Federal Reports

Our Objective(s)To evaluate PHMSA's (1) collection and tracking of hazardous materials (HazMat) registration fees and (2) monitoring and reporting of grantees' use of funds for the Hazardous Materials Emergency Preparedness (HMEP) Grant Program.
Why This AuditPHMSA administers grants, for emergency planning and first responder training related to the transport of HazMat. To fund these grants, PHMSA collects fees from HazMat transporters for their required annual registrations. We conducted this audit due to a recent significant increase in HazMat grant funding authorized under IIJA and the important roles the grants play in preparation for and response to emergency HazMat incidents.
What We FoundPHMSA's processes for registration fee collection and data tracking make data verification difficult.

PHMSA uses an online registration portal to collect registrants' data and fees to support the HazMat Grant Program. The Agency requires registrants to determine their business' sizes using the Small Business Administration's (SBA) business-size regulations and then self-certify the accuracy of their data. These SBA business-size regulations include complex variables and increase the risk for inaccurate fee assessments.
Data quality issues impact PHMSA's ability to monitor the quantity and accuracy of the information in its registry. PHMSA could not readily explain why the data issues we found"such as business size and fee mismatches"occurred. A PHMSA standard operating procedure (SOP) includes a daily error reporting process to identify data quality issues, but staff were unfamiliar with and could not locate any daily error reports or anyone who was familiar with them.

PHMSA did not always comply with its grant monitoring procedures or congressional reporting requirements.

PHMSA did not always complete all monitoring activities as required by its HazMat Grants SOP. Forty of 64 (62.5 percent) low and medium risk grantees we evaluated did not receive required annual spot checks, and 25 of 43 (58.1 percent) medium and high-risk grantees did not receive required desk reviews. PHMSA also did not receive or review all grantees' financial and performance reports in a timely manner.
PHMSA did not meet the annual reporting requirements to Congress but has implemented a redesign of its report and data collection process to meet these requirements.

RecommendationsWe made four recommendations to improve PHMSA's oversight of HMEP grants.

We audited Flat Branch Mortgage, Inc., to evaluate its quality control (QC) program for originating and underwriting Single Family FHA-insured loans.  Our audit covered the period October 2020 through September 2022.  We selected Flat Branch for review based on its loan volume and delinquency rate and because its rate of self-reporting loans to HUD when it identified fraud, material misrepresentations, and other material findings that it could not mitigate was below average for more than a 5-year period.

We found that Flat Branch’s QC program for originating and underwriting FHA-insured loans was not sufficient.  Specifically, Flat Branch (1) did not select the proper number of loans for review and maintain complete and accurate data to document its loan selection process; (2) did not complete all loan reviews in a timely manner; (3) did not always complete key review steps and sometimes missed material deficiencies; and (4) did not adequately assess, mitigate, and report loan review findings, which included self-reporting loans to HUD when required.  These issues occurred because Flat Branch had insufficient controls over its QC program, was not always familiar with HUD requirements, and experienced staffing constraints.  As a result, HUD did not have assurance that Flat Branch’s QC program fully achieved its intended purposes, which include, among other things, protecting the FHA insurance fund and lender from unacceptable risk, guarding against fraud, and ensuring timely and appropriate corrective action.

We recommend that HUD require Flat Branch to (1) update its QC plan and related procedures to align with HUD requirements; (2) provide training to staff and management on HUD requirements for lender QC programs; (3) review the loans that it had not selected and take appropriate actions when applicable; (4) obtain credit reports and reverifications of borrower information for QC reviews in which it did not complete these steps and evaluate the risk of findings identified for these loans; and (5) evaluate its QC files for the loans in which it identified material findings to confirm whether it self-reported to HUD all findings of fraud or material misrepresentation, along with any other material findings that it did not acceptably mitigate.

Our investigation determined that a Clerk based in New Brunswick, New Jersey, violated company policies by using her company-issued computer and other company equipment, such as printers and copiers, to conduct personal business by selling items online on company time. We also confirmed that she was selling company property on Poshmark for personal profit. She was terminated on June 20, 2025, and she is not eligible for rehire.

New York based health care providers Muhammad Mirza, a medical doctor, and Punson Figueroa, an acupuncturist, were excluded June 19, 2025, from participating in federal health care programs by the Health and Human Services Office of Inspector General (HHS OIG). The two providers previously pleaded guilty for their participation in an Amtrak-OIG investigated health care fraud conspiracy in which they conspired with dozens of Amtrak employees to use the employees’ health insurance information to file fraudulent claims. In exchange, the two providers paid cash kickbacks to the employees.

Mirza was sentenced on May 10, 2024, to 26 months in prison and ordered to pay restitution of $1.37 million, and Figueroa was sentenced on September 26, 2024, to 34 months in prison and ordered to pay restitution of $9.05 million. Both Mirza and Figueroa were excluded from participating in federal health care programs for 25 and 30 years, respectively.

The U.S. AbilityOne Commission (AbilityOne) Office of Inspector General (OIG) conducted an investigation of employee conduct in response to a complaint received.