DEC has staff in HUD headquarters and five field offices. PIH  provides assistance to state and local public housing agencies that  generally own and administer units for eligible tenants. DEC’s system is designed to capture various data,  including the date DEC received the referral, name of the property owner  or grantee being referred, cause of the referral, status of the referral, final  action to close the referral, and corrections made related to the referral,  among other things. Two of Three HUD Program Offices We Examined Lack Guidance for Making Referrals and Targets Based on Program Risk

DEC and the three HUD program offices we examined have agreements  in place that generally describe the process the offices follow to make  referrals to DEC and the responsibilities of the parties. However, two of  the three program offices (PIH and CPD) do not provide their staff with  specific guidance for making referrals, and the target number of referrals  these two offices have established to send to DEC does not address the  risk of noncompliance. Multifamily Housing Office Makes Referrals to DEC Based on Defined Thresholds

MFH makes automatic and elective referrals to DEC based on specific  thresholds for program noncompliance defined in its agreement with  DEC. MFH properties are automatically referred to DEC if: (1) the  property scores below a certain threshold on a REAC physical inspection;  (2) the owner fails to submit audited financial statements to HUD within  60 days following the end of the owner’s fiscal year; or (3) REAC’s  automated compliance review of the property’s financial statements  identifies unauthorized uses of project funds greater than an agreed-to  threshold (see figure 1). However, beyond that,  there is no guidance to help field staff decide when to make a referral. Because two of the program  offices (PIH and CPD) we examined have not developed specific  guidance for making referrals for oversight reviews, these offices cannot  ensure that field staff are identifying and making referrals on a well- supported, risk-based, and consistent basis, and this may limit DEC’s  effectiveness in fulfilling its mission of providing independent oversight of  HUD’s programs. According to federal internal control standards, management should  identify, analyze, and respond to risks related to achieving the defined  objectives, and management should design control activities in response  to the entity’s objectives and risks to achieve an effective internal control  system. Without a target number of referrals based on the risks to the  programs, PIH and CPD offices cannot be confident that DEC resources  are being used most efficiently to address the risks of noncompliance by  housing agencies and grantees. Lack of Recommendation Tracking

DEC does not track the status of its recommendations. In addition, DEC did not consistently record information on the corrective  actions taken by DEC or MFH following a DEC review. Information Technology

DEC has experienced various information technology challenges that  have affected its ability to achieve its mission. For example, the system  does not allow DEC to easily determine the basis for a financial referral it  receives from REAC on MFH properties. Further, DEC officials told us that the system has experienced continuing  outages and breaks in service. Other factors besides DEC’s current location may explain why DEC  may not be utilized more effectively. In addition, as we note above, the  absence of guidance on when program offices should make referrals may  limit DEC’s ability to assess its enforcement efforts. Target number of referrals. Without improvements in its performance measurement, it will be  difficult for DEC to fully assess and demonstrate its effectiveness,  ensure accountability, and identify and prioritize potential  improvements. Data recording. (Recommendation 3)
The Director of the Departmental Enforcement Center and the Assistant  Secretary for Public and Indian Housing should develop targets for the  number of referrals that PIH should make to DEC that are based on  program risk. Setting the targets will also  allow DEC and the program offices to better assess whether they are  achieving their goals and objectives, and may encourage program offices  to refer entities to DEC.
HUD also disagreed with our sixth recommendation that DEC should  develop and implement performance measures that measure its  timeliness in completing reviews, noting that DEC has tracked the  timeliness of its oversight work since 2014. HUD noted in its  response to our first and second recommendations that CPD and PIH  would establish parameters for when a referral will be made to DEC. With  respect to our fifth recommendation, HUD stated that DEC would work  with relevant offices in fiscal year 2019 to develop performance measures  that assess outcomes of enforcement activities and would consult with  federal enforcement agencies to understand how they measure  outcomes. Appendix I: Objectives, Scope, and Methodology

Our objectives were to examine (1) the processes that selected  Department of Housing and Urban Development (HUD) program offices  have in place to make referrals to the Departmental Enforcement Center  (DEC), (2) how DEC assesses its performance, and (3) challenges that  may affect the ability of DEC to achieve its mission. Collectively, these three  program offices accounted for 73 percent of the total referrals DEC  received from fiscal years 2014 through 2017 (6,724 of the 9,258 total  referrals).
Why GAO Did This Study

HUD established DEC in 1998 to consolidate enforcement functions. In fiscal year 2017, DEC received about 2,800 referrals from program offices for oversight of and enforcement actions against property owners, public housing agencies, and state and local grantees that do not comply with requirements.
The Joint Explanatory Statement accompanying the Consolidated Appropriations Act, 2017, included a provision for GAO to assess DEC's effectiveness addressing noncompliance. GAO examined (1) the processes selected program offices have in place to make referrals, (2) how DEC assesses its performance, and (3) challenges that may affect the ability of DEC to achieve its mission. GAO reviewed agreements and referral data between DEC and three of the nine HUD program offices that made referrals to DEC from fiscal years 2014 to 2017 (accounting for 73 percent of the total referrals during that period), and interviewed HUD staff in headquarters and field offices.

What GAO Found

The three program offices of the Department of Housing and Urban Development (HUD) that GAO examined have a process in place for referring cases of potential noncompliance to the Departmental Enforcement Center (DEC), but two of the offices do not provide their staff with specific guidance on when to make referrals. The Office of Multifamily Housing makes referrals to DEC based on defined thresholds for noncompliance, such as for properties that do not pass physical inspections. In contrast, the Offices of Public and Indian Housing (PIH) and Community Planning and Development (CPD) have broad guidelines but not specific thresholds for when to refer an entity to DEC. These two offices do not provide field staff with specific guidance to help determine which housing agencies or grantees to refer to DEC for possible enforcement action. As a result, the offices cannot ensure that decisions on whether to make referrals are made on a well-supported and consistent basis, potentially limiting DEC's effectiveness in fulfilling its mission of providing independent oversight of HUD's programs. In addition, PIH and CPD have targets for how many annual referrals the program office will make to DEC, but the targets are not based on program risk. According to federal internal control standards, management should identify, analyze, and respond to risks related to achieving the defined objectives. Without a target number of referrals based on program risk, PIH and CPD cannot be confident that the number of cases referred to DEC is appropriate and that DEC resources are being used efficiently.
DEC tracks some performance measures, but it largely measures outputs, such as number of work assignments completed, rather than outcomes, such as financial performance improvements resulting from its work, that would help assess the impact of its activities. DEC also does not track the status of recommendations it makes to program offices or measure indicators of its timeliness in completing its reviews for the referrals it receives. In addition, GAO found that DEC staff did not consistently record two key data elements (including the corrective action taken) in the spreadsheet used to track referrals. Improving DEC's performance measurement system and data recording would be consistent with federal internal control standards and allow DEC to better assess its effectiveness, ensure accountability, and identify potential improvements.
DEC has experienced various information technology challenges that have affected its ability to carry out its mission. For example, DEC's current system is not designed to allow staff to easily determine the basis for certain referrals or identify and analyze trends in referrals over multiple years. In addition, DEC has experienced continuing outages and breaks in service. HUD has developed plans for a replacement system, but funding constraints have delayed the implementation of the new system. DEC staff also noted that the organizational location of DEC within the Office of General Counsel was a challenge to carrying out its mission because it limited DEC's ability to hold program offices accountable for corrections. HUD disagreed and also stated that the department has no plans to relocate DEC. Based on GAO's review, other factors, such as the lack of guidance for making referrals (discussed above), may better explain why DEC may not be utilized more effectively.

What GAO Recommends

GAO is making eight recommendations to HUD related to DEC, including for staff guidance on when to make referrals; targets for the number of DEC referrals based on program risk; outcome measures to track performance; and controls to ensure consistent data recording. HUD agreed with five of the eight recommendations, noting that setting referral targets was inconsistent with basing them on program risk. GAO maintains that setting referral targets can help ensure that program offices make referrals to DEC.