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REPORTAR FRAUDE, DESPERDICIO O ABUSO
Noviembre 14, 2016
  • Chief Financial Officer
2017-FO-0003
2017-FO-0003.pdf

This report was reissued on February 24, 2017, to correct Appendix A. This reissued report now correctly shows the monetary benefit associated with each recommendation.

This report supplements our independent auditor’s report on the results of our audit of HUD’s principal financial statements for the fiscal years ending September 30, 2016 and 2015 (Restated) related to HUD’s internal controls and compliance with applicable laws, regulations, and governmentwide policy requirements and provisions of contracts and grant agreements.

We issued a disclaimer of opinion on HUD’s consolidated financial statements for fiscal years 2016 and 2015 (restated) due to HUD’s inability to deliver principal financial statements for the fiscal years ending September 30, 2016 and 2015 (Restated) and accompanying notes in a timely manner.  This report provides additional details on five material weaknesses, four significant deficiencies, and four instances of noncompliance with applicable financial management laws and regulations.  Details of the results of our audit of HUD’s component entities, the Federal Housing Administration and Government National Mortgage Association (Ginnie Mae), can be found in separate audit reports. 

Primarily, HUD (1) lacked adequate controls over its financial reporting preparation process, (2) inadequately accounted for assets and liabilities in accordance with GAAP, (3) delayed completion of significant reconciliations, (4) did not account for the Office of Community Planning and Development’s formula grant programs’ commitments and disbursements in accordance with GAAP, and (5) lacked adequate financial management systems to ensure accurate and reliable financial reporting.  These conditions were caused by (1) inadequate monitoring and rushed implementation of the New Core Project and the transition to a Federal shared service provider, (2) poor internal controls and oversight of Ginnie Mae’s financial reporting, and (3) continued weaknesses in HUD’s financial management governance structure.

We recommend that HUD (1) properly account for all financial transactions in accordance with GAAP, (2) improve internal controls over the financial reporting process, (3) transition as much as $168.3 million in excess funding from public housing agencies to HUD-held reserves, and (4) deobligate $332.4 million in invalid or inactive obligations.