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The Audit Process

An audit typically begins with a proposal based on self-initiated analyses or risk assessments of the U.S. Department of Housing and Urban Development (HUD) programs, concerns expressed by HUD program officials, Congressional requests, complaints submitted to our hotline, and internal referrals from other OIG components. We also conduct audits that are mandated by laws and regulations.

  • Stage 1: Survey
  • Proposal
  • Notification letter
  • Entrance conference
  • Survey fieldwork
  • Stage 2: Audit
  • Audit Fieldwork
  • Finding outline(s)
  • Message Meeting
  • Audit Fieldwork Completed
  • Stage 3: Report Issuance
  • Draft Report
  • Exit Conference
  • Auditee Written Comments & OIG Evaluation
  • Final Report
  • Stage 4: Audit Resolution
  • Management Decision
  • Agreement on decision
  • Corrective action Plan
  • Recommendation closure

The survey stage begins when Audit management approves the proposal and we notify HUD that we are initiating the audit of HUD itself; or, we notify HUD and an external program participant that we are initiating an audit of the external entity. After notification, an entrance conference is held to introduce the audit, address questions, and collect information the auditee has gathered in preparation for the start of the survey. During survey, the audit team conducts fieldwork to gain an understanding of the auditee’s operations and internal controls relevant to the objective, and to perform preliminary tests to confirm the planned audit approach. If the audit team identifies potential or actual noncompliance with laws or regulations, deficiencies in internal controls, misuse of HUD funding, or other deficiencies, the team transitions to the audit stage. Depending on the identified concerns, the audit team may adjust the objective, scope, or methodology before transitioning to the audit stage. If the audit team does not identify sufficient concern to pursue the next stage, the survey ends and no audit is conducted.

The audit stage comprises the bulk of our fieldwork and is focused on fully addressing the audit objective. In the audit stage, the audit team learns more about the auditee and its use of HUD funds by conducting in-depth analyses of auditee documentation and system data, conducting interviews, and performing audit tests. Throughout this process, the audit team is communicating with HUD and the external entity, as applicable, regarding identified deficiencies (findings). The audit team provides finding outlines to the auditee that identify the deficiency, the reason for the deficiency, and recommendations for corrective action. Before completing audit fieldwork, we conduct an internal message meeting that ultimately frames the report message, and the audit team completes the fieldwork.

Based on the results of the fieldwork, a draft report is prepared and provided to HUD and the external auditee (if applicable). An exit conference is held soon after to discuss the draft report and address auditee questions or concerns. We ask the auditee to respond with written comments about the report within 10-15 days, which we incorporate into the final report. The audit team evaluates the response and includes that evaluation in the final report as well. We issue the final report to HUD officials, the audited entity (if other than HUD), and members of Congress; then post the report within 3 days for viewing by the general public.

The fourth and final stage is the audit resolution process. In this stage, our office and HUD coordinate to reach a consensus on how to resolve the issues and recommendations. HUD proposes a management decision (corrective action) for our consideration, and we work with HUD toward an agreeable resolution within HUD’s goal of 120 days of report issuance. By law, HUD and our office are to reach agreeable management decisions within 180 days, but HUD’s goal is 120 days to ensure impasses can be resolved before reaching 180 days. HUD also has a goal to have all corrective actions completed within 1 year of the management decision. However, this is not feasible in certain instances, and in those instances, a longer final action period is put in place. Once corrective actions are taken to resolve a recommendation, and HUD has provided sufficient supporting evidence, our office closes the recommendation.