The HUD Office of Inspector General (the “OIG”) recently released an audit of the front-end assessment (“FERA”) undertaken for the Rental Assistance Demonstration’s (the “Demonstration”) first, or public housing, component. A FERA is a formal review by the applicable program office to determine a new program’s susceptibility to waste, fraud, abuse, and mismanagement and to establish internal controls as preventative measures.
Findings
The OIG found that the Office of Public and Indian Housing (“PIH”) did not 1) sufficiently identify risks in its FERA that could disrupt the Demonstration’s effective implementation; 2) document a plan to reduce these risks to an acceptable level; or 3) conduct the FERA in a timely manner as required. The OIG further found that the Office of Housing (“Housing”) failed to document its contribution to the FERA or clearly identify specific risks associated with converted units.
In particular, the OIG found that the FERA did not adequately address the following risk factors:
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Need for administrative funding to implement the Demonstration in the absence of additional appropriations;
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Determination of funding level and computation of program funds and the resulting effect on the Demonstration and tenants;
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Site conditions, including HUD’s wavier of certain Site and Neighborhood Standards, and residents’ ability to return post-conversion; and
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Management and information systems capacity by participants.
Recommendations
The OIG recommended that PIH and Housing reexamine and modify the FERA to 1) ensure that risks, including those identified above, are adequately identified; and 2) put in place a plan for reducing the risks to an acceptable level.
Response
HUD responded that it concurred with several of the risks identified in the audit and that PIH and Housing will work collaboratively to update the existing FERA accordingly
