EXECUTIVE

Watchdog calls out HUD for $500B-plus in accounting 'errors'

'The Property Man' Bob Massi weighs in

 

Everybody makes mistakes – but this could be an accounting error for the ages. 

An inspector general audit has identified more than $500 billion in "errors corrected" in the notes and financial statements for the Department of Housing and Urban Development under the Obama administration. 

According to the report released in March, HUD reissued financial statements for fiscal 2015 and 2016 "due to pervasive material errors that we identified." Those errors were contained in a November filing.

"The total amounts of errors corrected in HUD’s notes and consolidated financial statements were $516.4 billion and $3.4 billion, respectively," the IG said.  

The office also noted other circumstances that apparently made it difficult for the IG to obtain “sufficient, appropriate evidence” as part of the report. According to the IG, this included weak internal controls over financial reporting which led to errors and delays in preparing financial statements; several “significant deficiencies”; and instances of noncompliance with applicable laws and regulations.

In response, HUD revised the statements and said the “errors” were solely in “presentation” of financial information which had since been corrected. A February letter from HUD’s Chief Financial Officer Courtney B. Timberlake also argued that the corrections “did not represent a change in cash balances, any improper payments, or misallocation of HUD resources.”

A source at HUD told Fox News that the matter of revising and re-issuing financial statements is taken “very seriously.”

But according to the Office of the Inspector General, HUD’s statements are “misleading” because they imply that the information reported was correct, and “merely presented inconsistently.”

OIG said HUD’s management is “downplaying the severity of the condition and impact of errors identified,” noting that they were significant enough to cause the department to reissue financial statements and notes for 2016.

Some of the errors were caused by HUD rounding dollar amounts to the nearest “billion,” when financial guidance calls for rounding to the nearest “million.” 

Errors are common, but not of this magnitude.

“While we have audited HUD’s reissued statements, we have not fully evaluated any of the new process improvements HUD discussed in its response,” Assistant Inspector General for Audit Randy McGinnis wrote in a March 1 letter. “We look forward to evaluating these processes as part of our fiscal year 2017 audit.”

While Ben Carson is now secretary of HUD, Julian Castro was secretary at the end of the Obama administration.

HUD OIG performs an annual audit, as required by the Chief Financial Officers Act of 1990. 

Brooke Singman is a Politics Reporter for Fox News. Follow her on Twitter at @brookefoxnews.