MESSAGE FROM THE ACTING CHIEF FINANCIAL OFFICER

November 15, 2011 

I am pleased to report, for the twelfth consecutive year, the Department has earned an unqualified (clean) audit opinion on its FY 2011 financial statements; and, for the fourth consecutive year, no material weaknesses in internal controls.  HUD continues its history of strong financial management and effective internal controls by steadily improving the capabilities of HUD’s financial infrastructure.  HUD is in the process of implementing a flexible, modern core financial system that promotes transparency and produces accurate and faster reporting.  This effort coincides with the Department’s Strategic Goal to Transform the Way HUD Does Business. 

Although HUD’s OIG issued an unqualified opinion with no reported material weaknesses, the OIG noted ten significant deficiencies (SDs), of which three were new this fiscal year.  HUD has been working diligently toward resolving these significant deficiencies.  Many corrective actions to resolve the SDs are multi-year efforts.  The SDs and their expected resolution dates are addressed in the Summary of Financial Statement Audit and Management Assurances subsection found in the Other Accompanying Information section of this report.

In addition to the SDs, the OIG noted five areas where HUD did not substantially comply with laws and regulations.  The first, non-compliance with the Federal Financial Management Improvement Act, was also noted as a significant deficiency and is discussed in the Management Assurances subsection of the Management’s Discussion and Analysis section.  For information on the Department’s non-compliance with laws and regulations, please refer to the Summary of Financial Statement Audit and Management Assurances subsection found in the Other Accompanying Information section of this report.  

The area of improper payments has received significant attention under the present Administration as the federal government seeks to utilize its ever decreasing resources in an effective and efficient manner.  The Improper Payments Elimination and Recovery Act (IPERA) of 2010 and Executive Order 13520, Reducing Improper Payments and Eliminating Waste in Federal Programs, are the driving forces toward reducing improper payments.  HUD has served as a Government-wide leader in reducing improper payments (see the narrative in the Other Accompanying Information section of this report).  For example, HUD’s Office of PIH recognizes decreases in the following areas:  a) improper payments made on behalf of deceased beneficiaries by 48 percent; b) program beneficiaries with invalid social security numbers by 42 percent; and c) cases of tenant underreporting of income by 28 percent.  Overall, HUD reduced the combined baseline gross improper payment estimates of $3.43 billion in FY 2000 (i.e., 17.1 percent of FY 2000 expenditures) to $959 million in FY 2010 (i.e., 2.9 percent of FY 2010 expenditures), a reduction of 72 percent.

In accordance with an Executive Order titled Delivering an Efficient, Effective, and Accountable Government, dated June 13, 2011, HUD strives to serve the American people with the utmost effectiveness and efficiency by cutting waste and increasing the efficiency of Government operations.  Read more...