We audited the City of Bethlehem, Pennsylvania’s (City) community planning and development program. On March 6, 2009, the U.S. Department of Housing and Urban Development (HUD) awarded the City $1.1 million under the American Recovery and Reinvestment Act of 2009 (Recovery Act) for its community planning and development program. The U.S. Office of Management and Budget directed the Inspectors General to perform audits to ensure that funds provided under the Recovery Act are used for their intended purposes. Our objective was to determine whether the City had the capacity to effectively administer its community planning and development funds provided under the Recovery Act according to applicable requirements. The City had the capacity to effectively administer community planning and development funds provided to it under the Recovery Act according to the applicable requirements. The City had adequate internal control procedures pertaining to accounting controls, staffing levels, personnel operating policies, monitoring of subrecipients, procurement of goods and services, and establishment of program guidelines that are in compliance with HUD requirements. A recent HUD OIG audit and other reviews disclosed no major problems with the City’s program. The City is planning to use its Recovery Act funds on eligible activities that meet the objectives of the programs and the Recovery Act. Since we did not identify any deficiencies, there are no recommendations.