We audited the State of Louisiana's (State) additional compensation grant (grant) component of the Road Home homeowner assistance program, managed by the State's contractor, ICF Emergency Management Services, LLC (ICF). We initiated the audit in conjunction with the Office of Inspector General (OIG) Gulf Coast Region's audit plan and examination of relief efforts provided by the federal government in the aftermath of Hurricanes Katrina and Rita. During our audit to determine grant eligibility, we identified possible eligibility issues through a review of the electronic data. To immediately address the issues, we developed an additional objective to determine eligibility for those grants coded ineligible or lacking an eligibility determination.

Out of 22,135 grants, the State funded 418 (2%) grants coded ineligible or lacking an eligibility determination, totaling $15.8 million. This occurred because the State's contractor, ICF, did not have system controls in place to prevent these improper disbursements. File reviews of 26 (6%) of the 418 grants, determined, as of October 13, 2007, the State had misspent federal funds for 17 ineligible and for two unsupported grants. The remaining seven grants were eligible or had input or coding errors. As a result, the State will need to review the remaining 392 grants, which total over $14.6 million, as the disbursements are questionable.

We recommend the U.S. Department of Housing and Urban Development's (HUD) General Deputy Assistant Secretary for Community Planning and Development require the State to repay amounts disbursed for ineligible grants to its Road Home program; either support or repay amounts disbursed for unsupported grants; review all of the remaining 392 grants coded ineligible or lacking an eligibility determination and either support or repay the $14.6 million disbursed for them; and implement system controls to prevent future improper disbursements.