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Chairman Mica, Ranking Member Connolly, and Members the Subcommittee, David Montoya, Inspector General the U.S. Department Housing and Urban Development (HUD). Thank you for the opportunity highlight our perspectives waste, fraud, abuse, and mismanagement public housing agencies (PHA) and related oversight issues HUDs Public and Indian Housing (PIH) programs well discuss our longstanding work these areas. Public housing was established provide decent and secure housing for eligible low-income families, the elderly, and persons with disabilities. The role PIH ensure safe, decent, and affordable housing; create opportunities for residents' self-sufficiency and economic independence; and assure fiscal integrity all program participants. Public housing comes all sizes and types, from scattered single family houses high rise apartments for elderly families. There are approximately 1.1 million households living public housing units managed over 3,100 PHAs. HUD administers federal aid local PHAs manage housing for low-income residents affordable rents. HUD furnishes technical and professional assistance planning, developing and managing these local PHAs. PHAs also administer HUDs Section Housing Choice Voucher (HCV) program, which the Departments principal program for assisting very low-income families, the elderly, and persons with disabilities enabling them afford safe and sanitary housing the private market. The HCV program provides rental assistance about 2.2 million families and administered locally approximately 2,300 PHAs. Funding for the HCV program consists housing assistance payments made private owners cover the difference between tenants rent contribution and the unit rent, and administrative fees paid PHAs cover the cost administering the program. Oversight PHAs continues priority for HUD OIG. Since the beginning fiscal year 2012, OIG has issued audits related PHAs reporting about $225 million questioned costs and about $24 million funds put better use. Our investigative activity this program area also continues significant. Since the beginning fiscal year 2012, have completed total 216 administrative civil actions; 121 convictions, pleas pretrial diversions; and produced financial recoveries exceeding million. PIH programs have long been source concern for HUD OIG, particularly regards the overarching areas financial management and governance. order better synthesize and highlight the continuing problems have identified our body work this area, OIG launched initiative designed assess our lengthy history work products for continuing patterns practice that negatively affect PHAs. The initiative intended focus the Departments attention problem areas that and others have reported over many years and set about develop and recommend array strategies for consideration the Department and Congress ways address and correct some these long-standing problems. have placed our web site list focus areas emanating from this assessment our PIH portfolio. These topics categorize where have found, through the body our work, areas that have continued impede the overall effectiveness the programs and where intend conduct special projects, audits, evaluations, investigations into the future, and where the Department can concentrate its resources. These subject matters include: Ethics/Governance Structure Housing Quality Standards Improper Payments Movement Poorly Performing Executive Directors (ED) from one PHA Another Moving Work Demonstration Program Program Oversight and Enforcement Procurement and Contracting Questionable/Ineffective Use Administrative Funds PHAs under Receivership Ethics/Governance Structure PHA legal entity authorized state develop administer low-rent public housing defined the U.S. Housing Act 1937. PHAs are authorized state law and created cities counties, which must adopt activating resolution. Once authorized city county and activated resolution, PHA separate public body, special purpose district---similar school district, public utility district port authority---providing public housing. Therefore, PHA responsible for the management and operation its local public housing program and, extension, cities and counties are responsible for the second level oversight after the PHAs and the boards/commissions which are established operate the PHA. Over the course our work, have seen that PHAs often run with little oversight and are, some instances, prone ethical lapses that may attract media attention. PHAs operate under state law and, accordingly, ethics rules and requirements vary from state state. The activities EDs and other officials should overseen the PHA board/commission, but have also seen many situations where the board/commission exercises little oversight and the members themselves have few qualifications effectively discharge their responsibilities. Our audit and investigative case work over the years has shown propensity for some officials improperly use the resources the PHA for personal benefit gain. Oversight the and PHA inherent responsibility the board/commission and, executed properly, would mitigate much the misconduct and mismanagement eventually uncover. Finally, believe that such responsibility extends levels above the housing authority governance structure city, county and state government authorities. These units government must take more active and aggressive role their oversight obligations especially when one considers that these programs support and service their citizenry including those that may vulnerable. Without such checks and balances place all levels, abuses will continue. Housing Quality Standards Time and again see violations housing quality standards individual PHAs. These standards are integral part HUDs commitment safe, decent and sanitary housing. particular, have performed numerous audits the administration local Housing Choice Voucher (HCV) programs and whether the units located therein met applicable physical quality standards. response our audit work this area, HUD has been working revise its standards and develop uniform inspection protocol provide for improved oversight the physical condition the rental units that are participating the program. One our key positions from May 2008 audit was recommendation that the Department develop physical inspection system for the HCV program within three years from the issuance the report. HUD has been working this system for approximately six years and has only recently tested protocols for conducting the inspections. Unfortunately, HUD does not expect implement the inspection system until October 2014. the meantime, our external audits PHAs continue report significant percentages units that not meet HUDs housing quality standards. recent example, HUD OIG audited the New York City Housing Authoritys (NYCHA) HCV program report dated May 2014. NYCHA the largest PHA the United States and January 2013, had 92,561 vouchers assisting 225,000 residents. Our findings revealed that the Authority did not always ensure that its units met HUDs housing quality standards. the 119 units HUD-OIG inspected its sample, did not meet standards the time inspection. Further, the units were material noncompliance. concluded that material deficiency existed (1) the condition causing the deficiency created unsafe living conditions, (2) the deficiency was preexisting condition, (3) the condition existed but was not noted prior inspection, (4) the PHA allowed the owner defer maintenance that was needed bring the unit into compliance. estimate that over the next year the PHA does not implement our recommendations, HUD will potentially pay more than $148 million housing assistance for units that materially not comply with HUDs standards. HUD has challenges monitoring the HCV program. The program electronically monitored through PHAs self-assessments and other self-reported information collected HUDs information systems. Based recent audits and HUDs on-site confirmatory reviews, clear that the self-assessments are not always accurate and that there remains some question the reliability the information contained PIH systems. PIH management expects that should able address these limitations with the Next Generation Management System, which under development but currently not fully funded and years away from completion. HUD has implemented the Portfolio Management Tool, which positive step, but that system lacks all the functionality the Next Generation Management System. Also, its data accuracy and completeness are dependent field offices that not fully utilize the application. Therefore, until both systems are completely implemented and evaluated, HUD will continue face challenges monitoring the HCV program. Improper Payments Our latest review HUDs Compliance with the Improper Payments Elimination and Recovery Act 2010 (IPERA) was issued April 15, 2014. reported that HUD did not comply with IPERA reporting requirements because did not sufficiently and accurately report its (1) billing and program component improper payment rates; (2) actions recover improper payments; (3) accountability; (4) corrective actions, internal controls, human capital, and information systems required IPERA. addition, found that HUDs supplemental measures and associated corrective actions did not sufficiently target the root causes its improper payments, identified HUDs contractor studies, because did not track and monitor processing entities ensure prevention, detection, and recovery improper payments due rent component and billing errors. HUDs billing error estimates were based fiscal year 2004 data for public housing. The study was conducted several years ago, and HUD had not reevaluated consider inflation, programmatic, population changes. Therefore, HUDs estimate did not reflect HUDs true annual billing error. Additionally, HUD did not report billing error for the tenant-based rental assistance program because PIH believed had eliminated billing error when the program became budget-based using predetermined payments. OIG believes, however, that while traditional billing errors may not exist, HUD still risk paying PHAs improperly since the predetermination payments was based expenses that were self-reported PHAs through HUDs Voucher Management System. error could still occur PHA reported its expenses incorrectly and was given funding over the amount its actual expenses. One specific area would note for improvement concerns the lack use background checks. Housing agencies are required conduct criminal history checks applicants using the Department Justice National Crime Information Center (NCIC) database. Our experience has been that many PHAs not conduct these checks routinely because the cost. Each inquiry costs the PHA $24 dollars and that amount cannot passed onto the applicant. Consequently, agencies have been forgoing these checks and using methods that are not effective. Because mobility the Section program, are seeing problem tenants moving new jurisdictions with past issues not being discovered because NCIC checks are not being conducted. OIG believes there potential solution this problem. HUD permits housing agencies retain the greater percent collections fraudulent housing assistance payments actual costs incurred collect such amounts. During the past two calendar years, PHAs recovered over $122 million fraudulent housing assistance payments. suggest Congress allow additional portion the recoveries placed into fund, and dedicated all PHAs fund the background checks. This would not only prevent improper payments, but would also reduce the administrative burden the current pay and chase approach for improper payments. addition recommend that Congress also authorize PHAs conduct NCIC checks all new employees. This would help prevent the movement embezzlers and swindlers from one agency another. Movement Poorly Performing Executive Directors from one PHA Another Over the years have anecdotally noted the movement PHA officials from one PHA another. particular, situations were noted where poorly performing individual, individual who had even been caught engaging questionable activity, emerged different PHA. This raises questions about the due diligence employed the hiring PHAs fully examine the skills, qualifications, and even the reputation candidates for critical positions such the ED. Except the limited situation where HUD has taken over PHA, HUD does not play role overseeing the hiring PHAs key officials, which function the mayor other local county officials. Moving Work Demonstration Program The Moving Work (MTW) program has been demonstration program for small group PHAs for the last years. The program was authorized 1996 legislation and implemented 1999. MTW had been originally designed provide PHAs the opportunity design and test innovative, locally-designed strategies that use federal dollars more efficiently, help residents find employment and become more self-sufficient, and increase housing choices for low-income families. MTW provides exemptions from many existing public housing and voucher rules and gives PHAs more flexibility how use its federal funds. assessment the body HUD OIG work generates level concern over such amplification this program. Monitoring and oversight, all levels, those authorities participating the MTW demonstration program continues particularly challenging each PHA has different MTW plan. the program expanded, HUD needs ensure that the selection and approval process objective and not questionable have reported the past. The demonstration program was originally intended for high performing authorities yet HUD has admitted substandard performers into the program. HUD should require all current MTW PHAs, and those being considered for inclusion, demonstrate their ability properly administer HUD funds and have proven track record before inclusion the program. Simply, HUD should not admit PHA with long history poor questionable performance. counterintuitive and goes against the intent the authorizing language. While participating PHAs report annually their performance, April 2012 Government Accountability Office (GAO) report found that MTW guidance does not specify that the plans provide that performance quantifiable and outcome oriented. not identifying the performance data needed assess the results the PHAs MTW program, HUD unable effectively evaluate the program. Evaluation its success key component demonstration program and provides the basis for determining whether such program has proven its effectiveness order continue into the future. was never intended permanent program until such time the data proves its benefits. demonstration program that has been going for years should adequately demonstrated this juncture. More troubling that HUD has not developed systematic way identify lessons learned get the benefit intended from the MTW demonstration program. Accordingly, there appears limited evaluative support that MTW has accomplished what HUD and Congress intended. HUD needs demonstrate where designated PHA has actually designed and tested innovative strategies that use federal dollars more efficiently, helped residents find employment and become self-sufficient, and increased housing choices for low-income families before expansion. Currently, there wide push for expansion the program. HUD has indicated that intends increase the number MTW participants and believes that with additional participants will able demonstrate the positive impacts the program. However, stress that HUD needs first develop methodology assess MTW program performance recommended GAO and evaluate the results prior making decision increasing the number MTW participants. Expanding the program would require HUD fully implement recommendations contained GAOs April 2012 report the program. HUD disagreed with GAOs recommendation that create overall performance indicators. OIG feels strongly that performance indicators are critical demonstrating program results especially when one considers the amount federal dollars going into program that then allows for less oversight those dollars. Increased scrutiny needed not only ensure that the programs statutory objectives are met, but also prevent waste (or outright fraud) such the excessive use and expense outside attorneys and insurance carriers, well other inappropriate uses HUD funds which HUD OIG has shown occurred recent audits participating PHAs particularly when there less oversight. fiscal year 2012, reported significant departures from the MTW agreement some the participating PHAs. HUD needs quantify formal process for terminating participants from the demonstration program for failure comply with established agreements especially because these PHAs are exempt from many existing public housing and voucher rules and therefore are subjected less oversight HUD. Program Oversight and Enforcement HUD relies great deal electronic monitoring through PHAs self-assessments and through other self-reported information collected HUDs information systems its primary form oversight. Until HUD able modernize its outdated systems and more effectively target its resources, will continue constrained. Any system self-reporting should met the Department, believe, with response trust but verify. addition, have observed reluctance HUD take enforcement actions its own and have primarily relied HUD OIG initiate such remedy. attitude often displayed the Department response problems that come the fore emphasizes that public housing locally administered program and that such problems are not federal issue for resolution. takes this position despite the fact that regularly criticized for not having better control over the PHAs. While HUD ultimately responsible for overseeing PHAs regardless its posture, should noted that has limited resources which are easily overwhelmed the magnitude the program participants and requirements. HUD OIGs contention that oversight responsibility begins with the ED, followed the board commission and then should further enhanced with oversight city, county and state government authorities where PHA located. When things wrong, often find that such responsibility has been neglected some, not all, these parties and yet HUD bears the brunt the blame. Both the OIG and the GAO have reported recurrent oversight weaknesses. For example, GAO reported 2009 that HUDs oversight processes could more focused identifying potential inappropriate use mismanagement public housing funds. addition, and mentioned earlier, OIG has long been concerned about HUDs reliance PHAs self-reported information monitor the program. The assessments are not always accurate and there remains some question the resulting reliability the information contained PIH systems. The OIG continues focus significant audit and investigative resources oversight and enforcement issues. Procurement and Contracting Our external audits and investigations find repeated instances PHAs violating HUDs and its own internal procurement requirements. For example, routinely find that PHAs will bypass controls designed ensure fair and competitive procurement process, will award contracts other than the lowest bidder with justification, will pay for construction work that was not actually performed, will even illegally accept bribes kickbacks exchange for contract awards. While difficult quantify the extent which procurement violations have occurred, nevertheless have seen enough blatant examples over time for this cause for concern. Questionable/Ineffective Use Administrative Funds Asset Management PHAs 250 more units are required operate their public housing programs under asset management, consistent with the broader multifamily management industry. Under asset management, Central Office Cost Center (COCC) established manage all the centralized activities PHA. The COCC charges each project reasonable management fee consistent with fees paid the local market. These fees are lieu overhead allocations. The fees that project program pays the COCC are eligible program expense and the earned fees are considered local income and thus are construed nonfederal funds. Under asset management, HUD made policy decision give blanket approval for PHAs use ten percent their Capital Fund, without support, for administrative costs. Once this fee earned the PHA, any amounts excess the PHAs costs become available for whatever purpose the PHA desires. have found instances our external audits extravagant spending from these funds that did not appear within the statutory mission PHAs. Due this policy decision, our audit findings were disputed during the audit resolution process with the Department and were not ultimately sustained the Department. expect issue audit the near future relating HUDs oversight PHAs asset management fees and central office cost centers and the continuing concerns have regarding abuses occurring when such funds are de-federalized. Executive Director Compensation The fiscal year 2012 appropriations bill established cap $155,500 the use federal funds for PHA salaries. This legislation was response media reports and congressional outrage over revelations about excessive annual compensation for some PHA EDs, which one case exceeded $600,000 and other cases exceeded the salary paid governor state mayor city. 2013, HUD published notice the Federal Register asking public housing authorities for more comprehensive data how they pay their EDs, including information with breakdown base salary, bonus and incentive compensation, and which payments are made with federal funds. Last week, May 16, 2014, the Department published the results outlining 2013 executive compensation information its website. Despite its intention, significant concern still exists that without capping the entire compensation package the employee, this requirement can easily bypassed. The legislation does not preclude the use non-Federal funds exceed the cap. Also, there may ways use federal funds they are not within the strict definition the term salary, such using federal funds for bonus, use federal funds they cross fiscal years and split the amounts. Moreover, even with total compensation package cap, cars and other benefits can made part the PHAs inventory but then made available for the personal use the employee. Also, other perks can written off PHA expenses and, therefore, not appear part compensation package. Moreover, those under the cap are not required publish their salaries and therefore transparency not achieved there non-reporting. Use Outside Attorneys have been concerned for some time about the extent which some PHAs use outside legal counsel. This issue was particularly egregious the Philadelphia Housing Authority which paid $30.5 million for outside legal services provided law firms during the period April 2007 through August 2010. Alarmingly, the PHA could not adequately support $4.5 million that paid outside attorneys during that period, virtually the entire limited amount reviewed, raising questions about the propriety the remaining $26 million payments that did not review. addition, the PHA made unreasonable and unnecessary payments $1.1 million outside attorneys obstruct the progress HUD OIG audits. The PHA also did not obtain required HUD written concurrence before accepting all settlement offers arising out its litigations and allowed apparent conflict interest situation exist when entered into contract with law firm that employed the son its board chairman. PHAs Under Receivership There are two basic types receiverships: administrative and judicial. Administrative receivership process whereby HUD declares PHA substantial default its Annual Contributions Contract and takes control the PHA. such situation, HUD appoints one more its departmental staff work on-site the PHA manage housing operations and conduct the affairs the authority. Judicial receiverships are established, monitored and supervised federal courts. HUD currently reports seven administrative and two judicial receiverships outlined below: Name Locale Start Date Administrative East St. Louis Housing Authority East St. Louis, October 1985 Wellston Housing Authority Wellston, July 1996 Housing Authority New Orleans New Orleans, February 2002 Virgin Islands Housing Authority St. Thomas, August 2003 Detroit Housing Commission Detroit, July 2005 Housing Authority the City Lafayette Lafayette, March 2011 Gary Housing Authority Gary, July 2013 Judicial Housing Authority Kansas City Kansas City, July 1993 Chester Housing Authority Chester, August 1994 September 2012 OIG audit relating the East St. Louis receivership found that HUD did not effectively oversee and manage the receivership that PHA. Specifically, did not have adequate structure place for its staff and did not develop receivership plan specific the PHA. the above list indicates, some PHAs have remained under receivership for long periods time. August 2011 OIG evaluation report noted that since 1979, there have been PHAs placed under receivership, either HUD the Federal courts. February 2011, PHAs had been under receivership between and years with average years. PHAs under judicial receiverships have remained that status for average years. have found instances where problems continued for years after the PHAs were under HUD control, notably the East St. Louis and New Orleans PHAs. Particularly troubling were two major investigative cases the New Orleans PHA (see below), where the frauds occurred while HUD was acting receiver for the PHA. Fraud PHAs and PHA Officials HUD OIGs Office Investigation conducts investigations involving allegations fraud PHA employees. Many its cases highlight similar findings found OIG audits the areas inadequate financial management and governance. Our analysis our investigative casework for fiscal years 2010 through 2014 indicated there were suspensions and debarments, which precluded discredited PHA employees from participating federal programs for specified period time indefinitely. Historically, PHA fraud investigations involve the misuse HUD funding. Some examples include: inappropriately using PHA credit card for personal use; embezzling capital funds over-paying relatives for maintenance/rehabilitation work that some instances was never performed; soliciting/accepting bribes for resident waiting list priority; and embezzling receivables from tenant rent payments. Investigated PHA employees typically include EDs, accountants, contractors, maintenance personnel, inspectors, attorneys, and board members. some instances, EDs were not criminally charged but were terminated under suspicion illegal unethical behavior. have seen occurrences where who was under investigation suspicion had been rehired another PHA despite their questionable prior conduct. The PIH program represents approximately percent HUD OIGs total open investigations. Currently, OIG has 105 ongoing investigations involving allegations fraud, waste, and abuse PHA employees. Additionally, these open investigations are current former EDs PHAs around the country. The level public corruption exhibited some local government officials entrusted administer PHA programs disconcerting. Below selection recent cases investigated OIG which EDs senior Housing PHA personnel were charged criminally: Chelsea Housing Authority, Massachusetts former pled guilty and was sentenced months prison, followed two years supervised release, for falsely reporting his salary annual budgets required HUD and the Massachusetts Department Housing and Community Development. Philadelphia Housing Authority, Pennsylvania former maintenance worker was sentenced conspiracy charges. Between September 2002 and July 2011, and others conspired purchase building materials with PHA funds, sell those materials discount, and conceal those fraudulent sales. was sentenced months incarceration followed term years probation and ordered pay restitution nearly $350,000. While not charged criminally, important note that March 2014, HUD debarred the former from participation federal programs for three years based evidence false certifications and improper use federal funds for lobbying identified and reported HUD-OIGs Office Audit. Bessemer Housing Authority, Alabama former accountant for the PHA was sentenced months incarceration, months supervised release and ordered pay nearly $200,000 restitution for her earlier guilty plea embezzlement and aggravated identity theft. She embezzled the funds for her personal use. Maywood Housing Authority, Illinois former pled guilty one count felony theft and one count official misconduct and was sentenced years imprisonment for diverting over $400,000 portable housing assistance voucher payments from several PHAs across the country. Although these funds were earmarked for Maywood, they were ultimately diverted hidden personal account. Those funds were later traced the purchase and subsequent monthly principal and interest payments personal residence, which was valued more than $500,000. Housing Authority New Orleans (HANO), Louisiana The former contract Chief Financial Officer was sentenced months incarceration, months supervised release, and ordered pay $75,000 criminal penalty and approximately $226,000 restitution HUD. From 2006 through 2009 the CFO was contracted perform CFO services while the PHA was under HUD receivership. The CFO then submitted false timesheets for himself and his wife for hours which were never worked, overbilling the contract over $900,000. The CFO was also debarred from participation federal programs for indefinite period time. another HANO case, former employee was sentenced years probation, and ordered pay approximately $660,000 restitution. Between April 2007 and May 2009, and former procurement officer carried out scheme steal more than $600,000 from the agency when they created 135 fraudulent purchase orders, all payable one the employees who then deposited the checks and made cash payments back the former procurement officer. Taos County Housing Authority, New Mexico former was sentenced months prison and was ordered pay restitution nearly $800,000, jointly and severally with her husband. addition the restitution, her husband was sentenced months prison. Their respective sentences were result their individual guilty plea August 2013 one count conspiracy. Between 2003 and 2011, the former conspired with her husband embezzle about $815,000 HUD Section funds. Deerfield Beach Housing Authority, Florida former executive assistant embezzled nearly $350,000 from the PHAs Housing Choice Voucher program. She was responsible for making payments landlords but instead made changes the PHAs internal payment system and re-routed rental payments into her personal bank account. The scheme was detected when she forgot pay landlord and the bank noted that the payment question had been paid but another account. She was convicted theft government funds, sentenced months incarceration, and ordered pay HUD nearly $330,000 restitution. Addressing fraud PHAs has long been difficult challenge because agencies, their Inspectors General, were not required report suspected fraud our office. However, this may changing because the Office Management and Budget issued new uniform rule regarding recipients federal awards. HUD has until December 26, 2014 issue implementing regulations. Among the provisions one that would require housing agencies, among other federal award recipients, report writing the awarding agency all violations federal criminal law involving fraud, bribery, gratuity potentially affecting the federal award. office will work with the Department develop policies and procedures make this effective requirement. Prevention Initiatives order address some the systemic causes waste, fraud, abuse and mismanagement public housing, the HUD OIG has issued several fraud prevention materials including integrity bulletins. These resources are designed highlight abuses and red flags well educate public housing officials better ways avoid poor management operational decisions that may lead fraud particularly the areas financial management and governance. HUD OIG has previously provided presentations various national housing associations such the Public Housing Authorities Directors Association (PHADA). order educate PHAs, boards/commissions, city, county and state agencies and the public, have posted our web site prevention related materials that have covered best practices for: Avoiding embezzlements Hiring using good screening procedures Adopting enforceable fraud policies Alerting PHA commissioners integrity risks Cautioning applicants and tenants subsidy fraud believe these materials can play role assisting PHAs. Nevertheless, also realize that pervasive institutional attitudes and behavior affect the way which PHAs perceive HUDs oversight role and the way which the Department views its responsibility. our interaction over the years, see that PIH times seems support attitude mission above management. reaction some the pervasive issues that appear audits and investigations, believe that rather than accepting them cost doing business, the industry needs step the plate provide real enforcement and self-policing. This necessary particularly light what view erosion HUD authority, ability, and sometimes willingness hold PHAs accountable for the federal funds they receive. Programs like MTW and policies designed loosen federal oversight funding and reporting are, believe, counterintuitive the many problems and GAO have highlighted over the years. Both PIH and Congress have given PHAs more and more independence how they operate help them stretch limited funds. However, while some authority officials may using those initiatives productive ways improve operations, others have used such separation abuse the programs and enrich themselves because HUD has ceded control. manifestation this scenario plays out some states where lawmakers are increasingly calling for the consolidation regional state PHAs that more accountability can put into management particularly those that are small size. Associations like PHADA would like see strengthened ethics and accountability requirements but not have the ability impose corrective action because they are voluntary organizations and lack any real authority over their membership impose standards. All this discussion must understood light the fact that neither the Department nor OIG will ever have enough resources conduct comprehensive oversight the thousands PHAs. Consequently, some alternative needed that gives HUD the ability assert control when necessary but not restrictive its administration compliance with regulations and rules that may not take into account differences size, location, capabilities individual PHAs. While housing authorities want the autonomy run their own programs with little interference, history has shown that there needs support make sure they have the skills, knowledge, and willingness address integrity issues. Our current and future fraud awareness bulletins are aimed providing that help but more needs done. Certification and accreditation key personnel associated with the running PHAs are missing link mitigating opportunities for mismanagement and poor governance. Integrity programs reduce the rising costs improper payments for rental assistance are another area needing attention. Finally, clearinghouse scrutinize employment EDs and others positions trust potentially solution the issue bad actors landing employment other PHAs. While many EDs are running their authorities well, the extent damage inflicted incompetent and/or board commission can financially devastating community and PHA with limited resources and its impact can widespread particularly population that great need the services provides. Recommendations The following are recommendations culled from wide variety work produced this office over extensive period time and are offered try address some the problems highlighted this testimony. These include: Require complete background check EDs and other positions trust before employment and require applicants sign consent form disclose publically available records including previous audits investigations where the applicant had been employed. Require the implementation regulation that mandates EDs have some combination specific education, direct and relevant experience, manage PHA before they can hired. Require the Department establish certification and accreditation system for key personnel PHAs. Require PHA boards and EDs meet minimum training requirements the area contracting and procurement. Require all PHA employees provide signed statement employment applications under penalty perjury that they are not under investigation and have not been involved financial crimes crimes moral turpitude prior being hired. Require PHAs have policies that allow them deny terminate employment these conditions are disclosed discovered later. Require all PHA employees sign code conduct/ethics agreement that specifically describes prohibited conduct such the following: misuse the credit card; misuse the PHAs vehicles; leasing luxury vehicles; unauthorized travel without justification; use PHAs funds pay personal bills, mortgages, student loans; etc. Require PHAs have place anti-fraud policies and programs designed address improper payments order mitigate abuse and reduce the occurrence tenant fraud. Enforce restrictions regarding the hiring awarding contracts relatives. Conclusion The Departments role has greatly increased over the last decade has had deal with unanticipated disasters and economic crises that, addition its other missions, have increased its visibility and reaffirmed its vital role providing services that impact the lives our citizens. Because the limited capability the Department provide direct oversight and budget cuts throughout the federal government critically important more than ever that program participants and beneficiaries take responsibility for their proper administration and participation these programs. office strongly committed working with the Department and the Congress ensure that these important programs operate efficiently and effectively and intended for the benefit the American taxpayers now and into the future. Our goal foster positive change that will improve the management the nations public and assisted housing and ultimately the lives the people who benefit from these programs. This will continuing process that will require city, county and state authorities and the Department put forth innovative solutions and the OIG stands ready assist where needed. addition, the PHAs themselves and the organizations that represent them must also play critical and more active role addressing many these concerns. Working together, can all help solve many these recurring and seemingly intractable problems. DAVID MONTOYA http://www.hudoig.gov/sites/default/files/styles/staff_photo_lg_160x200/public/bio_images/montoya_sm_0.jpg?itok=gdtBPTZe Mr. David Montoya was sworn Inspector General for the U.S. Department Housing and Urban Development (HUD) December 2011. The Departments mission is create strong, sustainable, inclusive communities and quality, affordable homes for all. The mission the Office Inspector General promote the integrity, efficiency, and effectiveness HUD programs assist the Department meeting its mission. Inspector General, Mr. Montoya the senior official responsible for audits, evaluations, investigations, and oversight efforts relating HUD's programs and operations. Mr. Montoyas 27-year career has been dedicated public service focused law enforcement, with more than years oversight, supervisory, and executive leadership positions, including more than years experience the Federal Senior Executive Service. His professional career has demonstrated rigorous focus accountability, high ethical standards, and integrity. Before Mr. Montoyas appointment HUD, served senior-level positions for the Offices Inspector General the U.S. Postal Service and the U.S. Department the Interior and Deputy Director the Environmental Protection Agency's Criminal Investigation Division. Mr. Montoya member the Financial Fraud Enforcement Task Force, established President Obama November 2009, and co-chair the Mortgage Fraud Working Group, which charged with addressing wide range fraud the mortgage, finance, and housing markets. also member the Council Inspectors General Financial Oversight, established the Dodd-Frank Wall Street Reform and Consumer Protection Act, which assists improving financial oversight and evaluating the effectiveness and internal operations the Financial Stability Oversight Council. addition, Mr. Montoya member the Investigations Committee the Council Inspectors General Integrity and Efficiency, which charged with advising the Inspector General community issues involving criminal investigations, criminal investigations personnel, and criminal investigative guidelines. also member the International Association Financial Crimes Investigators, member its Advisory Council, and co-chair its Law Enforcement Committee. Mr. Montoya strongly committed collaboration with HUD staff and national stakeholders ensure that the Departments vital programs are effectively and efficiently implemented. addition, focused developing analytics for early detection waste, fraud, and mismanagement through the strategic application OIGs audits, evaluations, reviews, and investigations. Mr. Montoya believes fraud prevention imperative the front end and consistently coveys this message every OIG employee. Mr. Montoya has received many Executive Performance Awards, including Certificate Commendation from the U.S. Department Justice. native Paso, TX, and 1986 graduate the University Texas Paso.