We audited the State of New York’s Community Development Block Grant Disaster Recovery-funded Non-Federal Share Match Program. We conducted this audit because the State had used approximately $223 million for the program as of December 2016 and a U.S. Department of Housing and Urban Development (HUD) review of the program had identified weaknesses related to compliance monitoring and recordkeeping. Our objective was to determine whether the State used disaster recovery funds under its program for eligible and supported costs.
The State did not show that disaster recovery funds allocated to its program were used only for eligible and supported costs. Specifically, it did not maintain sufficient documentation to show that $18.8 million used for four of the six activities reviewed was for eligible and supported costs. For example, the State’s files did not always contain detailed invoices, proper records to support labor costs, and proof of payment. Further, analysis of the limited documentation maintained by the State showed that approximately $1.2 million of the $18.8 million may have been used for transitional shelter assistance payments, which exceeded the period allowed by HUD. These deficiencies occurred because the State relied on work performed by other entities and incorrectly believed that it had received a waiver covering the extended transitional shelter assistance. As a result, HUD did not have assurance that the $18.8 million was used as intended to assist storm-impacted entities with the cost share associated with other Federal funds and was not used to duplicate other benefits.
We recommend that HUD require the State to (1) provide documentation to show that the $18.8 million used for the four activities was for eligible and supported costs and did not duplicate other benefits or repay from non-Federal funds any amount that it cannot support; (2) implement procedures to ensure that remaining program costs reimbursed with disaster recovery funds are adequately reviewed for eligibility and support, thereby putting $9 million to better use; and (3) provide training to its staff on applicable HUD and Federal requirements for eligibility, documentation of costs, and duplication of benefits reviews.