We audited the U.S. Department of Housing and Urban Development’s (HUD) Office of Native American Programs’ Indian Housing Block Grant program.  We selected the program based on concerns as to whether grantees invested, obligated, and spent program funds within the required period.  Our audit objective was to determine whether HUD’s Office of Native American Programs ensured that grantees invested, obligated, and spent program funds within HUD’s required time limits.

HUD generally ensured that grantees obligated, spent, and invested program funds within HUD’s required time limits in fiscal years 2015, 2016, and 2017.  However, for two of six grantees reviewed, HUD did not always ensure that the grantees maintained the required depository agreements to invest program funds in investment securities for use in carrying out affordable housing activities.  We attributed this condition to a weakness in HUD’s internal control, which included relying on the grantees to maintain the required depository agreements.  In addition, its Indian Housing Block Grant Recipient Self-Monitoring Guidebook included an expired requirement for investing program funds.  As a result, HUD did not fully ensure that all grantees maintained the required depository agreements to allow them to invest program funds for affordable housing activities, and the expired guidance in the Guidebook put grantees at risk of not complying with current requirements to meet program objectives.

We recommend that the Deputy Assistant Secretary of the Office of Native American Programs (1) obtain the required depository agreements for two grantees to ensure that they invest program funds in investment securities for use in carrying out affordable housing activities, (2) strengthen monitoring controls to ensure that current and future grantees maintain the required depository agreements before allowing them to invest program funds, and (3) update HUD’s Indian Housing Block Grant Recipient Self-Monitoring Guidebook to replace the expired requirements with the latest requirements to ensure that grantees remain compliant with requirements for investing program funds.