Update standard operating procedures on the departmentwide unliquidated obligations review to conduct a routine review of justifications provided by the program offices for retained obligations, while ensuring that they are for a bonafide need and to support the annual certification made by the Secretary on open obligations.

As part of the OOR process, conduct monitoring activities of obligations sent to OCPO for deobligation by developing a mechanism to routinely track the status, to include key information, such as but not limited to the owner (program), date transmitted to OCPO, point of contact, last contact date, and current status. OCFO should use this information to ensure that all information has been communicated among all parties involved to enable timely deobligation.

Implement a process to ensure that ongoing ADA violation investigations are properly documented as the investigation progresses to enable timely review of open cases.

Correct the impact of all of the modeling errors identified in this report.

Revise the modeling policies and procedures to use the established HECM loan limits in the HECM LLG cash flow model.

Develop alternative policies and procedures that would enable the use of the final single-family LLG cash flow model results and HECM return on notes cash flow model results in the final ROA models.

Reassess the HECM assumption that mortgages with an unpaid principal balance greater than the maximum claim amount will not be assigned to HUD and perform the following: (1) compare this assumption to historical experience, (2) document the basis for selecting the assumption as opposed to alternative assumptions, and (3) determine the impact of this assumption and the associated risk.

Reassess the model design that was implemented to avoid the double counting of the cash flows for HECM mortgages in the LLG cash flow and ROA models and perform the following: (1) determine whether there are alternative methodologies that will not result in the exclusion of cash flows in both models, (2) document the basis of the selected methodology, and (3) determine the impact and risk of the selected methodology.

Restate the fiscal year 2017 financial statements to correct the impact of using the improper discounting methodology in the HECM ROA model in fiscal year 2017.

Implement an automated subsidiary ledger system with the capability of obtaining loan-level transaction data from FHA, Treasury, and FFB source systems.

Work with Treasury and FFB to receive monthly loan-level transaction reports.

Identify the cause for the accrued interest differences and determine the correct accounting treatment.

Establish policies and procedures for recording and accounting for manual transactions, including the accounting rationale for the principal and interest on the direct loans and accrued interest on the borrowings.

Correct the error related to the allocation of the liquidating reestimates in fiscal years 2017 and 2018.

Restate salary and administrative costs on FHA’s fiscal year 2017 statement of net cost, statement of net position, and footnote disclosures.

Require FHA and HUD OCFO to work together to determine a policy and procedure to ensure that both parties receive and provide complete information related to salaries and administrative costs.

Establish and implement a review process for salary and administrative cost information that is received from HUD OCFO to ensure that the information is complete and accurate.

Ensure that $399.1 million identified as invalid obligations in fiscal year 2018 is deobligated as appropriate.

Document the rationale and policy for the crosswalks used to prepare the financial statement note line items.

Document and implement policies and procedures, which include a review process to ensure that the general ledger accounts are correctly crosswalked to financial statement note line items.