Recommendations

Systematically evaluate whether control deficiencies identified by the AIR program have affected the accuracy or completeness of HUD’s financial statements. This assessment should include: 
a) Review relevant financial statement line items, disclosure, and account balances for misstatements attributable to ineffective controls;
b) Document the evaluation results, including the rationale for conclusions regarding the presence or absence of misstatements;
c) Make correcting entries to September 30, 2025 balances, as appropriate;
d) Retain supporting analysis for both internal and external review; and
e) Leverage test of balances results to inform remediation efforts.

Work with program offices through remediation activities to determine the underlying causes of the control deficiencies identified by the AIR program.
 

Based on the causes identified, coordinate with the program offices through remediation activities to develop corrective action plans with defined milestones, responsible parties, and timelines. Progress should be tracked, documented, and periodically reported to senior management.
 

Require targeted, role-specific training for program office staff and managers in areas where deficiencies were identified, including approvals, segregation of duties, recordkeeping, and delegated authority. This training should reinforce the importance of compliance with internal control requirements and include HUD escalation and enforcement mechanisms.

Assess and address barriers to timely and adequate responses from program offices during AIR program internal control testing. This assessment should:
a) Identify recurring causes for delayed or incomplete responses from program offices and implement escalation protocols or incentives to ensure timely fulfillment of AIR program requests;
b) Identify and implement efficiencies in the testing process to optimize the time program offices spend on the AIR program, such as streamlining communication, clarifying expectations, finding alternatives to time consuming tasks, and optimizing scheduling;
c) Provide additional guidance, training, or resources to program offices as needed to improve the quality and timeliness of submissions; and
d) Monitor response rates and timeliness, reporting persistent issues to senior leadership for corrective action.

Re-examine and enhance HUD’s process for evaluating the potential financial impact of control deficiencies identified by the AIR program or other sources to ensure that:
a) Assessments of financial impact are initiated promptly upon identification of control deficiencies;
b) The evaluation process is structured to deliver clear, actionable conclusions in sufficient time to inform any necessary adjustments to financial statements prior to the financial report date; and
c) Documentation of the assessment process and results is maintained to support audit requirements and management’s assertions.
 

Coordinate with the Principal Deputy Assistance Secretary for each Program Office to:
a) Define governance protocols to include reassessing HUD’s escalation protocols and enforcement mechanisms for repeated or willful noncompliance with documented controls, such as additional oversight, retraining, or disciplinary action as appropriate. Based on the assessment, update those protocols and mechanisms, as warranted.
b) Establish and resource a HUD-wide centralized digital repository for artifacts and key supporting documentation to provide consistent documentation retention and accessibility. Based on this initiative, define governance protocols for repository use, including security, version control, timely review/update requirements, and periodic audits to validate compliance.