Financial Management: Information on the Mandated Transfer of	 
HUD's Appropriation Law Function to the Chief Financial Officer  
(21-NOV-03, GAO-04-272R).					 
                                                                 
The Departments of Veterans Affairs and Housing and Urban	 
Development (HUD), and Independent Agencies Appropriations Act,  
2003 (the Appropriation Act) gave HUD's Chief Financial Officer  
(CFO), in consultation with the HUD Budget Officer, the "sole	 
authority" to investigate potential or actual violations under	 
the Anti- Deficiency Act and all other statutes and regulations  
related to the obligation and expenditure of funds made available
in any act. Further, the Appropriations Act provided that the CFO
shall determine whether violations occurred and submit the final 
reports required by law. Finally, the Appropriation Act required 
the Secretary of HUD to transfer no fewer than four appropriation
law attorneys from its Office of General Counsel (OGC) to its	 
Office of Chief Financial Officer (OCFO). These provisions and	 
HUD's actions to implement the Appropriation Act's requirements  
raised a number of potential implementation issues and led to a  
Congressional request that we review and provide information on  
the impact that these provisions have had at HUD. Specifically,  
Congress asked for information pertaining to five questions,	 
which we have provided in a question and answer format in this	 
report. As discussed, the responses to these questions are	 
primarily based on information obtained from interviews with	 
various HUD and HUD Office of Inspector General (OIG) officials  
who were affected by the Appropriation Act.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-272R					        
    ACCNO:   A08930						        
  TITLE:     Financial Management: Information on the Mandated	      
Transfer of HUD's Appropriation Law Function to the Chief	 
Financial Officer						 
     DATE:   11/21/2003 
  SUBJECT:   Strategic planning 				 
	     Conflict of interests				 
	     Federal agency reorganization			 
	     Federal law					 
	     Appropriations					 
	     Internal controls					 

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GAO-04-272R

United States General Accounting Office Washington, DC 20548

November 21, 2003

The Honorable Christopher S. Bond
Chairman
The Honorable Barbara A. Mikulski
Ranking Minority Member
Subcommittee on Veteran Affairs, HUD and Independent Agencies
Committee on Appropriations
United States Senate

Subject: Financial Management: Information on the Mandated Transfer of
HUD's Appropriation Law Function to the Chief Financial Officer

The Departments of Veterans Affairs and Housing and Urban Development
(HUD), and Independent Agencies Appropriations Act, 2003 (the
Appropriation Act)1 gave HUD's Chief Financial Officer (CFO), in
consultation with the HUD Budget Officer, the "sole authority" to
investigate potential or actual violations under the Anti-Deficiency Act2
and all other statutes and regulations related to the obligation and
expenditure of funds made available in any act. Further, the
Appropriations Act provided that the CFO shall determine whether
violations occurred and submit the final reports required by law. Finally,
the Appropriation Act required the Secretary of HUD to transfer no fewer
than four appropriation law attorneys from its Office of General Counsel
(OGC) to its Office of Chief Financial Officer (OCFO).

These provisions and HUD's actions to implement the Appropriation Act's
requirements raised a number of potential implementation issues and led to
your request that we review and provide information on the impact that
these provisions have had at HUD. Specifically, you asked for information
pertaining to the following five questions, which we have provided in a
question and answer format in this report. As discussed with your staff,
the responses to these questions are primarily based on information
obtained from interviews with various HUD and HUD Office of Inspector
General (OIG) officials who were affected by the Appropriation Act.

1. 	What functions were transferred to OCFO and how has HUD implemented
the administration of these functions within OCFO?

1 Pub. L. No. 108-7, Div. K, 117 Stat. 11, 474 (2003). 2 31 U.S.C. S:S:
1341, 1342, 1350, 1517, 1519 (2000).

2. 	Is there any conflict between the CFO's traditional duties and
responsibilities and (a) the sole authority to investigate and report on
potential or actual violations of statutes and regulations related to the
obligation and expenditure of funds or (b) the added responsibility of
sole authority to opine on all appropriations law issues?

3. 	What steps has HUD taken to ensure that any conflict of interest has
been identified and eliminated?

4. 	Are there any issues associated with removing the HUD General Counsel
from being able to review any appropriations law actions of the CFO or the
HUD Budget Officer and render timely, needed advice to the HUD Secretary
on any aspect of appropriations law?

5. 	Does the "sole authority" to investigate and report provided to the
CFO by the Appropriation Act conflict with or undermine the authority
provided to the Inspector General by the Inspector General Act?

To address your request, we obtained and reviewed the relevant provisions
of the Appropriation Act and related conference and committee reports. We
interviewed several senior level HUD officials affected by the
Appropriation Act's provisions, including the General Counsel and several
other attorneys from HUD's OGC; HUD's Deputy Chief Financial Officer3 and
staff from his office, including the head appropriations law attorney and
HUD's budget officer; and senior officials from HUD's program offices who
receive legal services from HUD's attorneys. We also interviewed officials
from HUD's OIG and reviewed the OIG's March 2002 report on the Office of
Multifamily Housing Assistance Restructuring (OMHAR) Anti-Deficiency Act
case.4 We also reviewed the Anti-Deficiency Act, the Chief Financial
Officers Act of 1990, and the Inspector General Act of 1978, as amended
(IG Act). Finally, we reviewed the department's revised funds control
handbook dated December 18, 2002, which was updated and issued just prior
to the enactment of the Appropriation Act

5

and which lays out HUD's process for handling future Anti-Deficiency Act
issues. We requested comments on a draft of this report from the Secretary
of Housing and Urban Development and HUD's Inspector General or their
designees. We conducted our work from August 2003 through November 2003 in
accordance with U.S. generally accepted government auditing standards.

Summary

There was general agreement among the HUD officials we spoke with that the
OMHAR Anti-Deficiency Act investigation was contentious and highlighted
the need for changes to strengthen the department's funds control system
and to improve the

3 HUD's Chief Financial Officer position is currently vacant.
4 HUD Office of Inspector General Audit Memorandum Report 2002-DE-0801
(March 22, 2002),
"Alleged Violations of the Anti-Deficiency Act and the HUD Reform Act by
the Office of Multifamily
Housing Assistance Restructuring (OMHAR)." There was consensus among HUD
officials that HUD's
handling of this Anti-Deficiency Act case played a significant role in the
events leading to enactment of
the Appropriation Act's provisions that are the subject of this request.
5 HUD is currently revising its funds control handbook (Handbook No.
1830.2 Rev-4) to incorporate the
organizational changes mandated by the fiscal year 2003 Appropriation Act.

department's process for responding to Anti-Deficiency Act issues. Some
HUD officials also told us that tension over the handling of
Anti-Deficiency Act issues led to changes in OGC's provision of legal
assistance to OCFO, which hindered timely, informal communications between
OCFO and OGC's appropriation law attorneys. However, there were differing
views on how to address these matters and on various implementation issues
raised about provisions included in the Appropriation Act.

There was agreement on what functions and roles OCFO assumed pursuant to
the Appropriation Act. HUD transferred four appropriations law attorneys
from OGC to OCFO as required. Also, in addition to OCFO's typical
responsibilities of accounting, financial reporting, budgeting, and
establishing and maintaining the department's funds control system, the
HUD officials concurred that OCFO is now responsible for all appropriation
law matters, including providing legal interpretations on appropriation
law to HUD's Secretary and program offices and leading all Anti-Deficiency
Act investigations that may arise within the department. There also was
general consensus that having OCFO as a designated focal point within HUD
for addressing Anti-Deficiency Act matters was a positive development.

Regarding the remaining questions you raised, there was much less
consensus concerning potential conflicts of interest and the respective
roles of OCFO, OGC, and the IG. Responses to the remaining questions
revealed different perspectives, most notably over the implication of the
Appropriation Act providing OCFO with "sole authority" to investigate and
determine violations of appropriation law and transferring attorneys from
OGC to OCFO.

Certain HUD officials and the OIG officials we spoke with believe there is
a conflict of interest, or at least the appearance of a conflict, by
having OCFO solely responsible for investigating, determining, and
reporting on potential or actual Anti-Deficiency Act violations in
situations involving breakdowns in HUD's funds control system. The OIG
officials cited the OMHAR Anti-Deficiency Act case as a prime example of
the existence of a conflict as two of the four individuals deemed
responsible for that violation worked within OCFO. Others, particularly
within HUD's OCFO, while acknowledging these concerns, did not necessarily
feel that the Appropriation Act's provisions created a conflict. Instead
they said it was their management responsibility, even without the
legislation, to be involved with and lead investigations of potential or
actual Anti-Deficiency Act violations. Nevertheless, OCFO has taken
certain steps that it believes will help minimize the potential for, or
the appearance of, a conflict of interest by establishing and documenting
the process that will be followed if and when future Anti-Deficiency Act
violations arise. Additionally, OCFO is also now finalizing the
establishment of a new division within OCFO that will be headed by an
individual with no budgetary or funds control responsibilities to oversee
and report on future Anti-Deficiency Act investigations.

The HUD program officials and most of the attorneys, including the head
appropriations law attorney in OCFO, we spoke with who work with the
program offices every day did say that despite HUD's best efforts to
implement the new mandated structure and ensure collaboration among the
two groups of attorneys, the transfer of the appropriations law attorneys
from OGC to OCFO caused initial and lingering confusion over which group
of attorneys should be consulted for legal assistance. According to the
General Counsel, this confusion delays legal advice,

provides the opportunity for program officials to "shop" for legal
interpretations, and hampers his ability to provide timely, needed legal
advice not only to the Secretary but also to the HUD program offices.
Further, numerous officials said they were not sure how differing legal
views would be resolved. Historically, the General Counsel has made the
final interpretation. On the other hand, officials from OCFO said the
transfer of the appropriation attorneys was necessary because at some
point during the OMHAR Anti-Deficiency Act investigation the General
Counsel began restricting access to the appropriation law attorneys by
requiring formal written requests for all appropriation law services. As a
result, an official in HUD's OCFO said that his office and the program
offices could not obtain needed assistance on appropriation law issues in
a timely manner.

Finally, OIG officials told us that they see two conflicts, or at least
possible conflicts, between the literal language of the Appropriations Act
and the language of the IG Act. First, they said that by providing OCFO
with "sole authority" to investigate potential or actual Anti-Deficiency
Act violations, the Appropriations Act conflicts with the language of the
IG Act that generally authorizes the OIG to investigate HUD matters. In
response to this conflict, the OIG is referring all potential
Anti-Deficiency Act issues to HUD's OCFO. Second, the OIG officials said
they believe there is a possible conflict between OCFO's sole authority to
report on Anti-Deficiency Act violations under the Appropriation Act and
the OIG's authority to report criminal violations to the Attorney General
under the IG Act. On the other hand, officials from HUD's OCFO said that
the OIG should not routinely be involved in an Anti-Deficiency Act
violation until an official determination has been made by the department.
At that time, the OCFO official said it would be appropriate for the OIG
to review the work that went into the investigation, and more importantly
and pursuant to their authority, to investigate and determine whether
criminal acts may have been committed.

Background

In its report 6 on the fiscal year 2003 Departments of Veterans Affairs
and Housing and Urban Development, and Independent Agencies Appropriations
Bill, the House Appropriations Committee noted that in prior years it and
others, including GAO and the Office of Management and Budget (OMB), had
raised concerns about HUD's system of funds control and compliance with
the Anti-Deficiency Act. Congress enacted the Anti-Deficiency Act and has
amended it over many years to prohibit agencies from making obligations
and expenditures in excess of the appropriations provided to them. Among
other things, the Anti-Deficiency Act prohibits officers or employees of
the United States government, unless otherwise authorized by law, from (1)
making or authorizing an obligation or expenditure in excess of an
available appropriation or fund, (2) involving the government in any
contract or obligation in advance of appropriations, or (3) making
obligations or expenditures in excess of an apportionment or the amount
permitted by agency regulations. To help protect against violating the
Anti-Deficiency Act's prohibitions, Congress amended the Anti-Deficiency
Act on several occasions to establish requirements for agency systems of
funds control. When violations do occur, the Anti-Deficiency Act requires
that agency heads report to the President and Congress and subjects the
officers and

6 H.R. Rep. No. 107-740, at 78-79 (2002).

employees responsible for the violation to possible adverse personnel
actions and criminal penalties.7

The House Appropriations Committee report also noted that these concerns
and three recent Anti-Deficiency Act violations8 that were brought to the
Committee's attention prompted an investigation by the Committee's Survey
and Investigations staff into HUD's procedures to investigate and enforce
the Anti-Deficiency Act. According to the House Appropriations Committee
report, the House investigators determined that HUD lacked adequate funds
control policies and procedures with respect to oversight, checks and
balances, automated systems, audits, and training.

On the basis of these findings, the House Appropriations Committee
included bill language and additional funding to assist HUD's efforts to
improve funds control and its financial management systems. Additional
bill language vested the sole authority to investigate, determine, and
report compliance with the Anti-Deficiency Act and all other
appropriations law with HUD's OCFO. The bill language also required the
transfer of no fewer than four appropriation law attorneys from OGC.

The Senate's version of the fiscal year 2003 appropriations bill for HUD
did not contain any similar provisions. The Departments of Veterans
Affairs and Housing and Urban Development, Independent Agencies
Appropriations Act, 2003, was ultimately enacted on February 20, 2003, as
part of the Consolidated Appropriations Resolution, 2003.9 The
appropriations for HUD "Management and Administration, salaries and
expenses" essentially adopted the language from the House bill that
involved OCFO's responsibilities for Anti-Deficiency Act and other
appropriation law matters and the transfer of four appropriation law
attorneys.10 In the conference report11 on the Consolidated Appropriations
Resolution, 2003, the conferees reiterated the concerns expressed in the
House report about the severe chronic funds control problems at HUD,
including the department's failure to make timely, formal determinations
of the violations of the Anti-Deficiency Act and other appropriations
statutes. As of March 2003, HUD had completed the mandated transfer of the
four appropriation law attorneys from OGC to OCFO.

7 OMB Circular A-11 provides requirements for funds control and
instructions for required agency head
reports if the agency head determines that an Anti-Deficiency Act
violation occurred. For an extensive
discussion of the Anti-Deficiency Act, see chapter 6 of GAO's Principles
of Federal Appropriations
Law.
8 The most significant Anti-Deficiency Act violation involved HUD's Office
of Multifamily Housing and
Assistance Restructuring's (OMHAR) use of technical assistance grant
funds. HUD's investigation into
this matter was lengthy and resulted in mixed opinions about whether an
Anti-Deficiency Act violation
actually occurred. Both HUD's General Counsel and the Office of Inspector
General concluded that
with respect to the OMHAR case no Anti-Deficiency Act violation occurred.
However, HUD's
Secretary ultimately concluded there was an Anti-Deficiency Act violation
and reported it.
9 Pub. L. No. 108-7, Div. K, 117 Stat. 11, 474 (2003).
10 117 Stat. at 499-500.
11 H.R. Conf. Rep. No. 108-10, at 1427 (2003).

Questions and Answers

1. What functions were transferred to OCFO and how has HUD implemented the
administration of these functions within OCFO?

Provisions in the Appropriations Act, gave OCFO, in consultation with the
Budget Officer, the "sole authority" to investigate potential or actual
violations of the Anti-Deficiency Act and all other statutes and
regulations related to the obligation and expenditure of funds. In
addition, OCFO is to determine whether violations exist and is to submit
the final reports on violations to the Secretary, the President, OMB, and
Congress.

As required by the Appropriations Act, HUD transferred four attorneys from
the Legislation Division, Office of Legislation and Regulations, Office of
General Counsel to OCFO. Two of these attorneys had what HUD described as
"significant" appropriations law experience, while the other two had
lesser amounts of appropriations law experience. OCFO's appropriations law
function is now responsible for providing legal assistance on all
appropriations law matters to HUD's program offices as well as the HUD
Secretary. The appropriation law attorneys are supervised by a GM-15
attorney and are currently reporting to HUD's Deputy CFO, who is not an
attorney.

2. Is there any conflict between the CFO's traditional duties and
responsibilities and (1) the sole authority to investigate and report on
potential or actual violations of statutes and regulations related to the
obligation and expenditure of funds or (2) the added responsibility of
sole authority to opine on all appropriations law issues?

HUD's OCFO typically has been responsible for the department's accounting,
financial reporting, and budgeting functions, as well as for creating and
maintaining HUD's system of funds control to ensure appropriated funds are
used lawfully and as intended. Given these responsibilities, several of
the HUD officials and the OIG officials we interviewed told us that they
do believe the new responsibilities provided in the Appropriation Act have
led to or increased the potential for a conflict of interest or at least
the appearance of a conflict of interest. A chief concern is that OCFO is
now solely responsible for investigating potential Anti-Deficiency Act
violations that involve breakdowns in the funds control system, which it
is responsible for administering. Also, OCFO attorneys are now in the
position of having to render legal interpretations that may directly
implicate the performance of the CFO for whom they now work. Additionally,
there were some concerns raised about the supervision and rating of the
OCFO attorneys. The OIG officials cited the OMHAR Anti-Deficiency Act case
as prime example of why the Appropriation Act created a conflict of
interest. In the Secretary's OMHAR Anti-Deficiency Act report, two of the
four persons or positions deemed responsible for the violation worked
within OCFO.

Others at HUD, principally in OCFO, told us they do not believe there is a
clear conflict. Their belief is that since OCFO has been delegated
responsibility for funds

control within the department, management of that responsibility dictates
that OCFO should also be responsible for and involved with assessing where
that system failed, and if an Anti-Deficiency Act violation occurred.
Further, HUD's budget officer believes the Anti-Deficiency Act and OMB
circulars make it clear that the funds control responsibilities rest
within OCFO.

The Deputy CFO and some others said the Appropriation Act was useful in
that it clearly establishes who within HUD has responsibility for leading
and making future Anti-Deficiency Act violation determinations. During the
OMHAR Anti-Deficiency Act investigation, these responsibilities were not
clearly defined and this hampered the investigation. HUD's updated funds
control handbook now specifies individuals' responsibilities with respect
to future Anti-Deficiency Act issues. Further, the Deputy CFO stated that
the appropriation law attorneys now assigned to his office can focus on
reviewing newly required funds control plans, which he and others believe
are a key component in strengthening HUD's system of funds control to
prevent future Anti-Deficiency Act violations.

The Deputy CFO said that OCFO did recognize that others have concerns
about the potential for an appearance of a conflict of interest and
therefore, as discussed in the response to question 3, has taken or plans
certain actions to help mitigate these concerns.

3. What steps has HUD taken to ensure that any conflict of interest has
been identified and eliminated?

Given the responsibilities of HUD's OCFO, it would be difficult to
completely eliminate the potential for a conflict of interest or the
appearance of a conflict of interest. However, HUD has taken or is
planning to take certain steps to try to mitigate this risk. Specifically,
we were told that OCFO is in the process of establishing a new division
within OCFO that is to be headed by an individual with no funds control or
budget responsibilities to lead future Anti-Deficiency Act inquiries. The
investigative team is also to be comprised of staff not associated with
the activity where the Anti-Deficiency Act violation is alleged. We were
told that OCFO appropriations law attorneys would provide legal assistance
to this group and the new division would submit its report - a report that
we were told will serve as the department's report as required by the
Anti-Deficiency Act and OMB Circular A-11-to the CFO and HUD Secretary for
acceptance. A HUD official told us that this division is staffed and ready
to begin work pending notification to Congress.

Additionally, prior to the enactment of the Appropriations Act, HUD's OCFO
made substantial revisions to its funds control handbook. Included in this
revised handbook is a chapter that lays out the department's process for
responding to future Anti-Deficiency Act issues. The process spells out
who to notify when an Anti-Deficiency Act violation is suspected,
delineates responsibilities for conducting the investigation, and
prescribes the documentation that is to be maintained. HUD is now in the
final stages of updating the funds control handbook again to reflect the
organizational changes mandated by the Appropriations Act and the
establishment of the new division within OCFO that will lead future
Anti-Deficiency Act investigations.

4. Are there any issues associated with removing the HUD General Counsel
from being able to review any appropriations law actions of the CFO or the
HUD Budget Officer and render timely, needed advice to the HUD Secretary
on any aspect of appropriations law?

In our discussions concerning this question, agency officials had
different views. Most of the attorneys we interviewed from HUD's OGC,
including the General Counsel, shared the opinion that the current
organizational structure does not lend itself to ensuring the Secretary
receives the best, most timely legal advice. In fact, there was broad
consensus among those we spoke to that the current organizational
structure is awkward. On the other hand, officials in OCFO said the
transfer of attorneys was necessary because in the wake of the OMHAR
Anti-Deficiency Act investigation, OGC restricted access to the
appropriation law attorneys making it very cumbersome for OCFO staff and
program office officials to obtain timely, needed advice on appropriation
issues. We were told that collaboration occurred informally prior to the
OMHAR Anti-Deficiency Act investigation. At some point during the OMHAR
Anti-Deficiency Act investigation, OGC instituted a policy of requiring
formal written requests for all appropriation law services.

The General Counsel expressed three key concerns about the change in
organizational structure mandated by the Appropriations Act. First, he was
concerned that under the current structure his office might not be
informed of all legal issues that arise within the department, including
those that should be elevated to the Secretary's attention. Second, he and
others commented that now the Secretary and even the program assistant
secretaries could be presented with two conflicting legal interpretations
and that there is currently no mechanism for resolving these differences.
In the past the General Counsel, after hearing the opposing views, would
make the final interpretation of law. Third, he thought that under the
current structure there was a greater risk for program office officials to
"shop" for the legal interpretation that best met their goals. He said
having all the attorneys placed within OGC reduces that risk because all
legal issues ultimately were subject to review and resolution by the
General Counsel.

Officials within OCFO told us that they believe the creation of a separate
appropriations law function within OCFO has resulted in an increase in the
level of legal staff effort and service devoted to appropriations law
issues, and that this increased focus and effort should be sustained
regardless of its organizational placement within HUD. An OGC official
told us that prior to their transfer to OCFO, the four appropriation law
attorneys assigned to her spent less than half their time on appropriation
law issues.

Several HUD officials from both OGC and OCFO said that the OMHAR
Anti-Deficiency Act investigation highlighted the need for additional
resources and expertise in its appropriation law function and that prior
to the enactment of the Appropriation Act, OGC had hired an additional
attorney with considerable appropriations law experience to bolster that
function. However, this attorney was not one of those transferred to OCFO
because, according to HUD's General Counsel, at the time of the transfer
this individual was not assigned to the division that was specifically
identified in the Appropriation Act as having to transfer staff.

While most of the HUD attorneys we spoke with, including the head OCFO
appropriations law attorney, believed that HUD has done its best under the
new structure to ensure that coordination between the program attorneys
and the appropriation law attorneys continues, nearly all acknowledged
that there was initial and even lingering confusion in some situations as
to what group of attorneys has responsibility over a particular issue. The
HUD program office officials raised the same issue.

Two attorneys stated that it is often difficult to seperate appropriation
law issues from other legal issues, which highlights the need for good
coordination and communication between all of HUD's attorneys. There was
further concern raised that as the attorneys in OGC and OCFO change over
time the level of coordination between the two groups could deteriorate
under the current structure. Currently, OGC and OCFO attorneys have the
benefit of long-standing working relationships with one another.

5. Does the "sole authority" to investigate and report provided to the CFO
by the Appropriations Act conflict with or undermine the authority
provided to the Inspector General by the Inspector General Act?

The IG Act provides that IGs shall have the duty and responsibility to
"conduct, supervise, and coordinate ... investigations relating to the
programs and operations of the agency."12 The IG Act also provides that an
IG "shall report expeditiously to the Attorney General whenever the
Inspector General has reasonable grounds to believe there has been a
violation of Federal criminal law."13 The OIG identified these provisions
of the IG Act as being in conflict, or at least potentially in conflict,
with the literal language of the Appropriations Act.

The HUD OIG officials we met with, including the counsel to the Inspector
General, pointed to the language in the Appropriations Act that provides
the OCFO with "sole authority to investigate potential or actual
violations under the Anti-Deficiency Act" as conflicting with the language
of the IG Act providing the IG with general authority to investigate HUD
matters. They believe the literal language of the Appropriations Act
precludes the OIG from investigating potential Anti-Deficiency Act
violations, including those that might be identified during routine or
ongoing OIG jobs or those that are reported via the Inspector General's
fraud hotline. As a result, the OIG officials said they are referring all
potential Anti-Deficiency Act matters to OCFO.

The OIG also brought up that, in addition to providing OCFO with the sole
authority to investigate potential or actual Anti-Deficiency Act
violations, the language in the Appropriations Act provides that OCFO
shall determine whether violations exist and submit final reports on
violations.14 The OIG said that there is a possible conflict

12 5 U.S.C. Appendix S: 4(a)(1)(2000). Other provisions of the IG Act also
support the IG's authority to
investigate.
13 5 U.S.C. Appendix S: 4(c).
14 The Anti-Deficiency Act provides for heads of agencies to report
violations to the President and
Congress. 31 U.S.C. S:S: 1351, 1517(b).

between this language and the language in section 4(c) of the IG Act,
which directs the IG to report to the Attorney General if the IG
reasonably believes there has been a

15

violation of criminal law. The OIG is unclear how to reconcile this
provision with OCFO's current authority. OIG officials told us that they
have not yet been faced with a situation that required resolution of this
issue.

An OCFO official expressed a somewhat different view of the Appropriation
Act's potential effect on the IG. The officials stated that the OIG should
not routinely be involved in an Anti-Deficiency Act violation until the
department has determined whether an actual violation has occurred. At
that time, the OCFO official said it would be appropriate for the OIG to
review the work that went into the investigation, and more importantly and
pursuant to their authority to investigate, determine whether criminal
acts may have been committed.

Agency Comments and Our Evaluation

On November 19, 2003, HUD's Assistant Inspector General for Audits
provided us with oral comments expressing the Office of Inspector
General's agreement with the information presented that pertained to or
was attributable to the OIG. HUD did not take an official position on the
issues discussed in this report but instead provided separate letters
containing technical comments from its Deputy Chief Financial Officer and
the Deputy General Counsel. We considered these comments and as we deemed
appropriate made revisions to the report.

As agreed with your offices, unless you publicly announce the contents of
this report earlier, we plan no further distribution until 14 days from
its date. At that time, we will send copies to the Secretary of Housing
and Urban Development, the Inspector General, and interested congressional
committees. We will also provide copies to others on request. The report
will also be available at no charge on the GAO Web site at
http://www.gao.gov.

If you have any questions about this report, please contact me at (202)
512-9508, or Phillip McIntyre, Assistant Director, at (202) 512-4373. You
may also reach us by Email at [email protected] or [email protected]. Other
key contributors to this report were Jeffrey Jacobson and Jack Hufnagle.

Linda M. Calbom
Director, Financial Management and

Assurance

(190107)

15 An Anti-Deficiency Act violation may be subject to criminal penalty. 31
U.S.C. S:S: 1350, 1519 (2000).

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