Federal Reports

Peace Corps OIG'S Semiannual Report to Congress describes OIG's work in identifying significant findings relating to the Peace Corps' administration programs and operations at both headquarters and overseas posts during the semiannual reporting period from April 1, 2025, through September 30, 2025.

The VA OIG contracted with the independent public accounting firm Kearney & Company, P.C. (Kearney) to audit VA’s financial statements as of September 30, 2025. Kearney provided an unmodified opinion and noted material weaknesses and significant deficiencies in internal control and instances of noncompliance with laws and regulations. Regarding internal control, Kearney identified two material weaknesses. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected and corrected on a timely basis. Kearney also identified three significant deficiencies. A significant deficiency is a deficiency, or combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness yet important enough to merit attention by those charged with governance. Kearney also identified two instances of noncompliance with the law.

Kearney is responsible for the attached audit report dated January 27, 2026, and the conclusions expressed in the report. The OIG does not express opinions on VA’s financial statements, internal control, or compliance with FFMIA, nor does the OIG express conclusions on VA’s compliance with laws and regulations. The independent auditor will follow up on these internal control and compliance findings and evaluate the adequacy of corrective actions taken during the FY 2026 audit of VA’s financial statements.

We audited the U.S. Department of Housing and Urban Development’s (HUD) Office of Lead Hazard Control and Healthy Homes’ (OLHCHH) oversight of Lead-Based Paint Hazard Control (LBPHC) and Lead Hazard Reduction Demonstration (LHRD) grant programs.  These programs help reduce lead hazards in low-income households, particularly with young children.  Between fiscal years 2020 and 2022, OLHCHH awarded more than $353 million in competitive lead grants to 101 grantees as part of HUD’s efforts to address lead hazards in U.S. low-income households.  We conducted this audit due to concerns that grantees were not spending grant funds to assist in reducing lead in targeted households.  Our objective was to assess how HUD (1) evaluates grantees’ capacity to manage grant funds and (2) tracks and monitors grant performance.

HUD’s Office of Lead Hazard Control and Healthy Homes (OLHCHH) need to improve its oversight of competitive LBPHC and LHRD grants.  OLHCHH did not always (1) review grantees’ past performance when evaluating capacity to manage competitive lead grant funds, (2) designate poor performing grantees as ‘High Risk’ after two consecutive quarters of poor performance, and (3) provide timely reviews of quarterly performance reports.

Due to the pandemic’s impact on grantees, OLHCHH eased its application review criteria for evaluating grantees’ performance history and how grantees are designated as ‘High Risk’ performers.  OLHCHH believed that doing so would minimize any hindrance to grantees’ eligibility for competitive lead grants and avoid penalizing grantees still recovering from the pandemic’s impact.  In addition, OLHCHH contended with competing priorities such as reviewing grant applications and making grant awards, which delayed HUD’s reviews of grantees’ quarterly performance reports.  These oversight weaknesses did not allow for OLHCHH to hold grantees accountable and ensure agreed-upon performance benchmarks were met in reducing lead hazards in targeted U.S. households.  From our universe of 101 grantees awarded $353 million in lead grants, we sampled 17 grantees that were awarded $63.8 million.  Of the 17 sampled grantees, 11 of these grantees were awarded $44.9 million in lead grant funds that were not designated as ‘High Risk’.  As of August 2025, these 11 sampled grantees spent $13.5 million of the $44.9 million awarded funding in grants to provide lead hazard control services to U.S. households.  Two of these sampled grantees have expired grants in which they did not meet agreed-upon performance benchmarks by the respective end of their period of performance of June 30 and July 14, 2025.  This resulted in $3.8 million in unused competitive lead grant funds that expired instead of being used to provide lead hazard control services for at least 132 targeted households.

 We recommend that HUD (1) Provide support to show that the past performance history element was factored during the application review process, (2) improve how grantees are designated as ’High Risk’, (3) improve the timing of when reviewing grantees’ quarterly performance reports, (4) recapture $3,775,916 in undisbursed grant funds for the two grantees that were not designated ‘High Risk’ whose period of performance ended and, (5) take appropriate actions that may include recapturing other undisbursed grant funds that expired on or before December 31, 2025.

We contracted with the independent public accounting firm of Sikich CPA LLC to audit the financial statements of FHA as of and for the fiscal year ending September 30, 2025, and to provide reports on FHA’s (1) internal control over financial reporting and (2) compliance with laws, regulations, contracts, and grant agreements and other matters.  Our contract with Sikich required that the audit be performed in accordance with U.S. generally accepted government auditing standards, Office of Management and Budget audit requirements, and the Financial Audit Manual of the U.S. Government Accountability Office and the Council of the Inspectors General on Integrity and Efficiency.

 In its audit of FHA, Sikich reported

• That FHA’s financial statements as of and for the fiscal year ending September 30, 2025, were presented fairly, in all material respects, in accordance with U.S. generally accepted accounting principles.
• One material weakness for fiscal year 2025 in internal control over financial reporting, based on limited procedures performed.
• No reportable noncompliance for fiscal year 2025 with provisions of applicable laws, regulations, contracts, and grant agreements or other matters.

 In connection with the contract, we reviewed Sikich’s reports and related documentation and questioned its representatives.  Our review, as differentiated from an audit of the financial statements in accordance with U.S. generally accepted government auditing standards, was not intended to enable us to express and we do not express opinions on FHA’s financial statements or conclusions about (1) the effectiveness of FHA’s internal control over financial reporting and (2) FHA’s compliance with laws, regulations, contracts, and grant agreements or other matters.  Sikich is responsible for the attached Independent Auditors’ Report, dated January 27, 2026, and the conclusions expressed therein.  Our review disclosed no instances in which Sikich did not comply, in all material respects, with U.S. generally accepted government auditing standards. 

We determined that the FS Pacific Southwest Region’s Regional Office has deficiencies in the facility’s maintenance and safety procedures and observed that appropriate physical security measures did not exist in some areas, resulting in potential exposure to security threats.