Summary
The Department of Housing and Urban Development (HUD) provided over $6.7 billion in fiscal year 2008 to housing agencies to operate, modernize, and develop about 1.2 million public housing units. It is important that HUD exercise sufficient oversight of housing agencies to help ensure that public housing funds are being used as intended and properly managed. In this report, GAO examines HUD's oversight processes for detecting housing agencies at risk of inappropriate use and mismanagement of public housing funds. GAO analyzed HUD financial data on about 3,300 housing agencies, compared HUD's oversight policies with program and agency objectives, and interviewed agency officials.
Key HUD oversight processes could be more focused on identifying potential inappropriate use or mismanagement of public housing funds. HUD primarily relies on single audits to identify such problems, although HUD, its Office of Inspector General (OIG), and the President's Council on Integrity and Efficiency (now known as the Council of the Inspectors General on Integrity and Efficiency) have identified weaknesses with some audits. Further, even when these audits do identify issues, HUD does not systematically summarize audit findings to identify and understand emerging and persistent issues to better monitor housing agencies for inappropriate use and mismanagement of public housing funds. Understanding these problems could be useful for identifying housing agencies that are at greater risk of inappropriately using or mismanaging public housing funds. HUD uses the Public Housing Assessment System (PHAS) to monitor and rate the overall condition and financial health of public housing agencies. However, PHAS is not intended to identify inappropriate uses of public housing funds and is limited in its ability to detect potential mismanagement. HUD also analyzes the financial data of public housing agencies, but its review focuses on the accuracy and completeness of the information used to calculate PHAS scores. GAO analyzed financial data from the housing agencies and found many housing agencies showed indicators that they were at risk of potential inappropriate use and mismanagement of public housing funds--while most received passing PHAS scores. For example, GAO found that from 2002 to 2006, 200 housing agencies had written checks for more than the funds available in their bank accounts (bank overdrafts) on average of $25,000 or more. However, 75 percent of these agencies received passing PHAS scores. Such overdrafts raise questions about these agencies' cash management. But HUD does not use these and similar measures to identify housing agencies at greater risk of inappropriately using or mismanaging public housing funds. Without fully leveraging the audit and financial information it collects, the department limits its ability to identify housing agencies that are at greater risk of inappropriately using or mismanaging program funds.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director:
Team:
Phone:
Mathew J. Scire
Government Accountability Office: Financial Markets and Community Investment
(202) 512-6794
Recommendations for Executive Action
Recommendation: In order to strengthen its oversight of housing agencies administering the public housing program and better leverage information that it already collects, the Secretary of the Department of Housing and Urban Development should regularly summarize and systematically evaluate the results of OIG and single audits of public housing agencies to allow program managers to identify and understand problems of potential inappropriate use and mismanagement of public housing funds, identify emerging issues, and evaluate overall monitoring and oversight processes. Summarized results of audits should be disseminated to field offices, housing agencies, and their auditors to help make them aware of emerging or persistent problems and assist them in monitoring and administering HUD's public housing programs.
Agency Affected: Department of Housing and Urban Development
Status: Open
Comments: In commenting on a draft of this report, HUD stated that the draft report contains useful information, but that the agency did not believe that our recommendations would achieve the objectives of strengthening oversight of housing agencies that administer the public housing program and of better leveraging information that it already collects. Although it provided no specific explanation for why it thought our recommendations would not achieve its objectives, HUD stated that more analysis of its existing oversight mechanisms and information collected from housing agencies should be performed in order to evaluate and develop possible alternatives and indicated that it would involve Public and Indian Housing parties in developing a more creative and comprehensive approach to addressing the issues raised in our report. We welcome efforts by HUD to reconsider the mechanisms and data it uses to oversee housing agencies and to identify opportunities for improving its oversight. However, we disagree with HUD's statement that our recommendations do not help achieve the objectives of strengthening its oversight and better leveraging the audit and financial information it already has. We believe the recommended actions present a reasonable first step in leveraging its existing information and permit HUD to better focus its limited resources.
Recommendation: In order to strengthen its oversight of housing agencies administering the public housing program and better leverage information that it already collects, the Secretary of the Department of Housing and Urban Development should develop mechanisms--such as financial indicators--to identify housing agencies that are at greater risk of inappropriately using or mismanaging public housing funds. Such mechanisms may be developed based on the department's evaluation of commonly occurring and emerging issues identified in OIG and single audits of housing agencies and developed by leveraging financial information that the department currently collects. Once such indicators are developed, the department should use them as part of its ongoing monitoring and review of housing agencies' use of public housing funds.
Agency Affected: Department of Housing and Urban Development
Status: Open
Comments: In commenting on a draft of this report, HUD stated that the draft report contains useful information, but that the agency did not believe that our recommendations would achieve the objectives of strengthening oversight of housing agencies that administer the public housing program and of better leveraging information that it already collects. Although it provided no specific explanation for why it thought our recommendations would not achieve its objectives, HUD stated that more analysis of its existing oversight mechanisms and information collected from housing agencies should be performed in order to evaluate and develop possible alternatives and indicated that it would involve Public and Indian Housing parties in developing a more creative and comprehensive approach to addressing the issues raised in our report. We welcome efforts by HUD to reconsider the mechanisms and data it uses to oversee housing agencies and to identify opportunities for improving its oversight. However, we disagree with HUD's statement that our recommendations do not help achieve the objectives of strengthening its oversight and better leveraging the audit and financial information it already has. We believe the recommended actions present a reasonable first step in leveraging its existing information and permit HUD to better focus its limited resources.
