Department of Housing and Urban Development

In testimony in October 2002 and in a report issued in April 2003 we raised concerns about the Department of Housing and Urban Development's (HUD) accountability for computers and computer-related equipment bought with government purchase cards. Our review identified a large volume of computers and computer-related purchases for which HUD did not have adequate supporting documentation. In addition, HUD acknowledged that items bought with purchase cards were not being consistently entered in its asset management system thereby increasing its vulnerability to loss or theft. Given these findings, and the approximately $59 million HUD reported it has spent on computers and computer-related equipment and services over the last 3 fiscal years, Congress asked of us to further assess HUD's accountability for these vulnerable assets. Specifically, it was requested that we determine whether HUD had established an effective system of internal control for maintaining accountability over its computer equipment. Our review covered HUD's systems and controls in place during fiscal years 2001, 2002, and 2003.

HUD did not have an effective internal control system in place to maintain accountability over its computer equipment. Fundamental internal control activities were not performed, and as a result, computers and computer-related equipment were highly vulnerable to loss or misappropriation. We found that HUD did not consistently record computer equipment purchases in its asset management system or effectively maintain or reconcile its records. In addition, HUD did not perform regular physical inventories to verify the quantities and location of computer equipment. Because of these serious internal control weaknesses, neither HUD nor we were able to reliably determine the total amount of computer equipment purchases during the period of our review. However, for four of HUD's major computer equipment vendors, we were able to identify over $2.2 million in computer equipment purchased in fiscal years 2001, 2002, and 2003 that was not recorded in HUD's asset management system, of which we determined over $82,000 to be lost or missing. Given the seriousness of the identified control weaknesses, these numbers could be much higher. Although HUD has awarded a new information technology contract for essentially all of its information processing, telecommunications, and related needs on an agencywide basis, it will still be accountable for HUD-owned equipment at least through fiscal year 2006. Until HUD corrects the weaknesses in its internal controls, accountability over existing computer equipment will remain problematic, and these assets will continue to be vulnerable to loss or misappropriation.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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