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 based on observations related to the appraised fair market values made during a previous audit (2015-NY-1010) of the State’s program. Our objectives were to determine whether the State ensured that (1) the appraised fair market values used to determine award amounts under its program were supported and (2) appraisal costs for its program complied with applicable requirements and were for services performed in accordance with Federal, State, and industry standards. The State did not ensure that (1) appraised fair market values used to determine award amounts under its program were supported and (2) appraisal costs complied with applicable requirements and were for services performed in accordance with applicable Federal, State, and industry standards. The State also did not ensure that it had a clear and enforceable agreement with the City of New York before relying on appraisal services provided by the City’s contractor and did not ensure that the appraisal services were properly procured and performed. These issues occurred because the State did not have adequate controls over its program. As a result, the U.S. Department of Housing and Urban Development (HUD) and the State did not have assurance that (1) more than $367.3 million paid to purchase properties was supported; (2) more than $3.4 million disbursed for appraisal services was for costs that were reasonable, necessary, and adequately documented; and (3) appraisal services were properly procured and performed. If the State improves controls over its program, it can ensure that up to $93.4 million not yet disbursed is put to better use. We recommend that HUD require the State to (1) provide documentation to support the appraised values of the properties purchased; (2) provide support to show that appraisal costs were reasonable, necessary, supported, and for services that were performed in accordance with requirements; (3) execute an agreement with the City for the use of appraisal services and show that services were properly procured; and (4) strengthen controls to ensure that Disaster Recovery funds used for appraisal services are for costs that are reasonable, necessary, supported, and for services that comply with applicable requirements.

We found that the Department complied with IPERA because it met each of the six compliance requirements. We also found that the Department’s improper payment estimates and methodologies were generally accurate and complete. Lastly, we found that some information in the Department’s improper payment reporting was inaccurate and incomplete, as described in Finding 1. As a result, we could not accurately evaluate the Department’s performance in recapturing improper payments.

What We Looked AtThe Federal Highway Administration (FHWA) oversees more than $40 billion in annual Federal aid for national highway and bridge projects. Federal law requires aid recipients to competitively award contracts for such projects unless some other method is more cost-effective or an emergency exists. One such method is force account work, which involves the noncompetitive use of State or local resources to execute highway projects. Given the inherent risk of higher costs associated with noncompetitive practices, we initiated an audit to (1) determine the scope and magnitude of force account projects funded through the Federal-aid Highway Program and (2) assess FHWA's processes for overseeing compliance with Federal force account requirements.What We FoundFHWA officials have designated force account as a low-risk activity. As a result, FHWA does not track force account activity and thus cannot readily identify which federally funded projects used force account or the amount and type of activity that received Federal funding. In addition, the Agency provides minimal oversight, does not monitor whether States comply with force account regulations, and has gaps in its guidance. For example, while Federal regulations detail when staff can waive a cost-effectiveness determination for use of force account, the Agency's guidance does not. Consequently, States may be using force account to perform permanent repairs when there may be a more cost-effective approach. FHWA does have a risk-based stewardship and oversight framework that gives it discretion in determining the scope of its oversight, as long as it is based on objective data and information. However, without adequate policies and procedures, FHWA cannot ensure that States comply with force account requirements and expend Federal dollars in a cost-effective manner.Our RecommendationsWe made four recommendations to improve FHWA's oversight of States' compliance with Federal force account requirements. FHWA concurred with recommendations 1, 2 and 4, and partially concurred with recommendation 3--stating that it neither agrees nor disagrees with our $22.3 million estimate of unsupported costs but will take the necessary corrective actions. We consider recommendations 1 through 4 resolved but open pending completion of the planned actions.

The TVA Office of the Inspector General (OIG) meets its legal requirement to report to Congress on its results twice a year through its Semiannual Report to Congress. In this semiannual period, our audit, evaluation, and investigative activities identified more than $3.3 million in funds TVA could put to better use and recoveries.