Hurricane recovery grants audited in La.

Hurricane recovery grants audited in La.

	Published : Mon, 29 Oct 2007 23:14 By : Agencies Print this Story

BATON ROUGE, La. (AP) - Businesses that received grants from a hurricane recovery program run by the Louisiana Department of Economic Development didn't always have required documents and, in some cases, appeared to be ineligible for grants they received, according to a new audit.

More than three-fourths of the grant recipient applications reviewed by Legislative Auditor Steve Theriot's office were missing documents, like required financial records, so the auditors couldn't determine if the applicants were eligible for the grants they received, according to the 68-page audit released Monday.

Ten percent of the files reviewed showed applicants who received grants should have been rejected because they weren't eligible, the audit says.

Because of the problems, the economic development department temporarily stopped payments to grant recipients, prompting complaints from lawmakers who said the program was desperately needed to help small businesses rebuild and stay afloat after hurricanes Katrina and Rita.

The Louisiana Recovery Authority created the small business recovery program -- which also includes loans for businesses -- in August 2006 with federal recovery block grant dollars, but made later changes to the program and increased its funding. More than $211 million has been set aside for the program.

The grants are doled out in rounds, and future rounds are planned. The audit reviewed the first round of grants.

Auditors reviewed the files of 68 businesses that received grants through the recovery program of the 3,438 applications that were approved. Fifty-three of those files -- for $979,319 in grants -- were missing pieces of information that were supposed to be required to receive grants. Seven of the files -- or $126,838 in grants -- should have been rejected, the audit says.

Seven intermediary agencies were hired by LED, the LRA and the governor's Office of Community Development to administer the program. Those community based lending organizations included nonprofit agencies, business development groups and a credit union.

The audit says the economic development department fast-tracked the program without developing a set of formal procedures governing it and then continuously changed the guidelines as the program continued, causing confusion among applicants and the intermediaries.

The department also didn't monitor the intermediaries to make sure grants were awarded properly, the audit says.

'If the agency had given itself adequate time to collect and review the first round grant applications, it could have better ensured that only eligible applicants received a grant,' the audit says.

Economic Development Secretary Mike Olivier included a written response to the audit that said his department has hired more staff, is refining the guidelines and policies governing the program and will have better training and monitoring in place before the second round of grants is awarded in early 2008.

In its response, the Office of Community Development referenced communications problems between the agencies as a problem in the first round of the grant program but said both LED and OCD have worked to improve the situation.