Federal Reports

What We Looked AtThis report presents the results of our quality control review (QCR) of an audit of the Department of Transportation's (DOT) Enterprise Services Center (ESC) controls. Operating under direction of DOT's Chief Financial Officer, ESC provides financial management services to DOT and other agencies. The Office of Management and Budget (OMB) requires ESC, as a management services provider, to either provide its user organizations with independent audit reports on the design and effectiveness of its internal controls or allow user auditors to test its controls.To meet this requirement for the period of October 1, 2018, through June 30, 2019, we contracted with KPMG LLP to conduct this audit subject to our oversight. The audit objectives were to determine whether (1) management's descriptions of ESC's systems were fairly presented, (2) ESC's controls were suitably designed, and (3) ESC's controls were operating effectively throughout the period. KPMG will do additional testing and issue a follow-up letter to our office for the period July 1, 2019, through September 30, 2019. We performed a QCR on KPMG's report and related documentation.What We FoundOur QCR disclosed no instances in which KPMG did not comply, in all material respects, with generally accepted Government auditing standards.RecommendationsDOT concurs with KPMG's three recommendations.The quality control review and attachments have been marked as For Official Use Only to protect sensitive information exempt from public disclosure under the Freedom of Information Act, 5 U.S.C. § 552. To receive a copy of the report, please contact our Freedom of Information Act Office.

The VA Office of Inspector General (OIG) conducted this audit to determine whether the Veterans Benefits Administration (VBA) Loan Guaranty Service provided required oversight of the default resolution process for VA-guaranteed home loans. VA’s reported default resolution rate has steadily increased each year for the last four fiscal years from 2015 to 2018. The Loan Guaranty Service monitors loan servicers and intervenes as needed to ensure delinquent VA home loan borrowers have all available alternatives to foreclosure. The OIG found the Loan Guaranty Service did not always provide sufficient oversight to ensure borrowers in default received the needed assistance. The audit team estimated, based on a sample review of 200 loans, that 14 percent of loans had at least one oversight deficiency. Specifically, the OIG team found the Loan Guaranty Service was sometimes unaware servicers were not reporting loan status, and at other times did not ensure loan servicers sent borrowers the required loss mitigation letters. The OIG team also found that the Loan Guaranty Service did not conduct quarterly monitoring of loan servicing and did not implement a mandatory tier-ranking system for loan servicers. The OIG team and the Loan Guaranty Service also identified potential loan servicing risks to borrowers in disaster areas. The Loan Guaranty Service director said upgrades to the VA Loan Electronic Reporting Interface (VALERI) system implemented on May 28, 2019, were to provide the missing capabilities. The OIG recommended that the under secretary for benefits implement controls to identify and address unreported monthly loan statuses in VALERI, make certain loan servicers report when loss mitigation letters are sent and cite them for infractions when required, ensure key loan servicer performance statistics are generated, and develop a plan to implement a formal tier-ranking system for loan servicers.