High-Risk Series: Department of Housing and Urban Development (Letter
Report, 02/01/97, GAO/HR-97-12).

GAO reviewed the corrective actions that the Department of Housing and
Urban Development (HUD) has taken or initiated since GAO's 1995
high-risk report and further actions that are needed.

GAO found that: (1) while HUD has formulated approaches and initiated
actions to address the four Departmentwide management deficiencies,
HUD's planned actions are far from complete; (2) in 1995, HUD fully
implemented its new management planning and control program and reported
that it had only 9 material internal control weaknesses; (3) HUD's
Office of Inspector General, however, has questioned the effectiveness
of HUD's management control program and the department's process for
closing out three of eight material weaknesses during fiscal year 1995;
(4) despite its importance as a management control tool, HUD's
monitoring of program participants continues to be a problem area; (5)
HUD continues to make progress in improving its information and
financial management systems, but much work remains; (6) despite these
efforts, some of the projects that involve major improvements to HUD's
financial and information management systems will not be completed
before the year 2000; (7) HUD still has 93 systems that do not comply
with the Federal Managers' Financial Integrity Act and therefore cannot
be relied upon to provide timely, accurate, and reliable information and
reports to management; (8) HUD's efforts to improve its systems have
been hampered by problems with systems development, funding constraints,
and data conversion problems; (9) to improve organizational structure,
HUD completed a field reorganization that eliminated its regional office
structure and transferred direct authority for staff and resources to
the Assistant Secretaries and plans additional reorganization efforts;
(10) HUD has made some progress in addressing the problems with staff
members' skills and with resource management; (11) although HUD has just
begun to evaluate the effectiveness of its stepped-up training efforts,
the directors GAO surveyed generally believed that the skills of their
staff have improved over the past 2 year; (12) since GAO's 1995 report,
HUD has also continued efforts to restructure and consolidate its
current wide array of programs, an outcome GAO believes is important to
reducing HUD's risks to an acceptable level; and (13) the problems of
inadequate staff resources to monitor and administer HUD's current array
of programs likely will be compounded as HUD implements its downsizing
plans over the next 4 years, unless actions are taken to consolidate,
reduce, and reengineer HUD's existing programs.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HR-97-12
     TITLE:  High-Risk Series: Department of Housing and Urban 
             Development
      DATE:  02/01/97
   SUBJECT:  Federal agency reorganization
             Financial management systems
             Systems conversions
             Internal controls
             Human resources training
             Housing programs
             Community development programs
             Information resources management
             Reengineering (management)
             Risk management
IDENTIFIER:  HUD Reinvention Blueprint
             HUD Reinvention Blueprint II
             HUD Insured Section 8 Multifamily Rental Housing Portfolio
             HUD Single Family Mortgage Insurance Program
             HUD Section 8 Rental Assistance Program
             Community Development Block Grant
             HUD Section 236 Rental Assistance Program
             HUD Title II Prepayment and Preservation Program
             HUD Single Family Mortgage Assignment Program
             HUD Section 235 Homeownership Assistance Program
             Operation Safe Home
             HUD Integrated Disbursement and Information System
             HUD Central Accounting and Program System
             HUD Integrated Business System
             HUD Tenant Rental Assistance Certification System
             High Risk Series 1997
             HUD Mark to Market Program
             HUD Section 8 Portfolio Reengineering Program