Federal Reports

This memorandum provides the results of our evaluation of the Economic Development Administration’s (EDA’s) plan for the implementation of Coronavirus Aid, Relief, and Economic Security Act (CARES Act)1 funding. Our objective was to determine whether EDA implemented and followed the requirements of the CARES Act. Specifically, we determined (1) what steps EDA took in implementing the CARES Act, (2) challenges EDA faced during implementation, and (3) EDA’s ongoing efforts in awarding funds under the CARES Act. Overall, we found that EDA implemented and followed the requirements of the CARES Act. EDA has put in place measures to mitigate challenges resulting from employees working from home due to the COVID-19 pandemic, and it is on track to obligate all CARES Act funds before September 30, 2022. EDA, however, still faces challenges in its workforce planning for emergency and disaster relief efforts.

The U.S. Department of Housing and Urban Development, Office of Inspector General, has completed its audit of Federal Housing Administration (FHA)-insured loans originated in calendar year 2019. Our audit objective was to determine whether FHA insured loans that were not eligible for insurance because they did not have the required flood insurance coverage. We found FHA insured at least 3,870 loans that closed in 2019, totaling $940 million, which were not eligible for insurance because they were made for properties in flood zones without the required flood insurance coverage. We found loans that had private flood insurance instead of the required national flood insurance program coverage, coverage that did not meet the minimum required amount, or no coverage at the time the loan was closed and endorsed. We recommend that FHA require lenders to provide evidence of sufficient flood insurance or execute indemnification agreements for the 43 loans in our statistical sample that did not have sufficient flood insurance at the time of our audit. We also recommend that FHA add to HUD databases the information necessary to ensure that the required flood insurance is in place at loan origination, including flood zone, flood insurance type, flood insurance amount, and site value of the property, and include system checks that prevent endorsement of loans without the required flood insurance.

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To gain insight on the effects and impact of COVID-19 on law enforcement investigative operations, the DOJ Office of the Inspector General (OIG) surveyed law enforcement personnel within the DOJ during July and early August of 2020. Specifically, the OIG deployed an anonymous online survey to Special Agents; Criminal Investigators; General Inspection, Investigation, Enforcement, and Compliance personnel; and U.S. Marshals and Deputy U.S. Marshals. Results from this survey are available at the following link: https://experience.arcgis.com/experience/891259547d994573a314acf7927ac6…

For our evaluation of the First Responder Network Authority’s (FirstNet Authority’s) actions following our August 2019 management alert, FirstNet Management Altered Contract Requirements Without Authorization -- which was a result of a hotline complaint -- our objective was to assess whether FirstNet Authority management took steps to address the concerns noted in our August 2019 management alert and whether continued concerns still existed.We observed that FirstNet Authority management took several actions consistent with the corrective steps proposed in the management alert. However, FirstNet Authority’s actions have not fully mitigated issues included in the management alert. Continued management attention is warranted to strengthen the underlying control environment, which continues to allow inappropriate management actions.

We audited Neighborhood Housing Services of Los Angeles County’s (NHSLA) Neighborhood Stabilization Program 2 (NSP2). The audit was based on a complaint alleging questionable NSP2 financial activity, double payments to contractors, and payments to contractors for incomplete work. Our Office of Audit received the referred complaint in late 2018. However, because the complaint included concerns regarding activities and auditee actions from at least 5 years before, we did not address the specific complaint issues but instead reviewed more recent program activities. The objective of the audit was to determine whether NHSLA administered its NSP2 in accordance with program requirements, focusing on procurement and contracting, expenditures of program income, and tracking and accounting of program income.NHSLA did not always follow program requirements in administering its NSP2. Specifically, it (1) could not support NSP2 activities in its interfund account and revolving loan fund, (2) borrowed NSP2 program income and deposited those funds into its non-NSP2 accounts, (3) could not support administrative and project delivery costs, and (4) did not have proper documentation to support the procurement of its construction contract. As a result, the U.S. Department of Housing and Urban Development (HUD) did not have assurance that more than $5.1 million in program income was used for its NSP2, $1.7 million in salary expenditures was in accordance with program requirements, and $856,692 in construction costs was reasonable.We recommend that the Director of the Los Angeles Office of Community Planning and Development require NHSLA to (1) support the eligibility of interfund activities or repay the program $3.4 million from non-Federal funds, (2) return $529,745 in program income funds to its NSP2 account, (3) support the use of its loan proceeds or repay the program $658,261 from non-Federal funds, (4) support transfers of NSP2 funds or repay the program $500,000 from non-Federal funds, (5) support its administrative and project delivery costs or repay the program more than $1,388,545 from non-Federal funds and not reimburse another $324,478, (6) support the reasonableness of the construction contract or repay the program $856,692 from non-Federal funds, and (7) develop and implement procedures and controls for its procurement.

DOL-OIG Investigations Newsletter Volume XXXI for the period of October 1 - November 30, 2020

Memorandum for Department of Defense Lead Inspector General