We initiated our audit in accordance with our strategic goal to provide the U.S. Department of Housing and Urban Development (HUD) with services and products to address vulnerabilities, to provide opportunities for improvements, and to recognize positive outcomes. The audit objective was to determine whether the HUD Office of Community Planning and Development (CPD) monitored and ensured that its Disaster Relief Appropriations Act, 2013, grantees complied with the Act’s 24-month statutory expenditure requirement.
Although it monitored grantees, CPD did not enforce the 2013 Act’s 24-month grantee expenditure requirement. Specifically, CPD allowed the six grantees reviewed to either (1) spend more funds than they had obligated and budgeted, (2) record expenses before an amendment was executed, or (3) record expenses after the 24-month expenditure deadline. These issues occurred because CPD’s actions showed that it did not strictly enforce the Act and its Disaster Recovery Grants Reporting system had material control weaknesses. Further, HUD’s Office of the Chief Financial Officer did not use its financial controls to monitor compliance with the Act. As a result, CPD allowed grantees to improperly receive payments totaling $526 million as of January 19, 2018. In addition, it allowed grantees to revise 1,333 vouchers totaling $1.8 billion from the month in which the original voucher was created to 3 years later. CPD also did not recapture and reallocate unspent funds totaling $524,289, and it did not ensure that grantees reported their activities and expenses in a transparent manner. If CPD does not correct the identified issues, grantees risk misspending $413 million of the remaining $6.2 billion in unspent 2013 Act Community Development Block Grant (CDBG) Disaster Recovery funds as of January 19, 2018.
We recommend that CPD require the grantees to repay a total of $526 million in ineligible payments made (1) in excess of the amount obligated for a round, (2) before a grant round agreement was executed, (3) after a grant round agreement expired, and (4) with funds that should have been recaptured. We also recommend that CPD (1) adopt and enforce new written policies, procedures, and internal controls for CDBG Disaster Recovery funds that have a statutory expenditure deadline and (2) take action to correct and address the DRGR system material internal control weaknesses.
Recommendations
Community Planning and Development
-
Status2019-FW-0001-001-AOpenClosed$167,254,244.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on Marzo 31, 2020We recommend that Deputy Assistant Secretary for Grant Programs require two grantees to repay $167,254,244 for grants funds spent in excess of the amount obligated for a round.
-
Status2019-FW-0001-001-BOpenClosed$24,409,255.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on Marzo 31, 2020We recommend that Deputy Assistant Secretary for Grant Programs require five grantees to repay $24,409,255 for grant funds spent before the grantee had signed a grant round agreement obligating the funds.
-
Status2019-FW-0001-001-COpenClosed$334,441,871.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on Julio 01, 2020We recommend that Deputy Assistant Secretary for Grant Programs require four grantees to repay $334,441,871 for grant funds spent by the grantee after the grant round’s 24-month expenditure deadline had expired.
-
Status2019-FW-0001-001-DOpenClosed$524,289.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on Marzo 31, 2020We recommend that Deputy Assistant Secretary for Grant Programs recapture $524,289 in grant funds, which the grantee had not reported spent by the grant round expenditure deadline, and return the funds to the U.S. Treasury as HUD can no longer reobligate the funds.
-
Status2019-FW-0001-001-EOpenClosed$413,530,414.00Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
Closed on Julio 01, 2020We recommend that Deputy Assistant Secretary for Grant Programs adopt and enforce new written policies, procedures, and internal controls for all CDBG Disaster Recovery funds that have a statutory grantee expenditure deadline, which will ensure that $413,530,414 in 2013 Act funds will be put to better use.
-
Status2019-FW-0001-001-FOpenClosedClosed on Julio 01, 2020
We recommend that Deputy Assistant Secretary for Grant Programs take action to correct and address the DRGR system material internal control weaknesses identified in this report.