Federal Reports

We audited the North Carolina Department of Commerce’s Neighborhood Stabilization Program (NSP) grants as part of our annual audit plan because the Department received more than $57 million in NSP1 and NSP3 funding. Our audit objective was to determine whether the Department administered its NSP1 and NSP3 grants in accordance with the U.S. Department of Housing and Urban Development’s (HUD) requirements.The Department did not administer its NSP1 and NSP3 grants in accordance with HUD’s requirements. Specifically, it did not deobligate grant funds in a timely manner, reallocate grant funds with proper justification, maintain adequate documentation to support grant expenditures, properly track program income, and ensure that six NSP activities met their national objectives. These conditions occurred primarily due to a lack of written and implemented policies and procedures. As a result, the Department (1) allowed more than $417,000 in grant funds to remain unused, (2) improperly reallocated $1.3 million in grant funds, (3) used more than $1.1 million in grant expenditures without adequate supporting documentation, (4) underreported at least $6.1 million in program income to HUD, and (5) drew down more than $11.9 million in grant funds without showing that a national objective was met.We recommend that the Director of HUD’s Greensboro, NC, Office of Community Planning and Development require the Department to (1) reprogram and put $417,113 in NSP1 funds to better use, (2) support more than $2.4 million or reimburse its NSP grants from non-Federal funds, (3) reconcile and update the NSP program income reported to HUD, and (4) develop and implement a remediation plan to show that national objectives have been met as required to support more than $11.9 million in program funds. We also recommend that the Director review the Department’s expenditure of the remaining $736,088 in NSP1 grant funding before its drawdowns.

The objective of our audit was to assess the Postal Service’s management of mail processing overtime during fiscal year (FY) 2018. The Postal Service had a goal to reduce mail processing staffing costs by about $130.5 million in FY 2018. While the Postal Service uses overtime to provide flexibility and meet its operational requirements, it must be managed efficiently. Overtime is paid at one and one-half times the employee’s hourly rate; and penalty overtime pay is paid, under specific conditions, at double the employee’s hourly rate.

Between March and August 2016, VA’s Technology Acquisition Center (TAC) awarded the Transformation Twenty-One Total Technology Next Generation multiple award contract to 28 contractors for information technology services. The contract has a total maximum value of $22.3 billion. The VA Office of Inspector General (OIG) conducted this audit to determine whether task orders issued under the contract were administered according to federal and VA acquisition regulations, as well as VA national and local policies and procedures. The OIG also examined whether the TAC performed task order award and modification procedures according to applicable regulations and policy and took actions that reasonably ensured contractors could successfully complete contract requirements. While the OIG identified no violations of federal and VA acquisition regulations, the audit team found oversight weaknesses that, if not corrected, could increase the likelihood of VA conducting business with contractors unable to provide services according to contract requirements. These weaknesses place information technology systems and hundreds of millions of taxpayer dollars at unnecessary risk and potentially harm VA’s ability to fulfill its mission to care for veterans. The OIG made recommendations to address identified deficiencies with improved procedures that program office contracting officer’s representatives and TAC contracting officers should perform. These include determining the method and level of detail required for contracting officer’s representatives to document their review of the acceptability of deliverables and procedures that will provide contracting officers the assurance this review was adequately completed. The OIG also recommended timeliness requirements for submitting performance assessments. Finally, the OIG recommended implementing procedures to monitor contracting officers’ actions through compliance reviews; assessing the risk related to removing certain past performance assessments from procedures; and defining actions to take when higher-risk financial stability risk scores are identified.

Our audit objective was to determine whether the U.S. Patent and Trademark Office has adequately managed its Active Directory to protect mission critical systems and data. Our review focused on fundamental security practices of Active Directory management and security control implementations of the servers hosting Active Directory .