Update the CPD Monitoring Handbook to incorporate the review of the PR 29 report when performing financial monitoring reviews.

Develop written procedures on how to review PR 29 report submissions and monitor resubmissions, late submissions, and nonsubmissions.

Evaluate and update IDIS to ensure that resubmissions of PR 29 reports are tracked and prior submissions are preserved and correct the system’s misclassification of unsubmitted and uncertified draft PR 29 reports as submitted.

Determine how often grantees’ requests for reimbursement contain cost outside the quarter and in coordination with OCFO, evaluate CPD’s grant accrual methodology and assumptions to ensure that it adequately considers the impact of these late cost reimbursements.

Develop guidance that encourages grantees to draw down funds for reimbursement on a regular schedule, not less than quarterly.

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 have been working together to develop a plan to accelerate HUD’s ability to produce statistically valid estimates. With respect to project-based rental assistance (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. With respect to PIH-TBRA, in lieu of pursuing an estimate for the FY 2024 reporting cycle, PIH will focus on “its existing efforts to enhance PIH [IT] systems”, which HUD considers to be a more strategic use of resources. It is not clear from HUD’s response what PIH will do differently than it already had planned prior to the management alert as HUD did not provide a detailed plan or timeline for OIG review. As of June 21, 2024, a detailed plan or timeline has not been provided.

Analysis

As of June 21, 2024, HUD has not provided a detailed plan or timeline for OIG review. It remains unclear how HUD will produce an estimate in the PBRA programs in 2024 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 $45.3 billion in FY 23, or 67.5 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. HUD’s sampling methodology did not test the full payment cycle. Further, the associated sample testing and statistical estimation of improper payments could not be completed in time for the required annual reporting of improper payment estimates in the Agency Financial Report (AFR), normally issued in November. 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 AFR.

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

We recommend that HUD’s Deputy Assistant Secretary for Single Family Housing update policies and procedures regarding discrimination complaints to ensure consistency among customer service representatives in rerouting these complaints to FHEO.

We recommend that HUD’s Deputy Assistant Secretary for Single Family Housing ensure that the FHA Resource Center updates its training program to ensure that refresher training on housing discrimination is regularly provided to staff (such as monthly, quarterly, semiannually, etc.).

We recommend that the Director of Disaster Recovery collect and record the number of days that it or other entities take to complete each milestone in the grant process.

We recommend that the Director of Disaster Recovery establish timing benchmarks for the milestones at each significant step in the allocation and award process based on actual data accumulated for the various grants.

We recommend that the Director of Disaster Recovery take steps to ensure that the milestone point of allocation is formally defined and documented, to allow for accurate tracking of compliance with requirements.

Develop a plan and a timeline that ensures all due and payable partial claims are transferred to the FOC, and subsequently processed by the FOC.

Develop and implement procedures to i) monitor the transfer of due and payable partial claims from NSC to the FOC for collection, ii) determine the financial statement impact of not referring due and payable partial claims to the FOC, and iii) decide when FHA will record a reclassification entry to accounts receivable for those due and payable partial claims that are not transferred to the FOC timely.

Consider accounting implications to the gross HECM loans receivable balance for the $20 million lost in security interests.

Record an adjusting entry to remove the duplicate $44 million from the gross HECM loans receivable balance as of September 30, 2023.

Identify and remove all duplicate transactions from the accounting module and prevent future occurrences.

Develop and enhance training for servicing the HECM portfolio.