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The audit is lengthy. Here’s a couple of things I came across:

****Errors in financial statement note disclosures. We found that 19 of 31 financial
statement notes (61 percent) contained errors with an approximate absolute value totaling
$278.5 billion. Of the $278.5 billion in errors, $159.4 billion in errors was due primarily
to (1) incorrect data entry, (2) omission of restated balances, or (3) incorrect data
provided by HUD’s component entities (FHA and Ginnie Mae). The remaining $119.1
billion in errors was due to inappropriate rounding adjustments. We found several
instances in which rounding was performed to the nearest billion and hundred billion,

1. HUD Assets and Liabilities Were Misstated and Not Adequately Supported
HUD did not properly account for, have internal controls over, or have adequate support for all
of its assets and liabilities. Specifically, (1) CPD did not validate its accrued grant liabilities
estimates; (2) HUD’s accounting for its cash management process did not include the recognition
of receivables and payables when incurred and understated its prepayment balance; (3) HUD did
not recognize a prepayment for funds advanced to its IHBG grantees that were used for
investment; (4) EHLP could not be audited; (5) balances related to HUD’s loan guarantee
programs were not reliable; and (6) HUD did not properly account for its property, plant, and
equipment. These problems occurred because of continued weaknesses in HUD’s internal
controls and a lack of communication between OCFO and the program offices. As a result,
several financial statement line items were misstated or could not be audited as of September 30,
2016. Specifically, (1) CPD’s accrued grant liabilities estimates could not be audited; (2) HUD’s
PIH prepayments and accounts receivable balances contained errors with an absolute value of
approximately $476.2 million and $201.2 million, respectively, and accounts payable were
understated by an unknown amount; (3) HUD’s expenses on its statement of net costs were
overstated by $293.2 million; (4) loans receivable balances for EHLP could not be audited and
were potentially misstated; (5) balances related to HUD’s loan guarantee programs were
misstated by unknown amounts; and (6) HUD’s $297 million balance for property, plant, and
equipment was not supported.

2....some contractors had inappropriate access to sensitive budget and general ledger financial transactions.
Further, inaccurate security documentation could lead to inappropriate decisions.

3. HUD Continued To Not Comply With the HOME Investment Partnership Act

4. HUD Did Not Comply With Treasury Financial Manual’s Rules on Cash Management or 2 CFR
Part 200

5. HUD Did Not Comply With the Improper Payments Elimination and Recovery Act of 2010

6. Ginnie Mae Did Not Comply With the Debt Collection Improvement Act of 1996

7. HUD Assets and Liabilities Were Misstated and Not Adequately Supported

Much more at link:

https://www.hudoig.gov/sites/default/files/documents/2017-FO-0005.pdf