We audited the New York Rising Home Enhanced Buyout Program to address the requirement that the U.S. Department of Housing and Urban Development, Office of Inspector General, monitor the expenditure of Community Development Block Grant Disaster Recovery (CDBG-DR) funds made available by the Disaster Relief Appropriations Act.  Our audit objective was to determine whether New York State officials established adequate controls to ensure that funds were used for eligible activities and reasonable expenses and procurement actions complied with Federal regulations. 

State officials did not always administer the program in accordance with program procedures and their partial action plan, ensure that property eligibility and the purchase price were adequately supported, maintain documentation to support that procurement actions complied with Federal and State requirements, and post required information to a Web site.  We attributed this condition to the State’s failure to follow published State procedures, weaknesses in maintaining file documentation, and officials’ unfamiliarity with Federal procurement regulations.  As a result, officials disbursed $6.6 million for properties that did not conform to published requirements and $672,000 and $598,300 for ineligible incentives and purchase prices in excess of authorized limits, respectively, and documentation was inadequate to support that $1.7 million was disbursed for eligible purchases and that $8.7 million spent for contracts complied with Federal or State requirements.  State officials had taken some corrective actions, thus ensuring that an additional $16.5 million would be put to its intended use.

We recommend that the Deputy Assistant Secretary for Grant Programs require State officials to (1) provide documentation to support that 19 properties, for which more than $6.6 million was disbursed, complied with the State’s partial action plan and the intent of its board resolution authorizing the buyout program; (2) repay ineligible incentives and purchase prices of $672,000 and $598,300, respectively; (3) provide support for more than $1.7 million in unsupported expenditures and that $8.7 million was disbursed for contracts procured in accordance with requirements; and (4) ensure that contracts and subrecipient agreements are executed in accordance with Federal and State regulations.