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HUD OIG performed an audit of the State of Alabama Department of Economic and Community Affairs, Homelessness Prevention and Rapid Re-Housing Program in Montgomery, Alabama. The audit was part of the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General’s (OIG) annual audit plan to review grant activities funded by the American Recovery and Reinvestment Act of 2009 (Recovery Act). We selected the grantee because it received $13.1 million, which was the largest single Program grant awarded within Alabama under the Recovery Act. In addition, the HUD Birmingham Office of Community Planning and Development had not conducted a monitoring review of the grantee. The objective of the audit was to determine whether the grantee administered the grant in compliance with the Recovery Act and other applicable regulations to ensure that (1) it properly reported results on the Recovery.gov Web site, (2) it properly monitored its subgrantees, and (3) program participants and activity expenditures were eligible and their eligibility was supported.

The grantee adequately reported results on the Recovery.gov Web site. However, it did not ensure that its subgrantees’ Program participants and activity expenditures were eligible and their eligibility was supported. As a result, the grantee missed opportunities to detect and prevent errors by its subgrantees on a timely basis. Consequently, Program funds totaling $69,036 were paid for participants who were not eligible or whose eligibility was not supported.

OIG recommended that the Director of HUD’s Birmingham Office of Community Planning and Development require the grantee to repay the U.S. Treasury account from non-Federal funds the ineligible costs of $1,075 charged to its Program and properly support the $67,961 charged to its Program or repay the U.S. Treasury account from non-Federal funds the amount that it cannot support.