Federal Reports

In coordination with the Pandemic Response Accountability Committee, we conducted an audit to identify potential fraud schemes that could affect HUD’s pandemic funds. We reviewed the funds appropriated by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the American Rescue Plan (ARP) Act for the Tenant-Based Rental Assistance (TBRA), Project-Based Rental Assistance (PBRA), HOME Investment Partnerships, and Public Housing Operating Fund programs to identify the fraud risks and potential fraud schemes that they face while delivering services to the public.Our objective was to develop an inventory of fraud risks that HUD had not previously identified for the funds appropriated by the CARES and ARP Acts for the TBRA, PBRA, HOME, and Operating Fund programs.We identified six overall and three program-specific fraud risk factors that increase the chance of fraud occurring by increasing the incentive, opportunity, and likelihood for an individual considering committing fraud. We used these fraud risk factors, along with the results of brainstorming sessions, interviews, and reviews of audit reports, investigations, and press releases from the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), and other agencies to develop an inventory of 66 potential fraud schemes that HUD had not previously identified. These fraud schemes could be used to misappropriate the CARES and ARP Act funds for the TBRA, PBRA, HOME, and Operating Fund programs, resulting in emergency funds being diverted from intended beneficiaries.We recommend that HUD use the identified fraud risk factors and inventory of potential fraud risk schemes to enhance its fraud risk assessments. Ultimately, this will increase HUD’s ability to safeguard its CARES and ARP Act funds from fraud and ensure that the funds are used for their intended beneficiaries.

We audited the U.S. Department of Housing and Urban Development’s (HUD) Community Development Block Grant Coronavirus Aid, Relief, and Economic Security (CARES) Act program.Our audit objective was to determine what challenges grantees faced in using program funds for activities that prepare for, prevent, or respond to the coronavirus and its impact. We used a survey questionnaire to gather feedback and insight directly from 1,047 program grantees. As of July 30, 2022, grantees had drawn more than $1.79 billion, or 36 percent, of the $4.99 billion in program funds. We performed this audit to provide HUD, the public, and Congress with insight into the challenges that impacted the grantees in using program funds.Grantees responding to our survey questionnaire identified many challenges they were facing in using program funds for activities that prepare for, prevent, or respond to the coronavirus and its impact. Specifically, grantees reported facing challenges in (1) managing multiple funding sources, (2) spending program funds within required timeframes, and (3) meeting program objectives and requirements.Grantees attributed these conditions to capacity issues, HUD’s program rules and regulations, and other competing CARES Act application and expenditure deadlines. As a result, program funds are at risk of being recaptured if not spent by the designated deadlines to provide help to those impacted by the pandemic or for activities that prepare for, prevent, or respond to the coronavirus.We recommend that the Principal Deputy Assistant Secretary for Community Planning and Development consider looking into (1) extending the spending deadline and (2) streamlining program requirements.