Determine if the remaining risk mitigation expenses of $185,731 drawn from ESG CARES Act funds were reasonable and necessary in accordance with program requirements or repay HUD from non-federal funds.
Publication Report
2026-LA-1003 | March 17, 2026
California Department of Housing and Community Development Needed Stronger Controls to Prevent Improper Payments in Its ESG CARES Act Program
In August 2024, we issued an audit report on the California Department of Housing and Community Development’s (HCD) fraud risk management practices, finding that HCD was not adequately prepared to prevent, detect, and respond to fraud due to the lack of… moreRelated Recommendations
Housing
- Status2026-FW-1003-002-AOpenClosed$31,275,000.00Questioned Costs
Recommendations with questioned costs identify costs: (A] resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B] that are not supported by adequate documentation (also known as an unsupported cost]; or (C] that appear unnecessary or unreasonable.
Require PRDOH to submit supporting documentation so HUD can evaluate the basis of the contract amendments and determine the eligibility of more than $31 million in disaster recovery funds. If HUD determines that the contract amendments were not supported, PRDOH must reimburse HUD from non-Federal funds.
Community Planning and Development
- Status2026-LA-1003-001-AOpenClosed$964,952.00Questioned Costs
Recommendations with questioned costs identify costs: (A] resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B] that are not supported by adequate documentation (also known as an unsupported cost]; or (C] that appear unnecessary or unreasonable.
Repay ineligible landlord holding fees of $964,952 drawn from ESG CARES Act funds to HUD from non-federal funds.
- Status2026-LA-1003-001-BOpenClosed$58,878.00Questioned Costs
Recommendations with questioned costs identify costs: (A] resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B] that are not supported by adequate documentation (also known as an unsupported cost]; or (C] that appear unnecessary or unreasonable.
Determine if the $58,878 drawn for 18 signing bonuses or additional security deposits from ESG CARES Act funds were reasonable under the program participant’s particular circumstances, and not more than necessary to house the program participants or repay HUD from non-federal funds.
- Status2026-LA-1003-001-COpenClosed$6,549.00Questioned Costs
Recommendations with questioned costs identify costs: (A] resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B] that are not supported by adequate documentation (also known as an unsupported cost]; or (C] that appear unnecessary or unreasonable.
Repay risk mitigation overpayments of $6,549 drawn from ESG CARES Act funds to HUD from non-federal funds.
- Status2026-LA-1003-001-EOpenClosed$96,561.00Questioned Costs
Recommendations with questioned costs identify costs: (A] resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B] that are not supported by adequate documentation (also known as an unsupported cost]; or (C] that appear unnecessary or unreasonable.
Support the cost reasonableness of $96,561 drawn from ESG CARES Act funds for the kitchen services contractor or repay HUD from non-federal funds.
- Status2026-LA-1003-001-FOpenClosed
Develop and implement additional written procedures and internal controls for the annual ESG program to ensure that it, and its subrecipients, do not charge holding fees and risk mitigation costs as expenses to the program, and that contracts are properly executed and maintained.