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We audited the State of Indiana’s Community Development Block Grant Disaster Recovery program.  The audit was part of the activities in our fiscal year 2015 annual audit plan.  We selected the State because it received the most program funds under the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act of 2009 in Region 5’s1  jurisdiction.  Our objectives were to determine whether the State’s Office of Community and Rural Affairs ensured compliance with the Federal Register regarding the (1) use and reporting of the State’s program income and (2) posting of the State’s quarterly performance reports to its official Web site.

The Office of Community and Rural Affairs did not always ensure that the Indiana Housing and Community Development Authority complied with the Federal Register in its use and reporting of program income.  More than $28.7 million in program funds were inappropriately drawn down from the U.S. Department of the Treasury to reimburse the Authority for program income that it used or when the Authority had available program income.  Further, the Authority did not report program income in the U.S. Department of Housing and Urban Development’s (HUD) Disaster Recovery Grant Reporting system in a timely manner.  As a result, (1) the U.S. Treasury paid nearly $373,000 in unnecessary interest on the program funds and (2) HUD and the State lacked assurance regarding the amount of program income available to the Authority.

The Office did not always comply with the Federal Register in posting the State’s quarterly performance reports for the program.  It posted the State’s reports for the program for the third and fourth quarters of 2014 to its official Web site more than 33 days after the end of each quarter.  As a result, the public did not have timely access to the State’s reports for the program.

We recommend that the Director of HUD’s Indianapolis Office of Community Planning and Development require the State to (1) reimburse HUD, for transmission to the U.S. Treasury, from non-Federal funds; (2) reduce program income in HUD’s system; and (3) implement adequate procedures and controls to address the findings cited in this audit report.

 

1Region 5 includes the States of Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin.