Summary

This report provides (1) the Department of Housing and Development's (HUD) comments on GAO's designation of HUD as an area within the government at particularly high risk for waste, fraud, abuse, and mismanagement and (2) GAO's response to those comments.

GAO noted that: (1) GAO designated HUD's programs as a high-risk area in 1994 because of: (a) internal control weaknesses; (b) poorly integrated, ineffective, and generally unreliable information and financial management systems that did not meet the needs of program managers; (c) organizational deficiencies, such as overlapping and ill-defined responsibilities; and (d) an insufficient mix of staff with proper skills, which hampered the effective monitoring and oversight of HUD's programs; (2) as pointed out in GAO's January 1999 report on HUD's major management challenges and program risks, GAO indicated that while HUD has made credible progress in laying the framework for improving its management, internal control weaknesses and problems with information and financial management systems persist at the Department; (3) furthermore, recent reforms to address the Department's organizational and staffing problems are in the early stages of implementation, and it is too soon to tell whether or not they will resolve the major deficiencies that GAO and others have identified; (4) consequently, as GAO reported in 1995 and 1997, these deficiencies, taken together, continue to place the integrity and accountability of HUD's programs at high risk; (5) GAO has pointed out that its criteria for designating programs or agencies as high-risk areas stem directly from GAO's professional and objective judgment about patterns of significant management deficiencies uncovered over time in its audits, as well as those of inspectors general and others, that remain largely unresolved; (6) GAO stated in its response to HUD's June 23, 1998, letter that programs and agencies for which they have removed GAO's high-risk designation are those that have demonstrated results in overcoming management deficiencies; (7) GAO further stated that it is important to note that while reform initiatives are important, plans for reform are not sufficient in and of themselves; (8) rather, it is the results of such reform initiatives--demonstrating that management problems have been corrected--that count; (9) GAO has also pointed out to HUD officials its consistent application of its criteria for high-risk designations; and (10) specifically, GAO reached its conclusion about HUD and all of its determinations of which government operations are considered to be high-risk in its January 1999 Performance and Accountability Series reports using the same methodology and criteria, which were the same as those used for GAO's February 1997 High-Risk Series reports.