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We completed a review of the Rhode Island Housing’s HOME Investment Partnerships Program based on an Office of Inspector General risk assessment of New England HOME recipients that considered the amount of funding provided and prior audit and monitoring findings.  Our audit objectives were to determine whether Rhode Island Housing officials awarded HOME funds to grantees in a reasonable and supported manner and whether HOME funds were disbursed in accordance with U.S. Department of Housing and Urban Development (HUD) rules and regulations.

Our review determined that Rhode Island Housing officials disbursed HOME funds for questionable expenditures.  Specifically, they disbursed HOME funds for (1) expenses incurred before the HOME agreement was executed, (2) expenses not included in the HOME agreement, (3) expenses that exceeded the budget allocation, and (4) an activity for which they did not obtain a deed restriction and support all of the costs incurred.  In addition, officials executed a HOME agreement that did not comply with Federal regulations and approved a HOME application with inaccurate costs.  As a result, they could not assure HUD that reasonable and necessary costs were charged to the HOME program, and more than $2.3 million in HOME funds was questioned.  In addition, officials did not always properly award and support HOME funds disbursed to community housing development organizations (CHDO).    As a result, officials could not assure HUD that $83,580 in HOME funds was allocated and disbursed in compliance with HOME requirements.

We recommend that HUD require Rhode Island Housing officials to reimburse HUD $887,544 from non-Federal funds for ineligible costs and provide support for more than $1 million in costs.  If sufficient support cannot be provided, officials should seek reimbursement from non-Federal funds and redistribute $500,000 in HOME funds to other eligible HOME activities.