Recommendations

Develop and implement a procedure to ensure that all differences identified during financial statement and note validations are corrected before certification.

Develop and implement a process that ensures the routine collection of information needed to accurately complete the narratives required according to GAAP and OMB Circular A-136.

Develop and implement a procedure to ensure that HUD’s quarterly consolidated financial statements accurately reflect HUD’s current contingent liabilities resulting from pending or threatened litigation or unasserted claims.

Restate the following in HUD’s fiscal year 2017 consolidated financial statements: (1) Note 3, Fund Balance with Treasury, so that it is comparable to HUD’s new status of fund balance with Treasury presentation, (2) the statement of net cost by reducing the administrative costs for non-FHA programs by $174 million, and (3) the balance sheet to correct the $136.7 million misstatements in the Commitments and Contingencies and Other Liabilities line items. If a partial restatement or no restatements are made, OCFO should provide justifications and support for the decisions.

In consultation with the Office of Housing FHA Comptroller, develop and establish internal controls to ensure periodic communications for assessing and agreeing to the cost allocation accounting policies and procedures.

Develop and implement a cost allocation methodology that includes all HUD programs and components, including Ginnie Mae, in the distribution of administrative costs.

In consultation with the Office of Chief Human Capital Officer (OCHCO), develop and establish an activity-based costing process to validate the accuracy of factors used to allocate personnel and other administrative costs to each program and ensure that the validation is performed annually.

In collaboration with the Office of the Chief Information Officer (OCIO), implement an improved cost allocation methodology for IT cost based on direct costs used by the programs.

Determine whether HUD’s FSSP, ARC, has resources available to enhance HUD’s cost allocation methodology to identify, trace, and allocate costs directly to program activities periodically and at yearend.

Develop and implement a procedure that (1) detects significant fluctuations or discrepancies in Ginnie Mae’s budgetary data, (2) investigates the fluctuation or discrepancy to determine whether an error has occurred, and (3) performs corrections as needed, in a timely manner.

Develop and implement a procedure to verify all information presented in HUD’s consolidated financial statement note disclosures with its standalone note disclosures before certifying HUD’s statements and notes.

Revise its quarterly tie point analysis to include a check for all of its budgetary accounts.

Evaluate the impact of the DRGR weaknesses identified in audit memorandum 2018- FW-0802 during the improper payment risk assessment process.

Evaluate the impact of the improper accounting for grant funds issued under the Disaster Relief Appropriations Act, 2013, identified in audit memorandum 2018-FW- 0802 and perform an adjustment or restatement of the impact if deemed significant.

Work with CPD on remediation plans to address application control weaknesses within DRGR identified by audit memorandum 2018-FW-0802 that have contributed to continuing FFMIA noncompliance.

Require the grantees to submit supporting documentation with their survey responses to substantiate the amounts certified in support of OCFO’s validation of grant accrual estimates

Provide periodic training to grantees to assist them with understanding and completing the information requested in the survey letter to validate HUD’s grant accrual estimates.

Research the survey responses received as part of OCFO’s validation of grant accrual estimates that resulted in a positive cash on hand to determine whether a cash advance exists. If so, OCFO 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.

Develop and implement standard operating procedures for recording and periodically evaluating sustained audit receivables to ensure that (1) all receivables are supported by a claim to cash and (2) an allowance for loss is recorded that reasonably estimates uncollectible amounts to reduce the gross amount of receivables to its net realizable value.

Develop and implement procedures that require action officials to certify the validity of accounts receivables periodically, at least quarterly. OCFO should use this information to assess the reasonableness of the allowance for loss estimate.

Work with action officials to determine the validity of all receivables from OIG sustained audit findings, determine whether restatement is necessary, and adjust HUD’s current and prior-year accounts receivable balances accordingly, ensuring that all writeoffs are reported to the Treasury.

Perform a validation, comparing the data used in OCFO’s PIH prepayment estimate calculation to the data used by PIH in its RNP reports to ensure that all CAM 1 codes and VMS fields are appropriately included. If it is determined that CAM 1 codes or VMS codes are missing or not properly included, OCFO should update the standard operating procedure and all estimates made to ensure that they are included.

Design and implement a procedure that ensures periodic communication between OCFO and PIH regarding all events that impact the PIH prepayment estimate.

Review FMC’s final December 31, 2016, balances and update the PIH prepayment beginning balance accordingly.

Design and implement a policy or procedure that ensures the accuracy of all information provided to HUD OCFO related to the PIH prepayment estimation methodology.

Delegate responsibilities to the appropriate program office and assign risk owners to provide responses for the acceptance, mitigation, and elimination of risks identified in HUD’s ERM risk profile.

Develop, implement, and document internal controls in response to identified risks from HUD’s ERM risk profile in compliance with OMB Circular No. A-123, Management's Responsibility for Enterprise Risk Management and Internal Control.

Complete and issue final FERA policy to the Department and communicate the requirements within the policy to program offices in a timely manner.

Assign and communicate the responsibility of FERA policy implementation and oversight to ensure that program offices are performing FERAs on a routine and timely basis to ensure effectiveness and efficiency of operations at the HUD program level and compliance with HUD internal policy and procedure.

Assign and communicate the responsibility of the MCR program policy, implementation, and oversight to ensure that program offices routinely conduct reviews to support a compliant internal control framework.

Conduct the OOR more frequently than annually to ensure that all obligations are adequately reviewed and deobligations are processed by the end of the fiscal year

Develop departmental policy that outlines the open obligation review process, to include (1) internal controls, (2) timeframes, and (3) roles and responsibilities of OCFO, OCPO, and program offices. These policies must outline sufficient internal controls in place to ensure that the Secretary can certify that all of HUD’s obligations are valid as of the end of the fiscal year.

Update standard operating procedures on the departmentwide unliquidated obligations review to conduct a routine review of justifications provided by the program offices for retained obligations, while ensuring that they are for a bonafide need and to support the annual certification made by the Secretary on open obligations.

As part of the OOR process, conduct monitoring activities of obligations sent to OCPO for deobligation by developing a mechanism to routinely track the status, to include key information, such as but not limited to the owner (program), date transmitted to OCPO, point of contact, last contact date, and current status. OCFO should use this information to ensure that all information has been communicated among all parties involved to enable timely deobligation.

Deobligate all obligations marked for deobligation during the departmentwide OOR, including as much as $7,517,486 in 187 program obligations and $62,183 in 9 administrative obligations marked for deobligation as of September 30, 2018.

Review the 473 identified inactive retained obligations with remaining balances totaling $43,005,703 and close out and deobligate amounts tied to obligations that are no longer needed.

Deobligate all obligations marked for deobligation during the departmentwide OOR, including as much as $51,396,319 in 735 administrative obligations and $5,350,112 in 68 program obligations marked for deobligation as of September 30, 2018.

Review the 65 identified inactive retained obligations with remaining balances totaling $4,310,534 and close out and deobligate amounts tied to obligations that are no longer valid or needed

Deobligate all obligations marked for deobligation during the departmentwide OOR, including as much as $588,694 in 12 administrative obligations marked for deobligation as of September 30, 2018.

Review the three identified retained inactive obligations with remaining balances totaling $78,069 and close out and deobligate amounts tied to obligations that are no longer valid or needed.

Deobligate all obligations marked for deobligation during the departmentwide OOR, including as much as $168,198 in 29 obligations marked for deobligation as of September 30, 2018.

Review the five identified retained inactive obligations with remaining balances totaling $110,224 and close out and deobligate amounts tied to obligations that are no longer valid or needed.

Deobligate all obligations marked for deobligation during the departmentwide OOR, including as much as $574,511 in 79 administrative obligations marked for deobligation as of September 30, 2018.

Deobligate all obligations marked for deobligation during the departmentwide OOR, including as much as $106,962 in 30 administrative obligations marked for deobligation as of September 30, 2018.

Review the one identified retained inactive obligation with a remaining balance totaling $60,395 and deobligate amounts that are no longer valid or needed.

Deobligate all obligations marked for deobligation during the departmentwide OOR, including as much as $54,909 in 13 administrative obligations marked for deobligation as of September 30, 2018

Develop technical reestimates for the EHLP direct loan portfolio annually in accordance with the requirements in OMB Circular A-11, section 185, and submit the reestimates to OCFO and ARC for recording.

Implement a process to ensure that ongoing ADA violation investigations are properly documented as the investigation progresses to enable timely review of open cases.