The U.S. Department of Housing and Urban Development, Office of Inspector General audited the Office of Healthy Homes and Lead Hazard Control’s monitoring of its American Recovery and Reinvestment Act of 2009 grant recipients. The audit was part of the activities in our fiscal year 2011 annual audit plan. We selected Healthy Homes for audit based upon an internal audit suggestion regarding Healthy Homes’ monitoring of its grant recipients related to the Recovery Act. Our objective was to determine whether Healthy Homes monitored its recipients of Recovery Act grants in accordance with Recovery Act and HUD requirements.

Healthy Homes did not maintain documentation in accordance with its requirements to support payments to four recipients totaling more than $4.2 million of the nearly $5 million in grant awards. The payments were made to reimburse the recipients for their claimed grant expenses. Additionally, Healthy Homes did not review the voucher requests for payments in a timely manner.

Documentation to support the recipients’ voucher requests for payment was either missing or not adequate. Healthy Homes accepted operating ledgers, billing summaries, email lists, a list of expenditures, budgets showing the current request by category, and copies of check stubs as support for the voucher requests for payment.

Healthy Homes also did not ensure that recipients’ working file included the required documents and reports such as annual and quarterly documents and reports.

We recommend that HUD’s Director of Healthy Homes and Lead Hazard Control (1) obtain adequate documentation to support the payment of $4,247,991 in Recovery Act funds as cited in this finding, (2) ensure that recipients’ voucher requests for payment are reviewed in a timely manner, (3) implement adequate procedures and controls to correct voucher processing deficiencies, and (4) implement adequate policies and procedures to ensure that recipients’ files contain the documentation and reports required by Healthy Homes’ issued guidance.