Federal Reports

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The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General, has completed its annual risk assessment of HUD’s purchase cards as required by the Government Charge Card Abuse Prevention Act of 2012 (Public Law 112-194) and Office of Management and Budget Memorandum M-13-21. Our objective was to identify and analyze risks of illegal, improper, or erroneous purchases and payments in HUD’s fiscal years 2017 and 2018 purchase card program. We found that a moderate risk was associated with HUD’s purchase card program. HUD’s purchase card program had a moderate risk of susceptibility to illegal, improper, or erroneous purchases. Risk-increasing factors included a prior audit recommendation not fully implemented, purchase card use by cardholders not identified as active or closed, cardholders and noncardholders late on meeting their 3-year training requirements, cardholders missing from the training records, potential split purchases, purchases at agency-restricted merchants, sales tax paid on purchases, interest paid on payments, and supporting documentation missing or not provided. Risk-decreasing factors included no open purchase card recommendations, a decrease in purchase card use from fiscal year 2016, and the discontinued use of the purchase card in the REAC Reverse Auction Program.This memorandum does not contain recommendations. We will use the risk assessment to determine the scope, frequency, and number of periodic audits or reviews of the purchase card program.

The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General audited the Fort Collins Housing Authority’s Village on Redwood Rental Assistance Demonstration Program (RAD) project. We selected the Authority because it had completed the entire RAD conversion process with new construction, and its Village on Redwood RAD project used the largest amount of Federal funds of the State of Colorado projects. Our audit objective was to determine whether the Authority administered its Village on Redwood RAD project in accordance with HUD rules and regulations.The Authority administered its Village on Redwood RAD project in accordance with HUD rules and regulations for the items reviewed. Specifically, it used Federal funds for eligible purposes, established proper written agreements, maintained its reserve for replacement account, followed requirements for its property disposition, calculated its tenants’ rent correctly, maintained separate books and records, and complied with occupancy requirements.This report contains no recommendations.

The Corporation for National and Community Service (CNCS or the Corporation) has begun toimplement a plan to restructure the Corporation and alter its core grantmaking and grantmanagement business practices. While CNCS’s Office of Inspector General (CNCS-OIG) stronglysupports a re-examination of the Corporation’s structure, our experience indicates CNCS doesnot have the capacity to carry out its complex transformation plan at the rapid pace envisioned.CNCS has scheduled the reorganization, with its many risks, to occur at the same time as criticallyneeded improvements to CNCS’s core business functions – developing information technologysufficient to support grant management; preparing and testing an effective grant risk model andaligned cost-effective monitoring activities; achieving reliable financial management, accountingand reporting; and establishing effective cybersecurity. Despite efforts, CNCS has been unableto achieve these improvements over the last several years, without the added stress of a majorstructural overhaul. The plan to accomplish these critical infrastructure upgrades whilesimultaneously reorganizing grantmaking, grant management and grant administration isunrealistic, exceeds the Corporation’s capabilities and creates a substantial risk that CNCS willnot be able to achieve its mission of supporting national service.Instead, we strongly recommend that CNCS sequence the reforms, concentrating first onstanding up the infrastructure to support informed, risk-based grantmaking and grantmonitoring. Also imperative is completing and validating the corrective actions for financialmanagement, accounting and reporting, so that CNCS can accurately track expenditures andprovide strong stewardship of taxpayer funds. We further recommend that CNCS delay thereorganization to a regional structure until such time as it implements these critical upgrades.We are not suggesting an abandonment of the reorganization, but rather a slower-paced andrisk-based, tiered approach to appropriately prioritize goals and promote the ultimate success ofCNCS’s comprehensive plan.

The Corporation for National and Community Service (CNCS or the Corporation) has begun toimplement a plan to restructure the Corporation and alter its core grantmaking and grantmanagement business practices. While CNCS’s Office of Inspector General (CNCS-OIG) stronglysupports a re-examination of the Corporation’s structure, our experience indicates CNCS doesnot have the capacity to carry out its complex transformation plan at the rapid pace envisioned.CNCS has scheduled the reorganization, with its many risks, to occur at the same time as criticallyneeded improvements to CNCS’s core business functions – developing information technologysufficient to support grant management; preparing and testing an effective grant risk model andaligned cost-effective monitoring activities; achieving reliable financial management, accountingand reporting; and establishing effective cybersecurity. Despite efforts, CNCS has been unableto achieve these improvements over the last several years, without the added stress of a majorstructural overhaul. The plan to accomplish these critical infrastructure upgrades whilesimultaneously reorganizing grantmaking, grant management and grant administration isunrealistic, exceeds the Corporation’s capabilities and creates a substantial risk that CNCS willnot be able to achieve its mission of supporting national service.Instead, we strongly recommend that CNCS sequence the reforms, concentrating first onstanding up the infrastructure to support informed, risk-based grantmaking and grantmonitoring. Also imperative is completing and validating the corrective actions for financialmanagement, accounting and reporting, so that CNCS can accurately track expenditures andprovide strong stewardship of taxpayer funds. We further recommend that CNCS delay thereorganization to a regional structure until such time as it implements these critical upgrades.We are not suggesting an abandonment of the reorganization, but rather a slower-paced andrisk-based, tiered approach to appropriately prioritize goals and promote the ultimate success ofCNCS’s comprehensive plan.