HUD OIG: Common Issues and Concerns Texas NAHRO’s 2018 Conference Senior Auditors Rick Espinoza & Lorenzo Garcia Corpus Christi, Texas | April 10, 2018

Overview What is OIG? How do we select auditees? Common Issues and Concern

Inspector General Act The Inspector General Act of 1978, as amended, established the duties, responsibilities, and authorities of a Federal Inspector General (IG). Conduct independent and objective audits, investigations, inspections, and evaluations off the Dept.’s programs and operations; Promote economy, efficiency, and effectiveness; Prevent and detect fraud, waste, and abuse; Review pending legislation and regulation; and Keep the agency head and the Congress fully and currently informed. The HUD Office of inspector General became statutory with the signing of the Inspector General Act of 1978, P.L. 95-452 Over the years, the Act has been amended to increase the number of agencies with statutory IGs and establish IGs in designated, independent agencies. Nearly 60 statutory IGs provide audit and investigative oversight across the Federal government.

Office of Investigations The OIG’s Office of Investigations employees are are statutory federal law enforcement officers, called special agents, that specialize in criminal investigations regarding issues in and against the Department. Carry firearms Make arrests Testify in Court Serve search warrants Serve subpoenas OIG special agents using the following techniques: Interview subjects/witnesses Surveillance Electronic monitoring In conducting investigations, OIG Special Agents work closely with other federal, state and local law enforcement agencies, as well as with OIG auditors.

Office of Audit Conducts audits, reviews, and other activities relevant to HUD’s mission. Keeps the Secretary, Congress, and the public fully and currently informed. Works collaboratively with HUD and program participants to ensure success of HUD program goals.

Office of Audit Conducts financial audits, which determines whether HUD’s financial statements are fairly presented, internal controls are adequate and laws and regulations have been followed. Information Systems audits, which determines the adequacy of general and application controls and whether security of information resources is adequate and complies with system development requirements. Performance audits, which determines whether programs are achieving the desired results or benefits in an efficient and effective manner

Office of Investigations/ Audit-Region 6 B - 55 R - 79 G - 80 B - 79

How Does HUDOIG Select it’s Auditees?

Audit Selection 1. HUDOIG Risk Assessment Office of Audit Annual Audit plan Information systems – REAC, FASS, M Congressional Inquiry 2. Complaints Hotline – 1-800-347-3735 HUD Request Entity Request – Board, management, employee 3. Outside source CPA Audits News stories

Common Issues and Concerns

Eligibility No documentation Incomplete application 2. No employment, income verification No contract- No recertification Incorrect Rent calculations – overhouse/underhoused, utilities, family information

Financial Capital funds misuse Excessive administrative costs for travel, beverages & M I & E Un-auditable financial records Expenses not appropriately allocated between programs Advance salary and leave program buy backs. Over paid management fees 5 Year capital funds plan not followed. Administrative costs for training and travel appeared exorbitant.

Housing Quality Standards Units did not meet HQS standards for security Units did not meet HQS standards for safety Units did not undergo annual housing inspection Maintenance inspectors had a Conflict of Interest

Procurement Conflict of Interest No Idependent Cost Estimate/Analysis No Contract No Solicitation – undocumented Sole Source contract No Certifications

Collaboration How can you you help us help you? Fraud, waste & abuse – must report to OIG or to HUD. Strong Internal Controls - Quality Assurance Ethics – should be annual & has to start at the top. Hotline - 1-800-347-3735, no anonymous calls

More Info on HUD OIG About us News room Latest issued reports Semiannual Report to Congress News room Locations and Field offices Hotline and report fraud

www.hudoig.gov Theresa Carroll, Assistant Regional Inspector General, Office of Audit tcarroll@hudoig.gov (817) 978-9664 Lorenzo Garcia, Office of Audit lgarcia@hudoig.gov (210) 475-6896 Larry Mcmillion, Office of Audit lmcmillion@hudoig.gov (210) 475-6898 Joanna Varenhorst, Office of Audit jvarenhorst@hudoig.gov (210) 475-6897 Jaime Lerma, Office of Audit jlerma@hudoig.gov (210) 475-6898 Rick Espinoza, Office of Audit eespinoza@hudoig.gov (210) 475-6896