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Document

We audited the U.S. Department of Housing and Urban Development’s (HUD) fraud risk management program at the enterprise and program-office levels and assessed its overall maturity.  Our objective was to determine HUD’s progress in implementing a fraud risk management framework at the enterprise and program-office levels that encompasses control activities to prevent, detect, and respond to fraud.

The Antifraud Playbook established by the Chief Financial Officers Council and the U.S. Department of the Treasury assess maturity of an agency’s fraud risk management program in four phases: (1) culture, (2) identifying and assessing fraud, (3) preventing and detecting fraud, and (4) turning insight into action.  We found that in all four phases HUD’s fraud risk management program was in the early stages of development, or at an “ad hoc” maturity level.  HUD’s program is still in its infancy because HUD had not previously dedicated sufficient resources to lead and implement fraud risk management activities. 

Although HUD has recently taken steps to mature its program, HUD needs to commit resources to enhancing antifraud controls and promoting a culture of fraud risk management. Without improvements to its program, HUD may miss opportunities to identify and eliminate fraud vulnerabilities, leaving its funds and reputation at risk.

We recommend that the Chief Risk Officer (1) perform a complete agency-wide fraud risk assessment and develop a plan to improve the maturity of HUD’s fraud risk management program; (2)  communicate to program staff the differences between HUD’s processes for enterprise risk management, Payment Integrity Information Act of 2019, and financial risk management risk assessment and how those processes relate to HUD’s fraud risk management program; (3) develop policies, procedures, and strategies for collecting and analyzing data to identify fraud within HUD’s programs, promote fraud awareness, and develop antifraud risk mitigation tools.  We also recommend that the Chief Financial Officer determine and seek to fulfill an appropriate level of dedicated staff resources to administer HUD’s enterprise and fraud risk management programs effectively and increase fraud risk awareness and strengthen antifraud controls in HUD’s program offices.

Recommendation Status Date Issued Summary
2023-FO-0001-001-A Open October 26, 2022

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 had initiated several responsive actions to resolve this recommendation to include: developing a fraud risk assessment program departmental policy, compiling program level oversight reports, establishing a fraud risk working group to strengthen HUD’s fraud risk culture, and supporting program offices with establishing risk programs within their offices to draw more direct attention to their risk management activities. HUD reported that all of these are ongoing activities working in an integrated manner towards achievement of this recommendation. Further, Congress approved HUD’s reorganization proposal to establish the Office of the Chief Risk Officer, allowing HUD to dedicate full time employees to focus on Enterprise and Fraud Risk Management. The final action target date is September 30, 2024.


Analysis

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.

Implementation of this recommendation will result in HUD better safeguarding taxpayer dollars and decrease improper payments.

2023-FO-0001-001-B Open October 26, 2022 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.
2023-FO-0001-001-C Open October 26, 2022 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.
2023-FO-0001-001-D Open October 26, 2022 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.
2023-FO-0001-001-E Open October 26, 2022 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.
2023-FO-0001-001-F Open October 26, 2022 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.
2023-FO-0001-001-G Open October 26, 2022 If the workforce assessment determines that additional staff are needed, work with the Chief Risk Officer to staff the necessary positions.