HUD’s Oversight of CDBG-DR Grantees’ Use of Program Income

We audited the U.S. Department of Housing and Urban Development’s (HUD), oversight of Community Development Block Grant Disaster Recovery (CDBG-DR) grantees’ use of program income. We initiated this audit in accordance with our goal of ensuring and promoting accountability and effectiveness in disaster response and recovery. Our audit objective was to determine whether HUD ensured that program income generated from disaster funds awarded to CDBG-DR grant recipients was used to positively impact and support disaster recovery in affected areas and to benefit program beneficiaries. HUD generally ensured that its CDBG-DR grantees used program income generated from disaster funds to positively impact and support disaster recovery in affected areas and to benefit program beneficiaries. HUD’s grantees maintained adequate documentation for most program income vouchers tested, supporting that program income was generally used in accordance with Federal regulations and positively impacted the program. However, some grantees did not always (1) spend a substantial amount of their program income funds before using their CDBG-DR funds and (2) submit Federal financial reports (FFR) quarterly as required. Opportunities existed for HUD to improve its oversight of program income funds to reduce risks related to the reporting, reconciling, and spending of program income. As a result, (1) HUD could not effectively track the status of grantee financial data related to program income, and (2) HUD did not have reasonable assurance that it provided accurate grant data reports to Congress.