HUD’s Fiscal years 2017 and 2016 (Restated) Consolidated Financial Statements Audit

Date Issued: 
Thursday, November 16, 2017
Publication/Report Type: 
Audit Reports
Report Number: 
2018-FO-0005
Program Area(s): 
Chief Financial Officer
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) and the stand-alone financial statements of the Federal Housing
Administration and the Government National Mortgage Administration (Ginnie Mae). 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 independent auditor’s report on HUD’s fiscal years 2017
and 2016 (restated) consolidated financial statements and reports on internal controls and
compliance with laws and regulations.

We expressed a disclaimer of opinion on HUD’s fiscal years 2017 and 2016 (restated)
consolidated financial statements because of the significant effects of certain unresolved audit
matters, which restricted our ability to obtain sufficient, appropriate evidence to express an
opinion. These unresolved audit matters relate to (1) HUD’s improper use of cumulative and
first-in, first-out budgetary accounting methods of disbursing community planning and
development program funds, (2) the $3.6 billion in nonpooled loan assets from Ginnie Mae’s
stand-alone financial statements that we could not audit due to inadequate support, (3)
unvalidated grant accrual estimates, and (4) the improper accounting for certain HUD assets and
liabilities. Additionally, due to weaknesses in its financial reporting process, we were unable to
review note 3 and note 7 to the consolidated financial statements. This report contains nine
material weaknesses, six significant deficiencies, and three instances of noncompliance with
applicable laws and regulations. Additional details of the material weaknesses, significant
deficiencies, and instances of noncompliance with laws and regulations and related
recommendations are included in separate audit reports entitled (1) Additional Details To
Supplement Our Fiscal Years 2017 and 2016 (Restated) U.S. Department of Housing and Urban
Development Financial Statement Audit, audit report 2018-FO-0004; (2) Audit of the Federal
Housing Administration Financial Statements for Fiscal Years 2017 and 2016 (Restated), audit
report 2018-FO-0003, and (3) Audit of the Government National Mortgage Association’s
Financial Statements for Fiscal Years 2017 and 2016 (Restated), audit report 2018-FO-0002.

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