Federal Reports

The Payment Integrity Information Act was enacted to improve efforts to identify and reduce federal improper payments—payments the federal government should not have made or made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. NASA complied with the Act during fiscal year 2025. However, several minor reporting errors resulted in overpayments identified and overpayments collected being overstated, but these amounts were immaterial.

Why We Did This Report

We conducted this inspection to determine the extent to which the EPA is using Infrastructure Investment and Jobs Act, or IIJA, funds to progress remediation at the Diaz Chemical Corp. Superfund site and whether the EPA has site safety measures in place to protect public health and the environment.

Summary of Findings

The EPA has acted swiftly to address past complaints from the public, but conducting community interviews during five-year reviews would allow the EPA to confirm that there are no community concerns. Also, updating the community involvement plan and making it publicly available would ensure that the EPA’s approaches for community engagement remain relevant.

We found the selected nonstatistical sample of the FSA’s ECAP applications contained accurate information, but determined FSA should establish additional oversight activities for commodity information for self-certified applications the agency considered low risk.

Background

The U.S. Postal Service delivers over 108 billion pieces of mail annually, and each piece requires an approved stamp or other payment indicator. Bad actors, however, are increasingly selling, printing, or distributing counterfeit stamps. To combat this threat to its finances and customers, the Postal Service and its primary law enforcement arm, the U.S. Postal Inspection Service, focus on preventing counterfeit stamps from entering the mail system through public education, removing online fraud schemes, or partnering with other federal law enforcement to interdict illicit inbound shipments.

What We Did

Our objective was to evaluate the Postal Service and Postal Inspection Service’s efforts to mitigate the threat of counterfeit stamps. We reviewed related policies, initiatives, and data; engaged a contractor to assess online threats; and tested equipment.

What We Found

Postal Service and Postal Inspection Service mitigation efforts are limited, with no substantive approach to identify counterfeit stamps in the Postal Service network. While the Postal Service and the Postal Inspection Service have increased prevention-related efforts, the quantity of counterfeit stamps in the network remains unknown.

The Postal Service has not developed a comprehensive, risk-based strategy for identifying and mitigating counterfeit stamps. Developing such a strategy would help coordinate efforts across the organization, putting the Postal Service in a stronger position to protect its revenues and customers. The urgency of this threat also necessitates immediate actions to address other mitigation shortfalls. First, the Postal Service did not set mail processing equipment’s detection capabilities to a level to sufficiently detect counterfeit stamps or conduct sample testing to quantify the potential revenue loss. Second, the Postal Service has no identification capabilities across any other points of mail entry. We estimate these shortfalls resulted in over $349 million in revenue loss and $1.7 billion of revenue at risk in fiscal year 2026. Lastly, the Postal Service takes more than twice as long as comparable companies to disable online threats due to legal considerations.

Recommendations and Management’s Comments

We made four recommendations to address the issues identified in the report, and management agreed with all four. We consider management’s comments responsive, as corrective actions should resolve the issues. Management’s comments and our evaluation are at the end of each finding and recommendation

We audited Solis Gardens Apartments’ management of its HUD-insured Section 207/223(f) multifamily property as part of our annual work plan.  The owner of Solis Garden Apartments manages 62 units in accordance with HUD requirements and its regulatory agreement which includes restrictions on the use of project funds and assets.  We selected Solis Gardens Apartments for an audit based on risk indicators, such as surplus cash deficiencies, missed or late mortgage payments, HUD’s risk rating, and the absence of any HUD Management and Occupancy reviews.  Our audit objective was to determine whether the owner managed Solis Gardens Apartments in accordance with HUD requirements and its regulatory agreement.

The owner of Solis Garden Apartments did not manage its property in compliance with HUD requirements or its regulatory agreement.  Specifically, the owner made improper routine cash distributions totaling more than $1.5 million and improperly deposited $35,979 of reserve for replacement funds into an owner-controlled account while the property was in a non-surplus cash position. The owner also accrued $25,210 in excess asset management fees and charged more than $16,764 in excess property management fees.  Lastly, property accounting records were not maintained in accordance with HUD requirements.  These conditions occurred due to insufficient oversight by the owner, and owner-established policies that conflicted with HUD requirements.  Collectively, these deficiencies demonstrate a failure to maintain transparent and HUD-compliant financial management and accounting practices.  Without corrective action, these conditions increase the risk of further regulatory violations and undermine the long-term financial viability of the property.

We recommend that the San Francisco Region Director of Multifamily Housing require the Solis Gardens Apartments’ owner to, (1) reimburse the property $1,556,322 from non-property funds for the ineligible distributions into the owner-controlled account; (2) reimburse the property account $35,979 from non-property funds for the ineligible deposits into the owner-controlled account from the reserve for replacement disbursements; (3) reverse the asset management fee accruals by $25,210 for the net over-accrual from 2023 and 2024; and (4) reimburse the property account $16,764 for excess property management fees.