Work with OCFO to ensure that CPD collects and reports to OCFO all of the information needed to properly account for all CPD activities in HUD’s financial statements in accordance with Federal financial reporting requirements and accounting standards.

Update Line 4 - Cash (grant funds) disbursed during the reporting period in the PR 29 report to allow grantees to report all CDBG grant funds disbursed, including funds that have not yet been drawn down from HUD for reimbursement.

Obtain the required approvals under PRA for the PR 29 report.

We recommend that the Deputy Secretary Develop and execute a detailed plan and timeline for both testing and reporting estimates of improper payments in the PIH-TBRA and PBRA programs in compliance with Federal law and OMB guidance.

Status

In response to the Management Alert, the Deputy Secretary stated that she would provide a plan in 30 days. On April 10, 2024, the Chief Financial Officer, Assistant Secretary for Housing, and Principal Deputy Assistant Secretary for Public and Indian Housing (PIH) stated their respective executives had been working together to develop a plan to accelerate HUD’s ability to produce statistically valid estimates. With respect to PBRA, HUD plans to use ongoing data collection for fiscal year (FY) 2023 tier 1 and tier 2 payments to develop a statistical estimate in FY 2024.

However, our ongoing Payment Integrity Information Act audit has determined that neither program produced a compliant estimate in fiscal year 2024. For multifamily-PBRA, HUD made some progress and reported an estimate that captured part of the payment cycle; however, the estimate did not include testing to ensure that housing assistance payments from contract administrators to owners were calculated correctly and supported by tenant-level documentation. The PIH-TBRA program did not produce an estimate at all, noting that IT system modernization must occur first. However, PIH has not yet provided a plan that indicates how the system upgrades will address this issue or a timeline for implementation. As of January 31, 2025, a detailed plan or timeline has not been provided.

Analysis

As of January 31, 2025, HUD has not provided a detailed plan or timeline for OIG review. It remains unclear how HUD will produce a complete estimate of the PBRA programs in future years, and when it will be able to produce an estimate for PIH-TBRA.

For HUD to close this recommendation, it must finish testing the full life cycle of payments in these programs and publicly report estimates of the improper payments in them. Merely producing a plan with future action target dates is not sufficient to meet the spirit of this recommendation.

PBRA and PIH-TBRA are the two largest program expenditures in HUD's portfolio, totaling $50 billion in FY 24, or 62.4 percent of HUD's total expenditures. HUD has been challenged with developing a compliant sampling methodology that can test the full payment cycle and that can be executed within the required timeframes. To fully address this recommendation, the sampling methodology should test the full payment cycle, and the associated sample testing and statistical estimation must be completed in time to be included in the Annual Financial Report.

Implementation of this recommendation will result in HUD better-safeguarding taxpayer dollars and decrease improper payments.

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 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 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 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 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 Director, Office of Disaster Recovery, perform monitoring of or otherwise review grantees’ detailed procedures for preventing duplication of benefits for each grant activity within the first year after HUD signs the grant agreement or before grantees process applications for assistance, whichever occurs first.

We recommend that the Director, Office of Disaster Recovery, develop and implement a process to review grantees’ detailed procedures for preventing duplication of benefits and require grantees to correct any deficiencies identified in the review before grantees process applications for assistance.

We recommend that the General Deputy Assistant Secretary, Office of Policy Development and Research, and the Deputy Chief Information Officer, Office of the Chief Information Officer develop the project management documents, as required by HUD’s Project Planning and Management Life Cycle V2.0 policy, including obtaining required approvals and ensuring that an adequate project risk management process is established for identifying, analyzing, and responding to project risks.

We recommend that the General Deputy Assistant Secretary, Office of Policy Development and Research; the Deputy Chief Information Officer; and the Director, Office of Disaster Recovery, identify and incorporate at least one additional data source into the Disaster Recovery Data Portal to further assist grantees with duplication of benefits assessments.

Provide additional guidance and training to servicers to address common loss mitigation issues found during this audit.

Update the Save Your Home - Tips to Avoid Foreclosure brochure to include new loss mitigation options as they are introduced and require servicers to send this additional information to delinquent homeowners. This could be done as a redesign of the existing brochure or as addendums to the brochure for temporary programs.

We recommend that the Deputy Assistant Secretary work with the Authority to assess the risk of potential improper payment for projects PW273 and PW100 and vouchers 576322, 583423, and 578761.

Develop and implement a nationwide protocol for field offices, describing how PHA self-inspections should be reviewed, based on REAC's determination of the number and frequency of PHA self-inspections.

Status

HUD closed this recommendation in August 2024, an action which HUD OIG disagrees with. HUD provided guidance for field office staff to send to PHAs with NSPIRE inspections that scored below 60 points. However, HUD did not provide a protocol detailing how it would receive and review PHAs’ self-inspections for compliance with HUD requirements. Therefore, HUD has not fully addressed the gap in controls identified in the audit that hinders HUD’s oversight over PHA self-inspections.

Analysis

To fully resolve this recommendation, HUD needs to provide a policy or procedure that provides guidance to the field offices on how public housing self-inspections should be reviewed for compliance with its requirements.

Implementation of this recommendation will result in public housing units that are decent, safe, and sanitary because it mandates oversight to ensure PHAs are addressing identified deficiencies.

For the contract activities during the period of January 1, 2020, through April 2022, the Director should require the Authority to implement adequate procedures and controls, including but not limited to ensuring that (1) proper documentation is maintained, (2) contracts are procured in accordance with Federal and the Authority’s procurement requirements, (3) procurement staff complies with Federal procurement requirements, and (4) payments are appropriately reconciled.

Implement adequate policies, procedures, and controls to ensure that public housing properties will be inspected within required timeframes.

Status

NSPIRE regulations clarified and modified the timing for which inspections should occur. The date for inspection of each public housing property must then be programmed into HUD's system to ensure that inspections occur within the required timeframes. The Real Estate Assessment Center (REAC) continues to work with its management and system support contractors on the list of public housing properties to inspect and the date the inspections should be completed under the new NSPIRE regulations. REAC is in the process of adjusting the list based on information relating to small, rural public housing. As of November 2024, the NSPIRE regulations on inspection timing are completed. However, REAC is not able to make the required modifications in the NSPIRE system to enforce the regulatory guidelines. REAC previously indicated that new IT funding is needed to make the system modifications but had not provided information about whether additional funding has been allocated. The final action target date was revised from May 31, 2024, to September 30, 2025.

Analysis

To fully address this recommendation, HUD must provide evidence demonstrating that it has implemented control activities that ensure public housing properties are inspected within the required timeframes.

Implementation of this recommendation will result in HUD accurately tracking the dates on which public housing properties should be inspected and that they are timely completed. Due to the uncertainty of when software changes to NSPIRE can take place to enforce the timing of inspections, REAC cannot enforce the requirements of inspection timing.

Establish an improper payment council within HUD that consists of senior accountable officials from across the Department with a role in the effort that would work to identify risks and challenges to compliance and identify solutions as a collaborative group.