We audited the functionality of the U.S. Department of Housing and Urban Development’s (HUD) New Core Financial Management Solution as part of the internal control assessments required for the fiscal year 2017 financial statement audit under the Chief Financial Officer’s Act of 1990. Our objective was to determine whether effective business processes and interface processing controls were in place for the New Core Financial Management Solution. This audit is the fifth in a series of audits completed on the New Core Project implementation.
We found that transaction processing using the New Core Financial Management Solution had improved, but challenges and weaknesses remained. Specifically, (1) transactions were inaccurately posted to the general ledger, and weaknesses still existed with transaction processing; (2) HUD had not completed reconciling the differences between the subledgers and the general ledger; and (3) the NCIS reconciliation tool was not effective.
3These conditions occurred because (1) an NCIS exclusion code was not recognized in HUDCAPS, there were timing issues with transaction processing and data entry errors in the crosswalk tables, funds were prematurely end dated for yearend close, and fund codes were erroneously disabled; (2) HUD did not have a process to ensure that a periodic reconciliation between the subsidiary ledgers and the general ledger took place before the New Core implementation, and lacked sufficient resources to assign to the subledger reconciliation project; and (3) HUD did not focus on the accuracy and usefulness of the NCIS reconciliation tool and reports, because resources were prioritized to improve NCIS transaction processing. Although HUD improved from what we found during our fiscal year 2016 audit work, (1) HUD continued to experience some weaknesses in transaction processing; (2) HUD cannot fully support the balances recorded in its general ledger; and (3) HUD did not fully reconcile data between HUDCAPS and its general ledger.
We recommended that HUD update yearend close procedures; implement a data validation process for crosswalk entries; improve the subledger reconciliation process and resolve unreconciled differences; revise the NCIS reconciliation status of funds report; and resolve the data reconciliation differences identified between HUD’s Centralized Accounting and Program System and Oracle Financials.