As part of our mission to safeguard the U.S. Department of Housing and Urban Development’s (HUD) programs from fraud, waste, and abuse, and to identify opportunities for HUD programs to progress and succeed, we selected Colorado for a review of potential improper payments. Our audit objective was to determine whether Colorado made improper non-Federal match activity payments. We also assessed whether the Office of Community Planning and Development’s Office of Disaster Recovery (CPD ODR) had sufficient and adequate controls to prevent improper match payments.
We did not identify duplicate or significant amounts of unsupported non-Federal match payments for Colorado. However, Colorado received $1.3 million of disaster recovery reimbursements from HUD that it reported as matching costs for FEMA’s Public Assistance program, but the costs were other disaster recovery costs. This occurred because Colorado did not establish financial or payment controls for non-Federal match costs within HUD’s Disaster Recovery Grants Reporting (DRGR) system. CPD does not require disaster recovery grantees to separately report non-Federal match costs in its data systems. As a result, Colorado over-reported the amount of HUD disaster recovery funds it spent on non-Federal match activities. Colorado’s reporting could increase the risk of improper payments as HUD and its stakeholders cannot use HUD’s data systems and reports to ensure that Colorado properly uses its disaster recovery funds for non-Federal match activities.
We recommend that Colorado incorporate financial and other internal controls to ensure that it allocates, tracks, and reports non-Federal match costs separately from non-match costs. If Colorado does so, it will enhance the accuracy and transparency of its reporting of $1.3 million of disaster recovery funds. We also recommend that CPD ODR require disaster recovery grantees to report non-Federal match activities or expenses in its data systems in a manner which will show that grantees are properly using their disaster recovery funds for the non-Federal match portion of FEMA’s Public Assistance program.
