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HUD OIG flags CDBG-DR match tracking as a fraud risk; audit report due soon, acting IG says
Summary
The HUD Office of Inspector General told lawmakers it has audited CDBG-DR grantees and found that match funds were not consistently tracked, which can result in HUD funding being used above authorized match caps; a final audit report is expected in the coming months.
Acting Inspector General Steven M. Begg told members that an OIG audit of Community Development Block Grant Disaster Recovery (CDBG-DR) grantees found that grantees are not consistently tracking or reporting the use of match funds, which can result in HUD funding exceeding authorized match caps.
Begg said grantees had budgeted more than "$94,000,000" and had spent nearly "$356,000,000" on completed and underway match activities in the cases the OIG reviewed. He said the match flexibility in some cases allowed grantees to treat funding sources inconsistently and HUD systems do not require grantees to report how they used match funds. The OIG issued an interim report to flag the issue and is preparing a final audit report expected "in the coming months." Begg said the OIG considers amounts spent above the match cap to be technically improper payments.
Why it matters: CDBG-DR awards are large and growing with frequent disaster activity; lack of tracking for match funds can create duplication of federal funding and increase fraud and improper-payment risk. Begg told the committee that HUD has a fraud-risk specialist in its community planning and development office but that HUD had not yet assessed fraud risks specifically for the DR program.
Ending: Begg said the OIG will issue the audit report soon, has already issued an interim report to HUD to prompt corrective action, and recommended HUD require grantees to track and report match use consistently and to assess fraud risks for the program.
