Create a plan and timeline that outlines OFO’s proposal to move the LBPR tracker to a different platform.

Develop a timeliness standard in the LBPR tracker to establish expectations for how often field office staff must reach out to PHAs on the LBPR tracker to discuss measures that will resolve cases in a timely manner.

Develop and issue a departmental grant accrual validation policy or update the existing grant accrual policy to include the validation process. The policy should include 1) specific control activities over the grant accrual validation and outline all of the specific roles and responsibilities; 2) a periodic review of the grant accrual validation to evaluate and reassess its continued relevance and control effectiveness, and ensure any changes are designed and implemented appropriately; and 3) a clear communication plan that requires formal and documented communications between appropriate program offices and OCFO to ensure the validation results are used to update the grant accrual methodology and subsequent period’s estimate, as appropriate.

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

HUD has made steady progress in building its Fraud Risk Management program. In FY 2024, HUD received Congressional approval to establish the Office of the Chief Risk Officer (OCRO). With its Fraud Risk Management Policy in place since 2022, OCRO worked with the HUD Risk Management Council to develop the Department’s approach and establish a cross-functional approach for Fraud Risk Management program accountability. The CRO also completed a fraud risk exposure assessment method that enables the Department to provide a risk-based approach to prioritize program fraud risk assessments and a department-level Fraud Risk Management Playbook to align HUD’s cross-functional activities and accountability to the GAO Fraud Risk Framework and CFO Council practices. The CRO is also working on tools and templates that are being customized for HUD program offices to help them complete their fraud risk assessments. Priority program offices are targeted to complete fraud risk assessments in 2025.

Analysis

While HUD has made progress in the area of fraud risk management, there is still work to be done for HUD to complete an entity-wide fraud risk assessment. HUD's exposure analysis will help it to determine where to focus its efforts. The Department still needs to conduct program-specific fraud risk assessments. Based on the demonstration by Multifamily Housing (MFH), we believe that MFH has made great progress in its fraud risk assessment, and we are encouraged that it has identified areas of weakness that it plans to target. However, Public and Indian Housing (PIH) and Community Planning and Development (CPD) have not been able to demonstrate progress in this area. We believe that the tools and templates the OCRO is developing, along with the continued support, will help PIH and CPD to complete these assessments.

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.

Consider conducting an analysis of staffing resources needed to manage the REO and notes sales on tribal trust properties program and adjust staffing accordingly.

In conjunction with corrective actions being taken on previous audits, revise ONAP’s internal policy and procedures to include detailed written policies and procedures for the marketing, preservation, and sale of defaulted loan notes and REO properties on tribal trust and other restricted lands.

Work with the Office of the Chief Information Officer to develop an electronic solution, such as a new module in Native Advantage or one similar to FHA’s P260 tracking system, to track the sale of defaulted loan notes and REO properties on tribal trust and other restricted lands. While the solution is being developed, HUD should put controls into place to ensure that manual systems used to track defaulted loans and REO properties are complete and accurate.

We recommend that the General Deputy Assistant Secretary for Public and Indian Housing require the Real Estate Assessment Center in coordination with the Office of Field Operations to develop and implement a plan to manage lead-based paint and lead-based paint hazards in public housing.

Requires the REAC in coordination with OFO to determine the number of developments and associated units that contain lead-based paint and lead-based paint hazards.

Status

In May 2023, HUD published a final rule establishing a new approach to defining and assessing housing quality: The National Standards for the Physical Inspection of Real Estate. Public Housing regulations were amended, and Public Housing program participants were required to comply with this final rule and use the NSPIRE standards starting July 1, 2023. The Real Estate Assessment Center and Office of Field Operations will collaborate with the Office of Lead Hazard Control and Healthy Homes, the Office of Policy Development and Research, and a statistician to evaluate data collected under the NSPIRE inspection program to estimate the number of public housing developments and associated units that contain lead-based paint and lead-based paint hazards. As of November 2024, PIH reported that inspections have had a slow start due to procurement delays. Additionally, the NSPIRE system did not get the requested functionality to collect lead inspections. The final action target date is March 31, 2025.

Analysis

To address this recommendation, HUD will need to provide evidence that it collected and evaluated data under NSPIRE and estimated the number of public housing developments and associated units that contain lead-based paint and lead-based paint hazards.

Implementation of this recommendation will assist HUD in working with PHAs to address the public housing units that contain lead-based paint and lead-based paint hazards and help HUD’s oversight of units in need of hazard reduction.