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HUD OIG is auditing the use of Community Development Block Grant – Disaster Recovery (CDBG-DR) funds as nonfederal match for the Federal Emergency Management Agency’s Public Assistance Program. We will review four grantees, which as of July 2023, had budgeted more than $904 million and had spent nearly $356 million on completed and underway match activities.
From 2001 to 2022, the Community Development Block Grant - Disaster Recovery program provided almost $98 billion to states, cities, counties, and territories to help them recover from disasters. Administering disaster recovery has been a recurring U.S. Department of Housing and Urban Development (HUD) top management challenge since 2018.
HUD OIG is auditing a State of New York Hurricane Sandy CDBG-DR grant, which totaled $4.4 billion, and was appropriated by Congress in Public Law 113-2. Our audit objective is to determine whether the grantee conducted its Hurricane Sandy funded 2017 through 2023 disaster recovery procurements using full, fair, and open competition methods.
We recommend that the Deputy Assistant Secretary for Grant Programs determine the fraud risk exposure in HUD's disaster recovery and mitigation programs and work with grantees to implement appropriate fraud mitigation activities.
We recommend that the Deputy Assistant Secretary for Grant Programs assess whether grantees have mature fraud risk management programs within the disaster recovery and mitigation programs.
We recommend that the Deputy Assistant Secretary for Grant Programs coordinate with HUD’s Chief Risk Officer to (1) provide training and technical assistance to PRDOH with a focus on the design, implementation, and performance of fraud risk assessments, and (2) establish a fraud risk management framework for the organization.
We recommend that the Deputy Assistant Secretary for Grant Programs evaluate PRDOH’s risk exposure and tolerance as part of HUD’s program-specific fraud risk assessment for disaster grant programs.
We recommend that the Deputy Assistant Secretary instruct PRDOH to improve fraud awareness initiatives, such as participating in organized antifraud conferences, reviewing the OIG’s Special Fraud Alerts, Bulletins, and Other Guidance, and attending fraud risk training tailored to the program’s fraud risk profile (including subrecipients).
We recommend that the Deputy Assistant Secretary instruct PRDOH to implement a process to regularly conduct fraud risk assessments and determine a fraud risk profile. The fraud risk profile should include key findings and conclusions from the risk assessment, including the analysis of the types of fraud risks, their perceived likelihood and impact, risk tolerance, and the prioritization of risks.
We recommend that the Director, Office of Disaster Recovery, for future grants, develop and implement procedures to ensure that all applicable requirements for preventing any duplication of benefits are included in the adequacy criteria, grantee certifications, and HUD review checklists supporting the certification.
