Federal Reports

Brian Kerr, former Building and Bridges Assistant Supervisor, pleaded guilty in New York County Supreme Court on March 23, 2022, to two misdemeanor counts to Falsify Business Records: Make False Entry. He was sentenced to a conditional discharge and ordered to pay restitution to the company in the amount of $360.23. Kerr, among others, participated in a scheme to intentionally misuse company badges and/or create counterfeit badges that he and the others fraudulently “swiped” for one another, via Amtrak’s time and attendance machines, to clock-in or out. Kerr resigned on February 21, 2022, and is ineligible for rehire.

What We Looked AtAccording to data from the Pipeline and Hazardous Materials Safety Administration (PHMSA), more than 3.3 billion tons of hazardous materials (hazmat) are transported within the United States each year. As PHMSA is responsible for evaluating the fitness of companies that transport hazmat, we initiated this audit with the following objective: to assess PHMSA’s implementation of Federal requirements for conducting fitness reviews of applicants seeking hazmat approvals or special permits. Specifically, we assessed (1) PHMSA’s three-tier process for reviewing applicants’ fitness and (2) internal controls the Agency employed to conduct those reviews and communicate the results, as required. What We FoundPHMSA is improving its three-tier hazmat fitness review processes, but its timeliness goal is not always achievable. Specifically, PHMSA processed most Tier 1 reviews within DOT’s 120-day goal but took longer for Tiers 2 and 3. PHMSA investigators did meet Agency standards for inspecting and developing fitness memorandums. PHMSA is also improving its methods for tracking Tier 2 and Tier 3 applications and for documenting decisions regarding Tier 3 inspections. However, its software systems do not communicate with each other, and the Agency does not require fitness memorandums to identify relevant inspection report numbers—factors that will hinder PHMSA’s efforts to meet its timeliness goal or identify potential problems. PHMSA also has internal control gaps for conducting hazmat fitness reviews, although it is working to address those gaps. In addition, some data were not correctly correlated to company profiles, which could impact the accuracy of Tier 1 reports and fitness reviews. Finally, PHMSA did not fully publicly communicate, as required, the status of applications delayed more than 120 days. Until PHMSA addresses these internal control gaps, it has less assurance its application review process will meet Federal requirements. Our RecommendationsWe made 12 recommendations to improve PHMSA’s implementation of Federal requirements for conducting fitness reviews. PHMSA concurred with all 12 recommendations, and we consider them resolved but open pending completion of planned actions.

This Office of Inspector General (OIG) Comprehensive Healthcare Inspection Program report provides a focused evaluation of the quality of care delivered in the inpatient and outpatient settings of the W.G. (Bill) Hefner VA Medical Center. The inspection covered key clinical and administrative processes that are associated with promoting quality care. This inspection focused on Leadership and Organizational Risks; COVID-19 Pandemic Readiness and Response; Quality, Safety, and Value; Registered Nurse Credentialing; Medication Management: Remdesivir Use in VHA; Mental Health: Emergency Department and Urgent Care Center Suicide Risk Screening and Evaluation; Care Coordination: Inter-facility Transfers; and High-Risk Processes: Management of Disruptive and Violent Behavior.The medical center’s executive leadership team had worked together for approximately three months, although two leaders had served in their positions for multiple years. The remaining team members were not permanently assigned to their positions. Employee survey responses demonstrated satisfaction with leadership. However, responses also revealed opportunities to reduce staff feelings of moral distress at work. Patient experience survey data highlighted opportunities for leaders to improve experiences in the inpatient and outpatient settings. The OIG’s review of the system’s accreditation findings did not identify any substantial organizational risk factors. However, the OIG identified a concern with leaders conducting institutional disclosures for all sentinel events. Executive leaders were knowledgeable within their scope of responsibilities about VHA data, organizational factors contributing to poor performance on Strategic Analytics for Improvement and Learning measures, actions taken to maintain or improve organizational performance, employee satisfaction, and patient experiences.The OIG issued four recommendations for improvement in three areas:(1) Leadership and Organizational Risks• Institutional disclosures(2) Quality, Safety, and Value• Systems Redesign Review Advisory Group participation• Surgical work group meeting attendance(3) High-Risk Processes• Staff training

What We Looked AtThe Department of Transportation’s (DOT) Operating Administrations (OA) receive billions to provide financial assistance to States and other entities. The Office of Management and Budget (OMB) requires recipients that expend $750,000 or more to perform single audits. OMB’s Uniform Guidance sets requirements for single audits. Recipients must submit reporting packages, including auditors’ reports, to the Federal Audit Clearinghouse (FAC) and develop plans to resolve findings. Because of the importance of single audits to tax dollar stewardship, we reviewed single audit processes at the Federal Aviation Administration (FAA), Federal Highway Administration (FHWA), and Federal Transit Administration (FTA). Our audit objectives were to evaluate their processes for (1) verifying that single audits are completed and reports submitted to FAC in the timeframe required by the Uniform Guidance, (2) issuing timely management decisions on single audit findings, and (3) following up on findings and recommendations, including high-priority findings and recommendations we identify in quarterly reports.What We FoundDOT does not ensure that single audit reports are completed and timely submitted to FAC, and does not have a single audit accountable official to ensure OAs fulfill Uniform Guidance requirements. DOT does not ensure the OAs verify that recipients complete single audits and submit timely packages. FAA, FHWA, and FTA’s processes for these activities are not sufficient. This lack of oversight could inhibit DOT’s ability to reduce improper payments. DOT also does not ensure OAs issue timely management decisions and track findings. Untimely management decisions inhibit OAs’ abilities to evaluate findings and recover funds. The OAs follow up on findings that we identify in our quarterly reports rather than all findings. Because it has not designated an SAAO, DOT does not ensure OAs perform required followup. The Uniform Guidance requires agencies ensure that recipients correct all findings. Our reports do not cover all single audit findings. DOT’s lack of oversight could increase the risk of improper payments.RecommendationsOST concurred with our seven recommendations to help improve single audit process oversight. We consider all recommendations resolved but open pending completion of planned actions. 

The U.S. Department of Housing and Urban Development, Office of Inspector General, has completed its audit of Federal Housing Administration (FHA)-insured loans serviced in calendar year 2020. Our audit objective was to determine whether borrowers of FHA-insured loans maintained proper flood insurance coverage. We found FHA insured at least 31,500 loans serviced during calendar year 2020 for properties in SFHA flood zones that did not maintain the required flood insurance coverage. We found loans that had private flood insurance instead of the required NFIP coverage, NFIP coverage that did not meet the minimum required amount, or no coverage during calendar year 2020. As a result, the FHA insurance fund was potentially exposed to greater risk from at least $4.5 billion in loans that did not maintain adequate NFIP coverage. We recommend that FHA require lenders to provide evidence of sufficient flood insurance coverage or execute indemnification agreements for the 21 loans in our statistical sample that did not have sufficient flood insurance at the time of our audit, develop a control to detect loans that did not maintain the required flood insurance to avoid potential future costs to the FHA insurance fund from inadequately insured properties, and consult with HUD’s Office of General Counsel to review the language in the statutes, regulations, and handbooks and make any necessary adjustments to the forward mortgage and Home Equity Conversation Mortgage handbooks.