GAO finds holes in HUD records

Department of Housing and Urban Development

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The Department of Housing and Urban Development did a poor job of managing and accounting for purchases of computers and related equipment over a three-year period, according to congressional auditors.

In reviewing HUD's internal accountability systems and controls during fiscal years 2001, 2002 and 2003, the General Accounting Office found that department officials consistently failed to record computer equipment purchases in its asset management system, adequately maintain or reconcile records, and conduct regular inventory checks of the locations and quantities of the equipment.

Unless the department addresses its weaknesses, GAO's report states that accountability over existing computer equipment "will remain problematic and these assets will continue to be vulnerable to loss or misappropriation."

In reviewing selected computer equipment purchases from four key vendors, GAO identified nearly 2,400 computer items, representing more than $2.2 million in value, that were not recorded in HUD's asset management system, called FIRMS (Facilities Integrated Resource Management System). Ultimately, department officials could not provide the locations for 104 items, collectively worth more than $82,000.

Partly to blame for the problem is the fact that such equipment was bought using government purchase cards. However, HUD awarded an $860 million information technology contract to EDS last August to consolidate all information processing, telecommunications and other IT needs on an enterprise basis. GAO's report states that one contractor should simplify the process, but the department still needs to reconcile FIRMS with the general ledger for disposal and depreciation activity as well as verify accountability.

Incidentally, the HUD Information Technology Services (HITS) contract is being contested by Lockheed Martin Corp., and EDS has also filed a new protest.

GAO issued seven recommendations, including:

Educating department employees abut policies and procedures for recording computer equipment purchases.

Follow up and determine the locations of 104 items not recorded in FIRMS.

Establish specific requirements to records maintenance in locating computer equipment.

Do quarterly reconciliation of both capitalized and noncapitalized computer equipment purchases in FIRMS.

Separate accountable equipment purchases from nonaccountable purchases in the general ledger to help reconcile the process.

Update FIRMS to reflect recently updated physical inventory.

Perform a complete and accurate physical inventory of computer equipment annually and update FIRMS as needed to reflect that.

In response to the report, Vickers Meadows, HUD's assistant secretary for administration, wrote that the department concurred with the findings and recommendations and that the responsible agencies will collaborate to reconcile FIRMS with the centralized accounting system.

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