oversight

Review of HUD's Process for Monitoring Recipient Reporting for the American Recovery and Reinvestment Act of 2009

Published by the Department of Housing and Urban Development, Office of Inspector General on 2009-10-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                       U.S. Department of Housing and Urban Development
                               Office of Inspector General
                                          451 7th St., SW
                                       Washington, DC 20410


                                              October 30, 2009

                                                   MEMORANDUM NO.: 2010-DP-0801

TO:            Elizabeth S. Wilmott, Senior Program Manager for Economic Recovery, S
               Jerry E. Williams, Chief Information Officer, Q
               Anthony Scardino, Acting Deputy Chief Financial Officer, F

                 //s//
FROM:          Hanh Do, Director, Information Systems Audit Division, GAA

SUBJECT:       Review of HUD’s Process for Monitoring Recipient Reporting for the
                     American Recovery and Reinvestment Act of 2009

                                   INTRODUCTION

The American Recovery and Reinvestment Act of 2009 (Recovery Act) includes $13.61
billion for projects and programs administered by the U.S. Department of Housing and
Urban Development (HUD). The Recovery Act created the Recovery Accountability and
Transparency Board (Board) to coordinate and conduct oversight of covered funds to
prevent fraud, waste, and abuse. The Board has required the Inspector General
community to evaluate Federal agencies’ process for monitoring recipient reporting of
Recovery Act funds for the quarter ending September 30, 2009. The audit reports are to
be issued to their agencies no later than October 30, 2009. The reports will also be
submitted to the Board, which will compile the results and issue a consolidated report
with recommendations for improvement across the Federal government.

                                      OBJECTIVE

The objective of this audit was to determine whether HUD had developed a process for
performing limited data quality reviews of recipient reporting of recovery funds. As part
of our continuing efforts to meet the Office of Management and Budget (OMB) directive1
that Inspectors General perform audits and inspections of their respective agencies
awarding, disbursing, and monitoring of Recovery Act funds, we plan to conduct an audit
to determine whether data submitted by Recovery Act grantees are complete and accurate
at a later date.

1 OMB Memorandum M-09-15: “Updated Implementing Guidance for the American Recovery and
Reinvestment Act of 2009”
                                         RESULTS OF REVIEW

Highlights

Our review found that HUD has made progress in the quality assurance process. HUD
has established a Recovery Implementation Team that has developed Department-wide
policies and procedures and provided guidance to HUD program offices. The Recovery
Implementation Team has developed a process for performing limited data quality
reviews of recipient reporting of Recovery Act funds. The team has also developed
procedures to identify and notify the recipients of the need to make appropriate and
timely changes to data submissions. HUD has begun reviewing data reported to
FederalReporting.gov2 by recipients and identified possible data errors that require
follow-up.

Our review also found areas that HUD needs to address. Not all prime recipients3 have
filed all of the required quarterly reports. HUD has not ensured that the prime recipients
review the data submitted by subrecipients4. HUD has not developed a process to
identify subrecipients that demonstrate systemic or chronic reporting problems and/or
otherwise fail to correct such problems as identified by the primary recipients.

Auditee Comments and OIG’s Evaluation of Auditee Comments

We received written comments from HUD on October 30, 2009. The Department noted
several areas of common ground with OIG and provided additional information that
describes HUD’s extensive efforts to ensure accountability and transparency in this very
important initiative. The complete text of the comments can be found in appendix B of
this memorandum.

We acknowledge that HUD has made progress and will continue to improve the overall
quality assurance process over time. We have identified areas that require HUD’s
attention as it continues to make progress. We have made changes as appropriate to the
memorandum.




2 FederalReporting.gov is a central government wide data collection system for Federal agencies and
recipients of Federal awards under Section 1512 of the Recovery Act. Recipients will access this site to
fulfill their reporting obligations. Federal Agency and recipient users will be able to submit reports, view
and comment on reports (Federal agency and prime recipient users), and update or correct reports.
3 Prime recipients are non-Federal entities that receive Recovery Act funding as Federal awards. The prime
recipient is responsible for reporting of all data required by Section 1512 of the Recovery Act. A prime
recipient may delegate responsibility to its subrecipient to report information into FederalReporting.gov.
4 Subrecipients are non-Federal entities that are awarded Recovery funding through a legal instrument from
a prime recipient.


                                                      2
Detailed Results of Review

The Board identified six areas for the Inspector General community to review. They are
listed below along with the results of our review.

1. Obtain HUD’s policy and procedures for reviewing quarterly Recovery Act data
   pursuant to OMB Memorandum M-09-215.

    HUD established a Recovery Implementation Team to develop Department-wide
    policies and procedures and provided guidance to HUD program offices. The team
    has developed and provided to the program offices a Department-wide process for
    reviewing the quality of the quarterly Recovery Act data submitted by the recipients.
    In addition to Recovery Act and related guidance developed by OMB, the HUD
    Recovery Implementation Team developed a Department-wide data quality review
    process for reviewing the quarterly Recovery Act data. This process provided
    program offices guidance on how to review the quarterly Recovery Act data
    submitted by HUD’s primary grant recipients. Program offices can issue specific
    guidance to grantees related to data quality control. Some program offices have
    issued additional guidance.

2. Determine how HUD plans to ensure that all prime recipients have filed the
   required quarterly reports pursuant to Section 1512 of the Recovery Act6 and
   how the agency will ensure that it conducts the required reviews of the reported
   data.

         The Recovery Implementation Team has developed Department-wide policies and
         procedures and provided guidance to HUD program offices. The program offices
         have e-mailed guidance on how to register and report in FederalReporting.gov to
         the recipients. Each program office has an outreach strategy to follow up with
         those recipients that did not submit their reports. This process includes multiple
         telephone phone calls and e-mails with support materials.
         HUD’s Secretary and Deputy Secretary issued a letter and an e-mail to HUD’s
         Recovery Act funding recipients and program staff to remind them of the
         registration requirement in FederalReporting.gov and reporting deadlines required



5 OMB Memorandum M-09-21 "Implementing Guidance for the Reports on Use of Funds Pursuant to the
American Recovery and Reinvestment Act of 2009" provides Federal agencies and funding recipients with
information necessary to effectively implement the reporting requirements included in section 1512 of the
Recovery Act.
6 Section 1512 of the Recovery Act requires recipients and subrecipients to submit reports on the use of
Recovery Act funds on a quarterly basis. The reports are due no later than the 10th day after the end of
each calendar quarter (beginning the quarter ending September 30, 2009). The Section 1512 report
contains aggregate information on awards, programs, activities, and employment impact.


                                                     3
       by the Sections 1512 of the Recovery Act. HUD is operating a call center to assist
       recipients with their submission of Recovery Act reports.
       The HUD Recovery Implementation Team conducted training classes for recipient
       and program offices. HUD also maintains a Web site
       (www.hud.gov/recovery/reporting) where grantees can review HUD-issued
       policies and guidance related to the Recovery Act.

3. Conduct a walk-through of HUD’s process to perform limited data quality
   reviews.

       The process that HUD uses to perform limited data quality reviews is as follows:

    a) Data migration: HUD downloads data files from FederalReporting.gov
       periodically after the 10th day after the end of each calendar quarter and imports
       the files into HUD’s Recovery Act reporting system for recipient data.

    b) Comparison: The Recovery Act reporting system compares the
       FederalReporting.gov data with data collected from HUD’s financial systems. For
       every significant error, a flag will be generated. Significant error flags will
       generate a comment that an error has been detected and direct the recipient to
       “check your records and correct your submission.” Also, the system will generate
       program error summary reports and e-mail them to program principal officials.
       HUD program staff and the HUD Recovery Implementation Team will manually
       enter the automated comments generated from the Recovery Act reporting system
       into FederalReporting.gov.

4. Determine whether HUD’s policy and procedures have been designed to
   emphasize the avoidance of two key data problems: material omissions and
   significant reporting errors.

    HUD has designed its policy and procedures to emphasize the avoidance of the two
    key data problems as follows:

       Material omissions: After October 10, HUD compared award numbers in reports
       downloaded from FederalReporting.gov to award numbers in HUD systems to
       identify prime grant recipients that had not reported Section 1512 data in
       FederalReporting.gov. HUD’s Recovery Act reporting system generates a report
       that lists the recipients that have not reported data. The report can be broken
       down in separate files for each program so that program office officials can
       contact the nonreporting recipients. The files are e-mailed to program principal
       officials for action.
       Significant errors: HUD used four data categories to identify reports with
       significant errors: (1) award amount, (2) total received, (3) total spent, and (4)
       jobs. An error flag and comments are generated for each significant error. The



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       Recovery Act reporting system will generate program error summary reports and
       e-mail them to program principal officials. The HUD program staff and the HUD
       Recovery Implementation Team will manually enter the automated comments
       generated from the Recovery Act reporting system into FederalReporting.gov.

5. Determine whether HUD has an adequate process in place to remediate systemic
   or chronic reporting problems.

    Process for Prime Recipients

       HUD has developed and implemented a data quality control process to identify
       prime grant recipients that demonstrate systemic or chronic reporting problems.
       HUD is in the process of informing prime grant recipients that did not submit the
       required data to FederalReporting.gov to ensure that they submit the data.
       HUD will use the Recovery Act reporting system to automatically identify
       significant errors by reviewing the four data categories and provide those error
       comments to the prime recipients. HUD has developed a Department-wide
       approach to enforce Section 1512 reporting requirements. For all recipients that
       fail to report in FederalReporting.gov by the end of their first applicable reporting
       cycle, HUD will generate a notification/warning letter to be sent to the recipients.
       The non-reporting recipients will be given an opportunity to correct the omission
       by reporting in the next quarterly reporting cycle. If they fail to report a second
       time, HUD will initiate further enforcement actions. The second-level
       enforcement action includes formal or informal hearings, suspension of access to
       funds, or other actions.

6. With the understanding that M-09-21 is a reporting tool rather than a
   management tool, determine whether HUD anticipates that it will be able to use
   the reported information as a tool for assessing compliance with the terms and
   conditions of award agreements, assessing risk, and determining when to release
   remaining funds.

       HUD anticipates that it will be able to use the reported information as a tool for
       assessing compliance with the terms and conditions of award agreements,
       assessing risk, and determining when to release remaining funds.


                       AREAS IN NEED OF IMPROVEMENT

1. HUD has not ensured that the prime recipients review the data submitted by
   subrecipients. The prime recipients are responsible for reviewing data submitted by
   subrecipients during the post-submission review period that runs from the 11th to the
   21st day of the reporting month. OMB Memorandum 09-21 requires prime recipients
   to maintain an updated inventory of subrecipient delegations and crosscheck all data
   records to avoid double counting in their reports. To ensure prime recipients


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    implement their responsibilities, OMB also requires Federal agencies to review prime
    recipient processes and procedures for collecting, reviewing, and reporting Section
    1512 information. HUD indicated that due to the large number of recipients, the
    program offices have only provided guidance to prime recipients and have not been
    able to monitor prime recipients’ processes for monitoring subrecipients.

2. Not all prime recipients have filed all of the required quarterly reports. For the
   October 10, 2009, reports filed by the prime recipients as of October 22, HUD’s
   verification process found that recipients had not submitted their reports for 4,209 out
   of 11,456 grant awards in FederalReporting.gov. HUD’s verification process was to
   compare award numbers in reports downloaded from FederalReporting.gov to the
   award numbers in HUD’s financial system. We attribute this problem to the
   following:
        HUD has limited capability for identifying all prime grant recipients that have not
        registered in FederalReporting.gov before the October 10 reporting deadline and
        following up with those recipients to ensure that they registered and reported their
        data in a timely manner. To identify all nonregistered prime grant recipients and
        contact them before October 10, HUD used an automated system to compare the
        DUNS7 numbers between reports downloaded from FederalReporting.gov and
        HUD’s systems. However, HUD’s systems do not maintain the DUNS numbers
        for all grants awarded before the Recovery Act. If those recipients did not register
        in FederalReporting.gov, HUD could not identify them and directed the program
        offices to follow up with these nonregistered grant recipients early in the
        registration and reporting process. With the large amount of non-reported
        recipients as of October 22, 2009, it is possible that HUD program offices will not
        be able to follow up with all of these recipients to ensure that they register and
        report data in FederalReporting.gov.
        HUD indicated that during the registration and reporting process, some grantees
        experienced access and technical problems with the HUD and OMB call-in
        centers. For instance, some grantees did not know which help desk they should
        call since there are three call-in centers: the OMB call-in center, HUD’s Recovery
        Act call-in center, and the HUD help desk call-in center. HUD’s Recovery
        Implementation Team was working with OMB and HUD’s help desks to solve the
        problems. The Recovery Implementation Team also provided guidance to
        program offices on how to help grantees with some of the technical problems
        during the registration and reporting process.

3. Regarding the process for subrecipients
    OMB Memorandum 09-21 requires Federal agencies to continuously evaluate prime
    recipient and subrecipient efforts to meet Section 1512 requirements as well as


7 DUNS stands for “data universal numbering system.” DUNS numbers are issued by Dun and Bradstreet
and consist of nine digits. OMB has adopted the use of DUNS numbers as a way to keep track of how
Federal grant money is dispersed.



                                                 6
   implement guidance and any relevant Federal program regulations. In particular,
   Federal agencies will work to identify and remediate instances in which:
       Prime recipients that demonstrate systemic or chronic reporting problems and/or
       otherwise fail to correct such problems as identified by the Federal agency;
       Subrecipients that demonstrate systemic or chronic reporting problems and/or
       otherwise fail to correct such problems as identified by the recipient or Federal
       agency; and
       Prime recipients that demonstrate systemic or chronic deficiencies in meeting its
       responsibilities to review and identify data quality problems of subrecipients
       consistent with the requirements of this guidance.

   While HUD has developed a process to identify prime recipients with systemic or
   chronic reporting problems and/or otherwise fail to correct such problems as
   identified by HUD.
    We found that:
       HUD has not developed a process for identifying those prime recipients that
       delegated reporting responsibility to subrecipients and did not perform data
       quality reviews and work with designated subrecipients to address any data quality
       issues due to the large number of prime recipients and subrecipients. However,
       HUD plans to select a sample of prime recipients, based on risk, to investigate
       their data quality review process.

       HUD has not developed a process for identifying subrecipients that demonstrate
       systemic or chronic reporting problems and/or otherwise fail to correct such
       problems as identified by the primary recipients. However, HUD plans to
       integrate this requirement into its process for monitoring prime recipients. The
       October reporting period is the first opportunity HUD has had to learn the
       identities of the subrecipients of these awards. HUD plans to identify problems
       with subrecipient reporting when it selects a sample of prime recipients to review
       their data quality control process.


                                RECOMMENDATIONS

We recommend that the Recovery Implementation Team
1. Require the HUD program offices to review the primary recipients’ processes and
   procedures for collecting, reviewing, and reporting Recovery Act data to ensure that
   they are in compliance with the Recovery Act.
2. Ensure that HUD officials continue to monitor the non-reporting prime grantees to
   ensure that they register and submit Section 1512 data in the next quarterly report.
3. Develop a process to identify subrecipients that demonstrate systemic or chronic
   reporting problems for data quality.


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cc:
Peter Grace, Special Assistant to the Secretary, S
James Parrott, Counsel to the Secretary, S
Judith Koumarianos, Departmental Operations Officer, I
Lynn Allen, Deputy Chief Information Officer, Q
Badeah Carroll, IT Project Manager, Q
Howard Hong, IT Project Manager, QCAM
Stephen Hill, Director of Investments Strategies, QDAM
Juanita L. Toatley, Information Technology Specialist, QDAM
Jeffrey Little, Program Analyst, F
Sara Meyers, Office of Strategic Management and Planning, F
Ronnie Fairley, Management Analyst, FMA
Kathryn Nicholson, Management Analyst, FMA




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Appendix A
                                Scope and Methodology

The review was performed between September and October 2009 at HUD headquarters,
Washington, DC. We used the “Recovery Act Reporting Data Quality Review Guide for
the Inspector General Community” provided by the Board to accomplish our objectives.
We conducted the audit in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and conclusions based
on our audit objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives. Specifically, we

       Evaluated HUD’s policy and procedures for reviewing quarterly Recovery Act
       data pursuant to OMB Memorandum M-09-21;
       Obtained and reviewed supporting documents to determine whether HUD
       program offices provided guidance and assistance to grant recipients;
       Evaluated actions and process used by HUD to ensure that all prime recipients
       filed the required quarterly reports;
       Interviewed HUD’s Recovery Implementation Team/HUD officials on its process
       to perform limited data quality reviews;
       Performed analyses of documents provided by the Recovery Team to determine
       reporting status of HUD’s grant recipients;
       Attended meetings held between HUD’s Recovery Implementation Team and
       program office managers;
       Reviewed HUD’s grant award agreements procedures and enforcement plan to
       determine whether HUD has an adequate process in place to remediate systemic
       or chronic reporting problems; and
       Reviewed relevant Federal laws and regulations, including Recovery Act guidance
       issued by the Office of Management and Budget.




                                             9
      Appendix B

              Comments from the U.S. Department of Housing and Urban Development


FROM:             Elizabeth S. Willmott, Senior Program Manager for Economic Recovery, S
                  Jerry E. Williams Chief Information Officer, Q
                  Anthony Scardino, Acting Deputy Chief Financial Officer, F

TO:               Hanh Do, Director, Information Systems Audit Division, GAA

SUBJECT:          Comments on Review of HUD’s process for monitoring recipient reporting for the
                  American Recovery and Reinvestment Act of 2009


Thank you for the feedback and for the opportunity to review the discussion draft audit report. The HUD Recovery
Team notes several areas of common ground with HUD-OIG. Along with factual corrections, we have additional
information to provide that describes HUD’s extensive efforts to ensure accountability and transparency in this very
important initiative.

We have additional information to provide for the report:

Overall

“HUD’s Recovery Act reporting system” should be “HUD’s Recovery Act Management and Performance System”
and appropriate changes made to other references to this system in the report.

Area #2, page 2

To support Recovery funding recipients in the completion of these unprecedented required quarterly reporting
requirements, HUD has conducted extensive and proactive outreach to grantees. This technical assistance has
included:

                  a website with numerous guidance materials and tip sheets (e.g., a completed “dummy template”
                   pre-populated with generic information that will be common across all recipients),
                  a call center (paid for by CPD and PIH) – which fielded several thousand calls over the reporting
                   period,
                  written guidance,
                  webinars by OMB,
                  trainings by the Office of Departmental Grants Management and Oversight,
                  four hour-long conference calls in partnership with the National Affordable Housing Management
                   Association (NAHMA) and American Association of Homes and Services for the Aging (AAHSA),
                   and
                  dedicated staffing of a highly used email help desk, reportinghelp@hud.gov – which fielded over
                   1,000 emails and led to hundreds of explanatory phone calls between grantees and HUD staff.

The Program Offices also sent out guidance tailored for their grantees, used program-specific email help desks and
posted updates regularly to both email list servers and agency webpages. The HUD Director of Public Engagement
sent out emails to a list of the major industry associations. HUD also convened a regular informal conference call to
share experiences and best practices with other federal agencies in preparing for reporting.

HUD program staff conducted active outreach during the “late submission” period. Staff members across programs
have developed a process to identify and communicate directly with every grantee that reported late, did not report, or
had problems with their submission. This includes phone calls to grantees, email reminders (e.g., an automated email
reminder system from HPRP’s e-snaps system), list server messages, and guidance posted on program web sites.
                                                        10
Areas #3 and #4, page 3

Regarding 3a: OCIO extracted the data from FederalReporting.gov daily (every morning) and uploaded into RAMPS.
OCIO generated the reports and provided it to the different program offices who in turn reached out to their grantees.
Our automated Data Quality Review process checks all reports for errors in the following four categories. All grantees
with these types of errors are currently being contacted via the Federal Reporting commenting process: Award
Amount; Total Received; Total Expended; and Number of Jobs. We also have generated new reports with four types
of outliers: Job creation over two with an award amount below $100k; Job creation of zero with an award amount over
$10 million; Duplicate reports; and Top 15 grantees for “Cost of Jobs” (Award Amount / # of Jobs). All grantees
associated with records that fall into these four categories have been contacted in the data quality review period.
Grantees have also been contacted to correct the following: wrong agency code, wrong Treasury Account Symbol,
wrong CFDA number, etc.

Area #6, page 4

         “HUD anticipates that it will be able to use the reported information as a tool for compliance, including the
         following potential actions: assessing compliance with the terms and conditions of award agreements;
         assessing risk; and determining when to release remaining funds.”



We have the following responses to the “Areas in Need of Improvement.”

Area in Need of Improvement #1

This finding relates to sub-recipients who have been delegated reporting responsibility. However, the current language
in this finding appears to be directed to the prime’s responsibility for data submitted by sub-recipients regardless of
their reporting status (delegated or not delegated). The reasons for our non-concurrence are as follows:

         Grantees in the Public Housing Capital Fund and Office of Native American Programs are not considered to
         have sub-recipients.
         OHHLHC ARRA Grantees (Prime recipients) do not delegate reporting responsibility and collect and
         evaluate data submitted by sub-recipients and vendors before reporting data on behalf of the sub-recipient.
         CDBG-R staff anticipated that few grantees will delegate direct reporting responsibilities to their sub-
         recipients. Because many prime grantees will enter data on sub-recipients directly, they will be in a position
         to review sub-recipients’ data and make any corrections before it is entered. Moreover, 24 CFR 570.501(b)
         of the CDBG regulations explicitly states: “The recipient is responsible for ensuring that CDBG funds are
         used in accordance with all program requirements. The use of designated public agencies, sub-recipients, or
         contractors does not relieve the recipient of this responsibility. The recipient is also responsible for
         determining the adequacy of performance under sub-recipient agreements and procurement contracts, and for
         taking appropriate action when performance problems arise….”

Moreover, there is no Recovery Act requirement that grantees identify sub-recipients in advance (nor is there any
programmatic statutory or regulatory requirement in this regard). Given that most grantees (or their sub-recipients)
have just begun to implement their program, that this is the first quarter for which prime recipients were required to
submit their reports, and that OMB reporting requirements were finalized only weeks before the October 1 reporting
period began, HUD could not have any historical data with which to identify sub-recipients.




                                                      11
However, we recognize that this monitoring process is an important issue. Now that sub-recipient information is
included in the FederalReporting.gov reports, HUD will use that information to identify prime recipients who delegated
responsibility, and programs will provide further explicit guidance to grantees emphasizing the need/responsibility for
prime recipients to review their sub-recipients’ reports.

Area in Need of Improvement #2

As of the publication of this report, the Recovery Accountability and Transparency Board has decided to exempt
Project-Based Rental Assistance from reporting requirements, based on the premise that those funds constitute
“payments to individuals.” Without that program considered in our report total, HUD recipients actually reported in a
much higher overall percentage than previously stated. With this in mind, as of the publication date of this report, over
90 percent of HUD recipients have reported into FederalReporting.gov. This should be considered impressive progress,
considering that this is a brand-new system.

Moreover, grantees had no opportunity to practice in the system or to see it firsthand until the first day of reporting.
Many HUD Recovery Act programs and grantees were in the very earliest stages of post-grant-award program
implementation at the time of reporting deadline. While HUD did everything possible in order to ease the burden of
grantees, these circumstances were challenging nonetheless.

HUD did take aggressive action to mitigate confusion with the systems. HUD programs communicated to the grantees
in all stages of the process that they should go to the Recovery Act call center with any questions on registration,
reporting and any agency comments. Also, the program offices are responding back, where appropriate, to the grantees
that have questions or comments relating to the agencies’ comments.

On page 5, the statement that “HUD systems do not maintain the DUNS numbers for grants awarded before the
Recovery Act” is inaccurate. The agency does maintain DUNS numbers, but HUD does not have a complete and up-to-
date list of DUNS numbers for all recipients. For example, the DUNS numbers that HUD has on file for given recipients
may differ from the DUNS numbers those recipients choose to use. This problem is especially prevalent when
interacting with large and complicated recipient organizations which have more than one DUNS number and changing
staff members. However, this is an issue that multiple programs are working aggressively to fix in the coming months.

On the same page, in overall response to the point, note that the program offices have been able to identify the grantees
who were awarded grant funds by using other identifier fields, such as the funding and award ID numbers located in
LOCCS, as well as organization name, and using this information to compare against the registered data in
FederalRecovery.gov. This information was used to outreach to those prime recipients who have not registered in the
system. These additional strategies significantly improved the process of identification.

On page 5, while the statement that “some grantees did not know which help desk to call” may be true in some few
instances, actually HUD made all possible efforts to communicate proactively through the website, written guidance
materials and third-party industry associations to identify the HUD call center as the source of information for
programmatic questions and the FederalReporting.gov call center for technical questions about the OMB site.
Considering that the reporting system was not a HUD-managed system, we feel that this was the right thing to do.

Area in Need of Improvement #3

First, several facts need to be recognized. This finding relates to sub-recipients who have been delegated reporting
responsibility. However, the current language in this finding appears to be directed to the prime’s responsibility for data
submitted by sub-recipients regardless of their reporting status (delegated or not delegated). The reasons for non-
concurrence are described in our response to Areas in Need of Improvement #1 above.




                                                             12
Also, decisions regarding whether or not to use sub-recipients, the selection of specific sub-recipients, and ensuring
compliance with requirements, all rest with the prime recipients. HUD does not have any contractual relationship
with grantees’ sub-recipients, and thus the principal responsibility for monitoring sub-recipients lies with the
grantees, not with HUD.

On page 6, it is an unreasonable evaluation that “HUD has not developed a process to identify those prime recipients
who delegated reporting responsibility to sub-recipients and did not perform data quality reviews and work with
designated sub-recipients to address any data quality issues due to the large number of prime recipient and sub-
recipients.”


On page 6, the statement that “HUD has not developed a process to identify sub-recipients that demonstrate systemic
or chronic reporting problems…” is not reasonably applicable to the first cycle of reporting. This period is the first
time that sub-recipients will have reported into the system, meaning that any judgment of “systemic” and “chronic”
problems is premature. HUD will analyze the reports from this period to identify potential concerns about sub-
recipient reporting and determine the optimal approach for monitoring and review.

As noted in our response to Areas in Need of Improvement #1, now that sub-recipient information is included in the
FederalReporting.gov reports, HUD will use that information to identify prime recipients who delegated
responsibility and sample those primes for their data quality review processes prior to the next quarter. Prior to the
next quarter reporting period, programs will provide further explicit guidance to grantees emphasizing the
need/responsibility for prime recipients to review their sub-recipients’ reports.

RESPONSES TO RECOMMENDATIONS

1.        Require the HUD program offices to review the primary recipients’ processes and procedures for collecting,
     reviewing, and reporting Recovery Act data to ensure that they are in compliance with the Recovery Act.

     Response: This goal will be met through our extended data quality review process in the coming months, by
     using a risk-based approach to sample prime recipients for data quality follow-up and review.

2.       Ensure that HUD officials continue to monitor those non-reporting prime grantees to ensure they register
     and submit section 1512 data in the next quarterly report.

     Response: This is already underway for the future quarters.

3.        Develop a process to identify sub-recipients that demonstrate systemic or chronic reporting problems for
     data quality.

     Response: Now that sub-recipient information is included in the FederalReporting.gov reports, HUD will use
     that information to identify prime recipients who delegated responsibility and sample those primes for their data
     quality review processes prior to the next quarter. Decisions regarding whether or not to use sub-recipients,
     regarding the selection of specific sub-recipients, and regarding ensuring compliance with requirements, all rest
     with the prime recipients. HUD does not have any contractual relationship with grantees’ sub-recipients, and
     thus the principal responsibility for monitoring sub-recipients lies with the grantees, not with HUD. However,
     we will sample the review processes and procedures of those prime recipients who did in fact delegate
     responsibility.




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