U.S. flag

An official website of the United States government Here’s how you know

The .gov means it’s official.

Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you're on a federal government site.

The site is secure.

The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Hotline

Crime, Fraud, Waste, and Abuse
  • Recommendation Number: 2026-LA-1003-001-F
  • Status: Open
  • Date Issued: March 17, 2026

Develop and implement additional written procedures and internal controls for the annual ESG program to ensure that it, and its subrecipients, do not charge holding fees and risk mitigation costs as expenses to the program, and that contracts are properly executed and maintained.

Publication Report

2026-LA-1003 | March 17, 2026

California Department of Housing and Community Development Needed Stronger Controls to Prevent Improper Payments in Its ESG CARES Act Program

In August 2024, we issued an audit report on the California Department of Housing and Community Development’s (HCD) fraud risk management practices, finding that HCD was not adequately prepared to prevent, detect, and respond to fraud due to the lack of… more

Related Recommendations

Housing

  •  
    Status
      Open
      Closed
    2026-FW-1003-002-A
    $31,275,000.00
    Questioned Costs

    Recommendations with questioned costs identify costs: (A] resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B] that are not supported by adequate documentation (also known as an unsupported cost]; or (C] that appear unnecessary or unreasonable.

    Require PRDOH to submit supporting documentation so HUD can evaluate the basis of the contract amendments and determine the eligibility of more than $31 million in disaster recovery funds. If HUD determines that the contract amendments were not supported, PRDOH must reimburse HUD from non-Federal funds.

Community Planning and Development

  •  
    Status
      Open
      Closed
    2026-LA-1003-001-A
    $964,952.00
    Questioned Costs

    Recommendations with questioned costs identify costs: (A] resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B] that are not supported by adequate documentation (also known as an unsupported cost]; or (C] that appear unnecessary or unreasonable.

    Repay ineligible landlord holding fees of $964,952 drawn from ESG CARES Act funds to HUD from non-federal funds.

  •  
    Status
      Open
      Closed
    2026-LA-1003-001-B
    $58,878.00
    Questioned Costs

    Recommendations with questioned costs identify costs: (A] resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B] that are not supported by adequate documentation (also known as an unsupported cost]; or (C] that appear unnecessary or unreasonable.

    Determine if the $58,878 drawn for 18 signing bonuses or additional security deposits from ESG CARES Act funds were reasonable under the program participant’s particular circumstances, and not more than necessary to house the program participants or repay HUD from non-federal funds.

  •  
    Status
      Open
      Closed
    2026-LA-1003-001-C
    $6,549.00
    Questioned Costs

    Recommendations with questioned costs identify costs: (A] resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B] that are not supported by adequate documentation (also known as an unsupported cost]; or (C] that appear unnecessary or unreasonable.

    Repay risk mitigation overpayments of $6,549 drawn from ESG CARES Act funds to HUD from non-federal funds.

  •  
    Status
      Open
      Closed
    2026-LA-1003-001-D
    $185,731.00
    Questioned Costs

    Recommendations with questioned costs identify costs: (A] resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B] that are not supported by adequate documentation (also known as an unsupported cost]; or (C] that appear unnecessary or unreasonable.

    Sensitive
    Sensitive

    Sensitive information refers to information that could have a damaging import if released to the public and, therefore, must be restricted from public disclosure.

    Determine if the remaining risk mitigation expenses of $185,731 drawn from ESG CARES Act funds were reasonable and necessary in accordance with program requirements or repay HUD from non-federal funds.

  •  
    Status
      Open
      Closed
    2026-LA-1003-001-E
    $96,561.00
    Questioned Costs

    Recommendations with questioned costs identify costs: (A] resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B] that are not supported by adequate documentation (also known as an unsupported cost]; or (C] that appear unnecessary or unreasonable.

    Support the cost reasonableness of $96,561 drawn from ESG CARES Act funds for the kitchen services contractor or repay HUD from non-federal funds.