Major Management Challenges and Program Risks

This publication is part of GAO's performance and accountability series which provides a comprehensive assessment of government management, particularly the management challenges and program risks confronting federal agencies. Using a "performance-based management" approach, this landmark set of reports focuses on the results of government programs--how they affect the American taxpayer--rather than on the processes of government. This approach integrates thinking about organization, product and service delivery, use of technology, and human capital practices into every decision about the results that the government hopes to achieve. The series includes an overview volume discussing governmentwide management issues and 20 individual reports on the challenges facing specific cabinet departments and independent agencies. The reports take advantage of the wealth of new information made possible by management reform legislation, including audited financial statements for major federal agencies, mandated by the Chief Financial Officers Act, and strategic and performance plans required by the Government Performance and Results Act. In a companion volume to this series, GAO also updates its high-risk list of government operations and programs that are particularly vulnerable to waste, fraud, abuse, and mismanagement.

GAO noted that: (1) HUD continues to make progress in overhauling its operations to correct its management deficiencies; (2) it has improved its financial reporting to the extent that its Inspector General was able to provide qualified opinions on its financial statements for fiscal years 1996 and 1997, compared with no opinion on the reliability of its financial statements for fiscal year 1995; (3) it deployed components for improving its information and financial management systems, reorganized its resources by function, and established various consolidated or centralized entities for single-family insurance operations, the payment of rental assistance, assessments of HUD-owned or HUD-sponsored rental properties, and enforcement activities; (4) HUD refocused and began retraining its workforce; (5) a major contributor to this progress is HUD's June 1997 2020 Management Reform Plan, a set of proposals intended to correct the management deficiencies that GAO and others identified; (6) the plan calls for reducing the number of programs, reducing staffing levels, retraining the majority of the staff and separating service from compliance functions, reorganizing the 81 field offices, consolidating processes and functions within and across program areas into specialized centers, and modernizing and integrating information and financial management systems; (7) HUD has also linked its management reform efforts to the strategic and annual plans it has developed under the Government Performance and Results Act of 1993; (8) as a result, its success in achieving strategic objectives and meeting annual performance goals depends on the success of its management reforms; (9) Booz-Allen and Hamilton, Inc., reported in March 1998 that these reforms, when implemented, should: (a) present a a significant improvement in HUD's performance; (b) lower the risk of fraud, waste and abuse in its programs; and (c) position HUD to better serve America's communities; (10) while major reforms are under way, GAO's recent work indicates that internal control weaknesses and problems with information and financial management systems persist; (11) furthermore, recent reforms to address HUD's organizational and staffing problems are in the early stages of implementation, and it is too soon to tell whether or not they will resolve the major deficiencies that GAO and others have identified; and (12) consequently, GAO continues to believe, as it reported in 1995 and 1997, that these deficiencies, taken together, place the integrity and accountability of HUD's programs at high risk.