Provide a means for which HUD grantees and their auditors can request technical advice and counsel.

Establish controls to determine if follow-up is being conducted to determine if the grant recipients have taken appropriate and timely corrective action. That follow-up must include the following: a. Issuing a management decision letter as prescribed in 2 CFR §200.521; b. Monitoring recipients to ensure they are taking appropriate and timely corrective action; c.Using cooperative audit resolution mechanisms (see 2 CFR §200.25) to improve federal program outcomes through better audit resolution, follow-up, and corrective action; and d. Developing a baseline, metrics, and targets to track, over time, the effectiveness of HUD’s process to follow-up on audit findings and on the effectiveness of single audits in improving recipient accountability and their use by HUD in making award decisions.

Establish controls to ensure that HUD provides Office of Management Budget (OMB) annual updates to the compliance supplement6 and works with OMB to ensure that the supplement focuses the auditor to test compliance requirements most likely to cause improper payments, fraud, waste, abuse or generate audit findings for which HUD will take sanctions.

Establish a control to hold HUD’s Single Audit Accountable Official responsible for improving the effectiveness of the single audit process based on single audit metrics that HUD will establish in response to recommendation 4D above.

Coordinate with CPD program staff to clarify the (1) roles and responsibilities of the CRO, HCCRT, and CPD’s risk management staff with regard to identifying, assessing, and mitigating fraud risks and (2) purpose and role of HUD’s ERM processes and program office risk management processes with regard to identifying, assessing, and mitigating fraud risks.

For the MF-RAP, PIH-TBRA, and CPD-HIM programs, ensure that the program 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.

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.

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.

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.

Prepare a white paper regarding the accounting treatment for each type of funding disbursed under the HCVP, to include a comparison of the qualities the funding embodies against the qualities that are necessary for it to be considered a prepayment versus an expense according to generally accepted accounting principles. The Chief Financial Officer should work with PIH to gather the information necessary to complete this analysis and have PIH review it to ensure the accuracy of the program information used.

Develop and implement a policy that requires OCFO to review all new program notices, new regulations, and new types of funding and evaluate each against the accounting standards and current accounting treatment (as documented in white papers or other forms) to determine whether OCFO’s treatment complies with generally accepted accounting principles and if not, propose changes. The policy should include formal designation of roles and responsibilities as well as internal controls to ensure proper review and approval of conclusions.

Once additional data are available, and at least quarterly, reduce the CARES Act PIH prepayment by the amount actually spent by PHAs or an estimated amount with a low level of estimation uncertainty.

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.

Research the survey responses that resulted in a positive cash on hand balance to determine whether a cash advance exists. If so, the Chief Financial Officer should coordinate with CPD to (1) determine whether the grantees have proper documentation and approvals allowing for cash advances and (2) develop and implement procedures to estimate and account for cash advances for financial reporting purposes.

Investigate other methods for validating CPD’s accrued grant liabilities estimate, including the use of other sampling units, which could provide additional relevant information that can be used to produce more reasonable results and reduce estimation uncertainty to a low level.

Work with the Director of the Office of Multifamily Asset Management and Portfolio Oversight to ensure that all debt owed to HUD is identified, accurately reported in HUD’s financial records, and properly monitored to ensure compliance with applicable laws and regulations.

The OIG has determined that the contents of this recommendation would not be appropriate for public disclosure and has therefore limited its distribution to selected officials.

Designate a Senior Agency Official for Records Management at the Assistant Secretary level or its equivalent.

Update and issue agency formal records policy, including detailed procedures and requirements for completing and maintaining program office and agencywide inventories of systems, records, and PII.

Update and obtain final NARA approval of all HUD records retention schedules, including the Capstone email schedule, to comply with Federal requirements, including OMB M-19-21.