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We audited the U.S. Department of Housing and Urban Development’s (HUD) Office of Community Planning and Development’s administration of Economic Development Initiative – Special Project and Neighborhood Initiative congressional grants.  This review was prompted by our Financial Audit Division’s 2012 review, which reported that HUD did not have effective controls to monitor its obligated congressional grant funds.[1]  Our audit objective was to determine whether HUD administered these congressional grants in accordance with its requirements; specifically, whether HUD ensured that grantees executed funded projects in accordance with applicable agreements and requirements.

HUD did not ensure that congressional grant funds were administered in accordance with HUD requirements.  Specifically, it did not always ensure that the accuracy of obligated grants and spent grant funds was supported in keeping with HUD requirements and internal policies and procedures.  In addition, HUD approved a project that was not eligible for program funding.  This condition occurred because HUD did not always monitor its congressional grants to ensure accurate reporting for compliance with grant agreements, objectives, and its own policies and procedures.  As a result, more than $4.1 million in grant funds was unsupported, and $343,000 in grant funds was spent on an ineligible project.

We recommend that HUD’s Deputy Assistant Secretary for Operations (1) support the eligibility of the more than $4.1 million in unsupported costs; (2) require one grantee to repay $343,000 from non-Federal funds for incurred ineligible program costs; and (3) improve its monitoring of congressional grants through closeout to ensure compliance with grant agreements, objectives, and policies and procedures.