HUD OIG has initiated an audit of HUD's Community Development Block Grants (CDBG-Non-State) Grantee Federal Financial Reporting. Our objectives are to determine (1) whether the financial information collected from CDBG entitlement grantees is sufficient to monitor grantee financial reporting and performance as required by the CDBG program (24 CFR 570.502) and the Uniform Administrative Requirements (2 CFR 200); (2) whether HUD is properly reporting this information in accordance with the Statements of Federal Financial Accounting Standards (SFFAS); and (3) whether HUD’s monitoring of grantee’s excess cash on hand is sufficient to ensure compliance with cash management requirements (2 CFR 200.305b) and to safeguard funds against fraud, waste, and abuse as required by the Internal Control (2 CFR 200.303e). In prior financial statement audits we identified instances where it appeared CDBG grantees were holding advanced funds. This practice is against CPD’s requirements. We also learned that CPD has discontinued requiring the grantees to submit the Federal Financial Report (form SF-425), which is required by OMB to comply with the financial and performance monitoring requirements of the USC Title 2 Grants and Cooperative Agreements (2 CFR 200.300).