Audit of USAID/Dominican Republic"s housing reconstruction activities

Audit report covers the period 2/99-9/00. The project is being implemented by the Cooperative Housing Foundation (CHF). The Mission is on track to complete all new housing construction activities on time. Current plans are to complete the 2,250 new houses by 8/01. However, for the housing repair activity, the Mission has decided to repair only 1,541 houses vs. the original target of 2,750 in order to include water and sanitation facilities in the new homes component. The Dominican government has verbally agreed to provide cost sharing for these facilities. The successful completion of the housing reconstruction activity could depend on obtaining this cost sharing contribution. More specifically, CHF has signed 26 subagreements with 12 NGOs to construct 1,402 houses and repair 1,291 homes, for a total of 2,693 housing solutions -- over half of the 5,000 houses in the approved work plan. Since construction began in 4/00, 596 new houses and 370 housing repairs have either been completed or are expected to be completed by 9/30/00. In addition, CHF has stayed within the project budget by limiting new housing construction proposals to a cost of $2,500 per unit and housing repair proposals to $300 per unit. CHF requires that any costs above these levels must be absorbed by the implementing NGO as cost sharing. As of 9/22/00, total disbursements to NGOs under the construction subagreements totaled $2.7 million. As a result of the Mission"s decision to focus more on new housing construction with water and sanitation facilities, only 3,791 families will be assisted vs. the original target of 5,000 families. These changes should be formalized in writing between USAID and CHF in order to clarify the expectations of both parties to the agreement. (The Mission has already begun to implement this recommendation.) The Mission has generally implemented an adequate monitoring system for the housing reconstruction activities. A reconstruction team has made numerous visits to the housing construction sites to ensure proper implementation and monitor progress. In addition, the project budget includes funds for monitoring activities. The Mission also contracted a local accounting firm to perform a concurrent financial statement audit of the CHF agreement. Documentation of project monitoring could be made more effective, however, e.g., by using trip reports to document visits to housing reconstruction sites. In addition, the substantial involvement clause of the CHF cooperative agreement requires, among other things, that the Mission approve the subawards between CHF and the NGOs. Mission approval of the housing construction work sites is also required. There is no documentary evidence of these required approvals.