Federal Reports

We reviewed the U.S. Department of Housing and Urban Development’s (HUD) funding allotment for tenant protection assistance at the Vineville Christian Towers (project) related to a housing conversion action and its approval of the project’s Rental Assistance Demonstration Program (RAD) conversion. The review was initiated as a result of internal issues identified during an external audit of the project’s RAD conversion. The objective was to determine whether HUD accurately allotted funding for tenant protection assistance and whether it properly approved the project’s proposed RAD conversion.HUD inaccurately allotted funding for tenant protection assistance at the project and improperly approved the project’s RAD conversion. Specifically, the Financial Management Division inappropriately processed a funding allotment for tenant protection assistance for a housing conversion action at the project based on unsupported requests from Multifamily and PIH program offices. Further, the Office of Recapitalization improperly approved the project’s RAD conversion for 90 units. These conditions occurred because (1) the procedures for funding allotments did not specify requiring support of the housing conversion action and (2) along with not maintaining adequate approval documentation, the Office of Recapitalization did not ensure that its requirement was met before approving the RAD conversion request for the project. As a result, nearly $715,000 in tenant protection assistance funding was inaccurately allocated, and more than $624,000 in housing assistance payments and administrative fees was improperly provided through an ineligible Section 8 Project-Based Voucher Program housing assistance payments contract.We recommend that the General Deputy Assistant Secretary for Housing, in coordination with the General Deputy Assistant Secretary for Public and Indian Housing, update and implement the internal procedures for processing housing conversion actions to require documentation, including but not limited to expired contracts or financial documentation from HUD’s Line of Credit Control System, to show when the last payment was made for the contract to support the proposed housing conversion actions before allotment of tenant protection funds, and Update and implement internal procedures to require verification that tenant protection funds were not previously allotted for the same type of housing conversion action. We also recommend that the Deputy Assistant Secretary for Multifamily Housing require the Office of Recapitalization, for the remaining retroactive RAD conversion not completed, to take steps, including but not limited to (1) maintaining adequate approval documentation and (2) training staff responsible for reviewing and approving RAD applications to ensure that it enforces its requirement that the tenant protection assistance is provided to tenants before the submission of the RAD application.

Twenty-one Amtrak machinists and supervisors were coached and counseled between October 31, 2019 and February 16, 2020, after our investigation determined the employees received temporary pay increases they were not entitled to. Known as “pay differentials,” these temporary hourly pay increases are granted for work performed beyond an employee’s regular duties. We found that employees based in Chicago, Los Angeles, and Washington, DC, were ineligible to receive the pay differentials, yet they requested these payments from the company’s Work Management System and their supervisors approved them without proper verification. We found that the company paid approximately $43,000 in pay differentials that it was not contractually obligated to pay under its collective bargaining agreement. Company officials said they implemented an updated pay differential policy that will prevent such future payments unless they are explicitly approved by management.

In accordance with the Chief Financial Officers Act of 1990, as amended, we are required to annually audit the consolidated financial statements of the U.S. Department of Housing and Urban Development (HUD) and the stand-alone financial statements of the Federal Housing Administration and the Government National Mortgage Association (Ginnie Mae). Our objective was to express an opinion on the fair presentation of HUD’s consolidated financial statements in accordance with U.S. generally accepted accounting principles applicable to the Federal Government. This report presents our independent auditor’s report on HUD’s fiscal year 2019 consolidated financial statements and reports on internal controls and compliance with laws, regulations, contracts, and grant agreements. We expressed a qualified opinion on HUD’s fiscal year 2019 consolidated financial statements because of the significant effects of certain unresolved audit matters, which restricted our ability to obtain sufficient, appropriate evidence about HUD’s other noncredit reform loans and other liabilities resulting from Ginnie Mae’s guaranty asset and guaranty liability. This report contains one material weakness, three significant deficiencies, and three instances of noncompliance with applicable laws, regulations, contracts, and grant agreements. Additional details on the material weakness, significant deficiencies, and instances of noncompliance with laws, regulations, contracts, grant agreements, and related recommendations are included in separate audit reports entitled (1) Additional Details To Supplement Our Fiscal Year 2019 U.S. Department of Housing and Urban Development Financial Statements Audit (audit report 2020-FO-0003); (2) Federal Housing Administration Fiscal Years 2019 and 2018 Financial Statements Audit (audit report 2020-FO-0001); and (3) Audit of the Government National Mortgage Association Fiscal Year 2019 Financial Statements (audit report 2020-FO-0002). We make no recommendations in this report because it is supplemented by three separate reports as described above to provide specific recommendations to HUD management.

Due to the importance of having critical spare parts available to reduce the amount of recovery time after events that may affect the transmission system, we conducted an evaluation to determine if Transmission is effectively managing critical spare parts. Transmission manages its critical spare parts as storm restoration material.We determined storm restoration material could be managed more effectively. Specifically, we found (1) discrepancies between storeroom inventory counts and data in TVA’s work management system, (2) storm restoration materials were not properly identified, and (3) storm restoration material reorder points were incorrect. Additionally, Transmission’s Web site contained out-of-date and incomplete data.