HUD's First-Year Implementation of the Federal Managers' Financial Integrity Act

GAO summarized the results of its review of the process used by the Department of Housing and Urban Development (HUD) to implement the Federal Managers' Financial Integrity Act.

GAO found that HUD has made progress in implementing its internal control evaluation process in accordance with Office of Management and Budget guidelines. In organizing the evaluation process, it: (1) requested top-level support and established a schedule for completing the various steps of the process; (2) developed overall guidance for compliance; (3) made a preliminary review of units which were considered highly vulnerable; and (4) took or plans to take actions to correct weaknesses it identified through the evaluation process. GAO considered the first annual statement to the President and Congress on the adequacy of internal controls and accounting systems to be an accurate representation of HUD progress to date. However, GAO found several areas that can be strengthened as HUD continues its internal control evaluation process: (1) HUD failed to perform sufficient vulnerability assessments; (2) the assessments did not include a separate preliminary evaluation of safeguards and cannot be easily compared; and (3) HUD failed to develop sufficient documentation to clearly indicate the factors considered, procedures followed, or bases for answers to questions concerning its internal control evaluation process. In addition, HUD did not emphasize automatic data processing (ADP) reviews and did not establish organizational responsibility for assessing ADP controls. Finally, HUD did not have specific guidance for performing quality assurance reviews of its internal control process.