We reviewed the U.S. Department of Housing and Urban Development’s (HUD) Office of Community Planning and Development’s (CPD) risk assessment procedures as they relate to subrecipient involvement in CPD programs.  We initiated the audit due to observations by HUD Office of Inspector General (OIG) auditors of frequent subrecipient-related findings in CPD external audits.  Our objective was to determine whether CPD’s risk assessments were adequate for evaluating grants administered or carried out by subrecipients.

CPD had established and implemented an adequate risk assessment process for developing monitoring strategies for grants administered or carried out by subrecipients.  From 2008 to 2012, HUD OIG issued 44 CPD reports with subrecipient deficiencies showing $104 million in questioned costs or funds that could have been put to better use.  During this period, CPD had continuously reevaluated its overall risk assessment process.  It had increased efforts to identify subrecipient-related issues by revising the risk factors specific to subrecipient involvement in its grants.  The actions that CPD took, as well as additional planned actions, should result in improved identification and monitoring of the grants most susceptible to waste, fraud, abuse, and mismanagement.
Our audit identified no reportable deficiencies; therefore, there are no recommendations.