A recent inspector general report concludes that the Department of Housing and Urban Development (HUD) maintains such poor financial records that it is practically impossible to audit billions of dollars in spending at the agency.
The report said that HUD's financial records are inaccurate, missing critical information and sometimes in violation of federal law, according to The Daily Caller.
"This audit report contains nine material weaknesses, eight significant deficiencies in internal controls and six instances of noncompliance with applicable laws and regulations," the report said. "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."
HUD's inaccurate reporting from its budgetary system made it impossible for the inspector general to audit $19.8 billion of the Government National Mortgage Administration's (Ginnie Mae) budgetary resources, the report said.
The inspector general also said it was unable to audit $5.4 billion in Ginnie Mae's nonpooled loan assets because accounting documents "did not completely transfer" from the previous contractors who maintained the accounting records to the new servicing contractors.
"As a result, Ginnie Mae was unable to provide appropriate supporting documentation and data to enable us to audit the completeness and accuracy of these asset balances. Because of this limitation in our audit scope, we were unable to determine whether adjustments might be necessary with respect to these nonpooled loan assets," the inspector general said. "Ginnie Mae's executive management failed to make significant improvements in addressing the financial management governance problems cited in our fiscal year 2014 audit report and regressed in some areas."
The inspector general also criticized HUD's inability to modernize its legacy financial management systems. "Program offices compensated for system limitations by using less reliable manual processes to meet financial management needs," according to the report.
HUD took some steps to address the key weaknesses in its financial management structure; however, the inspector general noted that it has asked for increased oversight for more than a decade, but significant deficiencies still exist.
"Multiple deficiencies existed in HUD's internal controls over financial reporting, resulting in misstatements on the financial statements and noncompliance with laws and regulations," the report said. "We have reported on HUD's administrative control of funds in our audit reports and management letters since fiscal year 2005. HUD continued to not have a fully implemented and complete administrative control of funds system that provided oversight of both obligations and disbursements."
HUD has also come under fire recently for failing to keep over-income families out of public housing. The inspector general concluded in July that public housing authorities provided public housing assistance to as many as 25,226 families whose income exceeded HUD's 2014 eligibility income limits. Those over-income families cost taxpayers an estimated $100 million annually, according to CNS News.
Rep. Bradley Byrne, R-Ala., has introduced legislation that would amend the Housing Act of 1937 to require annual income reviews of families residing in public housing.
