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Document

We audited the U.S. Department of Housing and Urban Development’s (HUD) fiscal year 2020 compliance with the Payment Integrity Information Act of 2019 (PIIA) and other Office of Management and Budget guidance.  PIIA was enacted to prevent and reduce improper payments and requires each agency’s inspector general to perform an annual review of the agency’s compliance with PIIA.  Our audit objective was to determine whether HUD complied with PIIA reporting and improper payments reduction requirements according to guidance from the OMB.

HUD did not fully comply with PIIA reporting and improper payments reduction requirements for fiscal year 2020.  Of the six requirements, HUD did not comply with one requirement, and one requirement was not applicable.  Specifically, HUD did not use a comprehensive sampling and estimation methodology for publishing an improper payments estimate for three of four reported programs.  Due to the impacts of the COVID-19 pandemic, HUD did not test the complete payment cycle, to include payments issued by State, local, or other agencies, which was not made clear in its reporting of improper payments estimates.  Instead, HUD was limited to the extent that the documentation and information were readily available to it without burdening the direct recipients of funds.  As a result, HUD’s programs were vulnerable to the adverse effects of improper payments, and HUD will likely continue to miss opportunities to prevent, identify, reduce, and recover improper payments unless it fully complies with PIIA reporting and reduction requirements.  However, we recognize that HUD is making progress in being fully compliant with PIIA and acknowledge its plan to execute a comprehensive sampling and estimation methodology in the coming year.

We recommend that HUD use a comprehensive sampling and estimation methodology for all reported programs and disclose in its reporting any limitations imposed or encountered.

Recommendation Status Date Issued Summary
2021-AT-0002-001-A Open May 17, 2021

For the MF-RAP, PIH-TRA, and CPD-HIM programs, ensure that the program's improper payments rate estimates adequately test for and include improper payments of Federal funding that are made by State, local, and other organizations administering these programs and adequately disclose any limitations imposed or encountered when reporting on improper payments, to a degree that fairly informs users of the respective reported information.


Status

As of October 2023, the Office of the Chief Financial Officer believed it has taken sufficient action to close this recommendation by developing a methodology for testing for improper payments but has not actually done so. OIG analyzed OCFO’s methodology and determined that it did not test the fully payment cycle. Consequently, OIG will continue to identify this as a priority open recommendation.


Analysis

HUD has been challenged with developing a compliant sampling methodology that can test the full payment cycle and that can be executed within the required timeframes. HUD’s sampling methodology did not test the full payment cycle. Further, the associated sample testing and statistical estimation of improper payments could not be completed in time for the required annual reporting of improper payment estimates in the Agency Financial Report (AFR), normally issued in November. To fully address this recommendation, the sampling methodology should test the full payment cycle, and the associated sample testing and statistical estimation must be completed in time to be included in the AFR.

Implementation of this recommendation will result in HUD better safeguarding taxpayer dollars and decrease improper payments.