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We audited the U.S. Department of Housing and Urban Development (HUD), Office of Community Planning and Development’s (CPD) oversight and monitoring of its Community Development Block Grant Disaster Recovery (CDBG-DR) slow-spending grantees.  This was a self-initiated audit consistent with our oversight activities and current top priority areas.  Our objective was to assess CPD’s monitoring and oversight tools related to the progress of grant expenditures and determine the status of the grants and impacts of COVID-19 on grantee spending.

CPD has tools available for the oversight and monitoring of its grantees.  The tools mainly assist in evaluating or tracking the progress of the grants.  While one tool identified slow spenders on a short-term basis, it did not help assess slow spending in the long term.  We identified opportunities for CPD to enhance its (1) monthly CDBG-DR grant financial report, (2) use of Disaster Recovery Grant Reporting (DRGR) system flags, (3) use of grantee expenditure projections, (4) documentation for quarterly performance report reviews, and (5) documentation for monitoring reviews and updating the related exhibit (questionnaire).  Enhancing these tools may allow CPD to provide more effective oversight of grant expenditures and better assist its grantees with the progress of their spending.  It will also assist in preventing the recapture of funds from communities with needs that can benefit from these funds.  As of July 30, 2021, more than $3.7 billion remained unspent of the $18.5 billion appropriated in CDBG-DR funds for disasters that occurred from 2011 through 2016, and the pandemic has slowed the progress of these grants.

We recommend that the Deputy Assistant Secretary require CPD to (1) continue developing proper methodology to identify slow spenders and update policies, procedures, and its monitoring exhibit; (2) establish a reasonable timeframe for grantees to adequately address the system flags in DRGR, and resolve or remediate outstanding flags; (3) require updated grantee projections; (4) sufficiently document its basis for conclusions in its monitoring and quarterly performance reviews; and (5) consider grantee suggestions to assist with the progress of spending funds.