Federal Reports

The VA Office of Inspector General’s (OIG’s) Mental Health Inspection Program evaluates Veterans Health Administration’s (VHA’s) continuum of mental healthcare services. This inspection focused on inpatient mental health care delivered at the Lexington VA Healthcare System in Kentucky. 

Facility leaders reported that the service line leadership structure promoted a culture of collaboration. However, despite adequate leadership staffing and a low patient census, the OIG identified oversight concerns and unmet VHA requirements. Concerns included a lack of veteran representation on the Mental Health Executive Council and recovery-oriented programming not being delivered as scheduled. 

Facility policy outlined written processes for involuntary hospitalization; however, there was no formal procedure to track and monitor compliance with relevant state laws. Additionally, staff inconsistently documented required discussions regarding medication risks, and discharge instructions were often difficult to understand or incomplete. 

Staff met suicide risk screening requirements; however, some safety plans omitted strategies to reduce access to lethal means other than firearms or opioids. 
Inspections used to identify environmental hazards occurred at the required frequency; however, risk assessments for identified deficiencies were not documented. Furthermore, facility leaders did not reconcile conflicting guidance between the Veterans Integrated Service Network and the National Center for Patient Safety regarding environmental safety requirements.

Facility and Veterans Integrated Service Network leaders concurred with the 11 recommendations issued by the OIG. Leaders described plans to address recovery-oriented staffing and programming, design elements, discharge instructions, informed consent, involuntary hospitalization, safety inspections, and hazard reporting on the inpatient mental health unit.

The Office of Inspector General (OIG) is issuing this evaluation report to assess SBA’s screening of 7(a) loan applications under its Risk Mitigation Framework. Our scope covered 7(a) loans approved and disbursed from August 1, 2023, to December 31, 2024, for which SBA used the framework to determine applicants’ eligibility. 

SBA’s Risk Mitigation Framework was not sufficient to determine borrowers’ eligibility because it did not screen or fully screen for three of six eligibility requirements. Specifically, the framework did not screen to determine whether a small business (1) was organized for profit, (2) met SBA’s size requirements, or (3) was an ineligible business type. We also reviewed 188 of the 9,650 loans that had at least one error code and found SBA did not maintain sufficient documentation to support the reviewer’s decision to clear error codes for 71 (or 38 percent) of the loans we reviewed, totaling about $60.7 million. As a result of SBA’s incomplete screenings, there is limited assurance that borrowers met eligibility requirements for the 73,302 loans, totaling about $32 billion in questioned costs. This includes the subset of 71 loans we identified, totaling about $60.7 million, for which SBA did not maintain sufficient documentation to support its decision to clear the error codes, further limiting this assurance.

We recommended that SBA flag the 73,302 loans for review at guaranty purchase to assess whether borrowers met all eligibility requirements and seek remedy for all loans deemed ineligible.

 SBA agreed with the recommendation, stating they will flag the 73,302 loans for review at guaranty purchase and seek recovery where appropriate and legally justified. 

The audit objectives were to determine whether program funds were managed in accordance with the ARC and Federal grant requirements.

We recently issued an audit report on the City and County of Honolulu’s (City) fraud risk management practices, which determined the grantee did not adequately develop a fraud risk management framework for the Coronavirus Aid, Relief, and Economic Security (CARES) Act funding provided for the Emergency Solutions Grant (ESG) program to prevent, detect, and respond to fraud (Audit Report No. 2024-LA-1002, issued August 6, 2024). This audit follows that recent work, in which we audited the City’s ESG CARES Act program with the objective of determining if improper payments existed.  

The City made some improper payments in its ESG CARES Act program because it did not always follow HUD’s requirements.  Specifically, the City and its subrecipients did not (1) determine that 233 landlord signing bonus payments totaling $714,512 were reasonable and necessary, (2) prorate the rent amount for partial months resulting in $51,235 in overpaid rent (projected to be $248,572 in overpayments based on our statistical sample), and (3) ensure there were no duplication of benefits for three program participants totaling $10,100.  We also determined that HUD communicated draw deadline dates to grantees that were inconsistent with guidance it publicly issued, causing the City to draw $1.9 million in grant funds after the deadline.  These conditions occurred because we determined that officials of the City and its subrecipients were not aware of some of HUD’s requirements for the ESG CARES Act program and did not have controls for preventing a duplication of benefits.  In addition, HUD used a single draw deadline for grantees, which conflicted with the three separate expenditure deadlines that it established, but did not issue formal written notice so that all grantees, subrecipients, and the public would be aware of the single deadline.  These results reduced the number of participants that could have been served by the program, intended to reduce or mitigate homelessness, and impacted the City’s ability to maintain program and payment integrity of the ESG CARES Act program.  Although the ESG CARES Act program has concluded, the City could make some of the same types of improper payments in the annual ESG program and other HUD-funded programs it operates, since these programs allow expenses for similar activities.

We recommend that the Director of HUD’s Honolulu Office of Community Planning and Development instruct the City to (1) determine whether the $714,512 paid for 233 signing bonuses under the ESG CARES Act program were reasonable and necessary, (2) develop and implement written policies and procedures for the ESG program to ensure that rents are prorated for the first month for tenant-based rental assistance, (3) repay HUD from non-Federal funds $51,235 in overpaid rent to landlords, (4) develop and implement written policies and procedures to prevent duplication of benefits, and (5) review the rental assistance payments made for the ESG CARES Act program to identify other possible duplication of benefits with other rental assistance programs that the City operates. 
 

We audited the U.S. Department of Housing and Urban Development’s (HUD) oversight of the Moving to Work (MTW) demonstration program.  We also reviewed three of the 39 initial MTW public housing agencies (PHA) for compliance with the MTW program’s statutory requirements.  We selected the three PHAs for review based on our analysis of risk factors for initial MTW PHAs.  Our objective was to (1) assess HUD’s monitoring of initial MTW PHAs’ compliance with the statutory requirements of the MTW demonstration program, which includes HUD’s confirmation of PHAs’ activities and related outcomes and (2) determine whether the selected PHAs complied with three of the statutory requirements (creating a reasonable rent policy that encourages employment and self-sufficiency, continuing to assist substantially the same number of eligible families, and maintaining families of similar sizes as the PHA would have if it had not participated in the demonstration program).  Further, we reviewed the PHAs’ activities to assess their established metrics and reported outcomes related to the statutory objectives.

We found that HUD’s monitoring of PHAs’ MTW demonstration programs had weaknesses.  Specifically, HUD relied on PHA self-reported data and certifications to determine full compliance with the statutory requirements and did not confirm program activities.  We determined that two of the three selected PHAs complied with the statutory requirements that we reviewed.  However, (1) one PHA did not always comply with the statutory requirement of serving substantially the same number of families as it had before joining the program, which HUD had identified through its monitoring; and (2) two PHAs’ reporting of local non-traditional households (LNT), which impacts that same requirement, had errors and were not supported.  Further, all three PHAs did not always use appropriate metrics when assessing program activities and related outcomes.  Lastly, two PHAs did not consistently maintain support for their program activities.  

These issues occurred because HUD did not verify PHAs’ reported information due to limited resources and its systems did not capture PHA data needed to determine full compliance with the statutory requirements.  Further, PHAs relied on third-party contractors to administer programs for LNT households without providing sufficient oversight to ensure that data reported for their MTW programs were accurate.  Additionally, HUD's standard metrics did not always align with the PHAs’ program activities; therefore, the PHAs could not consistently meet benchmarks and accurately report outcomes to HUD.  The PHAs also did not consistently maintain support for activities reported in their MTW reports because they believed that documentation was not needed or had relied on third-party contractors to develop and implement MTW activities on their behalf. As a result, HUD did not have complete and accurate information to determine PHAs’ full compliance with the statutory requirements and evaluate their MTW activities to make program decisions that could impact assisted housing, increase housing choices, and encourage low-income families to gain self-sufficiency.

We make several recommendations in this report to address the improvements needed in HUD’s monitoring of initial MTW PHAs to ensure accuracy and reliability of the information PHAs report to HUD related to program activities and outcomes.  Specifically, we recommend that the General Deputy Assistant Secretary for Public Housing Investments require the MTW Program Office to develop and implement a review and verification process to ensure that data provided by MTW PHAs is accurate, complete, and supported, and ensure corrections or updates to PHA information are reflected in either restated or subsequent MTW annual reports.  Further, establish a requirement for PHAs to retain supporting documentation for all data elements reported in their annual reports and program data not captured within HUD systems.  Based on the changes HUD made related to its reporting requirements and performance metrics during this audit, we recommend that HUD conduct an analysis to determine whether those changes will allow PHAs and HUD to appropriately measure the benefits and impacts of PHAs’ MTW program to include whether additional changes are warranted to appropriately evaluate results of the MTW program.  We also recommend that HUD develop and implement a review process to ensure that appropriate outcomes are assessed for each PHA’s local MTW program.