We completed a capacity review of the County of San Bernardino’s (County) Neighborhood Stabilization Program (Program). We performed the audit because Housing and Economic Recovery Act of 2008 reviews are part of the Office of the Inspector General’s annual audit plan and the Program was identified as high risk. In addition, the County was awarded significant Program funds of $22.7 million. Our objective was to determine whether the County had sufficient capacity and the necessary controls to manage and administer the Program. We found the County generally had questionable capacity to administer its allocation of Program funds. It had difficulty committing and spending its Program funds in a timely manner and had not been on track to meet the required 18-month obligation deadline, having obligated zero dollars toward its Program activities. In addition, it could improve internal controls for its two rental property acquisition and rehabilitation Program activities and Program monitoring by developing separate, specific, and well-documented policies and procedures for those activities. We recommend that the Director of the Los Angeles Office of Community Planning and Development require the County to (1) reevaluate its current strategies and consider modifications, including pursuing other, more attainable Program activities, and/or immediately return any Program funds to HUD that are not anticipated to be obligated by the 18-month deadline; (2) obtain technical assistance from the HUD Office of Community Planning and Development; (3) create and maintain policies and procedures specific to the Program acquisition and rehabilitation of rental property activities; and (4) create and maintain policies and procedures specific to Program-monitoring activities.