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The U.S. Department of Housing and Urban Development's Office of Inspector reviewed Cook County’s (County) Neighborhood Stabilization Program. The review was part of the activities in our fiscal year 2009 annual audit plan. We selected the County based upon the results of our three previous audits of the County’s HOME Investment Partnerships Program (HOME). Our objective was to determine whether the County had the capacity to effectively and efficiently administer its Neighborhood Stabilization Program. Congress amended the Neighborhood Stabilization Program and increased its funding as part of the American Recovery and Reinvestment Act of 2009 (Recovery Act). The County, as part of a consortium, submitted an application to HUD, dated July 14, 2009, which totaled more than $75 million in additional Neighborhood Stabilization Program funds under the Recovery Act. We found that the County needs to improve its capacity to effectively and efficiently administer its Neighborhood Stabilization Program since it had not established sufficient policies, procedures, and controls for its Program as of September 9, 2009. Further, the County should have sufficient staff to administer its Neighborhood Stabilization Program if it implements the revised staffing plan and budget provided to us on August 5, 2009; hires individuals with experience in the planned activities; and provides adequate training. Lastly, we found that HUD’s Chicago Office of Community Planning and Development did not include special conditions in its Neighborhood Stabilization Program grant agreement with the County.