Surviving a HUD Audit

Transcription

1 Surviving a HUD Audit Copyright 2015 by Cohen & Grigsby, P.C. (No claim to original U.S. Governmental material) All rights reserved. No part of this presentation may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of Cohen & Grigsby, P.C. The hiring of a lawyer is an important decision that should not be based solely on advertisements. Before you decide, ask us to send you free written information about Cohen & Grigsby's qualifications and experience. Michael H. Syme / msyme@cohenlaw.com COHEN & GRIGSBY, P.C. 625 Liberty Avenue, 5 th Floor Pittsburgh, PA

2 Preparing for and living through an investigation and on site-visit

3 Let s face it: Nobody likes to be inspected Old military joke about inspections: They all begin with two lies #1: Inspector shakes the Commander s hand and says, We re here to help #2: Commander shakes his hand back and says, We re glad you re here

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6 Recommendations that funds be put to better use - $1.1 Billion Recommended questioned costs - $950 Million Collections from audit - $1 Billion OIG measures its success on dollars recaptured.

7 AUDIT REPORTS BY PROGRAM Public & Indian Housing 25 Audits Almost 40% of all audits conducted

8 INVESTIGATIVE CASES OPENED Public & Indian Housing 41%

9 HOW TO TAKE THE OFFENSE WHEN THE INVESTIGATORS EXPECT (AND WANT) YOU TO PLAY DEFENSE Set the tone for the entire investigation via your response to notice of the complaint or investigation Be polite and agreeable, but firm

10 THROW THE BOOK AT THEM

11 1. The Yellow Book Government Auditing Standards GAO G 2. Audits Management System Handbook Rev.-4

12 LIMITING THE SCOPE OF THE ON-SITE REVIEW Request a written scope of the on-site review several days in advance Hold the team to that scope (i.e.. Additional requests must be made in writing and will be addressed as promptly as possible after the on-site visit concludes)

13 LIMITING THE SCOPE OF THE ON-SITE REVIEW Get additional time to respond to the allegations raised Conduct a thorough internal investigation as soon as possible before the on-site visit

14 THE INVESTIGATOR HAS MADE A REQUEST FOR DOCUMENTS. HOW SHOULD THIS BE HANDLED? Treat the document request as a formal discovery request and reply accordingly Review all documents before handing to auditor Look for problems; prepare solutions

15 THE INVESTIGATOR HAS MADE A REQUEST TO INTERVIEW STAFF Ask for a list of interviewees in advance Prepare all witnesses to be interviewed Have counsel participate in all interviews (by phone or in person)

16 COOPERATE Work with the Auditor Scope is requested so you can have things ready OIG will not waste time List of witnesses so you can insure availability Be nice Let your counsel be the bad guy

17 APPROPRIATE INTERACTION WITH THE ON-SITE TEAM

18 THE SMOKER

19 THE DONUT

20 THE WANDERER

21 PREPARE STAFF Explain the audit and the scope Direct employees to talk with counsel before discussing items with auditor Keep desks clean Keep conversations to a minimum

22 GIVE HUD AN OFFICE

23 ASSIGN ONE PERSON AS LIAISON

24 LIAISON Assign one employee to act as a liaison All requests go through liaison Keep the liaison close to the investigators Be nice, but be firm

25 RESPONSE Begin before initial draft audit arrives Get issues from the auditor Research facts Review regulations Put together a defense for every claim

26 DRAFT AUDIT REPORT Prepare written response Have explicit facts or regulations to support your position Get back-up information to disprove OIG claims Talk to Field Office and get support (if possible)

27 Listen to report Look for factual errors Note legal errors EXIT INTERVIEW Politely point out such errors on a finding-byfinding basis Be prepared to be ignored

28 HOW SHOULD THE HOUSING AUTHORITY ADDRESS ADVERSE FINDINGS FROM THE INVESTIGATING AGENCY? Written response Prepare Board and local politicians Work with Local Office Press Relations

29 AUDITS Obligating funds timely Spending funds timely Procurement pursuant to 24 C.F.R. Part 85

30 PROCUREMENT OIG understands 24 CFR Part 85 OIG only understands Part 85

31 OIG HEADLINES Mismanaged its Recovery Act funding Financial control weakness Failed to operate in accordance with HUD regulations and its own policies Improperly used funds Insufficient controls over Public Housing Programs

32 MORE OIG HEADLINES Mismanaged Section 8 Program Misused Federal Funds Used $ for ineligible and unsupported expenditures Could not adequately account for or support

33 OIG RETURNS If OIG finds procurement deficiencies, they will be back. If OIG weak financial controls, they will be back. Thus, prepare for OIG and limit exposure. Fixing a problem after the audit will not help you.

34 BE PREPARED!

35 THE OIG IS COMING

36 Q & A