units at a rate 80 percent
of the contract rent under for the first 60 days of vacancy, given certain
conditions are met (24 CFR section 891.650). For vacancies exceeding 60
days, the owner may apply for payment in an amount equal to the debt servicing
principle and interest payments required to amortize that portion of the
debt service attributable to the vacant unit (24 CFR section 891.650).
Subsequent to 1990
- Elderly Only
Capital Advances
After 1990, under
Public Law 101-625 (November 28, 1990), HUD capital advances replaced
the direct loan method of funding project construction and the assistance
to projects for the disabled were moved to CFDA 14.181 Supportive Housing
for Persons with Disabilities (Section 811). The capital advances are
awarded to non-profit organizations and are used to finance the construction
or rehabilitation of supportive housing for the elderly, including the
cost of real property acquisition, conversion, demolition, relocation,
and other related expenses.
The owner-entity
is required to put up a minimum capital investment under the capital advance
program. This amount is one-half of one percent of the HUD-approved capital
advance. The owner's investment may not exceed $10,000, or $25,000 if
the owner has a national sponsor or co-sponsor (24 CFR section 891.145).
The amount of the
capital advance approved by HUD may not exceed an appropriate development
cost limit, determined by HUD. Owners incurring total development costs
under this limit may retain 50 percent of this difference, which is required
to be deposited into a reserve for replacement account. A 75 percent retention
is allowed, where the owner adds energy efficiency features (24 CFR section
891.140).
No repayment is required
under the Capital Advance Program so long as the owner complies with the
Regulatory Agreement with HUD to make available rental housing to very
low income elderly persons (24 CFR section 891.170).
Rental Assistance
The project-based
rental assistance is provided under a Project Rental Assistance Contract
(PRAC) and is calculated based on operating cost standards established
by HUD (24 CFR 891.150). The owner submits monthly vouchers to HUD for
payment of rental assistance. The total amount of assistance equals total
HUD-approved operating expenses for the project minus the tenant payments
received for all units (PRAC paragraph 2.4(f)(1)).
Tenants are generally
required to 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 (42 USC 1437a).
The owner receives
assistance from HUD on vacant rental assistance units at a rate of 50
percent of Operating Expense for a unit under PRAC (PRAC paragraph 2.4
b) for the first 60 days of vacancy, given certain conditions are met
(24 CFR section 891.650).
Source of Governing
Requirements
This program is authorized
under Section 202 of the Housing Act of 1959, as amended, which is codified
at 12 USC 1701q. Implementing regulations for this program are 24 CFR
part 891, subparts A, B, and D.
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 and Unallowed
1. The project
shall provide the necessary services for the occupants which may include,
but not limited to: health, education, welfare, informational, recreational,
homemaking, meals, counseling, and referral services (12 USC 1701q;
24 CFR sections 891.225 and 891.500).
2. Project funds
may be used only for expenses that are reasonable and necessary to the
operation of the project as provided for in the Regulatory Agreement
between HUD and the project owner.
3. Project facilities
may not include infirmaries, nursing stations, spaces dedicated to the
delivery of medical treatment or physical therapy, padded rooms, or
space for respite care or sheltered workshops, even if paid for from
sources other than the HUD capital advance or loan. Except for office
space used by the owner (or borrower, if applicable), exclusively for
the administration of the project, project facilities may not include
office space (24 CFR section 891.315).
4. Project must
be modest in design and as such, the following are not to be funded
with capital advance funds; individual unit balconies or decks, dishwashers,
washers, dryers, trash compactors, swimming pools, saunas, jacuzzis.
Sponsors may include certain excess amenities but these must be paid
for with other than capital advance funds. Associated operating costs
must also be paid for by sources other than the project rental assistance
contract (24 CFR section 891.120).
E. Eligibility
1. Eligibility
for Individuals
Section 202 (CFDA
14.157) of the National Housing Act was designed to provide housing
for the elderly and disabled (prior to 1991). Section 811 (CFDA 14.181)
of The National Housing Act was created to provide separate funding
for disabled property development (subsequent to 1990).
To qualify as elderly,
one or more members of the household must be 62 years of age or more
at the time of initial occupancy (24 CFR section 891.205).
To qualify as disabled
(prior to 1991 Section 202's), the household must consist of at least
one person who is an adult (18 years or older) with a disability, two
or more persons with disabilities living together, or a surviving household
member under certain circumstances (42 USC 1437a(b)(3); 24 CFR section
891.305).
Very low-income
eligibility applies to the elderly subsequent to 1990 and the owner
is responsible to annually reexamine incomes for households occupying
assisted units or residential space and make appropriate adjustments
to the tenant payment and the project rental assistance payment (24
CFR section 891.410). Assistance applicants shall submit signed consent
forms upon initial application and at reexamination (24 CFR section
5.230).
2. Eligibility
of 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 Transactions Report - Not Applicable
e. HUD-52670
Application for Housing Assistance Payments and HUD-52670A
Schedule of Tenant Assistance Payments Due (OMB No. 2502-0182)
- These forms are submitted monthly to request rental and other housing
assistance payments from HUD.
2. Performance
Reporting - Not Applicable
3. Special
reporting - Not Applicable
N. Special Tests
& Provisions
1. Use of Project
Funds
Compliance Requirements
- Owners are required to establish and maintain a separate project account
in federally insured depository. All rents, charges, income, and revenues
arising from the project operation shall be deposited into this account.
Project funds must be used for the operation of the project (including
required insurance coverage), to make required principal and interest
payments on the Section 202 loan, and to make required deposits to replacement
reserve and the residual receipts accounts (24 CFR sections 891.400(e)
and 891.600(e)).
Audit Objectives
- Determine whether the project fund was properly established, required
deposits were made into this fund, and disbursements were only for allowed
purposes.
Suggested Audit
Procedures
a. Ascertain
if the project funds receipts account has been established in a federally
insured depository.
b. Perform
tests to ascertain if all rents, charges, income, and revenues arising
from the project operation were deposited into the fund.
c. Test a
sample of disbursements from the fund ascertain if they were used
only for the operation of the project or to make required deposits
to the replacement reserve or the residual receipts account.
2. Replacement
Reserve
Compliance Requirements
- Owners shall establish and maintain a replacement reserve to aid in
funding extraordinary maintenance and repair and replacement of capital
items. The replacement reserve funds must be deposited in a Federally
insured depository in an interest-bearing account. All earnings
including interest on the reserve must be added to the reserve. An amount
as required by HUD will be deposited monthly in the reserve fund (Regulatory
Agreement, item 5 A). All disbursements from the reserve must be approved
by HUD (24 CFR sections 891.405 and 891.605).
Audit Objectives
- Determine whether the replacement reserve was properly established,
required monthly deposits were made, and disbursements were only for
HUD approved purposes.
Suggested Audit
Procedures
a. Ascertain
if reserve has been established in a federally insured depository
in an interest bearing account.
b. Ascertain
if the required monthly deposits have been made to the reserve.
c. Ascertain
if interest earnings from the reserve were retained in the reserve.
d Test a sample
of disbursements from the reserve and ascertain if they were approved
by HUD and were made for the approved purpose.
3. Residual
Receipts Account
Compliance Requirements
- Any project funds in the project funds account (including earned interest)
at the end of the fiscal year shall be deposited in a federally insured
account within 60 days following the end of the fiscal year. Withdrawals
from this account may be made only for project purposes and with the
approval of HUD (24 CFR sections 891.400(e) and 891.600(e)).
Audit Objectives
- Determine whether the residual receipts account was properly established,
the required deposit was made within 60 days following year end, and
disbursements were only for project purposes and the approval of HUD.
Suggested Audit
Procedures
a. Ascertain
if residual receipts account has been established in a federally-insured
depository.
b. Ascertain
if the required annual deposit was made within 60 days following year
end.
c Test a sample
of disbursements from the residual receipts account and ascertain
if they were used for project purposes and approved by HUD.
IV. OTHER INFORMATION
To protect its
interest in a capital advance, HUD requires a note and mortgage, generally
for a 40 year term. The owner is not required to repay the principal
or pay interest and the note is forgiven at maturity, as long as the
owner provides housing for the designated class of people in accordance
with applicable HUD requirements. However, the full outstanding balance
on the note should be considered Federal awards expended, included in
determining Type A programs, and reported as loans on the Schedule of
Expenditures of Federal Awards or accompanying notes in accordance with
OMB Circular A-133.
DEPARTMENT
OF HOUSING AND URBAN DEVELOPMENT
CFDA 14.182 SECTION
8 NEW CONSTRUCTION AND SUBSTANTIAL REHABILITATION
CFDA 14.195 SECTION
8 HOUSING ASSISTANCE PAYMENTS PROGRAM--SPECIAL ALLOCATION
CFDA 14.856 LOWER
INCOME HOUSING ASSISTANCE PROGRAM-SECTION 8 MODERATE REHABILITATION
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,
883.101, 884.101, 886.101, and 886.301).
II. PROGRAM PROCEDURES
Under this project-based
cluster, the rental subsidy is tied to a specific unit and when a family
moves from the unit, it has no right to continued assistance.
Certain project-based
programs are administered by State, local, or other governmental entities
qualifying as Public Housing Agencies (PHAs). The Department of Housing
and Urban Development (HUD) enters into annual contributions contracts
with PHAs 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 PHA or HUD through the HAP contract.
The PHA is then reimbursed by HUD through the annual contributions contract.
HUD also provides funds for PHA administration of the Section 8 programs.
PHAs are required
to maintain a HAP contract register or similar record in which to record
the PHA'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 PHAs 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 PHA.
The moderate rehabilitation
program assists low income families in affording decent, safe and sanitary
housing by encouraging property owners to rehabilitate substandard housing
and lease the units with rental subsidies to low income families. The
PHA and the owner execute an Agreement to Enter into Housing Assistance
Payments Contract under which the owner agrees to rehabilitate the unit
to be subsidized and the PHA agrees to subsidize the units upon satisfactory
completion of rehabilitation. Upon completion of the rehabilitation, the
PHA and the owner execute a HAP contract. The PHA refers interested eligible
families on its Section 8 waiting list to the owner to fill vacancies
in moderate rehabilitation units.
The moderate rehabilitation
program assistance is considered a project-based subsidy because the assistance
is tied to specific units under an assistance contract with the owner
for a specified term. A family that moves from a unit with project-based
assistance does not have any right to continued assistance.
Source of Governing
Requirements
The program is authorized
by the U.S. Housing Act of 1937, as amended (42 USC 1437a, c, and f; 42
USC 3535(d); 42 USC 12701; and 42 USC 13611 through 13619). Implementing
regulations are 24 CFR parts 880 through 884 and 24 CFR part 886.
Availability of Other
Program Information
HUD maintains a home
page on the Internet (http://www.hud.gov/hudprog.html), which provides
general information about these programs.
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. The PHA
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, disabled, 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 and tenant certifications,
as appropriate; and, (d) determining that tenant income did not
exceed the maximum limit set by HUD for the PHA'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, 882.514, 833.701, 884.214, 886.119, and
886.318)
(2) Determine
the total tenant rent payment in accordance with 24 CFR section
5.613.
(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, 881.601, 883.701, 884.214, and 886
subparts A and C).
(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, 882.515, 884.218,
886.124, and 886.324).
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 Transactions Report - Not Applicable
e. In lieu of
the standard reports, the following reports are required on Section
8 project-based programs involving PHA/private-owners and HUD/PHA 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. 2577-0169)
- submitted annually; and
(4) The reporting
requirements for project-based 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
a. HUD-50058,
Family Report (OMB No.2577-0083) - The PHA is required
to submit this form electronically to HUD each time the PHA completes
an admission, annual reexamination, interim reexamination, portability
move-in, or other change of unit for a family. The PHA must also submit
the Family Report when a family ends participation in the program
or moves out of the PHA's jurisdiction under portability.
Key Line
Items: The following line items contain critical information:
(1) Line
2b - Effective Date of Action
(2) Lines 3b, 3c - Names
(3) Line 3e - Dates of Birth
(4) Line 3n - Social Security Numbers
(5) Line 5a - Unit Address
(6) Lines 5g, 5h - Unit Inspection Dates
(7) Line 7m - Total Annual Income
(8) Line 11n or 12q - Gross Rent of Unit
(9) Lines 2e and 16a - Family's Participation in the
Family Self-Sufficiency (FSS) Program
(10) Line 16d(2) - FSS Account Balance
b. HUD-50059,
Owner's Certification of Compliance With HUD's Tenant Eligibility
and Rent Procedures (OMB No. 2502-0204) - This report is
submitted electronically to HUD.
N. Special Tests
and Provisions
1. Contract
Rent Adjustments
Compliance Requirement
-The PHA or owner applies or ensures annual adjustments to contract
rents are applied. The HAP contract specifies the method to be used
to determine rent adjustments. Adjustments must not result in material
differences between rents charged for assisted units and comparable
unassisted units except as those differences existed at contract execution.
Special adjustments to contract rents may also be made to the extent
deemed necessary by the PHA or HUD (24 CFR sections 880.609, 881.601,
882.410, 883.701, 884.109, 886.112, and 886.312).
Audit Objective
- Determine whether contract rents are being adjusted properly.
Suggested Audit
Procedures
a. Review
the procedures for applying annual adjustment factors and handling
special adjustment requests.
b. Select
a sample of contracts and the related files with annual and special
rent adjustments and test the supporting data and certifications that
were submitted to support the adjustments.
c. Review
the selected HAP contract files or tenant files to verify that annual
and special adjustments were applied correctly and that rent adjustments
did not result in material differences between the rents charged for
assisted and comparable unassisted units.
2. Tenant Utility
Allowances
Compliance Requirement
- The PHA or owner must establish or ensure 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 5.603, 880.610, 881.601, 882.510,
883.701, 884.220, 886.126, and 886.326).
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, PHA determinations, and supporting documentation for utility
determinations.
d. Verify
that the allowances were applied to tenants correctly.
3. Housing Quality
Standards
Compliance Requirement
- The PHA or owner must provide housing that is decent, safe, and
sanitary. To achieve this end, the PHA 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, 881.601, 882.516, 883.701, 884.217, 886.123, and 886.323).
Audit Objective
- Determine whether the PHA or owner performs the required inspections
to assure that units meet housing quality standards.
Suggested Audit
Procedures
a. Examine
the procedures used by the PHA 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 PHA or owner assures that the inspections
and any needed repairs are completed timely.
d. Verify
that the PHA reviewed the evidence of completion submitted by the
owner on newly constructed or rehabilitated units accepted for occupancy.
4. Vacant Units
Compliance Requirement
- The PHA or owner must reduce claims for assistance on vacant units
under certain circumstances. However, there are instances where special
claims are allowed for vacancy losses, unpaid rent, and tenant damages
on eligible units (24 CFR sections 880.611, 881.601, 882.411, 883.701,
884.106, 886.109, and 886.309).
Audit Objective
- Determine whether payments to owners are reduced for vacant units
and whether payments for special claims are proper.
Suggested Audit
Procedures
a. Examine
the procedures used by the PHA 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.
c. Select
a sample of payments for special claims and verify that documentation
exists to support the payments.
5. Management
Reviews
Compliance Requirement
- The PHA is required to perform annual on-site inspections and complete
the Management Reviews of Multifamily Projects, form HUD-9834
(OMB 2502-0178). This review is a comprehensive assessment of the
owners procedures for directing and overseeing project operations (24
CFR sections 880.612, 881.601, 883.701, 884.217, 886.123, and 886.323).
Audit Objective
- Determine whether the PHA documented the required annual reviews.
Suggested Audit
Procedures
a. Review
the procedures used by the PHA to identify the projects subject to
annual review.
b. Test a
sample of projects subject to annual review and verify that the PHA
completed the Management Reviews of Multifamily Projects form.
6. Replacement
Reserve
Compliance Requirements
- The owner shall establish and maintain a replacement reserve to aid
in funding extraordinary maintenance and repair and replacement of capital
items. The replacement reserve funds must be deposited in an interest-bearing
account. All earnings including interest on the reserve must
be added to the reserve. All disbursements from the reserve must be
as approved or directed by HUD or the State Agency for 24 CFR part 883
projects, as applicable. An amount as required by HUD or the State Agency
for 24 CFR part 883 projects, as applicable; shall be deposited monthly
in the reserve fund in accordance with the Regulatory Agreement or HAP
contract (24 CFR sections 880.601, 880.602, 881.601 and 883.701).
Audit Objectives
- Determine whether the replacement reserve was properly established,
required monthly deposits were made, and disbursements were only for
approved purposes.
Suggested Audit
Procedures
a. Ascertain
if reserve has been established in an interest bearing account.
b. Ascertain
if the required monthly deposits have been made to the reserve.
c. Ascertain
if interest earnings from the reserve were retained in the reserve.
d Test a sample
of disbursements from the reserve and ascertain if they were made
for an approved purpose.
7. Residual
Receipts Account
Compliance Requirements
- Any project funds in the project funds account (including earned interest)
at the end of the fiscal year shall be deposited with the mortgagee
or other HUD-approved depository in an interest bearing account. For
projects under 24 CFR part 883, the funds must be deposited with the
State Agency or other Agency-approved depository in an interest bearing
account. Withdrawals from this account may be made only for project
purposes and with the approval of HUD or the State Agency for 24 CFR
part 883 projects, as applicable (24 CFR sections 880.601, 881.601,
and 883.701).
Audit Objectives
- Determine whether the residual receipts account was properly established,
the required deposit was made within 60 days following year end, and
disbursements were only for approved project purposes.
Suggested Audit
Procedures
a. Ascertain
if residual receipts account has been established in an interest-bearing
depository.
b. Ascertain
if the required annual deposit was made within 60 days following year
end.
c Test a sample
of disbursements from the residual receipts account and ascertain
if they were used for an approved project purpose.
DEPARTMENT
OF HOUSING AND URBAN DEVELOPMENT
CFDA 14.218 COMMUNITY
DEVELOPMENT BLOCK GRANTS/ ENTITLEMENT GRANTS
CFDA 14.219 COMMUNITY
DEVELOPMENT BLOCK GRANTS/SMALL CITIES PROGRAM (HUD-Administered Small
Cities)
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 benefitting 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.
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. 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).
2. 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 sites, or other improvements,
including removal of architectural barriers that restrict accessibility
of elderly or severely disabled persons; (3) clearance, demolition,
and removal of buildings and improvements; (4) payments to housing
owners for losses of rental income incurred in temporarily holding
housing for the relocated; (5) disposition of real property acquired
under this program; (6) provision of public services (subject to limitations
contained in the CDBG regulations); (7) payment of the non-Federal
share for another grant program that is part of the assisted activities;
(8) interim assistance where immediate action is needed prior to permanent
improvements or to alleviate emergency conditions threatening public
health and safety; (9) payment to complete a Title 1 Federal Urban
Renewal project; (10) relocation assistance; (11) planning activities;
(12) administrative costs; (13) acquisition, construction, reconstruction,
rehabilitation, or installation of commercial or industrial buildings;
(14) assistance to community-based development organizations; (15)
activities related to privately-owned utilities; (16) assistance to
private, for-profit businesses, when appropriate to carry out an economic
development project; (17) construction of housing assisted under Section
17 of the United States Housing Act of 1937; (18) reconstruction of
properties; (19) direct homeownership assistance to facilitate and
expand homeownership; (20) technical assistance to public or private
entities for capacity building (exempt from the planning/ administration
cap); (21) housing services related to HOME-funded activities; (22)
assistance to institutions of higher education to carry out eligible
activities; (23) assistance to public and private entities (including
for-profits) to assist micro-enterprises; (24) payment for repairs
and operating expenses for acquired "in Rem" properties; and (25)
residential rehabilitation, including code enforcement in deteriorated
or deteriorating areas, lead-based paint hazard evaluation, and removal
(24 CFR sections 570.200 through 570.207).
3. Each float
funded activity must meet all of the same requirements that apply
to CDBG-assisted activities generally (24 CFR section 570.301).
4. 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
activities; (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).
5. All the
activities that a grantee undertakes during their CDBG program year
must be identified in an action plan or an amended action plan (24
CFR sections 91.220 and 570.301).
6. 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.
7. 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).
G. Matching,
Level of Effort, Earmarking
1. Matching
- Not Applicable
2. Level
of Effort - 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. Program income does not include income
received in a single program year by the grantee and all of its subrecipients
if the total amount of such income does not exceed $25,000 (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 Transactions Report - Applicable
e. Integrated
Disbursement and Information System (IDIS) (OMB No. 2506-0077)
- Grantees use the IDIS to electronically submit to HUD an annual
performance and evaluation report for the CDBG Entitlement Program.
Auditors are only expected to test information extracted from IDIS
in the following system-generated reports:
(1) CO4PRO3
- Activity Summary Report
(2) CO4PR26
- CDBG Financial 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 when 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 (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.
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. 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).
2. 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).
3. 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)).
G. Matching,
Level of Effort, Earmarking
1. Matching
- Not Applicable
2. Level
of Effort - 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 Transactions Report - Not Applicable
e. Performance
and Evaluation Report (OMB No. 2506-0077) - 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
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).
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 Transactions Report - Applicable
2. Performance
Reporting - Not Applicable
3. Special
Reporting - Not Applicable
N. Special Tests
and Provisions
1. Maintenance
as Homeless Shelters
Compliance Requirement
- Any building for which ESG amounts are used for renovation, 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
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).
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 Transactions 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. 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)).
2. 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)).
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 may be used to pay the costs of administering housing
assistance, subject to the limits noted in III.A.2 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 Transactions 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)).
Key Line
Items - Financial data in Part I - Exhibit 3 (Supportive Services)
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. Identify
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. Examine
the non-Federal entity's documentation showing rents charged for comparable
unassisted units.
b. Verify
that the contract rents being paid are comparable with those paid
for unassisted units. If unassisted units are in the building, compare
rents paid for those units with the rents paid for the assisted units.
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 was performed after
the grant was executed.
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. 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).
2. 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)).
3. 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. Level
of Effort - 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
The auditor is
not expected to test for reporting.
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 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 are not the same as the person
drawing down funds.
b. Verify
that HOME payment certification amounts match the amount of disbursements.
3. Housing Quality
Standards
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. 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. 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)).
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 Transactions 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. 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.
3. 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 14.850 PUBLIC
AND INDIAN HOUSING
I. PROGRAM OBJECTIVES
The overall objective
of the Public Housing program is to provide and operate cost-effective,
decent, safe and affordable dwellings for lower income families through
an authorized local Public Housing Agency (PHA).
II. PROGRAM PROCEDURES
Public Housing
Annual contributions
are made to PHAs for debt service payments for commitments approved on
or prior to September 30, 1986, or direct funding of capital costs (grants)
is provided to PHAs for commitments approved after September 30, 1986.
In addition, operating subsidy funds are available to achieve and maintain
adequate operating and maintenance service and reserve funds.
Emphasis is on housing
type (i.e., acquisition with or without rehabilitation versus new construction)
and household type (i.e., large family). Funds may also be used for the
major reconstruction of obsolete existing public housing projects. The
statute requires that priority in development be given to housing larger
families requiring 3 or more bedrooms.
Public Housing Agencies
established in accordance with State law are eligible. The proposed program
must be approved by the local governing body. Pursuant to the Native American
Housing Assistance and Self Determination Act of 1996, Indian Housing
Authorities (IHAs) are no longer eligible for funding under the U.S. Housing
Act of 1937 or the Indian Housing Act.
There are three core
occupancy procedures which are described in program regulations and other
guidance: 1) determination of eligibility; 2) determination of income
and rent; and 3) leasing and continuing occupancy. Eligibility beneficiaries
are lower income families which include citizens or eligible immigrants.
"Families" includes but is not limited to: (1) a family with or without
children; (2) an elderly family (head, spouse, or sole member 62 years
or older), (3) near-elderly family (head, spouse, or sole member 50 years
old but less than 62 years old); (4) a disabled family; (5) a displaced
family; (6) the remaining member of a tenant family; or (7) a single person
who is neither elderly, near-elderly, displaced, or a person with disabilities.
Performance Funding
System
The PFS is the formula
used to calculate the amount of operating subsidy for each PHA . The operating
subsidy is equal to the Allowable Expense Level (AEL) plus the Allowable
Utilities Expense Level (AUEL) plus Other Costs minus the estimated Operating
Income of the Project. The methodology and procedures for this calculation
are found in 24 CFR part 990.
The PFS calculation
is prepared in conjunction with the PHA annual operating budget. Form
HUD 52723, Calculation of Performance Funding System Operating Subsidy
(OMB No. 2577-0029) is submitted between 90 and 150 days before
the beginning of the PHA fiscal year. The program operating budget constitutes
the approved plan for expenditure of operating subsidy funds and program
operating receipts. The HA reports actual operating expenditures against
the plan on the Form HUD 52599, Statement of Operating Receipts and
Expenditures (OMB No. 2577-0067), that is submitted within 45 days
after the end of the HA fiscal year.
Essentially, the
AEL, which is the non-utility costs for each PHA, is based on what it
would cost a well-managed PHA of comparable location and characteristics
to operate based on such variables as local Government Wage Rate Index,
number of bedrooms per high rise family project, and number of bedrooms
per unit. The resulting AELs are arrived at by application of the formula
utilizing these variables. These costs are updated annually based on inflation
and changes in the PHA characteristics included in the equation. Utility
expenses are estimated separately based on rules that set consumption
at the average of a prior 3-year period referred to as the "rolling base"
and changes in the utility rates. Other costs include cost of the independent
audit, costs of vacant units approved for deprogramming, costs attributable
to changes in Federal law or regulation, and costs resulting from combining
two or more units.
Performance Reporting
The Public Housing
Management Assessment Program (PHMAP) (24 CFR part 901) is used to assess
the management performance and capabilities of each PHA in managing PHA-owned
low rent housing. PHMAP is authorized by 42 USC 1437d(j). The current
assessment criteria include eight statutory indicators. The eight statutory
indicators are: (1) vacancy rate and unit turnaround time, (2) modernization,
(3) rents uncollected, (4) work orders, (5) annual inspections of units
and systems, (6) financial management, (7) resident services and community
building, and (8) security.
The PHA is required
to send HUD a certification for seven of the eight indicators after the
end of each fiscal year on HUD form 50072, Public Housing Management
Assessment Program (OMB 2577-0156). The PHA is also required to maintain
supporting documentation for post review purposes. As a result of the
PHMAP assessment, the PHA is rated as either high performing, standard,
or troubled. PHMAP does not apply to the performance of the Section 8
program.
Effective for fiscal
years ending September 30, 1999 and after, HUD evaluates a PHA using the
Public Housing Assessment System (PHAS) (24 CFR part 902). The PHAS is
based on four indicators: (1) the physical condition of the PHA's public
housing properties; (2) the PHA's financial condition; (3) the PHA's management
operations; and (4) resident's assessment (through a resident survey)
of the PHA's performance. The management indicator of this new assessment
system will incorporate the majority of the existing statutory management
assessment indicators. Each of the major indicators is comprised of components.
To assess the performance of a PHA on the basis of the first two indicators,
the Real Estate Assessment Center (REAC) will use the comprehensive and
standardized protocols to conduct physical inspections of public housing
properties and to assess the financial condition of PHAs.
For the management
operations indicator and the resident service and satisfaction indicator,
REAC will gather and analyze information provided by the PHA.
Source of Governing
Requirements
This program is authorized
by the U.S. Housing Act of 1937, as amended (42 USC 6(j), 9(a), 1437d(j),
1439, and USC 3535(d)). Implementing regulations are 24 CFR parts 5, 901,
902, 960, 966, and 990.
Availability of Other
Program Information
HUD maintains web
pages on the Internet (http://www.hud.gov/progdesc/pihindx.html and http://www.hud.gov/reac)
which provide general information about this program.
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
Most PHAs devise
their own application forms that are filled out by the PHA staff during
an interview with the tenant. The head of household signs: (a) a certification
that the information provided to the PHA is correct; (b) one or more
release forms to allow the PHA to get information from third parties;
(c) a federally-prescribed general release form for employment information;
and (d) a privacy notice. Under some circumstances, other members of
the family may be required to sign these forms (24 CFR sections 5.212,
5.230, and 5.601 through 5.617.
The PHA must:
a. As a condition
of admission or continued occupancy, require the tenant and other
family members to provide necessary information, documentation, and
releases for the PHA to verify income eligibility (24 CFR sections
5.230 and 5.617).
b. Verify
income eligibility and calculate the tenant's rent payment in accordance
with 24 CFR section 5.613 (24 CFR sections 5.601 through 5.617).
c. Select
tenants from the public housing waiting list (see "N.1, Public Housing
Waiting List") (24 CFR section 960.204).
d. Reexamine
family income and composition at least once every 12 months and adjust
the total rent and housing assistance payment as necessary (24 CFR
sections 5.617 and 960.209).
2. Eligibility
of 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 Programs
- Not Applicable
d. SF-272,
Federal Cash Transactions Report - Not Applicable
e. HUD-52599,
Statement of Operating Receipts and Expenditures (OMB No. 2577-0067)
- submitted annually to report actual Operating Receipts and Operating
Expenditures against approved operating budget estimates. The auditor
is not expected to test the columns headed "Budget Amount" and "Budget
PUM."
2. Performance
Reporting
a. PHMAP
- Applicable for reporting periods ending before September 30,
1999
Public Housing
HUD-50072, Public Housing Management Assessment Program (OMB No.
2577-0156) - A PHA has the right to request the exclusion or modification
of a specific indicator in its management assessment. The HUD field
office must approve the exclusion or modification requests.
Key Line Items
- The following line items contain critical information:
1. Indicator
#1: Vacancy Rate/Unit Turnaround:
(a) Component
#1: Vacancy Rate
Line b Total
number of ACC days
Line c Total
number of non-dwelling days
Line d Total
number of employee occupied days
Line e Total
number of days where units were deprogrammed
Line f Total
number of actual vacancy days
Line g Total
number of vacancy days exempted for modernization
Line h Total
number of vacancy days exempted for market conditions
Line i Total
number of vacancy days where units were exempted due to law or
regulations
Line j Total
number of vacancy days where units were exempted for other reasons
(b) Component
# 2: Unit Turnaround
Line b Total
number of turnaround days
Line c Total
number of vacancy days exempted for modernization
Line d Total
number of vacancy days exempted for other reasons
Line e Total
number of vacant units turned around and leased in the PHA's immediate
past fiscal year
Line f Average
number of calendar days units were in down time
Line g Average
number of calendar days units were in make ready time
Line h Average
number of calendar days units were in lease up time
2. Indicator
#3: Rents Uncollected
Line a Dwelling
rent owed by the residents in possession at the beginning of the
assessed fiscal year, carried forward from the previous fiscal year.
Line b Dwelling
rents billed during FY being assessed
Line c Dwelling
rents collected during FY being assessed
3. Indicator
# 4: Work Orders
(a) Component
#1: Emergency Work Orders
Line a Total
number of emergency work orders
Line b Total
number of emergency work orders corrected/abated within 24 hours
(b) Component
#2: Non-Emergency Work Orders
Line a Total
number of non-emergency work orders
Line b Total
number of calendar days it took to complete non-emergency work
orders
4. Indicator
# 5: Annual Inspection of Units and Systems
(a) Component
#1: Annual Inspection of Units
Line b Total
number of ACC units
Line c Units
exempted where the PHA made 2 documented attempts to inspect and
is enforcing the lease
Line d Vacant
units exempted for modernization
Line e Vacant
units exempted for other reasons
Line f Total
number of units inspected using local code or HUD uniform inspection
standards
(b) Component
#2: Annual Inspection of Systems
Line a Total
number of sites
Line b Total
number of sites exempted from the Inspection of systems
Line c Total
number of sites where all systems were inspected in accordance
with the PHA maintenance plan
Line d Total
number of buildings
Line e Total
number of buildings exempted from the inspection of systems
Line f Total
number of buildings where all systems were inspected in accordance
to the PHA maintenance plan
5. Indicator
# 6: Financial Management
(a) Component
# 1: Cash Reserves
Line a Amount
of cash reserves
(b) Component
#2: Energy Consumption -
Line a All
PHA units have tenant-paid utilities (enter Yes or No)
Option A:
Energy/Utility Consumption Expenses
Line a Total
energy/utility consumption expenses
b. PHAS
- This new system will be applicable for reporting periods ending
September 30, 1999 and after (OMB No. 2535-0106). The final rule on
the PHAS system was published in the Federal Register on September
1, 1998 (63 FR 46595) . All reports will be submitted electronically
to HUD. The PHAS form is not required to be finalized until June 1,
1999; however, based upon the PHAS Federal Register notice
and available information, the auditor should consider the following
as key line items which contain critical information.
PHAS Indicator
# 3: Management Operations
(1) Management
Indicator #1--Vacancy rate and unit turnaround time
The data
in the key line items listed above under PHMAP reporting for Indicator
#1: Vacancy Rate /Unit Turnaround.
(2) Management
Indicator # 3--Rents Uncollected
The data
in the key line items listed above under PHMAP reporting for Indicator
#3: Rents Uncollected.
(3) Management
Indicator # 4--Work Orders
The data
in the key line items listed above under PHMAP reporting for Indicator
#4: Work Orders.
(4) Management
Indicator # 5--Annual Inspection of Units and Systems
The data
in the key line items listed above under PHMAP reporting for Indicator
#5: Annual Inspection of Units and Systems
3. Special
Reporting
a. HUD-50058,
Family Report (OMB No. 2577-0083) - The PHA is required
to submit this form electronically to HUD the each time the PHA completes
an admission, annual reexamination, interim reexamination, portability
move-in, or other change of unit for a family. The PHA must also submit
the Family Report when a family ends participation in the program
or moves out of the PHA's jurisdiction under portability.
Key Line
Items - The following line items contain critical information:
(1) Line
2b - Effective Date of Action
(2) Lines
3b, 3c - Names
(3) Line
3e - Dates of Birth
(4) Line
3n - Social Security Numbers
(5) Line
5a - Unit Address
(6) Lines
5g, 5h - Unit Inspection Dates
(7) Line
7m - Total Annual Income
(8) Line
11n or 12q - Gross Rent of Unit
(9) Lines
2e and 16a - Family's Participation in the Family Self-Sufficiency
(FSS) Program
(10) Line
16d(2) - FSS Account Balance
b. HUD-51234,
Report on Occupancy for Public and Indian Housing (OMB No. 2577-0028)
c. HUD-52723,
Calculation of Performance Funding System Operating Subsidy (OMB
No. 2577-0029) This form is prepared at least 90 days before the
end of the fiscal year and is used by HUD to calculate funding for
the next year. The form's data is based upon historical information.
The auditor is not expected to audit the column headed "HUD Modifications
(PUM)."
Key Line
Items - The following line items contain critical information:
(1) Unit
Months Available (UMAs)
(2) Line
4 - Add-ons to allowable expense level from previous fiscal year
(3) Line
12 - Total rent roll
(4) Line
19 - Estimated Investment Income (EII)
(5) Line
20 - Other income
(6) Line
25 - FICA contributions
(7) Line
26 - Unemployment compensation
(8) Line
27 - Flood insurance premiums
d. HUD 52722-A,
Calculation of Allowable Utilities Expense Level (OMB No. 2577-0029)
Key Line
Items - The following line item contains critical information:
- Line 1,
UMA and actual consumption for old projects for 12 month period
which ended 12 months before RB Year
e. HUD 52722-B,
Adjustment for Utility Consumption and Rates (OMB No. 2577-0029)
Key Line
Items - The following line items contain critical information
1. Line
13, Actual Utility Costs for the fiscal Year for which adjustment
is requested.
2. Line
14, Actual consumption for the fiscal year for which adjustment
is requested.
N. Special Tests
& Provisions
1. Public Housing
Waiting List
Compliance
Requirement - The PHA must establish and adopt written policies
for admission of tenants. The PHA tenant selection policies must include
requirements for applications and waiting lists, description of the
policies for selection of applicants from the waiting lists, and policies
for verification and documentation of information relevant to acceptance
or rejections of an applicant (24 CFR sections 960.204 through 960.207).
Audit Objective
- Determine whether the PHA is following their own tenant selection
policies in placing applicants on the waiting list and in selecting
applicants from the waiting list to become tenants.
Suggested Audit
Procedures
a. Review
the PHA's tenant selection policies.
b. Test
a sample of applicants added to the waiting list and ascertain if
the PHA's tenant selection policies were followed in placing applicants
on the waiting list.
c. Test
a sample of new tenants to ascertain if they were selected from
the waiting list in accordance with the PHA's tenant selection policies.
DEPARTMENT
OF HOUSING AND URBAN DEVELOPMENT
CFDA 14.852 Public
Housing Comprehensive Improvement Assistance Program (CIAP)
I. PROGRAM OBJECTIVES
The objective of
the Comprehensive Improvement Assistance Program (CIAP) is to improve
the physical quality of housing provided to low income households through
modernization and development. Specifically, capital improvements, major
repairs, management improvements, and related planning costs are funded
through CIAP.
The objectives of
the modernization program are to: (1) improve the physical condition of
existing public housing developments; and (2) upgrade the management and
operation of such developments in order to assure that they continue to
serve low-income families.
The objective of
the development program is to provide a Public Housing Authorities (PHA)
with the opportunity to build or acquire the number, type, and size of
units needed to house low-income families.
II. PROGRAM PROCEDURES
Grants are applied
to housing and related services occupied by low income residents, whose
income is typically at or below 50 percent of the Department of Housing
and Urban Development (HUD) adjusted median income for the area. CIAP
grants are awarded on a competitive basis to PHA's of less than 250 units
of public housing and may be used for modernization and development activities.
(CFDA 14.859, Public Housing Comprehensive Grant Program applies to PHAs
with 250 or more units.)
Modernization Program
In the modernization
program HUD provides grant funds to the PHA to improve the physical condition
and upgrade the management and operation of existing public housing. In
planning its modernization programs, the PHA is required to consult with
residents and local government officials. After grant award, the PHA may
select an architect or engineer through competitive negotiation to develop
the plans and specifications for the construction work. Construction work,
as well as management improvements, may be carried out through contract
labor (competitively procured) or the PHA's own work force (force account).
The PHA or its architect monitors the work in progress for compliance
with contract requirements and acceptable work quality, and submits periodic
progress reports to HUD.
The PHA draws down
funds as needed to pay for accepted work through the Line of Credit Control
System, Voice Response System (LOCCS/VRS) on a three-day turnaround basis.
When work is completed, the PHA submits an Actual Modernization Cost
Certificate (AMCC) (OMB No. 2577-0044) to HUD.
Development Program
In the development
program, the PHA functions as a developer, owner, and manager of housing
projects. In a HUD-funded housing project, the PHA normally operates as
the development manager. As a developer, the PHA is responsible for obtaining
and maintaining local cooperation, for project planning, and for submitting
the application and the housing proposal. This includes selecting sites
or properties to be acquired, contracting with builders to construct or
rehabilitate housing, contracting with developers for the purchase of
completed (new or rehabilitated) housing, and purchasing existing housing
which may require repairs. Also, as a developer, the PHA is responsible
for selecting and contracting with other parties (e.g., architects and
engineers) and for expediting and coordinating the preparation of required
HUD submissions.
The PHA draws down
funds as needed to pay for accepted work through LOCCS/VRS on a three-day
turnaround basis. When work is completed, the PHA submits an Actual
Development Cost Certificate (ADCC) (OMB No. 2577-0036) to HUD.
Source of Governing
Requirements
This program is authorized
under 42 USC 14371. Implementing regulations are 24 CFR parts 941 and
968 subparts A and 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. Activities
allowed include capital improvements as well as major repairs, management
improvements, and planning costs and must be approved by HUD. HUD approval
is provided generally in the approved CIAP Application (HUD-52822, OMB
No. 2577-0044) and specifically in the CIAP Budget/Progress Report (HUD
52825, OMB No. 2577-0044) which details the work items that will be
completed and the allocated funding (24 CFR section 968.112).
2. The PHA may
not incur any modernization cost in excess of the total HUD-approved
CIAP Application which is the project budget. Budget revisions must
be approved by HUD for deviations from the originally approved modernization
program. A PHA shall not incur any modernization cost on behalf of any
development that is not covered by the original CIAP application (24
CFR section 968.225).
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 Programs
- Not Applicable
d. SF-272,
Federal Cash Transactions Report - Not Applicable
e. HUD-52825,
CIAP Budget/Progress Report (OMB No. 2577-0044) - This
report is submitted for the six-month periods ending 3/31 and 9/30
to report activities and costs.
2. Performance
Reporting - Not Applicable
3. Special
Reporting - Not Applicable
DEPARTMENT
OF HOUSING AND URBAN DEVELOPMENT
CFDA 14.855 SECTION
8 RENTAL VOUCHER PROGRAM
CFDA 14.857 SECTION
8 RENTAL CERTIFICATE PROGRAM
I. PROGRAM OBJECTIVES
The Section 8 rental
voucher program and rental certificate program provide rental assistance
to help very low income families afford decent, safe and sanitary rental
housing.
II. PROGRAM PROCEDURES
These programs are
administered by local public housing agencies (PHAs) authorized under
state law to operate housing programs within an area or jurisdiction.
The PHA accepts the application for rental assistance, selects the applicant
for admission, and issues the selected family a rental voucher or certificate
confirming the family's eligibility for assistance. The family must then
find and lease a dwelling unit suitable to the family's needs and desires
in the private rental market. The PHA pays the owner a portion of the
rent (a housing assistance payment (HAP)) on behalf of the family.
The subsidies provided
by the rental voucher and certificate programs are considered tenant-based
subsidies because when an assisted family moves out of a unit leased under
the program, the assistance contract with the owner terminates and the
family may move to another unit with continued rental assistance (24 CFR
section 982.1).
HUD enters into annual
contributions contracts (ACCs) with PHAs under which HUD provides funds
to the PHAs to administer the programs locally. The PHAs enter into housing
assistance payments (HAP) contracts with private owners who lease their
units to assisted families (24 CFR section 982.151).
In the tenant-based
Section 8 programs, the PHA verifies a family's eligibility (including
income eligibility) and then issues the family either a certificate or
voucher. The family generally has 60 days to locate a rental unit where
the landlord agrees to participate in the program. The PHA determines
whether the unit meets housing quality standards (HQS). If the PHA approves
a family's unit and lease, the PHA contracts with the owner to make HAPs
on behalf of the family. The PHA may not approve a lease unless the rent
is reasonable (24 CFR section 982.1(a)(2)).
Under the rental
certificate program, the rent and utility costs normally may not exceed
a HUD established fair market rent (FMR) for the unit size in the area,
and the tenant is generally required to pay 30 percent of adjusted monthly
income toward rent and utilities (the total tenant payment). The HAP made
by the PHA to the owner, makes up the difference between the rent the
owner charges for the unit and the amount of the total tenant payment.
However, the PHA has authority to approve over-FMR tenancies for up to
10 percent of the incremental rental certificates under the PHA's HUD-approved
budget. In an over-FMR tenancy, the initial gross rent may exceed the
FMR/exception rent limit and the tenant must pay the amount of the rent
that exceeds the FMR/exception rent limit in addition to the normal total
tenant payment.
Under the rental
voucher program, apart from the requirement that the rent must be reasonable
in relation to rents charged for comparable units in the private unassisted
market, there is no limit on the amount of rent that an owner may charge
for a unit or that the family may pay. Instead, the rental voucher subsidy
is set based on the difference between the PHA's payment standard for
the family's unit size and 30 percent of the family's monthly adjusted
income. This is the maximum amount of subsidy a family may receive regardless
of the rent the owner charges for the unit. Therefore, rental voucher
program participants may pay more or less than 30 percent of their monthly
adjusted income toward rent and utilities, depending on whether the gross
rent for the unit is more or less than the PHA's payment standard for
the unit. A family in the rental voucher program is required to pay at
least 10 percent of the family's gross income toward rent and utilities
(24 CFR part 982, subpart K).
If the cost of utilities
is not included in the rent to the owner, the PHA uses a schedule of utility
allowances to determine the amount an assisted family needs to cover the
cost of utilities. The PHA's utility allowance schedule is developed based
on utility consumption and rate data for various unit sizes, structure
types and fuel types. The PHA is required to review its utility allowance
schedules annually and to adjust them if necessary (24 CFR section 982.517).
The PHA must inspect
units leased under these programs at the time of initial leasing and at
least annually thereafter to ensure they meet HUD housing quality standards
(HQS). The PHA must also conduct supervisory quality control HQS inspections
(24 CFR sections 982.305 and 982.405).
Under the rental
certificate program, the PHA reviews and approves owner requests for annual
rent adjustments in accordance with HUD requirements and annual adjustment
factors which are published by HUD (24 CFR section 982.509).
PHAs are required
to maintain a HAP contract register or similar record in which to record
the PHA's obligation for monthly HAPs. This record must provide information
as to: the name and address of the family, the name and address of the
owner, dwelling unit size, the beginning date of the lease term, the monthly
contract rent payable to the owner, monthly rent payable by the family;
and the monthly HAP. The record shall also provide data as to the date
the family vacates and the number of days the unit is vacant, if any (24
CFR section 982.158).
The Section 8 Management
Assessment Program (SEMAP) is HUD's assessment program to annually and
remotely measure the performance of PHAs that administer the tenant-based
Section 8 programs. Under SEMAP, PHAs submit an annual certification,
Form HUD-52648 (OMB No. 2577-0215), to HUD concerning their compliance
with program requirements under 14 indicators of performance (24 CFR part
985).
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).
Source of Governing
Requirements
Section 8 rental
voucher and rental certificate program regulations are found in 24 CFR
parts 5, 982, and 985.
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
PHAs may use Section
8 rental voucher and certificate program funds for HAPs to participating
owners, and for administrative fees (24 CFR sections 982.151 and 982.152).
E. Eligibility
1. Eligibility
for Individuals
Most PHAs devise
their own application forms that are filled out by the PHA staff during
an interview with the tenant. The head of household signs: (a) one or
more release forms to allow the PHA to get information from third parties;
(b) a federally-prescribed general release form for employment information;
and (c) a privacy notice. Under some circumstances, other members of
the family may be required to sign these forms (24 CFR sections 5.212,
5.230, and 5.601 through 5.617).
The PHA must:
a. As a condition
of admission or continued occupancy, require the tenant and other
family members to provide necessary information, documentation, and
releases for the PHA to verify income eligibility (24 CFR sections
5.230, 5.609, and 5.617).
b. Verify
income eligibility and calculate the tenant's rent payment in accordance
with 24 CFR sections 5.613 and 982.516. This includes determining
adjusted gross income (including the value of assets totaling $5,000
or more, expenses related to deductions from annual income, and other
factors that affect the amount of assistance) and obtaining third
party verification of anticipated family annual income or documenting
in the tenant file why third party verifications were not possible
(24 CFR sections 5.601 through 5.617, and 982.201).
c. Select
tenants from the Section 8 waiting list (see "N.1, Selection from
the Section 8 Waiting List") (24 CFR sections 982.202 through 982.207).
d. Reexamine
family income and composition at least once every 12 months and adjust
the total rent and housing assistance payment as necessary. This includes
determining adjusted gross income (including the value of assets totaling
$5,000 or more, expenses related to deductions from annual income,
and other factors that affect the amount of assistance), obtaining
third party verification of anticipated family annual income or documenting
in the tenant file why third party verifications were not possible
(24 CFR sections 5.617 and 982.516).
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 Programs
- Not Applicable
d. SF-272,
Federal Cash Transactions Report - Not Applicable
e. HUD-52681,
Voucher for Payment of Annual Contributions and Operating Statement
(OMB No. 2577-0149) - submitted annually.
f. HUD-52595,
Balance Sheet for Section 8 and Public Housing (OMB No.
2577-0067) - submitted annually.
2. Performance
Reporting
HUD-52648, SEMAP
Certification - Addendum for Reporting Data for Deconcentration Bonus
Indicator (OMB No. 2577-0215) - PHAs with jurisdiction in metropolitan
FMR areas have the option of submitting data to HUD with their annual
SEMAP certifications on the percent of their tenant-based Section 8
families with children who live in, and who have moved during the PHA
fiscal year to, low poverty census tracts in the PHA's principal operating
area. Submission of this information with the SEMAP certification makes
the PHA eligible for bonus points under SEMAP (24 CFR section 985.3(h)).
Key Line Items
- The following line items contain critical information:
a. Line 1a
- Number of Section 8 families with children assisted by the HA in
its principal operating area at the end of the last HA fiscal year
(FY) who live in low poverty census tracts.
b. Line 1b
- Total Section 8 families with children assisted by the HA in its
principal operating area at the end of the last HA FY.
c. Line 1c
- Percent of all Section 8 families with children residing in low
poverty census tracts in the HA's principal operating area at the
end of the last HA FY.
d. Line 2a
- Percent of all Section 8 families with children residing in low
poverty census tracts at the end of the last completed HA FY.
e. Line 2b
- Number of Section 8 families with children who moved to low poverty
census tracts during the last completed HA FY.
f. Line 2c
- Number of Section 8 families with children who moved during the
last completed HA FY.
3. Special Reporting
HUD-50058, Family
Report (OMB No.2577-0083) - The PHA is required to submit
this form electronically to HUD each time the PHA completes an admission,
annual reexamination, interim reexamination, portability move-in, or
other change of unit for a family. The PHA must also submit the Family
Report when a family ends participation in the program or moves out
of the PHA's jurisdiction under portability (24 CFR part 908).
Key Line Items
- The following line items contain critical information:
a. Line 2b
- Effective Date of Action
b. Lines 3b,
3c - Names
c. Line 3e
- Dates of Birth
d. Line 3n
- Social Security Numbers
e. Line 5a
- Unit Address
f. Lines 5g,
5h - Unit Inspection Dates
g. Line 7m
- Total Annual Income
h. Line 11n
or 12q - Gross Rent of Unit
i. Lines 2e
and 16a - Family's Participation in the Family Self-Sufficiency
(FSS) Program
j. Line 16d(2)
- FSS Account Balance
N. Special Tests
and Provisions
1. Selection
from the Section 8 Waiting List
Compliance Requirement
- The PHA must have written policies in its Section 8 administrative
plan for selecting applicants from the waiting list and PHA documentation
must show that the PHA follows these policies when selecting applicants
for admission from the waiting list. Except as provided in 24 CFR section
982.203 (Special admission (non-waiting list)), all families admitted
to the program must be selected from the waiting list. "Selection" from
the waiting list generally occurs when the PHA notifies a family whose
name reaches the top of the waiting list to come in to verify eligibility
for admission (24 CFR sections 5.410, 982.54(d), and 982.201 through
982.207).
Audit Objective
- Determine whether the PHA is following its own tenant selection policies
in selecting applicants from the waiting list to become tenants.
Suggested Audit
Procedures
a. Review
the PHA's tenant selection policies.
b. Test a
sample of new tenants admitted to the program to ascertain if they
were selected from the waiting list in accordance with the PHA's tenant
selection policies.
c. Test a
sample of applicant names that reached the top of the waiting list
to ascertain if they were admitted to the program or provided the
opportunity to be admitted to the program in accordance with the PHA's
tenant selection policies.
2. Reasonable
Rent
Compliance Requirement
- The PHA's administrative plan must state the method used by the
PHA to determine that the rent to the owner is reasonable in comparison
to rent for other comparable unassisted units. The PHA determination
must consider unit attributes such as the location, quality, size, unit
type, and age of the unit, and any amenities, housing services, maintenance
and utilities provided by the owner. The PHA must determine that the
rent to the owner is reasonable at the time of initial leasing. Also,
the PHA must determine reasonable rent during the term of the contract:
(a) before any increase to the owner; and (b) at the HAP contract anniversary
if there is a 5 percent decrease in the published Fair Market Rent (FMR)
in effect 60 days before the HAP contract anniversary. The PHA must
maintain records to document the basis for the determination that rent
to owner is a reasonable rent (initially and during the term of the
HAP contract) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7),
and 982.503).
Audit Objective
- Determine whether the PHA is documenting the determination that the
rent is reasonable in accordance with the PHA's administrative plan
at initial leasing and during the term of the contract.
Suggested Audit
Procedures
a. Review
the PHA's method in its administrative plan for determining reasonable
rent.
b. Test a
sample of initial leases and ascertain if the PHA has documented the
determination of reasonable rent in accordance with the PHA's administrative
plan.
c. Test a
sample of leases for which the PHA is required to determine reasonable
rent during the term of the contract and ascertain if the PHA has
documented the determination of reasonable rent in accordance with
the PHA's administrative plan.
3. Utility
Allowance Schedule
Compliance Requirement
- The PHA must maintain an up-to-date utility allowance schedule. The
PHA must review utility rate data for each utility category each year
and must adjust its utility allowance schedule if there has been a rate
change of 10 percent or more for a utility category or fuel type since
the last time the utility allowance schedule was revised (24 CFR section
982.517).
Audit Objective
- Determine whether the PHA has reviewed utility rate data within the
last 12 months and has adjusted its utility allowance schedule if there
has been a rate change of 10 percent or more in a utility category or
fuel type since the last time the utility allowance schedule was revised.
Suggested
Audit Procedures
a. Review
PHA procedures for obtaining and reviewing utility rate data each
year.
b. Test data
on utility rates that the PHA obtained during the last 12 months and
ascertain, based on data available at the PHA, if there has been a
change of 10 percent or more in a utility rate since the last time
the utility allowance schedule was revised, and if so, verify that
the PHA revised its utility allowance schedule to reflect the rate
increase.
4. Housing Quality
Standards Inspections
Compliance Requirement
- The PHA must inspect the unit leased to a family at least annually
to determine if the unit meets Housing Quality Standards (HQS) and the
PHA must conduct quality control reinspections. The PHA must prepare
a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)).
Audit Objective
- Determine whether the PHA documented the required annual HQS inspections
and quality control reinspections.
Suggested Audit
Procedure
a. Review
the PHA's procedures for performing HQS inspections and quality control
reinspections.
b. Test a
sample of units for which rental assistance was paid during the fiscal
year and review inspection reports to ascertain if the unit was inspected.
c. Review
the PHA's reports of reinspections to ascertain if quality control
reinspections were performed.
5. HQS Enforcement
Compliance Requirement
- For units under contract that fail to meet HQS, the PHA must require
the owner to correct any cited life threatening HQS deficiencies within
24 hours of the inspections and all other HQS deficiencies within 30
calendar days or within a specified PHA-approved extension. If the owner
does not correct the cited HQS deficiencies within the specified correction
period, the PHA must stop (abate) HAPs beginning no later than the first
of the month following the specified correction period or must terminate
the HAP contract. The owner is not responsible for a breach of HQS as
a result of the family's failure to pay for utilities for which the
family is responsible under the lease or for tenant damage. For family-caused
defects, if the family does not correct the cited HQS deficiencies within
the specified correction period, the PHA must take prompt and vigorous
action to enforce the family obligations (24 CFR sections 982.158 and
982.404).
Audit Objective
- Determine whether the PHA documented enforcement of the HQS.
Suggested Audit
Procedures
a. Select
a sample of units with failed HQS inspections during the audit period
from the PHA's logs or records of failed HQS inspections.
b. Verify
that the files document that the PHA required correction of any cited
life threatening HQS deficiencies within 24 hours of the inspection
and of all other HQS deficiencies within 30 calendar days of the inspection
or within an PHA-approved extension.
c. If the
correction period has ended, verify that the files contain a unit
inspection report or evidence of other verification documenting that
any PHA-required repairs were completed.
d. Where the
file shows that the owner failed to correct the cited HQS deficiencies
within the specified time frame, verify that documents in the file
show that the PHA properly stopped (abated) HAPs or terminated the
HAP contract.
e. Where the
file shows that the family failed to correct the cited HQS deficiencies
within the specified time frame, verify that documents in the file
show that the PHA took action to enforce the family obligations.
DEPARTMENT
OF HOUSING AND URBAN DEVELOPMENT
CFDA 14.859 PUBLIC
HOUSING COMPREHENSIVE GRANT PROGRAM
I. PROGRAM OBJECTIVES
The objective of
the Comprehensive Grant Program (CGP) is to improve the physical quality
of housing provided to low income households through modernization and
development. Specifically, capital improvements, major repairs, management
improvements, and related planning costs are funded through CGP.
The objectives of
the modernization program are to: (1) improve the physical condition of
existing public housing developments; and (2) upgrade the management and
operation of such developments in order to assure that they continue to
serve low-income families.
The objective of
the development program is to provide Public Housing Authorities (PHA)
with the opportunity to build or acquire the number, type, and size of
units needed to house low-income families.
II. PROGRAM PROCEDURES
Grants are applied
to housing and related services occupied by low income residents, whose
income is typically at or below 50 percent of the Department of Housing
and Urban Development (HUD) adjusted median income for the area. CGP grants
are awarded to PHA's of 250 units or more of public housing via a formula
and may be used for modernization and development activities. (CFDA 14.852,
Public Housing Comprehensive Improvement Assistance Program applies to
PHAs with less than 250 units.)
Modernization Program
In the modernization
program HUD provides grant funds to the PHA to improve the physical condition
and upgrade the management and operation of existing public housing. In
planning its modernization programs, the PHA is required to consult with
residents and local government officials. After grant award, the PHA may
select an architect or engineer through competitive negotiation to develop
the plans and specifications for the construction work. Construction work,
as well as management improvements, may be carried out through contract
labor (competitively procured) or the PHA's own work force (force account).
The PHA or its architect monitors the work in progress for compliance
with contract requirements and acceptable work quality, and submits periodic
progress reports to HUD.
The PHA draws down
funds as needed to pay for accepted work through the Line of Credit Control
System, Voice Response System (LOCCS/VRS) on a three-day turnaround basis.
When work is completed, the PHA submits an Actual Modernization Cost
Certificate (AMCC) (OMB No. 2577-0157) to HUD.
Development Program
In the development
program, the PHA functions as a developer, owner, and manager of housing
projects. In a HUD-funded housing project, the PHA normally operates as
the development manager. As a developer, the PHA is responsible for obtaining
and maintaining local cooperation, for project planning, and for submitting
the application and the housing proposal. This includes selecting sites
or properties to be acquired, contracting with builders to construct or
rehabilitate housing, contracting with developers for the purchase of
completed (new or rehabilitated) housing, and purchasing existing housing
which may require repairs. Also, as a developer, the PHA is responsible
for selecting and contracting with other parties (e.g., architects and
engineers) and for expediting and coordinating the preparation of required
HUD submissions.
The PHA draws down
funds as needed to pay for accepted work through LOCCS/VRS on a three-day
turnaround basis. When work is completed, the PHA submits an Actual
Development Cost Certificate (ADCC) (OMB No. 2577-0036) to HUD.
Source of Governing
Requirements
This program is authorized
under 42 USC 14371. Implementing regulations are 24 CFR parts 941 and
968 subparts A and 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. Activities
allowed include capital improvements as well as major repairs, management
improvements, and planning costs and must be approved by HUD. The PHA
prepares a Comprehensive Plan in accordance with 24 CFR section 968.315
which includes a detailed physical and management needs assessment and
a Five Year Action Plan (HUD-52834, OMB No. 2577-0157) of proposed
modernization activities. This plan is updated every sixth year. On
an annual basis, the PHA provides HUD with its Annual Statement (HUD-52836,
OMB No. 2577-0157) in accordance with 24 CFR section 968.325(e)
which details the eligible activities to be funded with the current
year's grant and the estimated costs. HUD reviews and approves the activities
in the Annual Statement before the PHA can have access to the funds.
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 Programs
- Not Applicable
d. SF-272,
Federal Cash Transactions Report - Not Applicable
e. HUD-52837,
Annual Statement/Performance and Evaluation Report (OMB
No. 2577-0157) - At the end of the CGP program year the non-Federal
entity reports total actual cost for each grant with a separate Comprehensive
Grant Number for which funds are still being expended.
Key Line Items
- The "Total Actual Cost" columns in Parts I and II contain critical
information.
2. Performance
Reporting - Not Applicable
3. Special
Reporting - Not Applicable
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
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).
F. Equipment and
Real Property Management
Generally, when real
property that was acquired or improved using Indian CDBG program funds
in excess of $25,000 is disposed of, the Indian CDBG program must be reimbursed
for its fair share of the current market value of the property. If disposition
occurs after program closeout, the proceeds shall be used for allowable
activities and meeting the primary objective of the program (24 CFR section
953.504).
G. Matching, Level
of Effort, Earmarking
1. Matching
- Not Applicable
2. Level
of Effort - 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).
I. Procurement
and Suspension and Debarment
Sections__.36(i)(5)
(Compliance with the Davis-Bacon Act) and __.36(i)(6) (Compliance with
sections 103 and 107 of the Contract Work Hours and Safety Standards
Act) of the A-102 Common Rule do not apply to this program (24 CFR section
953.501(a)(13)).
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 - Applicable only during grant closeout.
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 Transactions Report - 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.