"Stimulus Plan and Energy Tax Credits"
FY 2010 OIG Recovery Act Plan Overview (updated May 2010) OIG Name: Department of the Treasury, Office of Inspector General The overall objectives of the OIG’s oversight of the Recovery Act funds for low-income housing and specified energy property grants in lieu of tax credits and the Community Development Institutions Fund are (1) timely and effective implementation of stimulus related activities, (2) proper internal control procedures are established and maintained, (3) fund recipients meet eligibility requirements; and (4) fund recipients properly comply with award requirements. Since the enactment of the Recovery Act, a new audit division has been established within the OIG to address Treasury's Recovery Act activities and four audits are now in progress. Our approach for meeting our overall objectives is to focus on areas of high risks and to continually reassess risks to modify our focus and procedures accordingly. We believe this approach will allow us to provide accountability and transparency for programs responsible for overseeing an estimated $22 billion of non-IRS Recovery Act funds. Based on our reassessment of risks, we continue to focus our Recovery Act work on the specified energy property program and the low income housing program as we deem these programs as Treasury's highest risk Recovery Act activities. These programs comprise over $19 billion of Treasury's $22 billion of non-IRS Recovery Act funds. The estimated cost for the specified energy property program is $16.5 billion over its life (the Recovery Act OIG Broad Recovery Act Goals: did not cap program) and as of April 2010, Treasury awarded over $3 billion to reimburse appplicants a portion of the cost for investing in renewable energy properties. The low-income housing program increased its original estimate of $2.93 billion to its current awarding of $5 billion to state housing credit agencies. Although over $5 billion has been awarded to states under the low-Income housing program, only $685 million has been sub-awarded to developers for low-income housing projects. Unlike the CDFI Fund which received additional funds and tax credit allowances for existing programs, the specified energy property program and low-income housing program are new programs for the Treasury office charged with their administration. That office is thinly staffed and expertise is limited. The CDFI Fund's Core Program and New Market Tax Credit Programs are also significant in that the Recovery Act doubled their funding and the CDFI Fund has systemic issues over monitoring awards. These programs are still assessed as having moderate risk. Our proactive approach with the CDFI Fund is to keep management apprised of our findings for their remediation that we will report on in FY 2010. During FY 2010, we will reassess risk to ensure we are achieving our audit objectives. The OIG has initiated external and internal Recovery Act outreach and training. To this end, the OIG has established liaison and is collaborating externally with OIG Broad Training and Outreach Recovery Act the OIGs from the Department of Energy and the Department of Housing and Urban Development to identify and investigate instances of criminal grant fraud. Goals: Internally, the OIG will increase overall departmental awareness and vigilence toward Recovery Act abuse through integrity awareness briefings within its bureaus. Page 1 of Overview 4c0646fd-d2ad-4eba-bdb1-de6fc83072fb.xls FY 2010 OIG Recovery Act Plan Overview (updated May 2010) The OIG is taking a number of actions to alert management of risks and recommend cost effective controls to help prevent fraud, waste, and abuse; and ensure program goals are achieved and stimulus funds are accurately tracked and reported. From continually reassessing risk, we have adjusted our focus on the programs and areas where risk of fraud, waste, or abuse of federal funds might exist and adjust our procedures accordingly. Treasury is responsible for overseeing an estimated $22 billion in Recovery Act funds for non-IRS programs with an estimated $19 billion under the control of one program office. We are very focused on Treasury’s Specified Energy Property and Low-Income Housing grant programs comprising the estimated $19 billion of Recovery Act funds and OIG Recovery Act Risk Assessment Process: have assessed these programs as high risk areas for Treasury. Our assessment is based on these programs being new to Treasury and thinly staffed by personnel with little to no experience in the areas of energy, low-income housing, and tax credits. Our assessment of risk remains the same for these programs which have awarded more than $8 billion in Recovery Act funds as of April 2010. We assessed CDFI Fund's additional $100 million in funding for the CDFI Fund Program and additional $3 billion for the New Markets Tax Credit Program as moderate risk since these are established programs with experience in these areas. Although the CDFI Fund has systemic monitoring issues, the CDFI Fund has hired a new manager to address monitoring. While risk is assessed as moderate, we do plan significant audit coverage of the CDFI Fund. We will re-assess risk as Recovery Act programs progress. OIG Recovery Act Funds: None provided. Expiration Date of OIG Recovery Act Funds: N/A NA - At this time, we do not anticipate using contractor support. However, should we later determine that such support is necessary for our oversight work that OIG Recovery Act Funds Allocated to Contracts: support will be paid for from non-Recovery Act funds. Purpose of Recovery Act Contracts: N/A Types of Recovery Act Contracts Awarded to N/A Date: Link to OIG Recovery Act Work Plan: 0 Page 2 of Overview 4c0646fd-d2ad-4eba-bdb1-de6fc83072fb.xls OIG FY 2010 Recovery Act Work Plan (updated May 2010) Review Included on Expected Expected Recovery Act Funds Expected Entity Performing Prior Quarter Quarter(s) Agency Program Area Associated Type of Review Project Title Background Objective Number of Review Recovery Work Reports w/Program Area Reports Act Plan Begins Issued (Y/N) Section 1602 of the Recovery Act requires the Secretary of Treasury to make amounts available To determine whether Treasury (1) timely and as grants in lieu of tax credits to State housing effectively implemented the Low-Income Housing credit agency in an amount equal to such state’s Grants In Lieu of Tax Credits Program activities; (2) low-income housing grant election amount. The established and maintained proper internal Low-Income Audit of Treasury's Low- Department of state agencies, in turn, subaward the funds to control procedures, including controls to prevent Q3 FY 10 - Housing Grants in $ 5,000,000,000 Performance Treasury OIG Staff Income Housing Grants Yes Q2 FY 09 15 the Treasury qualified parties to partially finance the subawardees from improperly receiving both tax Q4 FY 15 Lieu of Tax Credits Program construction or acquisition/rehabilitation of low credits and Recovery Act funds; and (3) assessed income housing. It should be noted that the whether fund recipients, at both the state the Recovery Act Funds amount is an estimate. The FY subawardee levels, meet eligibility requirements 2009 apportionment for this Program is $2.93 and properly comply with award requirements. billion. To determine whether Treasury (1) timely and effectively implemented the Specified Energy Property Grants in Lieu of Tax Credits Program Section 1603 of the Recovery Act requires the activities; (2) established (and followed) Secretary of Treasury to provide a grant to each appropriate procedures for awarding the grants; Specified Energy Audit of Treasury's person who places in service, in 2009 or 2010, Department of (3) established and maintained proper internal Q1 FY 10 - Property Grants in $ 16,455,000,000 Performance Treasury OIG Staff Specified Energy specified energy property to reimburse such Yes Q2 FY 09 10 the Treasury control procedures, including controls to prevent Q4 FY 17 Lieu of Tax Credits Property Grants Program person for a portion of the expense of such recipients from improperly receiving both tax property. It should be noted that the Recovery Act credits and Recovery Act funds; and (4) assessed Funds amount is an estimate. whether fund recipients meet eligibility requirements and properly comply with award requirements. Title V - Financial Assistance & General Government provides $100 million for the CDFI Fund available until September 30, 2010, to invest in and build the capacity of CDFIs to serve low- To determine whether the CDFI Fund (1) timely income people and communities lacking adequate Community Audit of the Community and effectively implemented the additional access to affordable financial products and Development Development Financial appropriation of $100 million for its programs; (2) Department of services. Of this amount, $90 million is for CDFI Q3 FY 10 - Financial $ 100,000,000 Performance Treasury OIG Staff Institutions Fund's (CDFI established and maintained proper internal Yes Q2 FY 09 3 the Treasury Fund core programs, $8 million is for programs to Q4 FY 2013 Institution Grant Fund) Additional Grants control procedures; and (3) assessed whether fund benefit Native American, Native Hawaiian, and Program Program recipients meet eligibility requirements and Alaskan Native communities, and $2 million for properly complied with award requirements. CDFI Fund administrative expenses. It should be noted that, with respect to the CDFI Fund, the Recovery Act provided additional fund for existing programs. Page 3 of Work Plan 4c0646fd-d2ad-4eba-bdb1-de6fc83072fb.xls OIG FY 2010 Recovery Act Work Plan (updated May 2010) Section 1403 increased the New Markets Tax Credit limitation for calendar years 2008 and 2009 from $3.5 billion per year to $5 billion per year (an increase of $1.5 billion for each year, or $3 billion To determine whether the CDFI Fund (1) timely total). The additional tax credits are to be Audit of the CDFI Fund's and effectively allocated the additional $3 billion allocated among qualified community CDFI Fund New Increase to the New of New Market Tax Credits to eligible recipents Department of development entities. It should be noted that GAO Q13FY 10 - Markets Tax Credit $ 3,000,000,000 Performance Treasury OIG Staff Markets Tax Credit and for eligilbe activities; (2) established and Yes Q2 FY 09 2 the Treasury is required by the Community Renewal Tax Relief Q4 FY 2011 Program Program for 2008 and maintained proper internal control procedures; Act of 2000 to report on the New Markets Tax 2009 and (3) assessed whether recipients complied with Credit program every 3 years with its final report tax credit requirements. to be issued January 31, 2010. Accordingly, we will coordinate our work with GAO. We will also coordinate our work with the Treasury Inspector General for Tax Administration. Note: The Treasury OIG's ability to undertake all self-identified planned audits of Treasury Recovery Act program may be impacted by the number and scope of specific, coordinated work requested by the Recovery Accountability and Transparency Board. Page 4 of Work Plan 4c0646fd-d2ad-4eba-bdb1-de6fc83072fb.xls