Thursday, March 9, 2017

Audit on HUD reveals billions in bookkeeping errors

Despite officials from the Department of Housing and Urban Development (HUD) correcting $520 billion in bookkeeping errors, the department’s financial records have been so poorly kept that HUD’s inspector general (IG) cannot complete an audit of them.
According to a new report from the IG, HUD officials cleaned up $3.4 billion in errors from its 2015 financial records and $516.4 billion in errors from 2016, after the IG was unable to issue an opinion on either year’s financial statements in December.
The IG pointed out 11 material weaknesses, seven significant deficiencies, and five instances of failure to comply with laws and regulations, problems reported for three straight years.
The IG remained unable to issue an opinion on HUD’s financial statements even after giving the department an extension and receiving a resubmission from HUD three months later with the reported issues unresolved.
The continued problems, the IG said, “were due to an inability to establish a compliant control environment, implement adequate financial accounting systems, retain key financial staff, and identify appropriate accounting principles and policies.”
The problematic issues identified by the IG include HUD lawyers’ refusals to sign a management letter listing all HUD litigation, the department’s improper accounting practices, failure to properly measure assets and liabilities, discrepancies between general ledger and sub-ledger accounts, and $4.2 billion in loan assets from Ginnie Mae’s financial statements that lack sufficient support for an audit.
In December 2016, HUD spokesman Brian Sullivan told The Daily Caller News Foundation’s Investigative Group, “HUD does apply generally accepted accounting standards,” although the IG asserted that the department does not.
In addition to recommending that HUD address existing problems, the IG also instructed the department to reassess its financial statement review process to identify errors and ensure that its financial notes comply with generally accepted accounting principles (GAAP).
Obama appointee Julian Castro served as HUD secretary from 2014 through the end of the Obama administration.
Castro was preceded by Shaun Donovan, who was nominated to be the next director of the Office of Management and Budget. On Mar. 2, former presidential hopeful Dr. Ben Carson was sworn in as the new HUD secretary.