HUD’s Fiscal Years 2016 and 2015 (Restated) Consolidated Financial Statements Audit (Reissued)

Date Published: 
Wednesday, March 1, 2017
Publication/Report Type: 
Audit Reports
Report Number: 
2017-FO-0005
Program Area(s): 
Federal Housing Administration (FHA), Chief Financial Officer, Government National Mortgage Association
State: 
District of Columbia
Summary: 

In accordance with the Chief Financial Officers Act of 1990, as amended, we are required to annually audit the consolidated financial statements of the U.S. Department of Housing and Urban Development (HUD). HUD reissued its fiscal year 2016 and 2015 (Restated) consolidated financial statements due to pervasive material errors that were identified by us. Our objective was to express an opinion on the fairness of HUD’s consolidated financial statements in accordance with U.S. generally accepted accounting principles applicable to the Federal Government. This report presents our reissued independent auditor’s report on HUD’s fiscal years 2016 and 2015 (Restated) consolidated financial statements, including an update to our report on HUD’s internal controls. 

The total amount of errors corrected in HUD’s notes and consolidated financial statements were $516.4 billion and $3.4 billion, respectively. There were several other unresolved audit matters, which restricted our ability to obtain sufficient, appropriate evidence to express an opinion.These unresolved audit matters relate to (1) OGC’s declination of signing the management representation letter; (2) HUD’s improper use of cumulative and first-in, first-out budgetary accounting methods of disbursing community planning and development program funds; (3) the $4.2 billion in nonpooled loan assets from Ginnie Mae’s stand-alone financial statements that we could not audit due to inadequate support; (4) the improper accounting for certain HUD assets and liabilities; and (5) material differences between HUD’s subledger and general ledger accounts. This audit report contains 11 material weaknesses, 7 significant deficiencies, and 5 instances of noncompliance with applicable laws and regulations. These were due to an inability to establish a compliant control environment, implement adequate financial accounting systems, retain key financial staff, and identify appropriate accounting principles and policies.

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