We audited the State of Alabama, Department of Economic and Community Affairs' (State), Hurricane Katrina Community Development Block Grant Disaster Funds program (program), administered by the State's subrecipient, the City of Bayou La Batre (Bayou La Batre). Our objective was to determine whether the State and Bayou La Batre administered the program in accordance with the requirements of their grant agreements. We initiated the audit as part of the Office of Inspector General Gulf Coast Region's audit plan and examination of activities related to Gulf Coast hurricane disaster relief efforts.

What we found in general, the State and Bayou La Batre properly administered the program by adequately documenting the housing applicants' use of financial assistance provided by other sources, ensuring that housing applicants did not receive a duplicate benefit. The State also ensured that Bayou La Batre adequately supported and expended program funds only for eligible costs.

Since the State ensured that Bayou La Batre properly administered its program in accordance with the requirements of its grant agreements, we did not recommend corrective action.