Federal Reports

In 2016, we began a series of audits in accordance with our goal to review the U.S. Department of Housing and Urban Development’s (HUD) multifamily housing programs. We issued five reports detailing violations found at Project-Based Rental Assistance (PBRA) properties in HUD’s Southwest Region. This assignment is a rollup of those five reports. In addition, we reviewed HUD’s controls to ensure that its housing assistance payment subsidies were based on accurate and supported information. Our audit objective was to determine whether HUD had adequate oversight of its PBRA program in the Southwest Region during the 5 years in which it suspended its project-based contract administrators’ management and occupancy reviews. We found that HUD did not have adequate oversight of its PBRA program in the Southwest Region during the 5 years in which it suspended its project-based contract administrators’ management and occupancy reviews. Specifically, during that time, HUD paid subsidies to property owners for nonexistent and unsupported tenants based on falsified, inaccurate, and unverified information. These conditions occurred because when HUD suspended the reviews of the assisted properties, it removed a major tool used by the contract administrators to verify housing assistance payment subsidies. Further, HUD’s contract amendment process created instability in the contract administrator’s operations. HUD did not adequately implement replacement procedures or its own onsite monitoring to reduce the deterioration and mismanagement risks to the properties it subsidized. This lack of monitoring resulted in owners’ not meeting contract requirements and incurring more than $5.6 million in questioned costs. When HUD reinstated the reviews, contract administrators faced many compliance issues resulting from the lack of onsite monitoring for 5 years. We recommend that the Office of Multifamily Housing Programs (1) enforce its written policies and procedures to ensure that the verification and payment of housing assistance payment subsidies for properties it subsidizes are based on accurate and supported information; (2) establish and implement policies to ensure effective contract administration, including providing project-based contract administrator contract amendments in a timely manner; and (3) develop contingency policies and procedures to ensure that the properties it subsidizes receive adequate and verifiable continuous monitoring.

337Info System Audit

The Federal Emergency Management Agency (FEMA) did not balance its Manufactured Housing Unit (MHU) program costs with disaster-related housing needs. In response to Hurricane Harvey in Texas, FEMA overestimated the number of MHUs it needed by nearly 2,600, which amounted to purchase, transportation, and storage costs of at least $152 million. The agency also overestimated the number of tank and pump systems (TPS) it needed to operate the fire sprinklers, by nearly 2,400, which amounted to purchase and transportation costs of approximately $29 million. Following Hurricane Harvey, FEMA focused on providing prompt assistance and did not emphasize financial accountability and recordkeeping. Had FEMA better managed and overseen the MHU program, it could have put an estimated $182 million to better use to assist survivors from Hurricane Harvey or other disasters. We made four recommendations that will help FEMA better manage its MHU program. FEMA concurred with the recommendations.

Medicare makes supplemental payments to hospitals, known as outlier payments, which are designed to protect hospitals from significant financial losses resulting from patient-care cases that are extraordinarily costly. Unlike predetermined payment amounts for most Medicare hospital claims, outlier payments are directly influenced by hospital charges. We selected CHI St. Vincent Infirmary (St. Vincent) based on outpatient outlier payments increasing from $216,484 in 2013 to $1.4 million in 2014.