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We completed a corrective action verification of a recommendation made to the U.S. Department of Housing and Urban Development’s (HUD) Office of Public and Indian Housing (PIH) pertaining to our review of the City of Hawthorne, CA’s Section 8 program, Audit Report 2011-LA-1008, which was issued March 28, 2011. The purpose of the corrective action verification was to determine whether HUD officials appropriately closed audit recommendation 1A. We found that HUD officials inappropriately closed the recommendation by using at least $768,541 in Federal funds as an offset against questioned Section 8 costs. We therefore recommend PIH reopen the recommendation in HUD’s Audit Resolution and Corrective Action Tracking System.