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We audited the State of Connecticut’s Small Cities Community Development Block Grant program based on an Office of Inspector General risk assessment, which ranked the State as the highest risk grantee in Connecticut.  Our audit objective was to determine whether the State ensured that its grantees properly administered their housing rehabilitation programs.  We also assessed various complaints made against the program to determine whether they had merit and if so, whether they were addressed and resolved.

The State did not ensure that its grantees properly administered their housing rehabilitation programs.  For example, the State did not ensure that its grantees always (1) conducted and documented environmental reviews, (2) properly procured contracts, (3) properly determined homeowner and project eligibility, and (4) correctly charged program costs.  Additionally, the complaints reviewed generally had merit, but they were not all addressed and resolved.  These deficiencies occurred, in part, because the State did not (1) provide adequate oversight and monitoring of its grantees to ensure that they administered program funds in accordance with program requirements and (2) have policies and procedures to assess the validity of all program complaints to ensure that they were addressed and resolved.  As a result, we identified more than $2.9 million in questioned costs.  Additionally, the State did not meet its program goal to assist the maximum amount of homeowners, and the U.S. Department of Housing and Urban Development (HUD) did not have assurance that all costs were eligible, supported, reasonable, and necessary and that valid complaints were reasonably addressed and resolved.

We recommend that the Director of HUD’s Hartford Office of Community Planning and Development require State officials to (1) repay more than $1.1 million in ineligible program costs, (2) repay $434,970 in unreasonable program costs, (3) adequately support or repay more than $1.3 million in unsupported program costs, (4) strengthen controls over program oversight to ensure that grantees comply with their agreements and program requirements, and (5) develop policies and procedures to address program complaints in a timely manner.