GAO Audits of Accounting and Financial Management Systems at the Federal Housing Administration

GAO discussed its examinations of the Federal Housing Administration's (FHA) financial management problems. GAO noted that: (1) serious problems with FHA financial management operations surfaced in 1975, with such accounting and internal control deficiencies as unrecorded transactions, lack of detailed supporting records, and unreconciliated accounts preventing FHA from producing accurate financial statements; (2) although GAO worked with FHA in 1981 to assemble a set of financial statements that conformed with generally accepted accounting principles, serious accounting and financial reporting problems caused GAO to terminate its audit of FHA fiscal year (FY) 1984 financial statements; (3) after determining that it could not audit FHA FY 1987 records, an independent certified public accounting firm audited financial statements to establish a baseline for a 1988 audit; and (4) previous GAO reports identified a wide range of such financial management problems as internal control weaknesses, accounting system deficiencies, management inattention, and inadequate management information systems. GAO believes that FHA will require multi-year solutions and long-term commitment from top management to correct its long-standing accounting and financial management problems.