Federal Reports

The Inspector General’s Statement on the SEC’s Management and Performance Challenges, October 2022

We audited the U.S. Department of Housing and Urban Development (HUD), Office of Native American Programs’ sale of defaulted loan notes and real estate-owned (REO) properties on tribal trust and other restricted lands. We performed this audit as a result of congressional interest in the Section 184 program and work performed during prior HUD, Office of Inspector General, audits. The objective of our audit was to determine whether HUD appropriately marketed, sold, and tracked defaulted loan notes and REO Section 184 tribal trust land properties.HUD appropriately marketed and sold Section 184 properties on restricted lands. However, its systems and controls for managing its portfolio of defaulted loan notes and REO Section 184 tribal trust land properties had weaknesses. This condition occurred because HUD prioritized its limited resources to focus on processing and guaranteeing new loans rather than defaulted loan notes and REO properties on trust land. As a result, HUD may continue to experience delays in selling defaulted loan notes and REO properties. These weaknesses could lead to unnecessarily vacant, abandoned, and blighted properties on trust lands, which could have a negative impact on the Loan Guarantee Fund.We recommend that the Deputy Assistant Secretary for Native American Programs (1) consider conducting an analysis of staffing resources needed to manage the REO and notes sales on tribal trust properties program and adjust staffing accordingly; (2) revise HUD’s internal policies and procedures to include detailed written policies and procedures for the marketing, preservation, and sale of defaulted loan notes and REO properties on tribal trust and other restricted lands; and (3) work with the Office of the Chief Information Officer to develop an electronic solution, such as a new module in Native Advantage or one similar to the Federal Housing Administration’s P260 tracking system, to track the sale of defaulted loan notes and REO properties on tribal trust and other restricted lands. While the solution is being developed, HUD should put controls into place to ensure that manual systems used to track defaulted loans and REO properties are complete and accurate.

What We Looked AtSince March 2020, Congress has provided $69.5 billion in supplemental funding to the Federal Transit Administration (FTA) to help transit systems in the United States mitigate the impacts of the Coronavirus Disease 2019 (COVID-19) pandemic. As of August 1, 2022, FTA had obligated over $63 billion and expended over $46 billion. In addition to increased funding, the Coronavirus Aid, Relief, and Economic Security (CARES), Coronavirus Response and Relief Supplemental Appropriations (CRRSA), and American Rescue Plan (ARP) Acts permitted changes in how recipients use FTA funds. Accordingly, our audit objective was to assess the design of FTA’s controls to address risks FTA has identified for COVID-19 relief funding. What We FoundFTA’s 2021 Internal Control Plan identified 16 risks and mitigation strategies related to its COVID-19 relief funds, 12 of which FTA currently considers to be risks. We determined that FTA’s controls fully address 8 of these 12 identified remaining risks, because they are relevant and sufficient in scope and specificity to mitigate the related risk, and partially address 4 of the 12 remaining risks. For the four risks that Agency officials indicated no longer applied, we found that FTA’s controls partially address two risks and do not address two. We included our assessment of these areas should FTA management determine the risks are applicable at a future time. Adding controls for those risk areas that are not fully addressed will help the Agency mitigate the potential impact of the risks facing its COVID-19 relief funding. Our RecommendationsFTA concurred with our two recommendations to improve controls for addressing COVID-19 funding risks. We consider all recommendations resolved but open pending completion of the planned actions.

On October 11, 2022, an Amtrak pipe fitter based in Miami, Florida, signed a civil settlement agreement with the U.S. Attorney’s Office, Southern District of Florida, and agreed to pay $10,000 in restitution and a $5,000 penalty. Our investigation found that the employee submitted an application that contained false statements and information to the Small Business Administration in order to qualify for a CARES Act Economic Injury Disaster Loan Advance, resulting in the receipt of funds to which he was not entitled.

On October 11, 2022, an Amtrak coach cleaner based in Miami, Florida, signed a civil settlement agreement with the U.S. Attorney’s Office, Southern District of Florida, and agreed to pay $10,000 in restitution and a $5,000 penalty. Our investigation found that the employee submitted an application that contained false statements and information to the Small Business Administration in order to qualify for a CARES Act Economic Injury Disaster Loan Advance.