We audited the Community Development Block Grant Disaster Recovery (CDBG-DR) assistance grant provided to the State of Connecticut by the U.S. Department of Housing and Urban Development (HUD) to monitor the expenditures of CDBG-DR funds as required by the Disaster Relief Appropriations Act. Additionally, the State was ranked first in a risk assessment of the five New England Hurricane Sandy grantees. The audit objective was to determine whether the State complied with CDBG-DR requirements for its Owner Occupied Rehabilitation and Rebuilding (rehabilitation) and Owner Occupied Reimbursement (reimbursement) programs.
The State did not always comply with CDBG-DR requirements for its rehabilitation and reimbursement programs. Specifically, procurements were not always executed in accordance with HUD requirements. The State also did not always support the low- and moderate-income national objective. Further, not all costs were eligible because the State did not always complete environmental reviews in accordance with requirements. In addition, the State did not always properly support and calculate the unmet need of homeowners. This condition occurred because the State had inadequate controls for its rehabilitation and reimbursement programs. As a result, more than $2.4 million in CDBG-DR funds was ineligible, and more than $13.5 million was unsupported. Further, HUD did not have assurance that all environmental hazards were appropriately identified and addressed or that low- and moderate-income information reported by the State in HUD’s Disaster Recovery Grant Reporting (DRGR) system was accurate.
We recommend that HUD instruct State officials to (1) repay from non-Federal funds or support that the more than $13.3 million awarded for architect, engineer, and construction management services contracts was fair and reasonable; (2) repay from non-Federal funds the $316,850 in payments made for services outside the scope of work for seven contracts; (3) repay from non-Federal funds or support that $227,138 in funds awarded met the low- and moderate-income national objective; (4) repay from non-Federal funds more than $2.1 million in ineligible CDBG-DR funds spent without the notice of intent and request for release of funds being published; and (5) strengthen program controls over procurement, contract scope of work, national objective documentation, environmental review determinations, and unmet need determinations.