Federal Reports

We audited the State of New York’s Community Development Block Grant Disaster Recovery-funded New York Rising Buyout and Acquisition program. We initiated this audit due to concerns related to whether properties purchased were substantially damaged. The objective of this audit was to determine whether the State ensured that properties purchased under the acquisition component of the program met applicable U.S. Department of Housing and Urban Development (HUD), Federal, and State requirements.The State did not ensure that properties purchased under the acquisition component of its program met eligibility requirements. Specifically, it did not ensure that properties (1) were substantially damaged and (2) complied with flood hazard requirements. Further, it may have improperly purchased properties that did not comply with flood insurance requirements. These deficiencies occurred because the State did not have adequate controls and relied on applicants and other entities to ensure compliance with requirements. For example, the State relied on letters from local governments provided by its applicants to show that properties were substantially damaged, and it did not have a process to ensure that the substantial damage determination letters were accurate and supported. As a result, the State disbursed more than $3.5 million for ineligible properties and incentives and more than $5.9 million for properties that it could not show met applicable requirements, and HUD did not have assurance that Disaster Recovery funds were used for their intended purpose.We recommend that HUD require the State to (1) reimburse more than $3.5 million in settlement costs and incentives paid for properties that did not meet eligibility requirements or should not have received incentives; (2) provide documentation showing that 15 properties met requirements related to substantial damage, flood hazards, and flood insurance or reimburse more than $5.9 million paid to purchase the properties; and (3) conduct a review of the other properties purchased under its program to ensure that properties were eligible and reimburse the amount paid for any additional properties found to be ineligible. Further, we recommend that HUD require the State to provide documentation showing that the acquisition component of its program has ended or improve its controls to ensure that properties purchased are eligible.

This report assesses the effectiveness of the company’s real property management processes.We identified several opportunities to strengthen the effectiveness of the company’s real property management processes. Specifically, the company could have avoided at least $23.2 million in unnecessary costs and could realize as much as $6.8 million in additional revenue if it had better data on its real property portfolio, used analytic tools such as business cases to make decisions about real property, and adopted a long-term facility plan. We recommended that the company finalize plans and develop a timeline for collecting quality data and, once completed, use the data to develop meaningful property metrics consistent with common practices in the private and public sectors. To do so, the company will need to develop a process for collecting current information on office assignments, hiring, departures, and relocations. We also recommended that the company require sponsoring departments to prepare business cases or similar analyses to make decisions about property leases. Finally, we recommended that the company develop a long-term facility plan to ensure that individual departments’ real property decisions are consistent with the company’s long-term strategic goals.

The National Credit Union Administration Office of Inspector General contracted with Moss Adams LLP to conduct a Material Loss Review ofthree federally insured credit unions, Melrose Credit Union, LOMTO Federal Credit Union, and Bay Ridge Federal Credit Union. We reviewed the credit unions to: (1) determine the cause(s) of the credit unions’ failure and the resulting estimated $765.5 million loss to the National Credit Union Share Insurance Fund; (2) assess NCUA’s supervision of the credit unions; and (3) provide appropriate suggestions and/or recommendations to mitigate future losses.

Williams, Adley and Company–DC, LLP completed an audit of Missouri’s management of State Homeland Security Program (SHSP) and Urban Areas Security Initiative (UASI) grants awarded during fiscal years (FY) 2012 through 2015. Williams Adley concluded that Missouri’s State Administrative Agency generally complied with applicable Federal laws and regulations. Although Williams Adley did not identify any duplicate benefits received by the state, it did identify instances in which the state did not fully comply with the Federal Emergency Management Agency’s (FEMA) FYs 2012–2015 Notice of Funding Opportunity guidance.

We analyzed U.S. Department of the Interior (DOI) transaction data for the first 6 months of fiscal year 2017 to determine whether (1) the DOI or its bureaus made transactions that were illegal, improper, or erroneous and (2) the existing internal controls detected and prevented illegal, improper, or erroneous transactions. We conducted this audit as part of a Governmentwide initiative by the Council of the Inspectors General on Integrity and Efficiency to examine risks associated with U.S. Government purchase card transactions.During the timeframe audited, 20,293 DOI employees had a purchase card, and they made 488,504 transactions that totaled approximately $166 million. We reviewed a sample of 100 high-risk transactions (for example, those with third-party vendors, sales tax, or split purchases), totaling $41,557 and identified the following weaknesses in internal controls:• Required documentation and reviews/approvals were missing.• Separation of duties was not ensured.• There is no DOI policy for purchases made through third-party vendors.• Cardholder accounts had missing or incorrect purchase limits.• State and local tax exemptions were not enforced.While our assessment involved a small sample of the total universe of DOI purchase card transactions, our findings highlight issues that may be applicable across the DOI’s purchase card policies and practices.We made five recommendations to help the DOI and its bureaus improve the oversight of its purchase card program. Based on the Office of Acquisition and Property Management’s response to our draft report, we consider four recommendations unresolved and one recommendation resolved but not implemented.