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We audited the Community Development Block Grant Disaster Recovery (CDBG-DR) assistance grant provided to the State of Rhode Island by the U.S. Department of Housing and Urban Development (HUD) to assist in disaster recovery and rebuilding efforts resulting from damages caused by Hurricane Sandy.  The audit objective was to determine whether State officials obligated and disbursed the grant funds in a timely manner in accordance with HUD rules and regulations.

State officials generally obligated and disbursed Sandy funds in a timely manner in accordance with HUD rules and regulations.  A review of approximately $7.5 million, representing 71 percent of the more than $10.5 million in CDBG-DR funds awarded, disclosed that the funds were budgeted for eligible and HUD-approved activities, disbursed for eligible costs, and properly supported.  However, State officials obligated $127,750 for one project without performing an adequate duplication of benefits analysis and cost analysis before procuring rehabilitation services.

We recommend that HUD instruct State officials to ensure that any insurance proceeds are included in the revised duplication of benefits analysis for the questioned project for which $127,750 was obligated, deobligate any amount found ineligible, and perform a cost analysis to adequately justify project costs.  Additionally, we recommend that HUD instruct the State to develop and implement policies and procedures to ensure that subgrantees comply with rules and regulations related to procurements.