Federal Reports

Prior Office of Inspector General reports identified inadequate controls related to the Department of Energy’s administration and oversight of financial assistance awards, and the Department had not ensured that annual independent audits were performed, as required. Financial assistance audits are intended to determine whether the grantee has an internal control structure that provides reasonable assurance that grants are managed in compliance with Federal laws and regulations and award terms and conditions.We conducted this audit to determine whether the Office of Science (Science) ensured that for-profit grantees were compliant with the audit requirements for Federal awards.We found that Science did not always ensure that for-profit grantees were compliant with audit regulations, including unaudited award expenditures, late audit report submissions, use of incorrect regulations or audit type, and incomplete reporting packages. These issues were due to Science lacking a system or tracking mechanism for monitoring grantees’ expenditures that may require an audit. Further, Science did not adequately review reporting packages or follow its reporting package review process. Finally, reduced staffing contributed to inadequate grant oversight.Award expenditures totaling $56,835,650 that were not audited, as required per 2 Code of Federal Regulations § 910, exposes the Department to an increased risk of fraud, waste, and abuse. Therefore, we are questioning $56,835,650 in award expenditures as unresolved costs pending audit. Not adequately reviewing the reporting package and not following the review processes increases the risk of undetected noncompliance with Federal program requirements and grant award terms and conditions. Grantees who did not have the required audits performed have a higher risk of charging unallowable costs to the Department. Although the scope of this audit was grants to for-profit grantees within Science, it is important that the Department consider the report findings across the complex because the Department received significant funding under the Infrastructure Investment and Jobs Act and Inflation Reduction Act of 2022, and some of this funding will be awarded through financial assistance instruments, including grants.To address the issues identified in this report, we have made five recommendations that, if fully implemented, should help ensure that grantees are compliant with Federal grant audit regulations.In response to our Final Report on Audit Coverage in Office of Science Grants, four grantees provided written responses for the purpose of clarifying or providing additional context to specific references in the report. Three grantees did not agree with the dates of independent audit reports submitted to the Office of Chief Financial Officer (OCFO). One grantee submission date was prior to the date Science had previously provided to the Office of Inspector General and one grantee concurred with the date reported. The OCFO concurred with the original submission dates provided by two grantees. However, the OCFO disagreed with the submission dates provided by the other two grantees, asserting the submission dates were later than stated by the grantees. The dates provided by the grantees differed from Science and the OCFO because the Department’s visibility into its data is lacking; however, establishing a new tracking system as recommended in our report, should reduce future discrepancies.

We audited the U.S. Department of Housing and Urban Development’s (HUD) Section Eight Management Assessment Program (SEMAP) based on our report on HUD’s top management challenges for fiscal years 2020 through 2022 and HUD’s strategic goals and objectives reported in its strategic plan for 2018 through 2022. Our audit objective was to assess the effectiveness of HUD’s SEMAP as a performance measure for the Housing Choice Voucher (HCV) Program.HUD has an opportunity to improve its process for evaluating the performance of public housing agencies’ (PHA) HCV Programs. HUD uses SEMAP to evaluate the performance of PHAs’ HCV Programs remotely. However, (1) the information reported by PHAs in SEMAP may not have accurately represented the performance of their HCV Programs and (2) HUD’s process for verifying the information PHAs use for SEMAP reporting did not effectively assist HUD in evaluating and identifying PHAs’ HCV Programs that may have needed improvement. These conditions occurred because (1) SEMAP uses performance indicators that are based on PHAs’ self-certifications and self-reported data and (2) HUD’s verification process did not capture the performance of all PHAs’ HCV Programs. Without an effective performance measurement process, HUD lacked assurance that PHAs’ HCV Programs met their intended objectives, which include assisting the maximum number of eligible families with obtaining affordable and decent rental units at the correct subsidy cost. In addition, HUD may have missed opportunities to identify PHAs experiencing difficulties in managing their HCV Programs.We recommend that HUD’s Deputy Assistant Secretary for Public Housing and Voucher Programs enhance SEMAP or develop a new performance measurement process that would identify PHAs with underperforming HCV Programs. We also recommend that HUD’s Deputy Assistant Secretary for Field Operations provide training and guidance to its program staff on SEMAP scoring, rating, and verification procedures, including confirmatory reviews, quality control reviews, and adjustments for the current and revised SEMAP processes.

A Labor Relations Specialist, based in Washington, D.C., violated policies when she shared access to folders and files on her company OneDrive account with her personal Gmail account. Many of the folders and files contained information of a sensitive nature. While our investigation found that the employee did not distribute these files beyond her Gmail account and she was taking these actions for a legitimate business purpose, she also did not obtain prior approval nor an exception from company policy, as is required. As a result of this investigation, we provided observations that may help the company better protect its data as it relates to the use of third-party accounts.Amtrak Management provided a response on March 3, 2023, stating that the employee had been counseled. In addition, the company implemented corrective action plans in response to our observations.

We audited the Office of Community Planning and Development’s (CPD) monitoring and oversight of the Community Development Block Grant - Disaster Recovery (CDBG-DR) program. The objective of the audit was to determine whether CPD had effectively and efficiently designed its CDBG-DR program requirements and monitoring to ensure that the grantees meet statutory and other Federal low- and moderate-income (LMI) requirements. Generally, CPD had effectively and efficiently designed its CDBG-DR program requirements and monitoring to ensure that the grantees met the various LMI requirements. Almost all (98 percent) of the closed grants met the requirements, and a majority (80 percent) of the active grants were meeting the requirements. Of the 193 grants reviewed, 1 closed grant did not meet the requirements, and 28 active grants needed to budget funds to meet the requirements. We identified opportunities for CPD to improve its monitoring and oversight of its grantees’ compliance with the requirements, such as (1) including an additional overall LMI benefit calculation in quarterly performance reports (QPRs) and (2) establishing budgeting benchmarks. If CPD implements the recommended improvements, it could potentially prevent other grants from becoming noncompliant and reduce the number of grantees that need to budget sufficient funds to LMI activities. The changes could also improve the accuracy of reporting.