We audited the Homeowner's Assistance Grant Program (Program), a component of the State of Mississippi's (State) administration of the $5.058 billion in Community Development Block Grant disaster recovery funds provided to the State in the aftermath of Hurricane Katrina. The State allocated $3 billion to help homeowners in Southern Mississippi recover from Hurricane Katrina. The audit objectives were to determine whether the State and/or its contractor (1) allowed only eligible homeowners to participate in the Program and (2) implemented adequate controls to prevent the homeowners from receiving duplication of benefits.

The State and its contractor had controls to ensure that only eligible homeowners participated in the Program. One of the 103 applicants reviewed was not eligible for the Program because the applicant did not meet one or more of the five eligibility requirements. The ineligible applicant received $16,871 in grant assistance. In addition, the State and its contractor had adequate controls to prevent homeowners from receiving duplicate benefits for the same damage. Of the 103 applicants reviewed, only one received a duplication of benefits totaling $3,700.

We recommend that the HUD require the Authority to repay the Program $20,571 for ineligible costs.