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Report Fraud, Waste and Abuse

OVERVIEW

The HUD Office of Inspector General (OIG) has been an integral partner in the Department’s post-disaster and reconstruction efforts by providing critical oversight of HUD’s use of Congressional Disaster Supplemental Appropriations. Through our post-disaster audit, evaluative, and investigative efforts, the OIG works to ascertain that disaster aid has been expended as Congress intended. The recent enactment of the Inspector General Empowerment Act of 2016, (Public Law 114-317), has greatly enhanced the OIG’s ability to conduct these oversight and investigative efforts. Some of the OIG’s historical and current reports on disaster oversight may be found below:

AUDITS

July 23, 2018 l AUDIT REPORT
HUD’s Office of Block Grant Assistance Had Not Codified the Community Development Block Grant Disaster Recovery Program
Report Number:  2018-FW-0002

What We Reviewed and Why: As part of our annual risk and internal planning process, we audited the U.S. Department of Housing and Urban Development (HUD), Office of Block Grant Assistance’s (OBGA) Community Development Block Grant (CDBG) Disaster Recovery program.  Our analysis noted that Congress had historically provided disaster funding through supplemental appropriations, yet OBGA had not created a formal codified program.

September 12, 2016 l AUDIT REPORT
Disaster Relief Appropriations Act, 2013 Financial Status, Observations, and Concerns
Report Number:  2016- FW-1007

What We Reviewed and Why: As part of a Council of the Inspectors General on Integrity and Efficiency (CIGIE) cross-cutting initiative involving eight Offices of Inspector General (OIG), we reviewed the Disaster Relief Appropriations Act, 2013, and eight agencies that received $46.5 billion for expenses related to the consequences of Hurricane Sandy and other disasters.  Our review objective was to compile and report on the eight Federal agencies’ total funding, expenditures, and monitoring.  The review’s objective was also to identify common concerns and make suggestions to improve oversight, enhance collaboration, and report best practices.

March 28, 2013 l AUDIT REPORT
State Community Development Block Grant Hurricane Disaster Recovery Program
Report Number:  2013-FW-0001

What We Reviewed and Why: We audited the U.S. Department of Housing and Urban Development’s (HUD) State Community Development Block Grant (CDBG) Hurricane Disaster Recovery program for hurricanes that hit the Gulf Coast States from August 2005 through September 2008.  Our audit objective was to assess the program overall.  Specifically, we wanted to (1) determine what had been accomplished using the funding and the funds remaining to be spent; (2) compare actual versus projected performance; and (3) identify best practices, issues, and lessons to be learned.  

July 10, 2017 l AUDIT REPORT
HUD's Monitoring of State CDBG
Report Number:  2017- FW-0001

What We Audited and Why: We audited the U.S. Department of Housing and Urban Development’s (HUD) Office of Community Planning and Development’s (CPD) risk assessment and monitoring of its State Community Development Block Grant (CDBG) recipients.  We started this assignment due to significant findings reported on the State of Oklahoma CDBG-Disaster Recovery (CDBG-DR) audit (2016-FW-1010) and HUD’s lack of monitoring the State since fiscal year 2011.  Our reporting objective was to determine whether CPD appropriately assessed State CDBG grantees’ risk to the integrity of CPD programs and adequately monitored its grantees.

June 2, 2017 l AUDIT REPORT
CDBG - Compliance with Departmental Clearance Procedures
Report Number:  2017- KC-0004

What We Audited and Why: We audited the U.S. Department of Housing and Urban Development (HUD), Office of Community Planning and Development’s (CPD) process for making changes to its programs, policies, and operations.  We initiated the audit because of concerns we had with HUD’s disaster recovery delivery sequence and duplication of benefits policies during a previous external audit (Audit Report 2016-DE-1003).  Our objective was to determine whether CPD complied with the departmental clearance process and associated Federal requirements when issuing its July 25, 2013, guidance on the duplication of benefits.

Evaluations

April 10, 2017 l MEMORANDUM
Navigating the Disaster Process
Report Number:  2017- OE-0002

This report is for informational purposes only and does not represent an OIG perspective or position. The Robert T. Stafford Disaster Relief and Emergency Assistance Act was designed to bring an orderly and systematic means of Federal disaster assistance for State and local governments to carry out their responsibilities to aid citizens.  Although, State and local governments may carry out their responsibilities in an orderly and systematic fashion, the path for citizens is not always seen as “orderly and systematic” for a variety of reasons.

March 2010 l EVALUATION REPORT
Inspection of the State of Louisiana’s (State) Road Home Elevation Incentive (elevation grant) Program
Report Number:  IED-09-002

We completed an inspection of the State of Louisiana’s (State) Road Home Elevation Incentive (elevation grant) program funded by HUD Community Development Block Grant disaster recovery funds.  We wanted to know whether homeowners used the funds to elevate their homes as set forth in their grant agreements.  Our inspection covered 199 (about 10 percent) of the 1,906 property owners who received more than $44.4 million in elevation grants during the first round of State funding in 2006 and 2007.

December 17, 2015 l EVALUATION REPORT
Buildings at Three Public Housing Authorities Did Not Have Flood Insurance Before Hurricane Sandy
Report Number:  2015-OE-0007S

What We Evaluated: We evaluated public housing authorities (PHA) that did not have flood insurance before Hurricane Sandy to determine why some buildings were not insured as required. Flood insurance is necessary to ensure that PHAs remain financially viable, continue to provide safe and habitable housing to low-income residents, and minimize costs to taxpayers for keeping public housing units operational.

May 3, 2017 l EVALUATION REPORT
HUD’s Internal Audit Requirement for Disaster Relief Appropriations Act of 2013 Grantees
Report Number:  2016-OE-0011S

What We Evaluated: CPD manages disaster grants and provides monitoring and technical assistance for grantees to ensure that they comply with HUD and Federal requirements.  To ensure that grantees perform and deliver on the terms of the disaster grants, CPD requires disaster grantees to establish an internal audit activity.  Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations.  It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.  To address our objectives, we interviewed a non-statistical sample of 12 of the 34 PL 113-2 disaster grantees.  

BULLETINS

CPD Integrity Bulletins for Industry and Recipients:

Key Components of Financial Management for CPD Grants

Financial management is the systematic application of procedures, forms, rules of conduct, and standards.  As a grantee or subrecipient in receipt of Federal funds, your financial management practices must comply with the cost principles established by the Office of Management and Budget (OMB).  This Bulletin is intended to identify components of a sound financial management system and offer guidance on avoiding some of the common challenges grantees face when managing Federal funds.  

Documenting the Life Cycle of a CPD Grant

Community Planning and Development (CPD) grantees and subrecipients endeavor to meet program requirements as they use grant funds for housing and community development activities.  While carrying out program activities should be the main focus, grantees must remember that documentation provides the evidence that grant funds were spent and activities completed appropriately.  When grantees and subrecipients fail to create, gather and retain necessary documentation, justifying what was done or how much it cost becomes a significant challenge.  As a result, audits and monitoring reviews frequently cite lack of documentation and questioned costs in findings.  For fiscal years 2011 to 2015, the U.S. Department of Housing and Urban Development (HUD) Office of Inspector General (OIG) conducted 269 audits of CPD programs, and questioned nearly $2.8 billion for ineligible or undocumented program costs.  The purpose of this bulletin is to make grantees and subrecipients aware of the impact that insufficient documentation can have on their grant programs and offer guidance on how to avoid these findings through the life cycle of a CPD grant.   

Implementing the Five Key Internal Controls

Internal controls are processes put into place by management to help an organization operate efficiently and effectively to achieve its objectives.  Managers often think of internal controls as the purview and responsibility of accountants and auditors.  The fact is that management at all levels of an organization is responsible for ensuring that internal controls are set up, followed, and reviewed regularly.  The purposes of internal controls are to:

  • Protect assets;
  • Ensure that records are accurate;
  • Promote operational efficiency;
  • Achieve organizational mission and goals; and
  • Ensure compliance with policies, rules, regulations, and laws.

Sub-recipient Oversight and Monitoring – A Roadmap for Improved Results

This bulletin highlights the importance of effective subrecipient management and oversight by grantees receiving funds from the U.S. Department of Housing and Urban Development’s (HUD) Office of Community Planning and Development (CPD).  On December 26, 2013, the Office of Management and Budget issued revised guidance under 2 CFR (Code of Federal Regulations) Part 200.  The result was consolidation of and changes to government-wide uniform administrative requirements, cost principles, and audit requirements for Federal awards.  These changes emphasized a grantee’s responsibility to manage and monitor its subrecipients, including monitoring a subrecipient’s performance and compliance with applicable laws and regulations, as well as taking appropriate action when performance and compliance issues arise.  This bulletin provides key tips for improving effective oversight of subrecipients.

Procurement & Contracting:  Five Ground Rules for Grantees and Sub-recipients

Goods and services must be procured in an effective manner and in compliance with Federal, State, and local laws.  These laws exist to ensure that funds are awarded through fair and open competition and are spent on eligible and reasonably priced goods and services.  Although the majority of grantees and subrecipients comply with these rules and regulations, we are issuing this bulletin to assist you in identifying potential weaknesses in procurement and contracting procedures.  Weak or nonexistent procurement policies and management oversight can entice some employees to manipulate contracts to their personal benefit and can result in costly, wasteful, or unenforceable contracts.  However, the very act of monitoring procurements and contracts has a deterrent effect on fraud and poor management and thereby enhances the integrity of the program.