Audit of Community Development Block Grant (CDBG) Funds

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Auditof Community Development Block Grant (CDBG) Funds

Auditof Community Development Block Grant (CDBG) Funds

QUESTION#1: Write the audit objectives for this engagement that you willannounce to the mayor of the city.

Theobjective of this audit engagement is to suffice the HUD, through theoffice of the Inspector General for Audit, a health check of thelarge urban city`s use of the Community Development Block Grant fundsto the tune of $600 million. A focus will be made on examining recordkeeping and the internal control procedures for the CDBG program inorder to assist and city Planning and Development department onimplementing recommendations. The audit will examine existing fundsmanagement practices with the intention to provide necessaryrecommendations to improve and enhance current procedures andpolicies in relation to the set practices. Also, the engagement willfocus on whether planning and development complies with writtenpolicies and this can be achieved through carrying out a riskassessment exercise and establishing the availability of a plan tomonitor the projects.

Thescope of the SDBG audit is designed to make an assessment of internalcontrol procedures and record keeping practices for the fund. Thescope is expected to be accomplished by collection, review andtesting of relevant and strongly sufficient supportive documents toenable in attaining the required audit objective (Hayes,Wallage &amp Gortemaker, 2014).The Audit is aimed at assessing and evaluating the monitoring andadministration of the grants and this objective is to be attainedthrough a focus on the state of planning and development of riskassessment tools used, the level of monitoring high risk projects,evidence of annual audit of all projects and programs, presence ofsigned written agreements before commitment of funds to the projects,and whether requirements for record keeping are maintainedaccordingly.

QUESTION#2: What type of background information will you gather and why,prior to starting your field work?

Oncethe objective of the CDBG audit and available resources for carryingout the exercise is clear, a critical preparation step insuccessfully completing the audit is to understand the urban city,how it manages its funds and its long tern plans on how to handlegrants. This is an important precondition plays a vital role in thepreparation of the audit plan that lays the foundation for the auditprocess. Information on whether the urban city has written policieson funds management, follows certain procedures, engages thecommunities in its activities, and whether projects fit on thecommunities needs will also be looked into. Apart from listening tofeedback from the residents in the urban city, the audit will seek toestablish whether sub recipients provide proof of their expenditureto support any form of spending of the grant funds on the designatedprojects.

Backgroundinformation that is necessary for conducting a successful audit planinvolves gathering information on the urban city and how it managesits grants, this will grant the opportunity to provide a focused,comprehensive, cost-effective and timely audit report. Another focuswill be on internal and external relations between the urban city andother stakeholders especially sub recipients of the funds.Information on how the urban city relates with the employees,consultants, partners, and independent contractors will be criticalin shaping the audit outcome. Also, background information on whatrole the CDBG grant plays in the city, and how the city interactswith the communities will also be explored.

Anotherfocus on background information aspect will be on whether theactivities/projects funded meets the national objectives ofbenefiting low income persons, aids in elimination or prevention ofslums, meets urban development needs. Also, information on whetherthere is involvement of citizens in the processes will also beimportant in establishing whether the grant funds meets theobjectives set.


Hayes,R., Wallage, P., &amp Gortemaker, H. (2014).&nbspPrinciplesof auditing: an introduction to

internationalstandards on auditing.Pearson Higher Ed.