Establish a process that requires the timely review and update of model documentation. The process should include tracking the dates and nature of the revisions.

Provide training and periodic reminders to field staff and management to ensure that the data fields in DAP and on the final Form HUD-290 are accurate and consistent.

Develop and implement written procedures that provide guidance or best practices that should be followed to address data anomalies. At a minimum, these written procedures should include the following: (1) a process for identifying key data attributes that significantly impact the results, (2) the determination of preset thresholds for analyst and management attention, (3) the treatment of data anomalies, such as null values or values that exceed preset thresholds, (4) a process for providing feedback to the upstream data provider(s) for corrective and preventive actions when data integrity issues are detected and management concludes the issue is significant, and (5) a process for preparing documentation to support management decisions.

As part of the validation process for CPD’s accrued liabilities, improve its validation process to ensure that it is based on verifiable grantees responses and supporting documentation.

We are recommending OCFO reopen the following recommendation reported in audit report 2021-FO-0003-0001-D: 1B. As part of the validation process for CPD’s accrued grant liabilities, review CPD’s accrued grant liabilities estimation methodology to ensure that it is based on verifiable grantee supporting documentation and all assumptions and variables used for the grant accrual estimate were properly established, supported, and documented.

Implement a policy to ensure the federal regulation responsibilities for outgoing HUD employees are reassigned to appropriate HUD personnel to enable HUD to continue to address those federal regulation requirements.

Establish controls to determine if single audits for HUD grantees are being completed and reported in a timely manner in accordance with 2 CFR §200.512.

Provide a means for which HUD grantees and their auditors can request technical advice and counsel.

Establish controls to determine if follow-up is being conducted to determine if the grant recipients have taken appropriate and timely corrective action. That follow-up must include the following: a. Issuing a management decision letter as prescribed in 2 CFR §200.521; b. Monitoring recipients to ensure they are taking appropriate and timely corrective action; c.Using cooperative audit resolution mechanisms (see 2 CFR §200.25) to improve federal program outcomes through better audit resolution, follow-up, and corrective action; and d. Developing a baseline, metrics, and targets to track, over time, the effectiveness of HUD’s process to follow-up on audit findings and on the effectiveness of single audits in improving recipient accountability and their use by HUD in making award decisions.

Establish controls to ensure that HUD provides Office of Management Budget (OMB) annual updates to the compliance supplement6 and works with OMB to ensure that the supplement focuses the auditor to test compliance requirements most likely to cause improper payments, fraud, waste, abuse or generate audit findings for which HUD will take sanctions.

Establish a control to hold HUD’s Single Audit Accountable Official responsible for improving the effectiveness of the single audit process based on single audit metrics that HUD will establish in response to recommendation 4D above.

Complete a program-specific fraud risk assessment and risk profile for the CDBG and ESG programs, with emphasis on CARES Act funding, and replicate this process to create program-specific fraud assessments and risk profiles for other CPD programs.

Consider OIG’s fraud risk inventory to improve CPD’s own fraud risk assessments and develop a program-specific fraud risk map and compendium.

Implement efforts to increase the awareness of fraud at all levels (headquarters, field offices, grantees, subrecipients, etc.), including but not limited to regularly publishing articles on known fraud schemes and identified instances of fraud in periodic newsletters or on CPD’s intranet website, providing recurring fraud risk trainings to HUD employees and grantees and working with OIG to develop materials to support fraud awareness.

Develop and implement a fraud risk checklist or other instrument as part of CPD’s monitoring oversight requirements, to be completed as part of each remote and onsite monitoring review.

Develop and implement a fraud analytics strategy using available data, including but not limited to data and information collected during the grantee risk assessment and monitoring processes, to begin conducting data analyses to identify potential fraud risks for further review.

Coordinate with CPD program staff to clarify the (1) roles and responsibilities of the CRO, HCCRT, and CPD’s risk management staff with regard to identifying, assessing, and mitigating fraud risks and (2) purpose and role of HUD’s ERM processes and program office risk management processes with regard to identifying, assessing, and mitigating fraud risks.

We recommend that the Director of HUD’s Houston Office of Public Housing require the Authority to reimburse its Public Housing Operating Fund $5,000 from non-Federal funds for the unrecovered remaining balance of the $20,000 that was paid to the attorney.

We recommend that the Director of HUD’s Houston Office of Public Housing require the Authority to ensure that no Federal funds are used to pay the remaining legal services invoices totaling $24,250, which will result in these funds being put to better use.

We recommend that the Director of HUD’s Houston Office of Public Housing require the Authority to update its policies to ensure the future commissioners obtain training on Texas’ Open Meetings Act requirements and HUD’s training for commissioners within 90 days after appointment, which will ensure that future commissioners understand the requirements for board meetings and procurement actions.