We audited the U.S. Department of Housing and Urban Development’s (HUD) fiscal year 2021 compliance with the Payment Integrity Information Act of 2019 (PIIA) and implementation of Office of Management and Budget (OMB) guidance. PIIA was enacted to prevent and reduce improper payments and require each agency’s inspector general to perform an annual review of the agency’s compliance with PIIA. Our objectives were to assess (1) whether HUD had met all requirements of PIIA and OMB Circular A-123, Appendix C-Requirements for Payment Integrity Improvement and (2) HUD’s efforts to prevent and reduce improper and unknown payments.
We found that HUD was noncompliant with PIIA in fiscal year 2021. Specifically, HUD’s improper and unknown payment estimates were noncompliant and unreliable because HUD was unable to test the full payment cycle for the Office of Public and Indian Housing’s Tenant Based Rental Assistance (PIH-TBRA) and Office of Multifamily Housing’s Rental Subsidy (MF-Rental Subsidy) programs, representing 63 percent of HUD’s total expenditures. This was due to logistical and security challenges, as documentation was not readily available, and HUD could not properly secure the data. Without completing its testing, HUD reported a 100 percent payment accuracy rate, instead of classifying the rate as unknown in accordance with OMB criteria. This put HUD at risk of not implementing corrective actions and other compliance requirements.
In addition, in the PIH-TBRA program, two of the primary monitoring and verification controls for improper payment detection and prevention were suspended due to COVID-19 related issues, increasing the risk of improper payments. HUD also missed opportunities to detect improper and unknown payments in its Office of Community Planning and Development (CPD) programs. Finally, there were some errors in HUD’s information on PaymentAccuracy.gov due to new government-wide processes. While HUD made some progress in fiscal year 2021, significant efforts are needed to bring PIH-TBRA and MF-Rental Subsidy programs into compliance.
For HUD’s noncompliant programs, we recommend that HUD (1) develop and implement a sampling methodology that allows for the timely testing of the full payment cycle and (2) consult with OMB on the appropriate reporting for untested portions of the payment cycle. Next, we recommend that HUD develop and implement a plan that ensures adequate internal controls over the PIH-TBRA program to detect and prevent improper payments, which can be implemented in a virtual environment. We also recommend that HUD work with grantees to better identify the risks of improper and unknown payments throughout the payment cycle in its CPD programs and ensure that its risk assessments and improper and unknown payment estimates fully consider these risks. Finally, we recommend that HUD coordinate with OMB to ensure that its data on PaymentAccuracy.gov are accurate.