We audited the City of Baltimore, MD's Homelessness Prevention and Rapid Re-Housing Program grant because (1) its $9.5 million grant was the largest grant in the State of Maryland, (2) it had disbursed $6.6 million of its grant funds as of December 2011, and (3) we have a mandate to audit American Recovery and Reinvestment Act of 2009 activities. The audit objective was to determine whether the City properly obligated and expended grant funds and monitored activities for compliance with Recovery Act requirements.

The City did not properly obligate and expend grant funds, and it generally did not monitor activities for compliance with Recovery Act requirements. Specifically, the City authorized reimbursements for program expenses based on prorated amounts rather than actual expenses, could not support all expenditures, used grant funds for potentially ineligible activities, and generally did not monitor the activity of its fiduciary agent and subgrantees. In addition, HUD’s monitoring review disclosed many problems with the City’s administration of the grant.

We recommend that HUD require the City to provide all of the documentation it collected supporting its actions to satisfy the key corrective measures prescribed in HUD’s March 16, 2012, monitoring letter and we also recommend that HUD review the documentation provided by the City to demonstrate that it used $9.5 million in grant funds only for eligible services for eligible participants and require the City to reimburse HUD from non-Federal funds for any amount that it cannot support.