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.

Revise CPD Validation Review Instructions to specify documentation requirements similar to those provided to the grantee and specify verification of dates for when the costs were incurred.

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.

Establish a formal policy addressing HUD’s federal awarding agency responsibilities under 2 CFR § 200.513(c). The policy should identify those involved in the process and their roles in addressing this single audit oversight function. The policy should also address how it will be carried out and documented.

Perform a complete agency-wide fraud risk assessment (which incorporates the fraud risk assessments performed at the program level) and use the results to develop and implement an agency-wide plan to move HUD’s fraud risk management program out of the ad hoc phase.

Status

As of July 2025, HUD cancelled its fraud risk management contracts and the Chief Risk Officer position was vacated under the Deferred Resignation Program. HUD is currently working to realign its business process and determining how it will address fraud risk management. As of January 2026, HUD has not provided an updated plan on how it will address the recommendation. However, HUD reported to HUD OIG that it is currently working on reducing fraud through a Task Force and other new initiatives. The final action target date for this recommendation was September 30, 2024.

Analysis

To fully address this recommendation, HUD must provide evidence that it has performed an agency-wide fraud risk assessment performed at the program level, adopted and implemented its fraud risk assessment program departmental policy, and that each HUD program office has established office-specific risk programs.

Develop and implement a procedure to collect and analyze reported suspected instances of fraud, along with other relevant data points, that can be leveraged to develop more robust antifraud risk mitigation tools.

Communicate to HUD program staff the differences between HUD’s enterprise risk management, PIIA, and financial risk management risk assessment processes to ensure an understanding of their roles and responsibilities within HUD’s fraud risk management program.

Develop and implement activities to raise awareness of fraud, such as participating in organized antifraud conferences or a newsletter that includes instances of recent fraud in Federal programs.

Develop and implement a strategy for collecting and analyzing agency-wide data, to include subrecipient and beneficiary data, to identify trends and potential indicators of fraud across programs.

Collaborate with the Chief Risk Officer to conduct a workforce assessment to determine the level of dedicated full-time staff resources needed by the Chief Risk Officer to effectively (1) administer HUD’s enterprise and fraud risk management programs and (2) support program risk officers by increasing employee and stakeholder awareness of potential fraud schemes that could impact each program respectively.

If the workforce assessment determines that additional staff are needed, work with the Chief Risk Officer to staff the necessary positions.

Update applicable requirements to require assisted property owners, including PHAs, to maintain adequate documentation to support their determinations that maintenance and hazard reduction activities that disturb surfaces with lead-based paint qualify for the de minimis exemption from the lead-safe work practices under the Lead Safe Housing Rule.

Status

To address this recommendation, The Office of Lead Hazard Control and Healthy Homes (OLHCHH) agreed to:                                                                                                                      
1. Issue a notice to assisted target housing owners and public housing agencies on the de minimis exception citing the correct application of the de minimis threshold; describing appropriate documentation methods for the application of the de minimis threshold; and recommendations of best practices for documenting applications.
2. Collect additional data regarding the use of the de minimis threshold, including information on how private and public housing owners: (a) determine how much paint in target housing will be disturbed during a maintenance or rehabilitation project; (b) use the paint disturbance area information; (c) monitor the amount of paint disturbed in projects that are designed to disturb de minimis amounts of paint in target housing.
3. Design and conduct webinars, including at least one for each program office’s major categories of stakeholders on requirements and best practices pertaining to the de minimis exception under the Lead Safe Housing Rule and its implementation; record the webinars on the HUD website (e.g., on HUD Exchange) for future viewing by stakeholders; and conduct outreach promoting the webinars. 
The OLHCHH had drafted guidance on the de minimis exception to the Lead Safe Housing Rule for PIH, Multifamily Housing, and CPD and submitted it through the clearance process in September 2024.  As of January 2026, OLHCHH continues to revise the draft guidance in consideration of the comments it received during the clearance review process.  However, HUD has not provided an updated target date to complete the agreed upon actions, which was January 31, 2024.

Analysis

To implement this recommendation, HUD needs to provide evidence that it has implemented the three actions OLHCHH agreed to complete.

Implementation of this recommendation and associated corrective actions will ensure assisted property owners are sufficiently informed regarding the requirements to support their determinations that maintenance and hazard reduction activities that disturb surfaces with lead-based paint qualify for the de minimis exemption from the lead-safe work practices under the Lead Safe Housing Rule and that assisted property owners are conducting this work safely, thereby ensuring households are residing in safe and healthy HUD-assisted housing.

In collaboration with all involved program offices, develop and implement a sampling methodology that allows for a sample size that reasonably allows for the testing of the complete payment cycle within the PIIA reporting timeframe.

Consult with OMB on the appropriate reporting for the untested portions of the payment cycle (such as reporting as unknown) and report accordingly.

Implement a procedure, which ensures that future improper and unknown payment testing that does not test the full payment cycle is reported in accordance with OMB’s guidance.

Coordinate with OMB to ensure that all of HUD’s data posted on OMB’s PaymentAccuracy.gov are accurate, including data before fiscal year 2021.

Update its procedures to include verifying all HUD data on PaymentAccuracy.gov immediately after the data are published on the public website to ensure that all data are accurate and if not, coordinate any corrections with OMB.

Develop and implement controls for use of the bulk grant closeout process going forward to ensure that grants are closed in accordance with all applicable requirements, including that administrative actions and required work under the grant award have been completed by the grantee before the grant is closed out. These controls should include but not be limited to increased collaboration and communication between headquarters and field offices.

Develop and implement controls to ensure that future grant data reporting to stakeholders is consistent and accurate, including defining how records should be counted and data should be presented and ensuring that accurate POP dates are maintained in HUD’s systems.