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The State of Missouri Did Not Correctly Allocate Salaries to Its Disaster Recovery Grants

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General, audited the State of Missouri’s Community Development Block Grant (CDBG) Disaster Recovery program because it was initially awarded more than $103 million in two CDBG Disaster Recovery grants for storms and flooding that occurred in 2008 and we had not previously audited the State’s activities regarding these funds.  Our audit objective was to determine whether the State adequately supported salary distributions for its Disaster Recovery grants.

The State did not correctly allocate salaries to its Disaster Recovery grants.  It distributed salaries to its grants by using distribution percentages based on project listings and employee feedback instead of requiring employees to report their individual activities on their timesheets, which would have enabled it to determine the actual amount of time spent on each activity. 

We recommend that the Director of the Kansas City, KS, Office of Community Planning and Development (1) require the State to support more than $1.2 million in unsupported salary costs for the B-08-DI-29-0001 Disaster Recovery grant or reimburse HUD from non-Federal funds any portion of that amount that it cannot support, (2) require the State to support $279,362 in unsupported salary costs for the B-08-DF-29-0001 Disaster Recovery grant or reimburse HUD from non-Federal funds any portion of that amount that it cannot support, (3) require the State to implement a detailed payroll tracking system to ensure that only salaries incurred in administering the Disaster Recovery program are charged to its Disaster Recovery grants, (4) ensure that the State receives training on salary distribution methods and documentation requirements for Federal grants, and (5) monitor the State to ensure that it establishes and implements a new time-keeping system.