Federal Reports

As a streamlined way to reduce interest rates on VA-guaranteed mortgages, interest rate reduction refinance loans (IRRRLs) are popular with veterans, especially when interest rates are low. In fiscal year (FY) 2020, VA reported a 598 percent increase in the number of these loans from the previous year—from 94,861 to 662,065, with IRRRLs totaling about $199 billion.Given the considerable increase in the use of IRRRLs and the large number of borrowers at risk for overcharges, the VA Office of Inspector General (OIG) conducted this audit to determine whether oversight of IRRRLs by the Veterans Benefits Administration’s (VBA) Loan Guaranty Service (LGY) ensures veterans are protected from unfavorable refinancing and unallowable or unreasonable refinance charges.The OIG found VBA made meaningful improvements in May 2020 regarding borrowers’ fee recoupment (recovering closing costs within three years), net tangible benefit (an interest rate reduction of at least one-half percent), and protections against serial refinances. However, some FY 2020 borrowers were still potentially overcharged through unsupported, unallowable, or unreasonable closing costs. Estimates totaled roughly $3 million for approximately 18,400 borrowers based on the FY 2020 audit sample. Also, borrowers did not always receive the loan comparison documents they needed to make informed decisions about whether to refinance. The OIG estimated that lenders did not provide the required statements at the time of application for at least 3 percent of the IRRRLs in FY 2020. This omission may have affected some 2,900 borrowers. LGY also lacked controls and sufficiently detailed guidance to fully perform loan oversight and quality assurance.Despite differences in some legal interpretations, VBA concurred with the OIG’s nine recommendations to strengthen LGY controls and quality assurance policies and procedures that would more effectively protect borrowers from unfavorable IRRRLs and guarantee loans that comply with program requirements.

What We Looked AtThis report presents the results of our quality control review (QCR) of an attestation examination of the Department of Transportation’s (DOT) Enterprise Services Center (ESC) controls. ESC provides financial management services to DOT and other agencies and operates under the direction of DOT’s Chief Financial Officer. The Office of Management and Budget requires ESC, as a service organization, to either provide its user organizations with independent audit reports on the design and effectiveness of its internal controls or allow user auditors to perform tests of its controls. We contracted with KPMG LLP to conduct this examination subject to our oversight. The objectives of the review were to determine whether (1) management’s description of ESC’s systems is fairly presented, (2) ESC’s controls are suitably designed, and (3) ESC’s controls are operating effectively throughout the period of October 1, 2022, through June 30, 2023. We performed a QCR on KPMG’s report and related documentation. What We FoundOur QCR disclosed no instances in which KPMG did not comply, in all material respects, with generally accepted Government auditing standards. Our RecommendationsKPMG made no recommendations. We are publicly releasing a summary of the report rather than the full report itself because the Federal Information Security Management Act of 2002 (FISMA), as amended, requires OIGs to take appropriate steps to ensure the protection of information that, if disclosed, may adversely affect information security.1144 U.S.C. § 3555(f)

U.S. Immigration and Customs Enforcement (ICE) has limited ability to identify and combat commodities imported as part of trade-based money laundering (TBML) schemes. Specifically, ICE does not have automated technology to identify import commodities at high risk for TBML schemes. Instead, it identifies TBML activities through manual searches of import records, which is time-consuming. Funding constraints and competing priorities have hampered ICE’s development of automated capabilities to identify TBML schemes.

We found opportunities for the U.S. Virgin Islands Department of Finance to improve internal control within its accounting system.

The VA Office of Inspector General (OIG) conducted an inspection to evaluate leaders’ responses to long-standing Cardiology Department staffing and workplace challenges at the Richard L. Roudebush VA Medical Center (facility) in Indianapolis, Indiana.Cardiology Department challenges identified during previous OIG, Office of the Medical Inspector, and National Cardiology Program Office (NCPO) reviews remained unresolved. Although NCPO gave clear recommendations regarding actions and resources needed for the Cardiology Department, facility leaders’ responses were neither timely nor commensurate and failed to resolve underlying issues.Facility leaders failed to maintain adequate cardiologist staffing levels resulting in the reduction and suspension of cardiac procedures, which affected the retention of nurse practitioners and cardiology nursing staff, and impacted workplace stability and morale.Resources necessary for the chief of cardiology to develop the Cardiology Department were not provided by facility leaders. The chief of cardiology was not afforded protected administrative time, did not receive position-specific training, mentorship, or dedicated administrative staff.Facility leaders failed to restore the partnership with the university affiliate. Despite NCPO directing accountability for this recommendation to higher levels of leadership, facility leaders diverted accountability, placing blame on the chief of cardiology’s inability to restore the relationship.A lack of commitment to and accountability for the Cardiology Department’s challenges by facility leaders, compounded by a lack of stability within key leadership positions, undermined efforts to resolve the department’s deficiencies.In February 2022, the chief of medicine initiated targeted efforts towards supporting and stabilizing the Cardiology Department. Leaders have made modest progress in increasing the number of cardiologists and partnering with the university affiliate; however, given the department’s history and inability to sustain periodic improvements, the OIG remains concerned about continued and future stability. The OIG made two recommendations to the Veterans Integrated Service Network Director and two recommendations to the Facility Director.