We audited rent credits that the U.S. Department of Housing and Urban Development (HUD) received from the U.S. General Services Administration (GSA) during fiscal years 2015 through 2018 in exchange for financial contributions for building improvements. We initiated this audit due to concerns we identified while completing a review of HUD’s use of funds approved by Congress for building improvements.[1] Our objective was to determine whether HUD accounted for and managed rent credits, issued by GSA in exchange for HUD’s financial contributions for building improvements, in accordance with applicable requirements.
[1] HUD Used Funds for Building Improvements in Accordance With Its Plans and the Approval of the House and Senate Committees on Appropriations, Memorandum 2019-PH-0801, issued November 7, 2018
HUD did not properly account for and manage reimbursements totaling nearly $7.8 million that it obtained through rent credits issued to it by GSA in 2017 in exchange for improvements that it made to its headquarters building in 2016. HUD’s Office of Administration used these funds for expenses it incurred in 2017 instead of depositing the funds in the U.S. Treasury general account. This condition occurred because Office of Administration staff improperly considered all rent credits received, regardless of type, as a refund to its current appropriation. The Office of Administration also lacked controls to ensure that its staff complied with HUD’s funds control policy. As a result, HUD exceeded its fiscal year 2017 appropriated funding level by nearly $7.8 million and potentially violated the Antideficiency Act.[2]
2 HUD’s Chief Financial Officer has the sole authority to investigate this potential violation and determine whether HUD was required to deposit the value of rent credits into the U.S. Treasury General Funds. HUD OIG can make a referral to the Chief Financial Officer to investigate the potential violation.
We recommend that HUD’s Chief Financial Officer investigate the facts surrounding the potential Antideficiency Act violation involving nearly $7.8 million in rent credits. If it is determined that a violation occurred, HUD should develop corrective action plans or internal process improvements, take appropriate disciplinary actions, and report violations to the appropriate oversight authorities, as required.
Recommendations
Chief Financial Officer
- Status2021-PH-0002-001-AOpenClosedClosed on October 20, 2023
We recommend that HUD’s Chief Financial Officer investigate the facts surrounding the potential Antideficiency Act violation involving the $7,787,675 in rent credits and make a formal determination. If it is determined that a violation occurred, the Chief Financial Officer should develop corrective action plans or internal process improvements as necessary, take disciplinary actions as appropriate, and report the identified violations to the oversight authorities including the HUD Secretary, the President, OMB, Congress and the Comptroller General.
Office of Administration
- Status2021-PH-0002-001-BOpenClosedClosed on April 19, 2022
We recommend that HUD’s Chief Administrative Officer implement the corrective actions and internal process improvements in internal control developed as a result of the Chief Financial Officer’s investigation addressed in recommendation 1A.
- Status2021-PH-0002-001-COpenClosedClosed on April 19, 2022
We recommend that HUD’s Chief Administrative Officer provide training to responsible staff and officials to ensure that those that may be involved with negotiating any GSA rent credits, like the credits addressed in this report, identify such potential rent credit transactions and follow the corrective actions and process improvements implemented to resolve recommendation 1B.