Federal Reports

What We Looked AtThe Department of Transportation’s (DOT) Operating Administrations (OA) receive billions to provide financial assistance to States and other entities. The Office of Management and Budget (OMB) requires recipients that expend $750,000 or more to perform single audits. OMB’s Uniform Guidance sets requirements for single audits. Recipients must submit reporting packages, including auditors’ reports, to the Federal Audit Clearinghouse (FAC) and develop plans to resolve findings. Because of the importance of single audits to tax dollar stewardship, we reviewed single audit processes at the Federal Aviation Administration (FAA), Federal Highway Administration (FHWA), and Federal Transit Administration (FTA). Our audit objectives were to evaluate their processes for (1) verifying that single audits are completed and reports submitted to FAC in the timeframe required by the Uniform Guidance, (2) issuing timely management decisions on single audit findings, and (3) following up on findings and recommendations, including high-priority findings and recommendations we identify in quarterly reports.What We FoundDOT does not ensure that single audit reports are completed and timely submitted to FAC, and does not have a single audit accountable official to ensure OAs fulfill Uniform Guidance requirements. DOT does not ensure the OAs verify that recipients complete single audits and submit timely packages. FAA, FHWA, and FTA’s processes for these activities are not sufficient. This lack of oversight could inhibit DOT’s ability to reduce improper payments. DOT also does not ensure OAs issue timely management decisions and track findings. Untimely management decisions inhibit OAs’ abilities to evaluate findings and recover funds. The OAs follow up on findings that we identify in our quarterly reports rather than all findings. Because it has not designated an SAAO, DOT does not ensure OAs perform required followup. The Uniform Guidance requires agencies ensure that recipients correct all findings. Our reports do not cover all single audit findings. DOT’s lack of oversight could increase the risk of improper payments.RecommendationsOST concurred with our seven recommendations to help improve single audit process oversight. We consider all recommendations resolved but open pending completion of planned actions. 

The U.S. Department of Housing and Urban Development, Office of Inspector General, has completed its audit of Federal Housing Administration (FHA)-insured loans serviced in calendar year 2020. Our audit objective was to determine whether borrowers of FHA-insured loans maintained proper flood insurance coverage. We found FHA insured at least 31,500 loans serviced during calendar year 2020 for properties in SFHA flood zones that did not maintain the required flood insurance coverage. We found loans that had private flood insurance instead of the required NFIP coverage, NFIP coverage that did not meet the minimum required amount, or no coverage during calendar year 2020. As a result, the FHA insurance fund was potentially exposed to greater risk from at least $4.5 billion in loans that did not maintain adequate NFIP coverage. We recommend that FHA require lenders to provide evidence of sufficient flood insurance coverage or execute indemnification agreements for the 21 loans in our statistical sample that did not have sufficient flood insurance at the time of our audit, develop a control to detect loans that did not maintain the required flood insurance to avoid potential future costs to the FHA insurance fund from inadequately insured properties, and consult with HUD’s Office of General Counsel to review the language in the statutes, regulations, and handbooks and make any necessary adjustments to the forward mortgage and Home Equity Conversation Mortgage handbooks.

The VA Office of Inspector General (OIG) reviewed Veterans Health Administration (VHA) assertions required by the Office of National Drug Control Policy (ONDCP) in its fiscal year 2021 detailed accounting report and budget formulation compliance report.The OIG’s review was conducted in accordance with generally accepted government auditing standards, which incorporate the attestation standards established by the American Institute of Certified Public Accountants. Those standards require that the OIG plan and perform the review to obtain limited assurance about whether any material modifications should be made to management’s assertions for them to be fairly stated. The OIG believes this review provides a reasonable basis for its conclusion.In the detailed accounting report, VHA reported three material weaknesses, two significant deficiencies, and five matters concerning noncompliance with laws and regulations, as identified in the OIG report, Audit of VA’s Financial Statements for Fiscal Years 2021 and 2020. A material weakness is a deficiency, or combination of deficiencies, 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. A significant deficiency is a control deficiency, or a combination of control deficiencies, that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.Based on the OIG’s review, except for the effects, if any, of the matters described in the preceding paragraph, the OIG is not aware of any material modifications that should be made to VHA management’s assertions for them to be fairly stated.

In November 2021, Congress passed the VA Transparency & Trust Act of 2021 to oversee VA’s spending of emergency relief funding related to the COVID-19 pandemic. The law requires VA to report to Congress how it will spend the funding and provide biweekly updates thereafter.The law also requires the VA OIG to report within 120 days on whether VA is spending the funds according to its plan and must address waste, fraud, and abuse. This inaugural report focuses on whether the spend plans VA provided to Congress on December 22, 2021, satisfy the requirements of the Transparency Act.VA’s spend plans generally outlined how it intended to use the supplemental funds. The OIG found, however, that the National Cemetery Administration’s planned use of funds included a shrine project to raise and realign over 17,000 headstones, replace irrigation, and repair turf in the historical sections of a cemetery. The $3.6 million used for the Beaufort National Shrine project may have violated the law because the work did not appear to be directly related to COVID-19. Further, the team identified a planned use of funds that did not include a projected cost related to maintaining information technology projects. As a result, it is unclear if all planned uses are captured in VA’s obligations reported in the ARP Act plan submitted to Congress.The OIG made two recommendations to the assistant secretary for management/chief financial officer to improve the quality and sufficiency of information reported to Congress: (1) consult with appropriate VA financial and legal officials to determine whether the use of emergency funds for the shrine project violates the law and correct if necessary, and (2) determine obligations for sustaining essential information technology investments, provide an updated spending plan to Congress, and include this information in future biweekly updates.