HUD's Unsupported Yearend Obligations Overstate the Progress of Assisted Housing

The discussion concerned the year-end surge in obligations in the Department of Housing and Urban Development's (HUD) assisted housing account and GAO conclusions regarding the validity of certain obligations. In fiscal year 1978, HUD obligated about 49 percent of its total annual obligations in the last month of the year, a surge of $18 billion. GAO believes that a substantial portion of the year-end obligations reported by HUD have been invalid because they did not meet the statutory test of legal sufficiency. By deobligating and reobligating funds HUD provides itself with significant amounts of obligational authority in excess of that indicated by its year-end financial reports. Furthermore, in reporting obligations based on reservation and notification letters, HUD could have misled Congress on its needs for additional budget authority during the next fiscal year by understating the balance available for obligation and giving the impression that HUD has actually contracted for assisted housing to a greater extent than it has. The review indicates that the year-end spending problem is of sufficient magnitude to be of concern, and that continual monitoring is necessary. GAO has suggested that the House and Senate Appropriations Committees consider deferring any action on the current HUD appropriation request for the assisted housing account until HUD can report to Congress an accurate and complete statement of valid obligations as required by law.