Summary
In testimony in October 2002 and in a report issued in April 2003 we raised concerns about the Department of Housing and Urban Development's (HUD) accountability for computers and computer-related equipment bought with government purchase cards. Our review identified a large volume of computers and computer-related purchases for which HUD did not have adequate supporting documentation. In addition, HUD acknowledged that items bought with purchase cards were not being consistently entered in its asset management system thereby increasing its vulnerability to loss or theft. Given these findings, and the approximately $59 million HUD reported it has spent on computers and computer-related equipment and services over the last 3 fiscal years, Congress asked of us to further assess HUD's accountability for these vulnerable assets. Specifically, it was requested that we determine whether HUD had established an effective system of internal control for maintaining accountability over its computer equipment. Our review covered HUD's systems and controls in place during fiscal years 2001, 2002, and 2003.
HUD did not have an effective internal control system in place to maintain accountability over its computer equipment. Fundamental internal control activities were not performed, and as a result, computers and computer-related equipment were highly vulnerable to loss or misappropriation. We found that HUD did not consistently record computer equipment purchases in its asset management system or effectively maintain or reconcile its records. In addition, HUD did not perform regular physical inventories to verify the quantities and location of computer equipment. Because of these serious internal control weaknesses, neither HUD nor we were able to reliably determine the total amount of computer equipment purchases during the period of our review. However, for four of HUD's major computer equipment vendors, we were able to identify over $2.2 million in computer equipment purchased in fiscal years 2001, 2002, and 2003 that was not recorded in HUD's asset management system, of which we determined over $82,000 to be lost or missing. Given the seriousness of the identified control weaknesses, these numbers could be much higher. Although HUD has awarded a new information technology contract for essentially all of its information processing, telecommunications, and related needs on an agencywide basis, it will still be accountable for HUD-owned equipment at least through fiscal year 2006. Until HUD corrects the weaknesses in its internal controls, accountability over existing computer equipment will remain problematic, and these assets will continue to be vulnerable to loss or misappropriation.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change
from "In process" to "Implemented" or "Not implemented" based on our follow up work.
Director:
Team:
Phone:
Jeanette M. Franzel
Government Accountability Office: Financial Management and Assurance
(202) 512-8341
Recommendations for Executive Action
Recommendation: In order to establish adequate internal control over HUD-owned computer equipment and reduce HUD's vulnerability to fraud, waste, and abuse, the Assistant Secretary for Administration/Chief Information Officer should reiterate to responsible HUD personnel the importance of following HUD's established policies and procedures for recording computer equipment purchases in the Facilities Integrated Resource Management System (FIRMS).
Agency Affected: Department of Housing and Urban Development: Office of the Chief Financial Officer
Status: Implemented
Comments: HUD completed implementation of this recommendation.
Recommendation: In order to establish adequate internal control over HUD-owned computer equipment and reduce HUD's vulnerability to fraud, waste, and abuse, the Assistant Secretary for Administration/Chief Information Officer should follow up on the items we identified as not recorded in FIRMS to determine the location of the computer equipment and update FIRMS to reflect the results.
Agency Affected: Department of Housing and Urban Development: Office of the Chief Financial Officer
Status: Implemented
Comments: HUD completed implementation of this recommendation.
Recommendation: In order to establish adequate internal control over HUD-owned computer equipment and reduce HUD's vulnerability to fraud, waste, and abuse, the Assistant Secretary for Administration/Chief Information Officer should establish specific requirements for maintenance of documentation and records to support changes in the location of computer equipment.
Agency Affected: Department of Housing and Urban Development: Office of the Chief Financial Officer
Status: Implemented
Comments: HUD completed implementation of this recommendation.
Recommendation: In order to establish adequate internal control over HUD-owned computer equipment and reduce HUD's vulnerability to fraud, waste, and abuse, the Assistant Secretary for Administration/Chief Information Officer should perform quarterly reconciliations of HUD-owned computer equipment balances in FIRMS, both capitalized and noncapitalized, to the recorded amounts in the general ledger, including researching all differences and correcting any identified errors.
Agency Affected: Department of Housing and Urban Development: Office of the Chief Financial Officer
Status: In process
Comments: GAO has requested, but not yet received information needed to assess the adequacy of actions taken to address this recommendation.
Recommendation: In order to establish adequate internal control over HUD-owned computer equipment and reduce HUD's vulnerability to fraud, waste, and abuse, the Assistant Secretary for Administration/Chief Information Officer should segregate accountable equipment purchases from nonaccountable purchases in the general ledger in order to facilitate the reconciliation process.
Agency Affected: Department of Housing and Urban Development: Office of the Chief Financial Officer
Status: Implemented
Comments: HUD completed implementation of this recommendation.
Recommendation: In order to establish adequate internal control over HUD-owned computer equipment and reduce HUD's vulnerability to fraud, waste, and abuse, the Assistant Secretary for Administration/Chief Information Officer should update FIRMS to reflect the results of the recently completed physical inventory of HUD-owned computer equipment.
Agency Affected: Department of Housing and Urban Development: Office of the Chief Financial Officer
Status: Implemented
Comments: HUD completed implementation of this recommendation.
Recommendation: In order to establish adequate internal control over HUD-owned computer equipment and reduce HUD's vulnerability to fraud, waste, and abuse, the Assistant Secretary for Administration/Chief Information Officer should perform a complete and accurate physical inventory of HUD-owned computer equipment at least annually and update FIRMS as needed to reflect the inventory results.
Agency Affected: Department of Housing and Urban Development: Office of the Chief Financial Officer
Status: Implemented
Comments: HUD completed implementation of this recommendation.
