July 30, 2015
Selected Recipients of Maryland Weatherization Assistance Program Funds
The Department of Energy's (Department's) Weatherization Assistance Program (Program) provides weatherization grants to states, territories, Indian tribes, and the District of Columbia to improve the energy efficiency of low-income family homes. Since 2009, the State of Maryland has received approximately $74 million in weatherization funding, including $64 million provided from the $5 billion in American Recovery and Reinvestment Act of 2009 weatherization funding received by the Department. In Maryland, the Department of Housing and Community Development (DHCD) administers the Program through 19 local weatherization agency subgrantees (local agencies) comprised of 11 nonprofit agencies and 8 local governments. Local agencies provide weatherization services by county, using Program funds as well as funding from other sources.
In December 2013, the Office of Inspector General received a complaint containing allegations of unethical and improper accounting practices by two local agencies in DHCD's Program: C&O Conservation, Inc. (C&O) and Maryland Energy Conservation, Inc. (MEC). The complaint also included one of MEC's contractors, House Warmers, LLC. In response, we initiated an audit to determine whether these subrecipients had effectively and efficiently managed Program funds.
Several serious aspects of the allegation were substantiated. We determined that C&O and MEC engaged in improper and, in our view, unethical accounting practices; C&O and MEC engaged in related-party transactions, which were highly troubling and resulted in potentially unallowable costs; and C&O used Program funds for the personal benefit of inside directors, which included potentially unallowable and misclassified personal credit card expenses. Although personal responsibility was at its core, the audit disclosed an operating environment that allowed significant deficiencies in subgrantee accounting systems.
Topic: Management & Administration