1. Preparing for a HUD - Office of Inspector General (HUD/OIG) Audit
Michael Tondra - Rhode Island

2. Who is the HUD/OIG?
U.S. Department of Housing and Urban Development, Office of Inspector General (OIG)
Established under Inspector General Act of 1978 (one of original 12 offices)
Independent, reports directly to the HUD Secretary and Congress
Mission – “To provide independent, objective, and impactful oversight of the Department to help ensure efficient and effective programs and operations.”
Vision – “To be the Office of Inspector General of choice for driving accountability and trust in Federal programs.”
Core Values – Accountability, Courage, Respect, Stewardship, Trust

3. HUD, Office of Inspector General
Offices
Audit*
Evaluation
Investigation*
Legal Counsel
Management & Technology
Audit – The Office of Audit’s workload is generally divided info four primary categories: performance audits, information systems audits, financial audits, and advisory and assistance services.
High Priority Focus Areas – Civil Fraud & Disaster Oversight

4. Semi-Annual Report to Congress
April 1, 2017 thru September 30, 2017 (most recent)
Criminal Prosecution Referrals
Profile of Performance - Excerpt
Audit Results
This Reporting Period
Fiscal Year 2017
Recommendations that funds be put to better use
$537,844,946
$3,854,174,737
Recommended questioned costs
$102,430,550
$246,964,572
Collections from audits
$20,189,725
$42,953,295

5. General Process Initial Contact Entrance Meeting/Conference
Engagement letter
Schedule
Scope
Entrance Meeting/Conference
Provide primary documents to be reviewed*
Discuss experience & expectations
Review Conducted (be helpful but challenge inaccuracies early)
Initial Draft report (not publicly released)
Opportunity to clarify/respond to content
Resolve issues
Final Draft Report (publicly released)
Notify State Leadership
HUD/CPD Follow-up

6. Preparation is key to success! Research…
Review high-level reports
Report(s) to Congress
Federal agency reports (HUD, Program-wide)
Review reports of counterparts (State/local programs)
Timing
Areas reviewed
Problems identified

7. Preparation: Research (Internal PIT Sample - Summary of HUD/OIG Audit Reports)
Grantees: 8 (6 States; 2 Cities) Program: CDBG/Disaster Recovery Grants: PL (6 Sandy; 2 Non-Sandy Disasters)
Audits w/No Recommendations 3
19%
Audits w/Ineligible Costs 5
31%
Audits w/Questioned Costs 13
81%
% undetermined
38%
> 50% 6
46%
Between 10%-50% 1 8%
< 10%

8. Preparation: Research (Internal PIT Sample Summary of HUD/OIG Audit Reports)
Observations (from content):
High risk activities
Exceptional programs/administrators
Common errors
Frequency of Issues Identified
Procurement 9
Cost Principles 5
Internal Controls 4
Duplication of Benefits 3
National Objective 2
Other
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9. Preparation: Official guidance…
Program Materials Readily Available
Statutory & Regulatory documents
HCDA, 24 CFR Part 570
24 CFR Part 85, Cost Principals
State laws/policies (Ethics, Procurement, Etc.)
Labor Standards/Environmental Review/Etc.
CPD Notices
Program Notices (eg. NSP, CDBG/DR)
Maintain Historical Guidance
Other Helpful Information
HUD/CPD Monitoring Checklists
Official Communications w/HUD Field Office
Training Materials (HUD)
OMB Compliance Supplement
HUD Handbooks ( )

10. Preparation: Files… Organize Mark files of anticipated interest
Duplicate copies
Obtain copies of pertinent local files
Notify subrecipients

11. Preparation: Staff… Establish staff liaison Prepare staff
Centralized point for questions/documents
Prepare staff
Summarize the process and scope of audit
Assure records and files are organized
Allow consultation with Counsel (if necessary)
Set positive culture/philosophy
Interviews may be conducted

12. Preparation: Learn… Conduct Self-Audit
HUD Checklists can generally assist (though differ from IG)
OMB Circulars HUD/OIG Monitoring Guide guides
Employees can audit their own responsibilities and/or responsibilities of others
Set strict schedule
Establish internal corrective actions for weaknesses identified

13. Preparation: Housekeeping…
Identify (possibly long-term) workspace
Access to internet/phone (if desired)
Work may be conducted off-site
Be Thoughtful
Proximity to staff/files
Check-in Periodically

14. Completion General Monitoring Conclusions HUD/OIG Common Language
Acceptable Performance (No problem)
Concern (Could lead to problem)
Finding (Major problem)
HUD/OIG Common Language
Funds be put to better use
Questioned/unsupported Costs
Primary Conclusion(s)
May be general/broad (Details follow)
Conclusions themselves do not always clearly detail issue(s)
“Ineligible” or “Unsupported” costs
“Recommendations” to HUD/CPD for further action

15. Completion. Timing
HUD Handbook (Timeframes for Management Decisions) Appendix 2 – OIG Audit Resolution Timeline
Goal – Final Action 1 year from Management Decision date
Disallowed costs – Up to 3 years
Timelines May Vary
Extensions

16. Response: Issue(s) may not be conclusive
IG may recommend HUD Field Office investigate further
“unsupported/undocumented” costs may need further investigation
*Issues subsequently addressed in conjunction with Field Office*
Research & Prepare response(s) on an ongoing basis
Respond to any items you feel are erroneous early
Pre-emptively address issues identified
Time allowed for response at conclusion may vary
If possible, consult with HUD/CPD Field Office

17. HUD/IG Reports BEST CASE SCENARIO: March 9, 2016
The State of Rhode Island Generally Administered Its Community Development Block Grant Disaster Recovery Assistance Grant in Accordance With Federal Regulations
Report Number: 2016-BO-1001
OTHER SCENARIO:
March 4, 2015
The State of Rhode Island Did Not Always Operate Its Neighborhood Stabilization Program in Compliance With HUD Regulations
Report Number: 2015-BO-1003

18. Be Prepared – Be Informed – Be Helpful – Survive!
After…
Work with HUD/CPD to resolve issues
Poor reviews/findings may result in:
High(er) Risk Designation
Additional HUD/IG reviews
HUD, Field Office reviews
State Auditor reviews
Media Inquiries
Be Prepared – Be Informed – Be Helpful – Survive!