24 CFR § 570.493 - HUD's reviews and audits.
(a) General. At least on an annual basis, HUD shall make such reviews and audits as may be necessary or appropriate to determine:
(1) Whether the state has distributed CDBG funds to units of general local government in a timely manner in conformance to the method of distribution described in its action plan under part 91 of this title;
(2) Whether the state has carried out its certifications in compliance with the requirements of the Act and this subpart and other applicable laws; and
(3) Whether the state has made reviews and audits of the units of general local government required by § 570.492.
(b) Information considered. In conducting performance reviews and audits, HUD will rely primarily on information obtained from the state's performance report, records maintained by the state, findings from on-site monitoring, audit reports, and the status of the state's unexpended grant funds. HUD may also consider relevant information on the state's performance gained from other sources, including litigation, citizens' comments, and other information provided by the state. A State's failure to maintain records in accordance with § 570.490 may result in a finding that the State has failed to meet the applicable requirement to which the record pertains.
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