CPA Loreana González-Lazzarini, founder and chief executive of Citizens of Mastery LLC, with two decades of experience in federal funds and disaster recovery, argues in a Microjuris opinion column that weaknesses in documentation and tracking of federally funded projects can signal audit findings and clawback risks long before external audits do. She cites two recent Puerto Rico-related reports.
On October 8, HUD’s Office of the Inspector General published report 2027-FW-1001 on non-federal matching payments under CDBG-DR funds: of a sample of 74 payments, 49 lacked adequate support, and the Inspector General recommended the U.S. Department of Housing and Urban Development (HUD) require the $47.8 million be substantiated or returned. The program’s own guidance allowed keeping invoices only for the match amount plus 5 percent, so staff followed the rules yet the guidance did not produce the evidence the federal funder required.
In March, Puerto Rico’s Comptroller published report OC-26-17 on COR3 capital advances: 504 projects had $747.7 million advanced with not one reimbursement request, and in 28 of 30 reviewed cases, follow-up came late. Puerto Rico’s Central Office for Recovery, Reconstruction and Resiliency (COR3), which pays out the federal disaster recovery money, said it paused meetings to review procedures, but no written authorization supported that, and the finding stood.
González-Lazzarini urges advisers to watch for early signals, document exceptions, and escalate when clawback risk arises.