Provide support to show that the performance history element was factored as part of the grantees’ capacity to manage the grants awarded through the 2025 NOFO.

Reevaluate ‘High Risk’ designation criteria as part of the SOP update and reimplement its updated ‘High Risk’ criteria to reflect how grantees will be designated as ‘High Risk’ within the program. In addition, train OLHCHH staff on the new ‘High Risk’ designation criteria stated in the SOP.

Notify grantees of HUD’s updated ‘High Risk’ designation criteria and HUD’s expectations when designated as ‘High Risk.’

Provide assistance to the nine identified ‘High Risk’ grantees that will help meet established performance benchmarks to be completed by the end of the respective grants in 2026.

Recapture $3,775,916 in undisbursed grant funds not used to meet agreed-upon performance benchmarks for the two identified ‘High Risk’ grantees whose period of performance ended in June and July 2025, respectively. In addition, identify those grantees that received 2020 through 2022 LBPHC and LHRD grants with a period of performance that ended on or before December 31, 2025, to determine whether agreed-upon performance benchmarks were met by that date, and take appropriate actions that include recapturing undisbursed grant funds.

Consider grantees’ suggestions to improve training sessions, technical assistance, and communication of information that grantees can use to help meet agreed-upon performance benchmarks. In addition, provide documentation to support the guidance OLHCHH plans to share with grantees to ensure agreed-upon performance benchmarks are met.

Reassess, establish, and incorporate a maximum review period of grantee-submitted QPRs into an SOP. Inform staff of the review period to ensure consistency and understanding of HUD’s expectations of the time to review grantee-submitted QPRs. In addition, establish formal guidance and implement internal controls to monitor and track the timely review of QPRs.

Systematically evaluate whether control deficiencies identified by the AIR program have affected the accuracy or completeness of HUD’s financial statements. This assessment should include: 
a) Review relevant financial statement line items, disclosure, and account balances for misstatements attributable to ineffective controls;
b) Document the evaluation results, including the rationale for conclusions regarding the presence or absence of misstatements;
c) Make correcting entries to September 30, 2025 balances, as appropriate;
d) Retain supporting analysis for both internal and external review; and
e) Leverage test of balances results to inform remediation efforts.

Work with program offices through remediation activities to determine the underlying causes of the control deficiencies identified by the AIR program.
 

Based on the causes identified, coordinate with the program offices through remediation activities to develop corrective action plans with defined milestones, responsible parties, and timelines. Progress should be tracked, documented, and periodically reported to senior management.
 

Require targeted, role-specific training for program office staff and managers in areas where deficiencies were identified, including approvals, segregation of duties, recordkeeping, and delegated authority. This training should reinforce the importance of compliance with internal control requirements and include HUD escalation and enforcement mechanisms.

Assess and address barriers to timely and adequate responses from program offices during AIR program internal control testing. This assessment should:
a) Identify recurring causes for delayed or incomplete responses from program offices and implement escalation protocols or incentives to ensure timely fulfillment of AIR program requests;
b) Identify and implement efficiencies in the testing process to optimize the time program offices spend on the AIR program, such as streamlining communication, clarifying expectations, finding alternatives to time consuming tasks, and optimizing scheduling;
c) Provide additional guidance, training, or resources to program offices as needed to improve the quality and timeliness of submissions; and
d) Monitor response rates and timeliness, reporting persistent issues to senior leadership for corrective action.

Re-examine and enhance HUD’s process for evaluating the potential financial impact of control deficiencies identified by the AIR program or other sources to ensure that:
a) Assessments of financial impact are initiated promptly upon identification of control deficiencies;
b) The evaluation process is structured to deliver clear, actionable conclusions in sufficient time to inform any necessary adjustments to financial statements prior to the financial report date; and
c) Documentation of the assessment process and results is maintained to support audit requirements and management’s assertions.
 

Coordinate with the Principal Deputy Assistance Secretary for each Program Office to:
a) Define governance protocols to include reassessing HUD’s escalation protocols and enforcement mechanisms for repeated or willful noncompliance with documented controls, such as additional oversight, retraining, or disciplinary action as appropriate. Based on the assessment, update those protocols and mechanisms, as warranted.
b) Establish and resource a HUD-wide centralized digital repository for artifacts and key supporting documentation to provide consistent documentation retention and accessibility. Based on this initiative, define governance protocols for repository use, including security, version control, timely review/update requirements, and periodic audits to validate compliance.
 

Update HUD Handbook 1900.40, Do Not Pay policy, to clearly define the responsibilities for all parties and align it with current laws, processes, and procedures. This should include defining responsibilities for preaward and prepayment verification, and developing a process and governance structure to ensure that preaward and prepayment verification are consistently performed across HUD’s programs.

Status

As of January 2026, HUD has not provided a management decision for this recommendation. While HUD reestablished its computer matching agreement with the Department of Treasury through the Treasury Do Not Pay verification portal, HUD has not developed a policy to define responsibilities going forward.

HUD OIG recently initiated  the annual Payment Integrity Information Act (PIIA) audit for fiscal year 2025. During this audit we will work with HUD to determine the status of this recommendation.

Analysis

Updating the HUD Handbook 1900.40 will define responsible parties for ensuring compliance with the Do Not Pay Initiative (DNP).    

The implementation of this recommendation will result in consistent use of DNP, allowing for instant verification of eligibility across the billions in payments that HUD processes, resulting in the reduction of future improper payments.

Develop a standard operating procedure to ensure that the OCFO is 1) monitoring the DNP Computer Matching agreement to ensure continuity, 2) reporting accurately on its DNP matching, and 3) working with program offices to adjudicate any payments that are identified as potentially improper during the computer matching process.

Work with Multifamily Housing to investigate the 11 of 24 entities with expired SAM.gov registrations to determine if those entities should have received payments totaling $212,208,450 and perform the required follow-up actions once a determination is made.

Deobligate the 101 program obligations totaling $1,967,991.45 identified for deobligation during the fiscal year 2024 OOR that had not been deobligated as of February 28, 2025.

Develop and execute a written agreement with ONDCP on the reporting methodology for the CoC annual numeric targets and actuals that would meet future reporting requirements and comply with the Strategy and timeframe for implementation.

Develop and execute a written agreement with ONDCP on the use of reporting annual numeric targets for the RHP performance measures that would meet future reporting requirements and comply with the Strategy and timeframe for implementation.