We conducted an audit of the U.S. Department of Housing and Urban Development’s (HUD) fiscal year 2012 compliance with the Improper Payments Information Act of 2002 as amended by the Improper Payments Elimination and Recovery Act of 2010 (IPERA).  The statute was enacted to prevent the loss of billions in taxpayer dollars due to improper payments by requiring the agency to identify and report on its programs and activities that are susceptible to significant improper payments.  IPERA also requires each agency’s inspector general to perform an annual review of the agency’s compliance with IPERA.  Our audit objectives were to (1) determine whether HUD complied with IPERA in accordance with the guidance prescribed by the Office and Management and Budget (OMB) and (2) assess the accuracy, completeness of reporting, and performance of HUD in reducing and recapturing improper payments.

While HUD generally complied with IPERA it did not meet all of the law’s objectives.  The Office of Chief Financial Officer’s (OCFO) and Federal Housing Administration’s (FHA) risk assessment processes need significant modifications to improve their performance in identifying and reducing improper payments.   Specifically, the design of the OCFO’s and FHA’s risk assessment methodology had weaknesses that limited their ability to identify programs and activities susceptibility to improper payments. 

Additionally, the Office of Multifamily Housing did not meet two supplemental measure target goals.  Further, a lack of reliable data in the Enterprise Income Verification system hindered management’s ability to accurately measure and reduce improper payments.