August 31, 1999

Thompson letter on GPRA - HUD Attachment 1

MOST SIGNIFICANT OPEN GAO RECOMMENDATIONS

ON

HUD HIGH-RISK PROBLEMS

Description of high-risk area: GAO designated HUD programs as a high-risk area in 1994 because of four serious, long-standing department-wide management deficiencies. Specifically, internal control weaknesses, such as lack of necessary data and management processes, were a major factor leading to the HUD scandals of the late 1980s. Second, poorly integrated, ineffective, and generally unreliable information and financial management systems did not meet the needs of program managers and weakened their ability to provide management control over housing and community development programs. Third, HUD had organizational deficiencies, such as overlapping and ill-defined responsibilities and authorities between its headquarters and field organizations and a fundamental lack of management accountability and responsibility. Finally, an insufficient mix of staff with the proper skills hampered the effective monitoring and oversight of HUD’s programs and timely updating of procedures. Resolving these management deficiencies is particularly critical for HUD because its housing and community development programs rely extensively on the integrity of thousands of diverse individuals and entities over whom it does not have direct control.

In January 1999, GAO reported that HUD is making significant changes and has made credible progress in overhauling its operations to correct its management deficiencies. But GAO’s recent work indicates that internal control weaknesses and problems with information and financial management systems persist. For example, material internal control weaknesses persist in the Section 8 subsidy payment process, which provides $18 billion in rental assistance, and HUD has not adequately monitored programs and functions such as its real estate asset management contractors and the performance of appraisers of properties purchased with FHA-insured loans. In addition to the 12 recommendations discussed in detail below, GAO has made 23 other recommendations that remain open dealing with issues such as improving information resources management (establishing a data management program, eliminating computer security control weaknesses, developing contingency plans for backup, recovery, and continuity, etc.); considering unexpended Section 8 project-based program balances to offset funding needs and the methodology for estimating expenditure rates; and improving HUD’s management and oversight of the Title I home improvement program.

GAO Report No. and Date	Recommendation
AIMD-94-34 April 14, 1994	In order to make the HUD Information Resources Management (IRM) program more responsive to its missions, the Secretary of HUD should direct Information Policies Systems to develop a strategic information architecture that is based on the strategic business and IRM plans to govern the development, deployment, and use of IRM resources.
AIMD-94-34 April 14, 1994	In order to make the HUD IRM program more responsive to its missions, the Secretary of HUD should establish strategic business and IRM planning processes and develop and maintain up-to-date plans that are clearly linked to each other.
AIMD-99-25 Dec. 18, 1998	In order to strengthen Financial Systems Integration (FSI) management and oversight and HUD’s information technology investment management decisions, the Secretary of HUD should ensure that the department: (1) prepares complete and reliable estimates of the life-cycle costs and benefits of the overall 1997 FSI strategy and individual FSI projects; (2) finalizes the detailed project plan for the core financial management system (HUD Central Accounting and Program System) to establish the milestones, tasks, task dependencies, a critical path, and staffing requirements and demonstrate that it is cost-effective to meet the October 1999 scheduled implementation date called for in HUD's 2020 Management Reform Plan, and (3) finalizes detailed project plans for individual FSI projects (mixed systems) that establish the milestones, tasks, task dependencies and critical paths, and staffing requirements to complete the 1997 FSI strategy.
AIMD-99-25 Dec. 18, 1998	In order to strengthen FSI management and oversight and HUD’s information technology investment management decisions, the Secretary of HUD should ensure that the department fully implements and institutionalizes a disciplined and documented process consistent with provisions of the Clinger-Cohen Act and the Paperwork Reduction Act, as well as GAO’s and OMB’s guidance for selecting, controlling, and evaluating information technology investments.
AIMD-99-25 Dec. 18, 1998	In order to strengthen FSI management and oversight and HUD’s information technology investment management decisions, the Secretary of HUD should ensure that the department develops and uses defined processes for estimating FSI costs.
RCED-98-65 March 27, 1998	So long as contractors are involved in providing asset management services for properties in HUD’s single-family inventory, the Secretary of HUD should establish a process for monitoring the administration of such contracts at field offices and home ownership centers.
RCED-98-117 April 23, 1998	To ensure that risk-sharing demonstration programs’ managers have consistent and reliable data to meet their statutory and regulatory obligations, the Secretary of HUD should take steps to correct current flaws in the information systems supporting the programs.
RCED-98-117 April 23, 1998	In correcting the flaws in the data system supporting the credit enhancement program, the Secretary of HUD should direct system designers and program managers to examine the near-term suitability of using spreadsheets and databases commonly contained in suite software within the context of the long-term data needs of a growing universe of projects, giving careful consideration to the requirements of all users of the system.
RCED-98-117 April 23, 1998	The Secretary of HUD should give priority to implementing a comprehensive monitoring system to ensure that HUD’s risk-sharing partners are complying with the demonstration programs’ procedures, regulations or risk-sharing agreements, including the requirements for timely reporting on the status of insured loans.
RCED-98-202 July 22, 1998	To improve HUD’s oversight Section 8 project-based balances, the Secretary of HUD should require the Chief Financial Officer to revise the procedures used in HUD’s annual review of unexpended balances to ensure that balances that are not needed are identified and deobligated in a timely manner.
T-RCED-94-273 July 26, 1994	The Secretary of HUD should develop a comprehensive strategy to address the very poor physical conditions under which some families supported by Section 8 project-based assistance are living.
T-RCED-94-273 July 26, 1994	To the extent that budgetary or legislative constraints prevent HUD from addressing the very poor physical conditions of Section 8 properties, the Secretary of HUD should provide Congress with an assessment of the resources and legislative changes the Department needs.