The U.S. Department of Housing and Urban Development (HUD) Office of Inspector General (OIG) released its Office of Audit and Evaluation Annual Work Plan for Fiscal Year (FY) 2026. The document outlines the audits, evaluations, and oversight projects HUD OIG plans to initiate or continue during the fiscal year across HUD programs and operations.
For Public Housing Agencies (PHAs), the work plan provides insight into HUD direction. This blog focuses specifically on the “Protecting Taxpayer Funds from Fraud, Waste, and Abuse” section of the FY 2026 work plan.
Three major legal and compliance risk areas emerge repeatedly across both planned and ongoing audits and evaluations:
- Improper Payments and Financial Integrity
- Fraud Risk Management and Internal Control Deficiencies
- Eligibility Verification and Occupancy Integrity Risks
The following tables outline the planned and ongoing audits and evaluations within this section that may carry significant legal, operational, and compliance implications for PHAs.
Planned Projects
Ongoing Projects
Here’s a breakdown of each of the three major legal and compliance risk areas found in the planned and ongoing audits.
Improper Payments and Financial Integrity
Planned Projects
- Community Planning and Development Expenditure Reviews
- PHAs’ Use of Public Housing Program Funds
- Spending of Community Development Block Grant Program Income Funds
- PBRA Payments to FHA-Insured Borrowers
- Ghost Tenants
- FY 2026 Payment Integrity Information Act of 2019
- FY 2026 Consolidated HUD Financial Statement Audit
- FY 2026 FHA Financial Statement Audit
- FY 2026 Ginnie Mae Financial Statement Audit
Ongoing Projects
- Assessing the Overlap of Housing Choice Voucher Payments and FHA-Insured Mortgages
- Improper Payment Estimate for HUD’s Multifamily Project Based Rental Assistance Program
- HUD, Ginnie Mae, and FHA Inactive Obligations
- Assessment of the U.S. Virgin Islands Fraud Risk Management and Potential Improper Payments
- Improper Payment Estimate for HUD’s Public and Indian Housing Tenant-Based Rental Assistance Program
Improper Payments and Financial Integrity is one of the largest compliance themes in HUD OIG’s FY 2026 work plan. Audits focus on improper payments, payment verification controls, occupancy accuracy, and overlapping federal assistance participation within the HCV and PBRA programs. This reflect growing federal concern regarding unsupported subsidy calculations, duplicate benefits, occupancy inaccuracies, and weak payment controls. For PHAs, this increases compliance risk around inaccurate income determinations, unsupported HAP calculations, overlapping subsidy activity, and unreported ownership interests or assets. The audits also suggest HUD OIG is placing greater focus on whether agencies have systems in place to prevent improper payments before they occur.
Several recent federal policy and oversight developments align closely with this growing focus on payment integrity. In late 2025, HUD announced that internal financial reviews and advanced analytics identified billions in potential improper payments across TBRA and PBRA programs after reviewing all 2024 rental assistance payments. HUD OIG also reported that HUD failed for the eighth consecutive year to produce compliant improper payment estimates for its two largest rental assistance programs, which together accounted for approximately $50 billion in FY 2024 expenditures. The OIG identified weaknesses involving payment verification oversight, coordination failures, and inconsistent use of Treasury’s Do Not Pay verification system. More recently, GAO reported that federal improper payments government-wide increased to approximately $186 billion in FY 2025.
Fraud Risk Management and Internal Control Deficiencies
Planned Projects
- HUD Program Offices’ and HUD Participants’ Fraud Risk Management Practices
- PHAs’ Use of Public Housing Program Funds
- Spending of Community Development Block Grant Program Income Funds
- Equity Skimming
- Single Audit Act Reviews
Ongoing Projects
- Assessment of the U.S. Virgin Islands Fraud Risk Management and Potential Improper Payments
- Fraud Risk Inventories for the Capital Fund, Disaster Recovery, and Single-Family Housing Programs
- HUD, Ginnie Mae, and FHA Inactive Obligations
Fraud Risk Management and Internal Control Deficiencies is another major compliance theme in HUD OIG’s FY 2026 work plan. Several audits focus on whether HUD participants have systems in place to prevent, detect, monitor, and respond to fraud risks. These projects emphasize internal controls, supervisory oversight, fraud detection frameworks, monitoring systems, documentation controls, and financial oversight mechanisms. For PHAs, this increases compliance risk around weak QC processes, insufficient documentation, poor vendor oversight, inadequate separation of duties, and weak monitoring of program expenditures. The work plan also suggests HUD OIG is placing greater focus on organization-wide compliance systems rather than isolated file-level errors.
Recent federal oversight and policy developments align closely with this growing focus on fraud risk management and internal controls. Throughout Trump’s second term, DOGE federal oversight discussions increasingly emphasized “waste, fraud, and abuse,” with expanded attention on improper payments, fraud prevention systems, and agency oversight weaknesses. This year Congress has advanced several pieces of legislation aimed at strengthening fraud prevention and internal controls across federal programs.
Eligibility Verification and Occupancy Integrity Risks
Planned Projects
- PBRA Payments to FHA-Insured Borrowers
- Ghost Tenants
Ongoing Projects
- FHA-Insured Single-Family Loans Issued to Deceased and Incarcerated Individuals
- Assessing the Overlap of Housing Choice Voucher Payments and FHA-Insured Mortgages
Eligibility Verification and Occupancy Integrity Risks reflects fewer audits within HUD OIG’s FY 2026 work plan, but the smaller number of audits does not make this a lower-risk area for PHAs. These projects focus on whether assisted individuals are actually eligible to receive HUD-funded assistance and whether agencies can fully support admissions and continued occupancy through accurate verification and documentation practices. The audits place increased attention on identity verification, eligibility, and occupancy validation. For PHAs, this creates compliance exposure around unsupported admissions or continued occupancy, incomplete verification documentation, inaccurate household composition reporting, deceased tenant payments, and weak occupancy monitoring controls.
HUD guidance and enforcement activity also reflect increased federal focus on eligibility verification and occupancy integrity. HUD expanded operational emphasis on EIV-SAVE tenant matching enforcement related to citizenship and immigration eligibility verification. HUD then issued Notice PIH 2026-11 updating requirements for the EIV Deceased Tenants Report and directing PHAs to review deceased tenant reports monthly, verify deceased participant status, terminate assistance where required, and recover improper payments when applicable. In addition, HUD also published updated guidance regarding criminal screening responsibilities, rescinding several prior documents and reinforcing requirements related to criminal background screening.
Resources to Support Your Team
For PHAs that want to stay ahead of HUD’s compliance signals without monitoring every notice in real time, AMA Consulting Group’s Affordable Housing Policy Alerts deliver curated regulatory updates straight to your inbox.
See Where You Stand Today
For PHAs that want a clear picture of their compliance posture without committing to a full audit, AMA Consulting Group offers the C3 Rapid Risk Assessment, a fixed-fee, five-day diagnostic that surfaces where risk is concentrated in your program today. The assessment delivers:
- A PIC Data Reconciliation comparing your System of Record to PIC to identify mismatches, data variances, and reporting risk
- Backlog and Risk Indicators that highlight late recertifications, inspections, and data gaps that may signal compliance exposure
- An expert review of five recently processed files to assess eligibility accuracy, calculations, and policy alignment
- A clear findings summary outlining observed risks, strengths, and recommended next steps
Conclusion
To prepare for these audits, PHAs should strengthen internal controls, improve documentation practices, and review QC and supervisory processes. Agencies should ensure income calculations, occupancy verification, EIV monitoring, and admissions and termination actions are accurate and fully documented. Collectively, these audits and policy developments suggest HUD is moving toward a more proactive oversight environment focused on payment integrity, fraud prevention, and eligibility verification.