HUD faces fight to exit `high-risk' list

The Department of Housing and Urban Development has a lot more work to do to clean up information technology deficiencies that leave the agency open to waste and fraud the General Accounting Office reported last month.

The sharply worded report issued as part of GAO's renowned "High-Risk Series " cited factors such as a lack of necessary data and management processes unreliable information and financial management systems and overlapping responsibilities.

The report concluded that HUD the only Cabinet-level department wholly designated as high-risk has made progress in reforming information and financial management systems since 1994 when it first was designated high-risk. But the report went on to note that "HUD's programs will continue to remain highly vulnerable to fraud waste abuse and mismanagement until the agency completes more of its planned corrective actions and until the administration and the Congress reach closure on a strategy to either consolidate reduce and/or re-engineer HUD's programs to bring the department's management responsibilities in line with its capacity."

GAO cited several information resources management snafus including Federal Housing Administration (FHA) systems that did not provide reliable information and management systems that did not meet Federal Managers' Financial Integrity Act requirements and therefore could not be relied upon to provide timely accurate and reliable financial information and reports.

"These [information and financial management] systems were poorly integrated ineffective and generally unreliable " according to the report. "They neither satisfied management's needs nor provided adequate control over HUD's housing and community development programs. These problems occurred because historically HUD's information resources had not been planned or managed to meet the department's missions and strategic objectives."

Larry Dyckman associate director of housing and community development issues for GAO acknowledged: "The government has a lot of exposure. [HUD] is aware of its problem. I think it's taking action."

HUD is one of the nation's largest financial institutions with responsibility for managing more than $400 billion worth of insured mortgages $485 billion in outstanding mortgage-backed securities and close to $180 billion in budget authority for future commitments. But the agency which is aiming to trim its staff from 10 500 to 7 500 by fiscal 2000 has scores of systems that do not comply with federal rules.

In his fiscal 1998 budget proposal President Clinton asked Congress for $253 million for IT investments at HUD $66 million of which would provide better internal controls and oversight of HUD programs and procedures such as verification of grant recipients' eligibility and servicing of FHA mortgages. Close to $43 million is being spent in the current fiscal year to hone HUD's IRM.

HUD officials have formed two committees to formulate plans pursuant to the Government Performance and Results Act which requires agencies to show how their IT expenditures will help them run their programs better in order to improve their systems.

Part of the remedy involves getting HUD officials to think differently said David Cristy HUD's director of IRM policy and management. "[The principal concern is with] how program managers are using and valuing information " he said. "It's getting program managers to understand information as part of their program.

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