We recommend that the Chief Financial Officer enhance existing policies to establish a formal grant accrual risk management framework to help ensure consistent standards across HUD with regard to the development, review, and execution of the grant accrual and validation. This framework should include 1) identifying grant accrual estimation risk, assessing the magnitude of this risk, and managing the risks that arise when using certain quantitative estimation methods, 2) a governance structure that includes estimation ownership, oversight, and framework assessment, 3) the creation of a committee that is responsible for establishing a holistic approach to estimation risk management, including key stakeholders from OCFO and program offices, such as CPD, and 4) a requirement for documentation of committee meeting agendas, minutes, and key decisions and discussion points which impacts the various grant accrual methodologies across the Department.

Develop a standard operating procedure for the monthly transaction review that aligns with the HUD policy and includes specific procedures on how to (1) identify and review common transactions that raise the level of risk in the program (for example, personal use purchases, other prohibited purchases, unauthorized purchases or services, split purchases, fraudulent purchases, FAR violation purchases, etc.), (2) methodically select transactions for investigation, and (3) follow up on identified potential improper transactions, including record-keeping requirements.

Develop and fully implement a departmentwide policy for the monthly transaction review process that requires program office participation and timely completion of the review and certification.

Update OCFO’s travel card monitoring procedures to obtain, review, and monitor the IBA Use report on a regular basis to ensure compliance with purchases required to be made on the government travel card.

HUD’s Office of the Chief Financial Officer (OCFO), in coordination with other appropriate program offices, should define and implement a risk-based process to assess and document IT risk management personnel resourcing needs and that those personnel are allocated effectively to support HUD’s risk management program (IG FISMA metric 7).

HUD OCFO, in coordination with other appropriate program offices, should define and implement a process to document and allocate non-personnel risk management resources in a risk-based manner, to include but not limited to funding, processes, and technology (IG FISMA metric 7).

Establish an improper payment council within HUD that consists of senior accountable officials from across the Department with a role in the effort that would work to identify risks and challenges to compliance and identify solutions as a collaborative group.

Develop and complete a detailed plan and timeline for completing compliant PIH-TBRA and PBRA program estimates and ensure that the improper payment council prioritizes completion of the plan in time for fiscal year 2023 reporting.

Develop a secure platform for the collection and storage of PIIA data that contain PII and formally assign a staff with adequate training and skillsets to administer the data and application (including maintaining and managing access controls of a chosen application that will be used to store the PIIA data with PII).

Reevaluate the methodology and reassess the weight assigned to each risk factor to ensure that appropriate weight is given to risks associated with non-Federal administrators or consider doing one risk assessment for HUD’s internal payment cycle and another risk assessment for the non-Federal entities that administer HUD’s program funds.

Until program-specific fraud risk assessments are completed, revise the PIIA fraud risk questionnaire process to compensate for the lack of program-specific fraud risk assessments.

Reassess the Homeless Assistance Grants program as part of the fiscal year 2023 risk assessment.

We recommend that the Chief Procurement Officer direct the contracting officers to review the current FSM contracts’ QASP and update accordingly to ensure that all minimum contract requirements are included.

We recommend that the Chief Procurement Officer direct the contracting officers to oversee the implementation of the current FSM contracts’ QASP.

We recommend that the Chief Procurement Officer require the contracting officers to implement the policies and procedures in the HUD Acquisition Policy and Procedure Handbook for completion of HUD’s FSM contractor performance assessment reports in CPARS to ensure that Government past performance is documented properly and in a timely manner, at least annually, for use by all Federal agencies and maintained in the contract files.

We recommend that the Chief Procurement Officer require all staff involved in the oversight of FSM contracts to maintain the required documentation in the official contract file identified by HUD policy to support the contracts.

We recommend that the Chief Procurement Officer require the contracting officers to formally designate CORs in a timely manner and maintain the required documentation in the proper location identified in the relevant HUD policies and procedures, which fully supports the CORs’ oversight of the FSM contract.

Develop and issue a departmental grant accrual validation policy or update the existing grant accrual policy to include the validation process. The policy should include 1) specific control activities over the grant accrual validation and outline all of the specific roles and responsibilities; 2) a periodic review of the grant accrual validation to evaluate and reassess its continued relevance and control effectiveness, and ensure any changes are designed and implemented appropriately; and 3) a clear communication plan that requires formal and documented communications between appropriate program offices and OCFO to ensure the validation results are used to update the grant accrual methodology and subsequent period’s estimate, as appropriate.

Develop and document internal procedures to ensure the OCFO’s responsibilities specified within the new or updated grant accrual validation policy are addressed.

Develop and implement procedures to ensure that planning for the CPD grant accrual validation is done early in the accounting cycle to allow for: • Sufficient resources to be available to perform the validation of the prior year grant accrual. • Validation efforts to start earlier to allow for follow-up on non-responsive grantees or grantees that provided incomplete information. • Materiality risk to be considered when planning and evaluating the CPD grant accrual validation.