Ensure that OCFO has the data it needs to record a reasonable PIH prepayment estimate related to supplemental pandemic funding in fiscal year 2021 and beyond if additional funding is provided.

Prepare a white paper regarding the accounting treatment for each type of funding disbursed under the HCVP, to include a comparison of the qualities the funding embodies against the qualities that are necessary for it to be considered a prepayment versus an expense according to generally accepted accounting principles. The Chief Financial Officer should work with PIH to gather the information necessary to complete this analysis and have PIH review it to ensure the accuracy of the program information used.

Develop and implement a policy that requires OCFO to review all new program notices, new regulations, and new types of funding and evaluate each against the accounting standards and current accounting treatment (as documented in white papers or other forms) to determine whether OCFO’s treatment complies with generally accepted accounting principles and if not, propose changes. The policy should include formal designation of roles and responsibilities as well as internal controls to ensure proper review and approval of conclusions.

Once additional data are available, and at least quarterly, reduce the CARES Act PIH prepayment by the amount actually spent by PHAs or an estimated amount with a low level of estimation uncertainty.

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.

Research the survey responses that resulted in a positive cash on hand balance to determine whether a cash advance exists. If so, the Chief Financial Officer should coordinate with CPD to (1) determine whether the grantees have proper documentation and approvals allowing for cash advances and (2) develop and implement procedures to estimate and account for cash advances for financial reporting purposes.

Investigate other methods for validating CPD’s accrued grant liabilities estimate, including the use of other sampling units, which could provide additional relevant information that can be used to produce more reasonable results and reduce estimation uncertainty to a low level.

Work with the Director of the Office of Multifamily Asset Management and Portfolio Oversight to ensure that all debt owed to HUD is identified, accurately reported in HUD’s financial records, and properly monitored to ensure compliance with applicable laws and regulations.

Adequately notify homeowners that, due to COVID-19, all FHA refund applications and supporting documents should be sent electronically to avoid delay in processing. This process should include (1) developing and expediting implementation of correspondence sent to homeowners with the application, (2) a notice of operational changes on HUD’s FHA refunds websites, (3) ensuring that HUD’s Does HUD Owe You a Refund website is updated to the most recent FHA Homeowners Fact Sheet, (4) an updated voice message from the call center including an accurate email, and (5) developing an updated script for call center agents for the initial contact with the homeowner, follow up, and contact with homeowners who already submitted their application by mail.

Conduct a privacy impact assessment for accepting homeowner FHA refund applications and supporting documentation that contain PII electronically to identify potential risks and develop and implement plans to mitigate those risks.

Develop and implement written policies and procedures for SFIOD to quickly respond to emergency situations when staff cannot return to the office. Procedures should include steps to quickly notify homeowners of any changes made to the FHA refund process.

Create separate reporting lines between model development and model validation functions so that both critical model functions do not report to OER, are appropriately segregated in accordance with industry guidance, and follow the foundational component of internal control standards.

Implement its procurement controls to ensure that it is able to locate and maintain the complete procurement documents for at least 3 years after the closeout of NSP1 and NSP3 in compliance with its own procedures and HUD regulations.

Provide the required documents to support $161,131 in NSP1 and $109,525 in NSP3 funds for expenses for acquisition, rehabilitation, and administration. If the City cannot provide the required documents, it should repay the U.S. Treasury from non-Federal funds.

Repay the U.S. Treasury from non-Federal funds for the $1,550 overpaid to acquire a foreclosed NSP3 property.

Obtain technical assistance from HUD to ensure that it is able to manage the programs and comply with program regulations before processing future expenses related to NSP1 and NSP3 projects and activities.

Follow its NSP procedures and HUD regulations to complete and submit its future NSP1 and NSP3 HUD quarterly performance reports and annual single audit reports within the required timeframes until the closeout of the respective programs or until HUD is assured that these reports are consistently submitted on time.

Follow its own procedures and HUD regulations to post the missing 21 NSP1 and 22 NSP3 HUD quarterly performance reports, as of June 30, 2019, on its official website; and, post the future NSP1 and NSP3 HUD quarterly performance reports on its website until the closeout of the respective programs or until HUD is assured that these reports are consistently posted on its website.

Obtain technical assistance from HUD to ensure that the City is able to submit its quarterly performance reports and annual single audit reports on time and post the performance reports on its website to comply with program regulations.

We recommend that the Director of HUD’s Office of Davis-Bacon and Labor Standards seek guidance from the Department of Labor to correct the wage determinations where applicable for the five projects addressed in this report.