Rhode Island

Two Years After HUD’s Warning, State Auditors Find RI Housing Office Still Can’t Track Its Grants: $2.8M Unrecorded, $200K Left on the Table

Virtue Forge briefing · Based on Rhode Island Current reporting (Christopher Shea, Oct. 12, 2026) on a 25-page Office of Internal Audit and Program Integrity report published Sept. 29, 2026

What happened

A 25-page report published Sept. 29, 2026 by the state’s Office of Internal Audit and Program Integrity found that the Executive Office of Housing (EOH) failed to record nearly $2.8 million in federal funds in the state accounting system and left $202,710 in grant money undrawn after four federal grants expired between 2022 and 2025. The audit covered EOH’s management of about $54.2 million in federal and state grants from July through December 2025.

Auditors blamed the absence of formal procedures and standard templates for tracking grants and monitoring recipients. Chief of internal audits Andrew Manca wrote that this produced “inconsistent implementation and incomplete compliance with federal and state requirements.” As of June 2026, the state’s grant system still had not been updated to reflect the status of the lapsed funds. Housing officials told auditors they had asked HUD to extend those grants but could not produce documentation of the requests.

The findings echo a 2024 HUD review that flagged weak record-keeping on COVID-era housing money (2021–2023), including failure to track beneficiaries and guard against duplicated assistance. EOH spokesperson Emily Marshall says several corrective actions are in place, HUD’s Boston office approved extensions on Oct. 1, quarterly grant reviews are now mandated, and remaining items are due by Oct. 31. The office, a standalone agency since 2023 and renamed in 2025 under Secretary Deborah Goddard, has grown from 17 employees in early 2023 to 31 today.

Fact check: The $2.8 million was unrecorded, not lost: unrecorded federal deposits are swept into a state escrow account at fiscal year-end. The auditor’s point is the risk of inaccurate financial reporting. EOH attributes the recording lag partly to the state’s switch to a new enterprise resource planning (ERP) system and says discrepancies were addressed by June 30, with the rest recorded in July. The HUD extensions approved Oct. 1 came after the audit was published. Rep. June Speakman (D-Warren) said she couldn’t tell whether the problems came from the agency or the ERP transition, and said, “It seems to me that they’re on it.” Virtue Forge has not independently reviewed the PDF of the audit; the figures above come from Rhode Island Current’s reporting on it.

Virtue Forge commentary

Rhode Island spent years building a bigger housing bureaucracy: a new department, then a rebrand into an “Executive Office” to consolidate oversight, with headcount nearly doubling. Expanding an agency is easy. Running it well is harder. Two years after federal monitors warned the state about sloppy grant records, the state’s own auditors found the same basic failures: no standard procedures, money that wasn’t booked, and expired grants nobody closed out.

Every undrawn dollar is housing that wasn’t built or rent that wasn’t paid during a housing shortage. That’s the real cost of centralizing power without accountability. Before Smith Hill sends another dollar or another mandate through EOH, the office should show it can do the bookkeeping. Credit goes to the internal auditors for doing their job. Now the Oct. 31 corrective-action deadline needs a public follow-up.

Bias check: Much of the 2024 HUD review covered the period before the housing office became a standalone agency, and the ERP transition is a real statewide disruption. No fraud or misappropriation is alleged. The critique is about competence and controls, not corruption.

What to watch: whether EOH meets the Oct. 31 deadline, whether a follow-up audit confirms the fixes, and whether the House Commission on Housing Affordability holds a hearing on it.

Original reporting

Read the underlying sources:

Rhode Island Current (Christopher Shea) — Audit of Rhode Island’s housing office finds missing records, expired grants and oversight gaps (Oct. 12, 2026)