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We audited the Homelessness Prevention and Rapid Re-Housing Program at the State of Arizona Housing Department (Department) because it was the largest single Homelessness Prevention and Rapid Re-Housing Program grant awarded within Arizona under the American Recovery and Reinvestment Act of 2009 (Recovery Act). Our objective was to determine whether the Department administered the grant in compliance with Recovery Act and other applicable regulations. We found that the Department had adequate policies and procedures to ensure that Recovery Act funds were accounted for separately and reporting requirements were met. However, it did not have adequate policies and procedures to ensure that its subrecipients properly established eligibility for program participants and activities and maintained source documents for program expenditures in accordance with the applicable documentation requirements for Federal grants. Further, the Department’s policies and procedures were not adequate to ensure that subrecipients received adequate training and monitoring to ensure compliance with the specific Homelessness Prevention and Rapid Re-Housing Program regulations. We recommend that HUD require the Department to provide supporting documentation or repay unsupported amounts for $75,543 in program expenditures. We also recommend that HUD require the Department to provide adequate training and monitoring to its subrecipients to ensure that they have implemented policies and procedures to comply with Homelessness Prevention and Rapid Re-Housing Program requirements and to maintain appropriate source documentation for program expenditures. By ensuring that its subrecipients properly establish and document that program participants and activities are eligible, the Department will reduce the risk of waste, fraud, and abuse for its remaining Recovery Act funds under the program.