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We conducted a review of the U.S. Department of Housing and Urban Development (HUD) Community Development Block Grant (CDBG) Supplemental Disaster Recovery program funds, administered by the State of Mississippi (State), a $5.5 billion CDBG Supplemental Disaster Recovery program grantee. Our objective was to determine whether the State ensured that disbursements made under the Homeowner Assistance Elevation Grant Program (Program) were eligible and supported. The audit was initiated as part of the Office of Inspector General’s strategic plan to review activities related to Gulf Coast hurricane disaster relief efforts.

Overall, the State generally ensured that disbursements to Program participants were eligible and supported. However, it disbursed funds to participants who (1) were initially eligible, but later defaulted, making the disbursements ineligible and (2) received duplicate assistance. This condition occurred because (1) the State had not implemented policies and procedures to assess whether there was a need for elevation construction before disbursing grant funds, (2) participants did not fully comply with the terms of the elevation grant agreement, (3) participants received duplicate assistance without reimbursing the State, and (4) the State had not identified other participants who received duplicate assistance. As a result, the State paid $90,000 in ineligible costs.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the State to (1) repay to its Program the $90,000 in ineligible costs; (2) reallocate $75,000 in unreimbursed funds, thereby ensuring that these funds are put to better use; and (3) develop and implement written policies to assess the need for elevation construction before disbursing funds to Program participants. We also recommend that HUD require the State to consider amending its Program policy to require staff performing file reviews to document its review and verification of required documentation; requiring land surveyors, engineers, and architects to submit photographs of properties with the elevation certificate; conducting periodic site visits of properties to ensure that homes were elevated in accordance with the Program elevation requirements; and conducting eligibility reviews across its disaster recovery programs to ensure different participants did not receive assistance for the same damaged property.