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Report Fraud, Waste and Abuse
September 30, 2011
  • Chief Financial Officer
2011-FO-0006
ig11f0006.pdf

We audited the U.S. Department of Housing and Urban Development’s (HUD) compliance with initial expenditure requirements related to six programs funded by the American Recovery and Reinvestment Act of 2009 (ARRA). The objectives of our audit were to determine whether (1) HUD grantees complied with their initial expenditure requirements; (2) recaptures were properly recorded and controls over the recapture process existed and complied with the Pay It Back Act; and (3) ARRA funds control plans were appropriately modified to include Pay It Back Act requirements.

Our review determined that HUD met the initial expenditure requirements for five of the six ARRA programs under review. Additionally, the remaining program was on track to meet its initial expenditure requirement by its specific expenditure deadline. However, HUD had $20.85 million in recaptured ARRA funds that must be returned to the U.S. Treasury’s general fund. Additionally, $6.2 million in available funds, which were recaptured before the Pay It Back Act, had not been reallocated and should be sent back to the U.S. Treasury.

We also found that the grant closeout process for two of the six programs may have caused noncompliance with ARRA. Lastly, we found that funds control plans for the selected programs had not been modified to include Pay It Back Act requirements, or modifications had not been reviewed and approved by OCFO.

We recommend that OCFO immediately return $20.85 million in recaptured ARRA funds to the U.S. Treasury general fund in accordance with the Pay It Back Act. Additionally, we recommend that TCAP immediately recapture $6.2 million in deobligated funds to ensure immediate return to the U.S. Treasury. Further, we recommend that HUD direct the ARRA program offices to review and, if necessary, revise grant closeout and fund retention policies and procedures to ensure that funds are expended or recaptured in accordance with ARRA requirements. Finally, we recommend that OCFO review all ARRA funds control plans to determine whether the plans have been appropriately modified and approved to include Pay It Back Act requirements.