Federal Reports

Our Objective(s)

To assess MARAD's risk management and oversight of Port Infrastructure Development Project (PIDP) grants funded through the Investment in Infrastructure and Jobs Act (IIJA). Specifically, we assessed MARAD's policies and procedures in the areas of risk management, oversight, workforce planning, and training. 

Why This Audit

MARAD's PIDP Federal grant program supports the modernization and expansion of port infrastructure across the United States. IIJA greatly increased PIDP funding, adding $2.25 billion over 5 fiscal years beginning in fiscal year 2022. We initiated this audit based on the heightened risks with administering a Federal grant program that receives such a large increase in funding in a short period of time. 

What We Found

MARAD did not apply comprehensive risk management tools to help identify and manage PIDP risks. MARAD began developing a PIDP Process Level Risk Assessment but had not yet used it to test the design and effectiveness of internal controls for PIDP. Additionally, MARAD lacked clear criteria and definitions to assess post award project risks. Gaps in MARAD's policies and procedures diminish their utility for overseeing IIJA-funded PIDP grants. MARAD employees conducting site visits of grantees lacked formal procedures and supervisory review of their findings was not required. The Agency's policies and procedures for reviewing grantee requests for advance and reimbursement of funds were not sufficient and MARAD lacked instructions for review of Federal Financial Reports. MARAD has not updated its Strategic Human Capital plan to address workforce challenges. MARAD has lost a significant number of staff with institutional knowledge while its funding and oversight needs have expanded. MARAD's Strategic Human Capital Plan expired in 2022 and does not account for the Grants Management Team's current workload. MARAD did not provide timely training for its staff to oversee the PIDP. The Agency planned to provide eight eLearning courses to staff and grantees; however, MARAD has not fully implemented that plan. 

Recommendations

We made 8 recommendations to improve MARAD's oversight of PIPD grants.

This is the second report of the fiscal year 2025 financial statements audit of the Smithsonian Institution performed by the independent public accounting firm of KPMG LLP (KPMG). On February 27, 2026, KPMG issued its independent auditor’s report on the Smithsonian Institution’s statement of financial position as of September 30, 2025, and the related statements of financial activity and cash flows. KPMG expressed an unmodified opinion that concluded the financial statements were presented fairly, in all material respects, in accordance with the applicable financial reporting standards. 
 

The objective of this inspection was to determine if the Farm Credit Administration complied with the Payment Integrity Information Act for FY 2025.

Annual summary perspective on the most serious management and performance challenges facing the FTC, as well as a brief assessment of the agency’s progress in addressing those challenges.

We have reviewed the U.S. Department of Housing and Urban Development’s (HUD’s) Detailed
Accounting Report and the related management assertions for National Drug Control Program activities
for the fiscal year ended September 30, 2025. We also reviewed the Budget Formulation Compliance
Report, which includes budget formulation information for fiscal year 2027, and the related
management assertions for National Drug Control Program activities. HUD’s management is responsible
for preparing the Detailed Accounting Report and Budget Formulation Compliance Report in accordance
with (or based on) the Office of National Drug Control Policy’s (ONDCP) Circular, National Drug Control
Program Agency Compliance Reviews, dated September 9, 2021. Our responsibility is to express a
conclusion about the reliability of each assertion made in these reports.
We performed this review as required by section 705(d) of Public Law 105-277, which requires National
Drug Control Program agencies to submit to the Director of ONDCP a detailed accounting of all funds
spent by the agencies for National Drug Control Program activities during the previous fiscal year and
that the accounting be authenticated by agency inspectors general before submission.

For our review, we performed the following: (1) reviewed HUD’s evidence for the assertions, (2)reviewed HUD’s source files for data reported in the Detailed Accounting Report, (3) determined whether HUD made the assertions required by ONDCP, and (4) made necessary inquiries of HUD and ONDCP personnel.

Based upon our review, we are not aware of any material modifications that should be made to HUD’s
Detailed Accounting Report and Budget Formulation Compliance Report for them to be in accordance
with ONDCP’s Circular, National Drug Control Program Agency Compliance Reviews, dated September 9,
2021.

HUD’s management’s assertions, along with the Detailed Accounting Report and Budget Formulation
Compliance Report, are included as attachment A.
 

Background 

The Postal Regulatory Commission (PRC) participates in the General Services Administration SmartPay® program. The program provides purchase cards to federal agencies through contracts negotiated with bank providers. PRC purchase card holders will use the government purchase card as its preferred acquisition method for official government business purchases $10,000 and under, to expedite purchasing, streamline payment, and reduce administrative costs. 

In 2022, prior to relinquishing its oversight responsibility to the U.S. Postal Service Office of Inspector General (OIG), the PRC OIG conducted the PRC Purchase Card Expenses audit, which found among other things, that the PRC purchase card policy needed strengthening. This audit follows up on those findings. 

What We Did 

Our objective was to evaluate the PRC purchase card expenses and assess the effectiveness of internal controls and procedures. For this audit, we analyzed 252 of the 588 purchases (or about 43 percent) made from October 1, 2023, through July 31, 2025. 

What We Found 

The PRC made significant strides to improve controls over their purchase card program since the PRC Purchase Card Expenses audit, including standing up the Office of Budget and Finance, updating purchase card policies, and initiating a system to electronically track all purchases. However, we found opportunities for the PRC to further strengthen controls over purchase card transactions. Specifically, we identified inconsistencies and missing documentation across several transactions and noted other opportunities for the PRC to replace recurring monthly payments with contracts. Lastly, we found that the PRC did not consistently use preferred vendors as required. These conditions may result in missed opportunities for cost savings, reduce individual accountability, and increase the risk of misuse of purchase cards. 

Recommendations and Management’s Comments 

We made three recommendations to address the issues identified in the report. The Postal Regulatory Commission agreed with all three recommendations. Management’s comments and our evaluation are at the end of each finding and recommendation. The OIG considers management’s comments responsive to all recommendations. Corrective actions should resolve the issues identified in the report.

On January 21, 2026, we issued the financial statements audit report (Report 26-03) performed by the independent certified public accounting firm KPMG LLP. The auditors issued a disclaimer of opinion on the consolidated balance sheet as of September 30, 2025. During that audit, KPMG identified and reported on four material weaknesses and one significant deficiency.

When conducting an audit of an agency’s financial statements, auditors may identify certain other matters involving internal controls that do not rise to the level of a material weakness or significant deficiency and are not required to be reported in the independent auditors’ report. Instead, those matters are communicated in a management letter.

This memorandum has been prepared to transmit a management letter prepared by KPMG, dated February 20, 2026, to report internal control issues identified during the 2025 financial statement audit, that were not included in the final financial statement audit report. The attached management letter entitled Controls Related to the Reporting of Outstanding Guaranty Loans details the following issues identified by KPMG:

• Management did not properly categorize the 1 month reporting lag of the guaranty loan balances as a non-generally accepted accounting principles policy.
• Management did not perform a timely review of the non-generally accepted accounting principles policy related to the untimely reporting of the guaranty loan balances and determine its impact on the financial statements and related notes.

The auditors made two recommendations based on these findings that management agreed to implement to improve internal controls. We consider the recommendations issued in this letter as open audit recommendations. In accordance with our audit follow-up process, we will monitor management’s implementation of the corrective actions.