Finding 479689 (2023-006)

2023-006 ALN 14.872 - Capital Funds Program - Special Tests - Environmental Reviews Condition and Criteria: According to HUD regulations, specifically 24 CFR Part 58, PHAs are required to conduct environmental reviews for projects funded under the Capital Fund Program. These reviews ensure that the projects comply with the National Environmental Policy Act (NEPA) and other related federal environmental laws and authorities. Certain activities may be categorically excluded from NEPA, but documentation supporting these exclusions must be maintained. During our audit, the PHA was unable to provide the environmental reviews or documentation supporting categorically excluded activities for CFP 501-21 and 501-22 grants during the audit period. There was no evidence that required environmental assessments or justifications for categorical exclusions were completed and retained. Amount of Questioned Costs: None Context: The Authority was unable to provide the environmental reviews or documentation supporting categorically excluded activities for CFP 501-21 and 501-22 grants during the audit period. Cause: The cause of this non-compliance appears to be inadequate oversight and internal controls under prior management regarding the environmental review process. The PHA did not have established procedures to ensure that environmental reviews were conducted and properly documented for all applicable projects. Effect: As a result, the PHA was not in compliance with HUD’s environmental review requirements. This non-compliance could result in projects being implemented without proper environmental safeguards, potentially leading to negative environmental impacts and jeopardizing federal funding. Auditor’s Recommendation: We recommend that the PHA implement procedures to ensure that all required environmental reviews are conducted and documented in accordance with 24 CFR Part 58. This includes maintaining a record of environmental assessments, justifications for categorical exclusions, and any other related documentation. Additionally, the PHA should provide training for staff responsible for overseeing the environmental review process to ensure compliance with federal requirements. Grantee Response: The Executive Director agrees with the finding and will follow the Auditor's recommendation.