Fraud Risk Inventory for the Tenant- and Project-Based Rental Assistance, HOME, and Operating Fund Programs’ CARES and ARP Act Funds

In coordination with the Pandemic Response Accountability Committee, we conducted an audit to identify potential fraud schemes that could affect HUD’s pandemic funds. We reviewed the funds appropriated by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the American Rescue Plan (ARP) Act for the Tenant-Based Rental Assistance (TBRA), Project-Based Rental Assistance (PBRA), HOME Investment Partnerships, and Public Housing Operating Fund programs to identify the fraud risks and potential fraud schemes that they face while delivering services to the public. Our objective was to develop an inventory of fraud risks that HUD had not previously identified for the funds appropriated by the CARES and ARP Acts for the TBRA, PBRA, HOME, and Operating Fund programs. We identified six overall and three program-specific fraud risk factors that increase the chance of fraud occurring by increasing the incentive, opportunity, and likelihood for an individual considering committing fraud. We used these fraud risk factors, along with the results of brainstorming sessions, interviews, and reviews of audit reports, investigations, and press releases from the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), and other agencies to develop an inventory of 66 potential fraud schemes that HUD had not previously identified. These fraud schemes could be used to misappropriate the CARES and ARP Act funds for the TBRA, PBRA, HOME, and Operating Fund programs, resulting in emergency funds being diverted from intended beneficiaries. We recommend that HUD use the identified fraud risk factors and inventory of potential fraud risk schemes to enhance its fraud risk assessments. Ultimately, this will increase HUD’s ability to safeguard its CARES and ARP Act funds from fraud and ensure that the funds are used for their intended beneficiaries.