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The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited the State of Iowa’s (State) business rental assistance program (program) funded by Community Development Block Grant disaster funds. Our objective was to determine whether the State ensured that the City of Cedar Rapids (City) provided rental assistance to eligible businesses based on appropriate leases.

The State did not implement adequate controls over its program. It did not provide adequate guidance for determining whether leases were market rate. It also did not perform a complete duplicate benefits check to verify that the businesses did not receive duplicate benefits from any other program, insurance, or source before awarding the disaster assistance funds. In addition, it did not perform onsite monitoring reviews to evaluate program operations.

We recommend that HUD require the State to provide documentation to support that program funds were properly paid or reimburse the CDBG program from non-Federal sources any amounts that it cannot support. We also recommend that HUD require the State to implement adequate controls over the program.