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To determine whether all the unexpended obligations of HUD are valid and meet funding guidelines, the Office of the Chief Financial Officer (OCFO) coordinates annually an Open Obligation Review (OOR) of all program and administrative funds. This review determines which funds are still needed and certifies to Treasury that the funds remaining in its obligation balance at the end of the fiscal year represent future obligations for the department. Historically, HUD OIG has audited the OOR as part of the annual financial statement audit. We have not reported findings in this area as part of the financial statement audit for the last six years because the amounts identified for deobligation have remained below the materiality set for audit.

We conducted our review to identify HUD’s open obligations marked for deobligation during the fiscal year 2024 OOR that had not been deobligated as of February 28, 2025. We found 835 administrative obligations totaling $38.5 million ($38,525,837) and 101 program obligations totaling just under $2 million ($1,967,991) were identified for deobligation but had not been deobligated.   

A careful review of open obligations strengthens HUD’s internal controls by removing balances from the accounting system that are no longer required for future payments, identifies funds that could be used for current requirements, and supports HUD’s formal year‐end certification to the Department of Treasury. While HUD has completed that careful review, the objective is not met if obligations that are no longer needed are not timely deobligated. While these amounts represent a small percentage of HUD’s total open obligations, it is important that all funds identified as no longer needed are promptly deobligated so they can be used to meet other HUD requirements or returned to Treasury for other needs.  We recommended HUD deobligate the 835 administrative obligations and the 101 program obligations identified for deobligation during the fiscal year 2024 OOR that had not been deobligated as of February 28, 2025.