The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General conducted a limited scope internal review of Office of Healthy Homes and Lead Hazard Control (Healthy Homes) to determine whether Healthy Homes allowed excessive administrative costs to be charged to the Lead-Based Paint Hazard Control grant program. This review was the result of the audit of the Washington State Lead Hazard Control grant (2012-SE-1005, August 9, 2012), which found excessive administrative costs charged to the grant.

Healthy Homes did not have an adequate system in place to ensure that grantees did not spend more than 10 percent of their Lead Hazard Control grant funds on administrative costs. This condition occurred because HUD management thought administrative costs posed little risk to the Lead Hazard Control grant program. As a result, Healthy Homes lacked assurance that grantees did not charge excessive administrative costs to their Lead Hazard Control grants. Healthy Homes’ management agreed to strengthen the controls over Lead Hazard Control administrative costs.