Federal Reports

This report details the Office of Inspector General's Semiannual Report to Congress. The following topics are included:

• Overview of the SBA and the OIG
• Pandemic Response Oversight
• Small Business Access to Capital
• Disaster Assistance Program
• Contracting and Counseling Programs
• Agency Management
• Other Significant OIG Activities
• Statistical Highlights
• Organizational Overview
• Appendices

We are pleased to present our report for the period April 1, 2024, to September 30, 2024. In this semiannual period, our audit, evaluation, and investigative activities identified more than $48.4 million in questioned costs; funds put to better use; recoveries, fees, and fines; and opportunities for the Tennessee Valley Authority (TVA) to improve its programs and operations.

As much as TVA proactively plans for growing electricity generation needs, maintaining fiscal health, and a path to zero carbon emissions, emerging risks can demand focus and shift priorities. Over the last several years, historic extreme weather events like Winter Storm Elliott and Hurricane Helene have impacted the Tennessee Valley and required TVA to respond in order to support the 10 million people of the Valley. It is crucial for TVA to remain nimble, foster workforce commitment, and allow room for the unexpected. Our office supports TVA’s mission by providing independent and objective perspectives to both known and emerging risks.

National Credit Union Administration (NCUA) Office of Inspector General (OIG) Semiannual Report to the NCUA Board and the Congress highlighting our accomplishments and ongoing work for the 6-month period ending September 30, 2024.

Our Objective(s)To evaluate single audit reports uploaded to the Federal Audit Clearinghouse between July 1, 2024 and September 30, 2024, and to identify findings that affect directly awarded Department of Transportation (DOT) programs.
Why This AuditOIG performs oversight of independent, non-Federal auditors single audit reports. Between 200 and 300 single audit reports are issued annually that include findings related to programs directly funded by DOT. We issue memoranda that summarize the single audit reports significant findings and recommendations that require priority action by DOT. When warranted, we also recommend that DOT recover funds that were inappropriately expended by non-Federal entities.
What We FoundAuditors reported 31 incidents of significant noncompliance with Federal guidelines related to 13 grantees that require prompt actions from DOTs Operating Administrations.

Of 31 findings, 13 were repeat findings related to 6 grantees.

Auditors identified questioned costs totaling $338,801 for three grantees.

Of this amount, $214,478 was related to Capital Area Transit System, Baton Rouge, LA.

We identified a finding that caused an adverse opinion for the City of Lawrence, Lawrence, KS.
We identified nonmonetary repeat findings that caused qualified opinions for three entities.
RecommendationsWe made two recommendations to OST to resolve and close the findings and recover questioned costs, if applicable

EAC OIG audited Help America Vote Act (HAVA) grants administered by the Election System of the Virgin Islands (ESVI), totaling $2.2 million. This included federal funds, program income, and interest earned on the Election Security and Coronavirus Aid, Relief, and Economic Security (CARES) Act funds.

Congress provided $5.5 billion for the Emergency Assistance to Nonpublic Schools (EANS) program. The purpose of the EANS programs, authorized under the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSA) and American Rescue Plan (ARP), is to provide services or assistance to eligible nonpublic schools to address educational disruptions caused by the COVID-19 emergency. Our audit sought to determine whether the Tennessee Department of Education (Tennessee) designed and implemented (1) application processes that adequately assessed nonpublic schools’ eligibility for EANS-funded services or assistance and complied with other applicable requirements and (2) oversight processes to ensure that EANS-funded services or assistance were used for allowable purposes. We found that Tennessee designed and implemented application processes that adequately assessed nonpublic schools’ eligibility for EANS-funded services or assistance and complied with other applicable requirements despite not having written procedures. However, we identified several weaknesses in Tennessee’s oversight of its EANS programs that could be improved: Tennessee did not ensure that drawdowns of CRRSA EANS funds were always supported by CRRSA EANS expenditures; Tennessee had not fully implemented policies and procedures for maintaining a record of assets purchased with EANS funds; and Tennessee did not obtain prior approval for certain EANS expenditures.

Proper practices and procedures can reduce the number of accidents resulting from an inadvertent release of hazardous energy, according to the Occupational Safety and Health Administration. The Tennessee Valley Authority’s Safety Procedure 18.613, Clearance Procedure to Safely Control Hazardous Energy Using Group Tagout, establishes minimum TVA-wide clearance requirements, while Power Operations Standard Programs and Processes 10.015, Coal and Gas Clearance Procedure, governs the clearance process at gas sites. These requirements are to be utilized to ensure equipment is isolated from energy sources and rendered nonoperative before performing work where unexpected energizing, start up, or release of stored energy could occur and cause injury or property damage. Due to the importance of the clearance procedure in preventing injury and/or property damage while equipment is being serviced, we performed an evaluation of Gas Operations clearances to determine if clearances, required training, and audits were performed in compliance with clearance procedures.

We determined clearances, required training, and audits were not always performed in compliance with clearance procedures. Specifically, we identified clearance documentation was not always completed and maintained, some Clearance Personal Accountability Logs were illegible, and some tags were missing or illegible. We also found training had not been completed for some contractors who worked on clearances. Additionally, we determined that audits were not being conducted as required.

Semiannual Report to Congress: April 1, 2024, through September 30, 2024

Eric Cardenas of Orlando, Florida, pleaded guilty on November 19, 2024, in the Circuit Court of Orange County, State of Florida, to credit card fraud related charges. The same day, Cardenas was sentenced to four days of incarceration and was assessed a fine of $473. Our investigation found that Cardenas and a codefendant were part of a sophisticated credit card fraud ring operating throughout central Florida. They used fraudulently obtained credit cards, to include an Amtrak Wright Express Corporation (WEX) card, to purchase fuel.

Judicial proceedings for the codefendant in this investigation are pending.

Report is undergoing a 508-compliance review.

Report is undergoing a 508-compliance review.

In keeping with its responsibilities under the Inspector General Act of 1978, as amended, the OIG monitored the audit of TVA's fiscal year 2024 financial statements performed by Ernst and Young LLP (EY) to assure their work complied with Government Auditing Standards. Our review of EY's work disclosed no instance in which the firm did not comply in all material respects with Government Auditing Standards.

SB & Company, LLC (SBC), an independent public accounting firm, under contract with the Denali Commission OIG, presented an unmodified opinion on the Denali Commission’s fiscal year 2024 financial statements.

The Office of Inspector General performed an evaluation of an Agricultural Research Service (ARS) facility’s physical condition and security.

To promote equal opportunity and identify and eliminate discriminatory practices, Federal regulation mandates that agencies review and respond to all employment-related discrimination complaints.  At the U.S. Department of Housing and Urban Development (HUD), the Office of Departmental Equal Employment Opportunity (ODEEO) is responsible for the enforcement of Federal laws related to eliminating all forms of discrimination in HUD’s employment practices and leading HUD’s efforts to prevent unlawful discrimination.

 During a formal complaint process, HUD conducts an investigation to gather information on the alleged discrimination.  The investigation process concludes when HUD provides the complainant with a completed report of the investigation and notifies the complainant of their right to elect either a hearing or a final agency decision (FAD).  A FAD is a report that evaluates the merits of each claim of discrimination and determines whether the complainant was or was not discriminated against.

 The percentage of ODEEO’s timely investigations that converted into formal equal employment opportunity (EEO) complaints improved from 51 percent in fiscal years (FY) 2017 to 93 percent in FY 2023, an 84 percent increase.  However, ODEEO did not improve the timeliness of FADs.  ODEEO issued all FADs in FY 2022 and FY 2023 beyond the regulated timeframe.  Several factors impacted HUD’s timeliness in processing formal EEO complaints.  For example, ODEEO had an external EEO vendor that did not meet ODEEO’s timeliness expectations.  To address this issue, in October 2023, ODEEO contracted with a new vendor.  The new contract included detailed provisions to ensure timely and quality services, such as criteria for contract deliverables, a performance requirement summary with clear quality standards and monetary incentives, a quality control plan, and a quality surveillance plan.

 Other factors that affected timeliness were ODEEO’s lack of internal milestones and an in-house FAD writer.  In 2023, ODEEO created its own internal milestones for the EEO complaint process in an effort to improve monitoring and ensure timeliness.  For the investigations, the internal milestones ensured that ODEEO staff acknowledged and accepted formal complaints quickly to allow investigators the maximum amount of time possible to conduct the investigation.  ODEEO management monitored these milestones and discussed them with staff during one-on-one meetings to ensure that complaints remained on track.  Before hiring a FAD writer, ODEEO relied exclusively on its external vendor to write its FADs.  According to ODEEO staff, the previous vendor wrote FADs that were longer than necessary and often included errors, resulting in a lengthy editing process.  In 2024, ODEEO hired an in-house FAD writer.

 Additionally, ODEEO previously had a centralized case management system to track EEO complaints but lost access to the system in September 2019.  To improve ODEEO’s ability to track complaints throughout the EEO complaints process and report accurate data, ODEEO reacquired iComplaints—an EEO complaints case management system—in September 2021.  According to an ODEEO staff member, only after ODEEO reacquired a case management system and began tracking all complaints in the system was it able to focus on improving timeliness.  The centralized case management system also improved data accuracy.

 Finally, between FY 2020 and FY 2022, ODEEO’s high staff turnover affected the timeliness of the formal complaint process.  During those years, ODEEO lost a total of 13 employees due to retirements or transfers to other Government agencies, including the Director and Deputy Director of ODEEO.  Given that ODEEO’s staffing ranged from 15 to 18 people during those years, this turnover significantly impacted the program office.  In FY 2021, ODEEO began to make changes to address its turnover and improve its retention.  Specifically, ODEEO hired new staff and started to focus on improving retention by prioritizing training and professional development.

 While these changes had a varied impact on the timeliness of ODEEO’s investigations and FADs thus far, they demonstrated ODEEO’s continued commitment to process improvement.  Due to ODEEO’s demonstrated efforts to improve timeliness, we are not issuing a recommendation at this time.

The AmeriCorps Office of Inspector General (AmeriCorps OIG) investigated allegations that surfaced during an AmeriCorps OIG audit regarding the submittal of false documents and unallowable living allowances to non-AmeriCorps members (members) by AmeriCorps State and National subgrantee, Kuumba Academy, located in Wilmington, DE.

The Chief Financial Officers Act of 1990 requires the Inspector General to audit the agency’s financial statements each year, which is intended to help improve an agency’s financial management and controls over financial reporting. The auditors issued a disclaimer of opinion on the FY 2024 consolidated financial statement of the U.S. Department of Education (Department), as they were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion because of errors identified in the underlying data used to calculate the subsidy re-estimates for the Department’s direct loan and loan guaranty programs. In addition, in the Report on Internal Control over Financial Reporting, the auditors identified one material weakness and two significant deficiencies in internal control over financial reporting. In the Report on Compliance and Other Matters, the auditors reported two instances of noncompliance that were required to be reported under Government Auditing Standards or OMB Bulletin No. 24-02. Nineteen recommendations were made to the Department to address the internal control and compliance findings. (See page 90 for the audit report).

The FCC financial statements were fairly presented in all material respects, in conformity with U.S. generally accepted accounting principles. In addition, Kearney did not find any reportable instances of noncompliance with laws, regulations, and contracts applicable to FCC. The report includes one significant deficiency with 27 recommendations for improvement.

We have audited the accompanying Reclassified Financial Statements of the U.S. Postal Service, which comprises the Government-wide Treasury Account Symbol Adjusted Trial Balance System (GTAS) Reconciliation Report -Reclassified Balance Sheet as of September 30, 2024, and the related GTAS Reconciliation Reports Reclassified Statement of Net Cost and Reclassified Statement of Operations and Changes in Net Position, for the year then ended (hereinafter referred to as the Reclassified Financial Statements) and accompanying Note 36. In our opinion, the Reclassified Financial Statements referred to above present fairly, in all material respects, the financial position of the Postal Service as of September 30, 2024, and its net costs and changes in net position for the year then ended in accordance with U.S. generally accepted accounting principles (GAAP).

Report on Audit of the FTC’s Fiscal Year 2024 Financial Statements

We contracted with the independent public accounting firm Ernst & Young LLP to audit NASA’s fiscal year 2024 financial statements. This audit resulted in a “clean” or unmodified opinion.

This report includes EAC OIG’s independent assessment of the top management challenges facing EAC in fiscal year 2025.

The Office of Inspector General's annual plan outlines the work planned for the year ahead, including agency wide audits or evaluations, mandated reviews, and which posts may receive audits or evaluations.

Pursuant to the Federal Information Security Modernization Act of 2014 (FISMA), an independent external auditor, on behalf of OIG conducted an annual independent audit of AmeriCorps’ information security program and practices. The fiscal year (FY) 2024 FISMA audit concluded that AmeriCorps’ information security program remains ineffective, assessed as of July 31, 2024. Control weaknesses in the following areas prevent AmeriCorps’ cybersecurity program from maturing: (1) inventory management, (2) supply chain risk management program, (3) vulnerability and patch management program, (4) personnel screening process, (5) authorization packages, (6) logging, and (7) contingency planning. AmeriCorps did not specify the findings and recommendations with which they were in agreement or disagreement. AmeriCorps’ response is included in its entirety in Appendix IV of the audit report. The recommendations related to the seven findings will remain open until corrective actions have been fully implemented.

Independent auditors have declined to issue an opinion on AmeriCorps’ financial statements for the eighth year. They issued a disclaimer of opinion reporting 11 material weaknesses and two significant deficiencies and added three new recommendations. The auditors, however, verified that AmeriCorps took appropriate actions to close 20 of the 95 prior year recommendations. As a result of this audit, there are now 78 open recommendations.

All eleven of the material weaknesses are recurring, three of them since FY 2017, five since FY 2018, one since FY 2021, and two since FY 2022. AmeriCorps included in its Annual Management Report a Statement of No Assurance, acknowledging that its system of internal controls does not currently provide the necessary level of assurance towards the effectiveness of internal control over operations, reporting, and compliance. This is the fifth consecutive year that AmeriCorps has issued a No Assurance statement.

AmeriCorps acknowledged the disclaimer of opinion and expressed concurrence to six material weaknesses and two significant deficiencies. However, AmeriCorps did not concur with five material weaknesses. AmeriCorps did not specify with which material weaknesses it was in agreement or disagreement in its response to the report. AmeriCorps’ response is included in its entirety in Exhibit IV of the audit report. The 78 recommendations will remain open until corrective actions have been fully implemented.

The National Service Trust holds the funds set aside to pay the education awards of national service members who successfully complete their service terms. Responsibility for the education awards that have been earned or will be earned in the near future is the largest liability on AmeriCorps’ financial statements at $287 million.

AmeriCorps has been unable to produce auditable financial statements for the last eight years. This year, independent auditors issued another disclaimer of opinion, reporting five material weaknesses and one significant deficiency. The auditors, however, verified that AmeriCorps took appropriate actions to close 16 of the 46 prior year recommendations. The remaining 30 recommendations continue to be valid and open, seven of them in modified form. The auditors also made three new recommendations, for a total of 33.

The Chief Financial Officers Act of 1990 requires the Inspector General to audit the agency’s financial statements each year, which is intended to help improve an agency’s financial management and controls over financial reporting. The auditors issued a disclaimer of opinion, as they were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion because of errors identified in the underlying data used to calculate the subsidy re-estimates for the direct loan and loan guaranty programs. In the Report on Internal Control over Financial Reporting, the auditors identified one material weakness and two significant deficiencies in internal control over financial reporting. In the Report on Compliance and Other Matters, the auditors’ testing did not identify instances of noncompliance or other matter to be reported. Seventeen recommendations were made to FSA to address the internal control findings. (See page 184 for the audit)

EAC OIG's response to Senator Grassley's request to review EEO complaints.

Our Objective(s)To perform a quality control review (QCR) of KPMG LLP's audit of the Department of Transportation's consolidated financial statements as of and for the fiscal years ended September 30, 2024, and September 30, 2023. We reviewed KPMG's report, dated November 12, 2024, and related documentation.
About This ReportWe contracted with the independent public accounting firm KPMG LLP to audit DOT's consolidated financial statements, provide an opinion on those financial statements, report on internal control over financial reporting, and report on compliance with laws and other matters.
What We FoundThe independent auditor, KPMG, found one significant deficiency in DOT's IT internal controls over financial reporting.

KPMG found general information technology control deficiencies within various systems at the Federal Highway Administration and the Federal Aviation Administration.

Our QCR disclosed no instances in which KPMG did not comply, in all material respects, with U.S. generally accepted Government auditing standards.
RecommendationsWe agree with KPMG's three recommendations to help strengthen DOT's General Information Technology Controls.

We rendered an unmodified opinion on the EPA's consolidated financial statements for fiscal years 2024 and 2023 (restated), meaning that they were fairly presented and free of material misstatement. However, we noted three material weaknesses and one significant deficiency. The most concerning material weakness the OIG identified is that the EPA used an existing rebate transaction type that was established to record the Clean School Bus rebate payments. This resulted in $828 million of rebate payments being recorded as expenses instead of advances

Allmond & Company rendered an unmodified opinion on the CSB's fiscal years 2024 and 2023 financial statements, meaning that the statements were fairly presented and free of material misstatements.

We contracted with the independent public accounting firm of Sikich CPA LLC to audit the financial statements of HUD as of and for the fiscal years ending September 30, 2024 and 2023, and to provide reports on HUD’s (1) internal control over financial reporting and (2) compliance with laws, regulations, contracts, and grant agreements and other matters, including whether financial management systems complied substantially with the requirements of the Federal Financial Management Improvement Act of 1996 (FFMIA).  Our contract with Sikich required that the audit be performed in accordance with U.S. generally accepted government auditing standards, Office of Management and Budget audit requirements, and the Financial Audit Manual of the U.S. Government Accountability Office and the Council of the Inspectors General on Integrity and Efficiency.

In its audit of HUD, Sikich reported

That HUD’s financial statements as of and for the fiscal year ending September 30, 2024, were presented fairly, in all material respects, in accordance with U.S. generally accepted accounting principles.
No material weaknesses for fiscal year 2024 in internal control over financial reporting, based on limited procedures performed.
One significant deficiency for fiscal year 2024 in internal control over financial reporting, based on the limited procedures performed.  The significant deficiency was related to HUD’s financial reporting controls over grant accruals.  
No reportable noncompliance issues for fiscal year 2024 with provisions of applicable laws, regulations, contracts, and grant agreements or other matters.
In connection with the contract, we reviewed Sikich’s reports and related documentation and questioned its representatives.  Our review, as differentiated from an audit of the financial statements in accordance with U.S. generally accepted government auditing standards, was not intended to enable us to express and we do not express opinions on HUD’s financial statements or conclusions about (1) the effectiveness of HUD’s internal control over financial reporting; (2) HUD’s compliance with laws, regulations, contracts,  and grant agreements or other matters; or (3) whether HUD’s financial management systems complied substantially with the three FFMIA requirements.  Sikich is responsible for the attached Independent Auditors’ Report, dated November 15, 2024, and the conclusions expressed therein.  Our review disclosed no instances in which Sikich did not comply, in all material respects, with U.S. generally accepted government auditing standards.

HUD’s financial statements are included in HUD’s Agency Financial Report which can be found at afr2024.pdf.

U.S. International Development Finance Corporation (DFC), Office of Inspector General’s (OIG) Semiannual Report to Congress for the reporting period of April 1, 2024, through September 30, 2024, in accordance with the Inspector General Act of 1978, as amended (IG Act).

AU-C 265 Management Letter

The U.S. Small Business Administration (SBA) Office of Inspector General (OIG) contracted with the independent certified public accounting firm KPMG LLP to conduct an audit of SBA’s consolidated balance sheets as of September 30, 2024 and 2023 and the related notes to these statements. Our contract with KPMG required that the audit be performed in accordance with auditing standards generally accepted in the United States of America, Government Auditing Standards issued by the Comptroller General of the United States, and Office of Management and Budget (OMB) Bulletin No. 24-02, Audit Requirements for Federal Financial Statements.

In the audit, KPMG reported significant matters for which they were unable to obtain sufficient and appropriate audit evidence to provide a basis for an audit opinion on SBA’s balance sheet as of September 30, 2024. Accordingly, KPMG issued a disclaimer of opinion on the consolidated balance sheets as of September 30, 2024 and 2023.

The basis for the disclaimer was that due to inadequate processes and controls, SBA was unable to provide adequate evidential matter in support of a significant number of transactions and account balances related to the Paycheck Protection Program, Economic Injury Disaster Loan program, Restaurant Revitalization Fund, and the Shuttered Venue Operators Grant program.

As a result, KPMG was unable to determine whether any adjustments might have been necessary with respect to the following:

• Credit program receivables and related foreclosed property,
• Other than intragovernmental accounts receivable,
• Downward re-estimate payable to Treasury, and
• Loan Guarantee Liabilities and the related notes.

For the period that ended September 30, 2024, KPMG identified seven material weaknesses and two significant deficiencies in internal control over financial reporting. Appendixes I and II of this report describe details of KPMG’s conclusions about the material weaknesses and significant deficiencies. Appendix III describes instances of noncompliance with applicable laws or other matters required to be reported under Government Auditing Standards or OMB Bulletin No. 24-02.

We provided a draft of the KPMG report to SBA’s Chief Financial Officer, who concurred with its findings and recommendations and agreed to implement the recommendations. The Chief Financial Officer stated that SBA has undergone tremendous effort to strengthen internal controls, policies, and procedures and will continue remediation efforts in the coming audit year.

We engaged an independent public accounting (IPA) firm to audit DIA’s Fiscal Year (FY) 2024 financial statements. We evaluated the reliability of data supporting the financial statements, determined the reasonableness of the statements produced, and examined disclosures in accordance with applicable guidance. We issued the results of our evaluation in a final report dated November 15, 2024.

The financial statements present fairly, in all material respects, the Commission's financial position as of September 30, 2024, and 2023, and its net cost of operations, changes in net position, and budgetary resources for the fiscal years then ended in accordance with accounting principles generally accepted in the United States of America.

Report on the Railroad Retirement Board's Financial Statements Fiscal Year 2024

The CFTC OIG contracted with the independent public accounting firm of Williams, Adley & Company, LLP (Williams Adley) to audit the financial statements of CFTC as of and for the fiscal years ended September 30, 2023, and 2024, to provide a report on internal control over financial reporting, report on compliance with laws and other matters, and provide an opinion on whether CFTC’s financial management systems complied substantially with the requirements of the Federal Financial Management Improvement Act of 1996 (FFMIA).

Our Objective(s)To perform a quality control review (QCR) of KPMG, LLP's audit of FAA's financial statements as of and for the fiscal years ended September 30, 2024, and September 30, 2023. We reviewed KPMG's report, dated November 8, 2024, and related documentation.
About This ReportWe contracted with the independent public accounting firm KPMG, LLP to audit FAA's financial statements, provide an opinion on those financial statements, report on internal control over financial reporting, and report on compliance with laws and other matters.
What We FoundThe independent auditor, KPMG, found no significant deficiencies in internal control over financial reporting that it considered to be a material weakness.
Our QCR disclosed no instances in which KPMG did not comply, in all material respects, with U.S. generally accepted Government auditing standards.
RecommendationsKPMG made no recommendations.