OIG-CA-26-026: Emergency Rental Assistance Program (ERA2) – Questioned Cost Finding, Moreno Valley, California

Summary

Treasury Office of Inspector General memorandum OIG-CA-26-026, dated March 13, 2026, Emergency Rental Assistance Program (ERA2) – Questioned Cost Finding, Moreno Valley, California, from Julie Wong to Jeffrey Stout, Acting Chief Program Officer, Office of Capital Access. The memo states that in August 2023 Inland Southern California 211, a subrecipient of the City of Moreno Valley, informed OIG of four cases of improper payments, and that OIG agreed with its conclusion on one case in which it paid $20,850 for an application that lacked valid documentation to establish eligibility, in violation of the Use of Funds statute. It states that Moreno Valley agreed it would repay the $20,850. OIG recommends that the Office of Capital Access disallow the costs and direct Moreno Valley to reimburse the Federal Government $20,850.

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                                           DEPARTMENT OF THE TREASURY
                                                  W ASHI NGTON, D. C. 20220




     OFFICE OF
INSPECTOR GENERAL
                                                      March 13, 2026

            OIG-CA-26-026

            MEMORANDUM FOR JEFFREY STOUT
                           ACTING CHIEF PROGRAM OFFICER, OFFICE OF CAPITAL
                           ACCESS
            From:                       Julie Wong /s/
                                        Acting Deputy Assistant Inspector General for Audit


            Subject:                    Emergency Rental Assistance Program (ERA2) – Questioned
                                        Cost Finding, Moreno Valley, California

            During the coronavirus pandemic, Congress authorized and funded two
            Emergency Rental Assistance (ERA) programs administered by the Department of
            the Treasury (Treasury) to provide rental assistance to eligible households:
            (1) ERA1 - Division N, Title V, Subtitle A, § 501 of the Consolidated Appropriations
            Act, 2021 (Pub. L. No. 116-260), Dec. 27, 2020, and codified as 15 USC § 9058a: and
            (2) ERA2 - Title III, Subtitle B, § 3201 of the American Rescue Plan Act (Pub. L. No.
            117-2), Mar. 11, 2021, and codified as 15 USC § 9058c.
            In August 2023, Inland Southern California 211 (ISC 211),1 a subrecipient of the
            City of Moreno Valley, California (Moreno Valley), informed the Treasury Office of
            Inspector General (OIG) of four cases of improper payments made from the
            grantee’s ERA2 financial assistance award. 2 After reviewing documentation
            provided by ISC 211 and Moreno Valley we agreed with ISC 211’s conclusion on
            one of the four cases reported. ISC 211 paid $20,850 on behalf of Moreno Valley
            for an application that lacked valid documentation to establish eligibility and
            therefore is in violation of the Use of Funds statute. Accordingly, we question this
            cost. In response to a draft of this questioned cost finding, Moreno Valley agreed
            it would repay the $20,850. We are recommending that the Treasury Office of


            1
                ISC211 is a subsidiary of Inland Southern California United Way.
            2
                Pursuant to 2 CFR § 200.113, Mandatory disclosures, under the Uniform Administrative
                Requirements, Cost Principles, and Audit Requirements for Federal Awards; The non-Federal
                entity or applicant for a Federal award must disclose, in a timely manner, in writing to the
                Federal awarding agency or pass-through entity all violations of Federal criminal law involving
                fraud, bribery, or gratuity violations potentially affecting the Federal award. Non-Federal entities
                that have received a Federal award including the term and condition outlined in appendix XII to
                this part are required to report certain civil, criminal, or administrative proceedings to SAM
                (currently FAPIIS). Failure to make required disclosures can result in any of the remedies
                described in § 200.339. (See also 2 CFR part 180, 31 U.S.C. 3321, and 41 U.S.C. 2313.)


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Capital Access disallow these costs and direct Moreno Valley to reimburse the
Federal Government $20,850.
Background/Legal Authority
Under the ERA2 statute at 15 U.S.C. § 9058c(d)(1), Use of Funds, an eligible
grantee shall only use ERA2 award funds to provide eligible households with
financial assistance, housing stability services, and as applicable, other affordable
rental housing and eviction prevention activities. The financial assistance
includes: the payment of rent; rent arrears; utilities and home energy costs;
utilities and home energy costs arrears; and other expenses related to housing, as
defined by the Secretary of the Treasury. The aggregate amount of such
assistance an eligible household may receive under an ERA2 award, when
combined with financial assistance provided under an ERA1 award authorized by
15 USC § 9058a, shall not exceed 18 months. See 15 U.S.C. § 9058c(d)(1)(A)(ii).
The ERA2 statute at 15 U.S.C. § 9058c(f)(2) defines an eligible household as a
household of one or more individuals who are obligated to pay rent on a
residential dwelling and with respect to which the eligible grantee involved
determines that: (1) one or more individuals within the household has (a) qualified
for unemployment benefits or (b) experienced a reduction in household income,
incurred significant costs, or experienced other financial hardship during or due,
directly or indirectly, to the coronavirus pandemic; (2) one or more individuals
within the household can demonstrate a risk of experiencing homelessness or
housing instability; and (3) the household income is not more than 80 percent of
the area median income for the jurisdiction.
Pursuant to the ERA2 statute at 15 U.S.C. § 9058c(g), the last day of the period of
performance for grantees ERA2 awards was September 30, 2025.
Facts and Analysis
In August 2023 and April 2024, we received reports from ISC 211 about four cases
of improper payments made from Moreno Valley’s ERA2 financial assistance
award.
Based on our inquiry of ISC211 and Moreno Valley, and review of documentation
provided, we agreed with ISC211’s conclusions on one of the four cases. 3
Specifically, for application #(b) (6) , ISC211 determined that the applicant
submitted altered lease and unemployment documents. ISC211 paid ERA2
assistance based on an application that lacked valid documentation to establish
eligibility and therefore ISC211 cannot establish an eligible use of funds. As such,
we determined that the rent and rental arrears paid, in the amount of $20,850, is

3
    ISC211 provided additional support that (a) two of the payments were made from another
    grantee’s ERA2 financial assistance award which also used ISC211 as a subrecipient and (b) one
    payment was in fact eligible.

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an ineligible ERA2 expenditure that failed to comply with the requirements of the
ERA2 statute. Accordingly, OIG is questioning the cost of $20,850 for the ERA2
financial assistance paid for this case.
Grantee Response
We provided Moreno Valley with an opportunity to respond to a draft of this
questioned cost finding. On April 7, 2025, the Grants Division Manager, Financial
& Management Services, Moreno Valley, provided written response by email,
included verbatim as follows:
      The application was deemed fraudulent after it was paid, no
      repayment has been received, the city preparing to de-obligate the
      balance of its ERAP2 funds, the $20,850 for this application will be
      returned along with those funds. This application was previously
      removed from the fraud tracker, hence why it wasn’t addressed
      sooner.
OIG Evaluation
Moreno Valley’s planned corrective action is responsive to the questioned cost
finding.
Recommendation
We recommend that Treasury’s Office of Capital Access disallow the questioned
cost amount of $20,850 and instruct Moreno Valley to repay that amount to the
Federal Government.
Methodology
We conducted our review of this ERA case from August 2023 to December 2025.
We inquired of the grantee and other relevant parties, reviewed related
documentation, and performed other appropriate procedures. We believe the
evidence obtained is sufficient and appropriate to provide a reasonable basis for
our findings and conclusions in this memorandum.
In conducting our review, we followed the OIG’s system of quality management
for ensuring that the information in this Notice is accurate. We also followed the
Council of the Inspectors General on Integrity and Efficiency (CIGIE) Quality
Standards for Federal Offices of Inspector General which require that our work
adheres to its general standards for integrity to include objectivity, independence,
professional judgment, and confidentiality as well as its general standard for
receiving and reviewing allegations.




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                                                                          Appendix


Schedule of Monetary Benefits
According to the Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards at Title 2 of the Code of Federal Regulations
§ 200.1 a “questioned cost” is an amount, expended or received from a Federal
award, that in the auditor's judgment:
   (i)    is noncompliant or suspected noncompliant with Federal statutes,
          regulations, or the terms and conditions of the Federal award;

   (ii)   at the time of the audit, lacked adequate documentation to support
          compliance; or

   (iii) appeared unreasonable and did not reflect the actions a prudent person
         would take in the circumstances.
Questioned costs will be recorded in Treasury’s Joint Audit Management
Enterprise System. The amount will also be included in the OIG Semiannual
Report to Congress. It is Treasury management’s responsibility to report to
Congress on the status of the agreed to recommendations with monetary benefits
in accordance with 5 USC § 405(c) of the Inspector General Act of 1978, as
amended.
Recommendation                                Questioned Costs
Recommendation No. 1                          $20,850.00
The questioned costs represent ERA2 amounts provided by Treasury under the
American Rescue Plan Act of 2021 that were paid by Moreno Valley to ineligible
households in violation of the ERA2 statute at 15 U.S.C. § 9058c(d), Use of Funds.




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Distribution
   Department of the Treasury
      Jeffrey W. Stout, Acting Chief Program Officer, Office of Capital Access
      Danielle Christensen, Deputy Chief Program Officer for State & Local
      Programs, Office of Capital Access
      Kendra N. Young-Freeman, Director, Housing Programs, Office of Capital
      Access
      Michelle Dickerman, Deputy Assistant General Counsel, Office of the
      General Counsel
      Carolyn Appel, Attorney-Advisor, Office of the General Counsel
      Blossom Butcher-Sumner, Attorney-Advisor, Office of the General Counsel
   City of Moreno Valley, Financial and Management Services
   Inland Southern California 211




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