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Report Fraud, Waste and Abuse
November 22, 2015
  • Chief Financial Officer
2016-FO-0004
2016-FO-0004.pdf

In accordance with the Chief Financial Officers Act of 1990, as amended, we are required to annually audit the consolidated financial statements of the U.S. Department of Housing and Urban Development (HUD) and the stand alone financial statements of the Federal Housing Administration and the Government National Mortgage Administration (Ginnie Mae). Our objective was to express an opinion on the fairness of the financial statements in accordance with U.S. generally accepted accounting principles applicable to the Federal Government.  This report presents the results of our audit of fiscal years 2015 and 2014 (restated) HUD consolidated financial statements, including our report on HUD’s internal control and test of compliance with applicable laws and regulations.

We expressed a disclaimer of opinion on HUD’s fiscal years 2015 and 2014 (restated) consolidated financial statements because of the significant effects of certain unresolved audit matters, which restricted our ability to obtain sufficient, appropriate evidence to express an opinion.  These unresolved audit matters relate to (1) HUD’s improper use of cumulative and first-in, first-out budgetary accounting methods of disbursing community planning and development program funds, (2) $5.4 billion in nonpooled loan assets from Ginnie Mae’s stand-alone financial statements that we could not audit because Ginnie Mae could not provide adequate support for us to test these asset balances, (3) $19.8 billion in Ginnie Mae’s budgetary resources that we could not audit because of the inaccurate reporting from its budgetary system, and (4) improper accounting for HUD’s assets resulting from advances made to public housing agencies and Indian Housing Block Grant grantees and loans receivable from the Emergency Homeowners’ Loan Program.  This audit report contains nine material weaknesses, eight significant deficiencies in internal controls, and six instances of noncompliance with applicable laws and regulations.  These weaknesses were due to an inability to establish a compliant control environment, implement adequate financial accounting systems, retain key financial management staff, and identify appropriate accounting principles and policies.

Our recommendations regarding each of the components’ findings were made in audit report 2016-FO-0001, 2016-FO-0002, and 2016-FO-0003.