Community Development:

Weak Management Controls Compromise Integrity of Four HUD Grant Programs

RCED-99-98: Published: Apr 27, 1999. Publicly Released: Apr 29, 1999.

Additional Materials:

Contact:

Stanley J. Czerwinski
(202) 512-6520
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Pursuant to a congressional request, GAO provided information on whether controls are in place to ensure that block grant programs' objectives are being achieved and that funds are being managed appropriately, focusing on whether: (1) the Department of Housing and Urban Development's (HUD) on-site monitoring of grantees under the Grants Management System is adequate; and (2) the Integrated Disbursement and Information System provides the data HUD needs to accurately assess grantees' performance.

GAO noted that: (1) while the Grants Management System provides a logical, structured approach to managing the four block grant programs, HUD's monitoring under the system--including on-site monitoring of grantees and the Integrated Disbursement and Information System--does not ensure that the programs' objectives are being met and that grantees are managing their funds appropriately; (2) HUD considers its on-site monitoring of grantees essential, but GAO found this monitoring is inadequate; (3) the five field offices GAO visited (accounting for about 20 percent of all block grant funds in fiscal year (FY) 1998, or $1.18 billion) conduct on-site monitoring infrequently because of a shift to a more collaborative relationship with the grantees and because of a lack of resources, according to the directors of the field offices; (4) furthermore, on-site monitoring seldom targets the grantees that receive the poorest evaluations from the field officers compared with other grantees, and this monitoring is not uniform or comprehensive because the field officers lack specific guidance; (5) the reviews of some grantees conducted by GAO and others, especially HUD's Inspector General, have identified significant problems in grantees' finances and performance; (6) while such reviews are not generalizable to all block grant programs, these reviews, along with the breakdowns in monitoring, call into question the integrity of programs funded at nearly $6 billion in FY 1998, including their safeguards against fraud, waste, and abuse; (7) for its part, HUD's Integrated Disbursement and Information System does not provide the information HUD needs to accurately assess grantees' performance and thus does not compensate for these breakdowns in monitoring; (8) fraught with major design flaws, the information system makes the process for establishing and maintaining accounts difficult and provides ample opportunity for major problems with entering data, does not allow such problems to be corrected easily, cannot track the program income from the revolving funds that grantees establish, does not provide timely and accurate information, and has difficulty producing reports; and (9) GAO also determined that the security controls for the information system are weak and therefore do not provide assurance that the system is safe from fraud and abuse.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: HUD indicated that it has placed increased emphasis on on-site monitoring through its FY 1999 implementation of its Business Operating Plans (BOP), which establishes a goal of monitoring 300 grantees. This level of on-site monitoring doubles prior year monitoring activities. HUD has actually conducted over 400 on-site visits in FY 1999. In addition, HUD has drafted guidelines which standardize the risk analysis process and specifies the level of risk that warrants intensive monitoring and how on-site monitoring should be conducted.

    Recommendation: In order to ensure that the Grants Management System identifies problems in achieving program objectives and safeguarding grant funds and protects the integrity of the block grant programs, the Secretary of Housing and Urban Development should direct the Assistant Secretary for Community Planning and Development to emphasize the importance of on-site monitoring by specifying the level of grantee performance that requires on-site monitoring and the steps that should be taken in conducting such monitoring.

    Agency Affected: Department of Housing and Urban Development

  2. Status: Closed - Implemented

    Comments: HUD contracted with the National Academy of Public Administration to demonstrate a resource estimation methodology for estimating human resource needs at the Department. In addition, HUD determined if field offices had adequate resources by analyzing each field office's progress in achieving its fiscal year 1999 monitoring goals. According to HUD, those offices that did not meet their goals have been targeted for additional staff and travel funds.

    Recommendation: In order to ensure that the Grants Management System identifies problems in achieving program objectives and safeguarding grant funds and protects the integrity of the block grant programs, the Secretary of Housing and Urban Development should direct the Assistant Secretary for Community Planning and Development to conduct analyses to determine the staffing and travel funds that may be required to better support the monitoring of grantees and direct available resources to the field offices as needed.

    Agency Affected: Department of Housing and Urban Development

  3. Status: Closed - Implemented

    Comments: Desk officers have made 10 visits to field offices during fiscal year 1999 explicitly to examine the capacity of field offices to conduct on-site monitoring. All of the visits focused on the capacity of field offices to carry out their monitoring responsibilities effectively and local concerns about their monitoring capacity. An overall risk rating process was followed by each desk officer in determining which offices to visit. Additionally, a standardized format was developed for the desk officer reviews so that generally consistent information was used for preliminary assessments of each office and final on- site review.

    Recommendation: In order to ensure that the Grants Management System identifies problems in achieving program objectives and safeguarding grant funds and protects the integrity of the block grant programs, the Secretary of Housing and Urban Development should direct the Assistant Secretary for Community Planning and Development to direct desk officers within the Office of Community Planning and Development at headquarters to visit their field offices to better assess how well the field offices are monitoring their grantees, to determine what problems the field offices are experiencing, and to provide technical assistance.

    Agency Affected: Department of Housing and Urban Development

  4. Status: Closed - Implemented

    Comments: In July 1999 HUD issued the Community Planning and Development Grants Management Process User Guide and training manual that contains guidance on how to enter program information into the system. In addition, HUD will be providing on-site training to its field offices on the new monitoring and risk analysis features in the system.

    Recommendation: In order to ensure that the Grants Management System identifies problems in achieving program objectives and safeguarding grant funds and protects the integrity of the block grant programs, the Secretary of Housing and Urban Development should direct the Assistant Secretary for Community Planning and Development to improve the Grants Management Process information system by providing guidance to the field officers to ensure that they are entering information consistently.

    Agency Affected: Department of Housing and Urban Development

  5. Status: Closed - Implemented

    Comments: HUD said that it would not do a cost benefit analysis to determine whether it is more cost beneficial to modify its IDIS or replace it. In September 1998, it made the decision to develop a Departmental Grants Management System, using IDIS as its basis. According to HUD, this system retains the good features of the IDIS, and replaces those IDIS components that were less successful. GAO has not verified that HUD's approach is efficient and effective. In addition, HUD indicated that, in November 1998, it starting implementing a stabilization plan to fix some of the problems with IDIS. According to HUD, this will ensure that IDIS is able to meet user expectations while the new Departmental Grants Management System is being developed and implemented.

    Recommendation: Because IDIS has not proven to be a useful tool in managing grantees, GAO recommends that the Secretary of Housing and Urban Development direct the Assistant Secretary of Community Planning and Development to consider whether it is more cost-effective to modify IDIS or replace it. After this determination is made and before IDIS is used as the base for developing the new grants management information system for all of HUD's 51 grant programs, the problems GAO identified with IDIS should be corrected. HUD should ensure that the new system does not require redundant data entry, reduces the time needed to enter information, readily allows timely corrections of data, provides a straightforward method of accounting for program income from revolving funds, provides timely and accurate information on grantees' performance, and readily produces reports.

    Agency Affected: Department of Housing and Urban Development

  6. Status: Closed - Implemented

    Comments: HUD indicated that an Automated Data Processing Security Plan for IDIS has been approved and is being implemented to address these concerns. The plan is dated May 12, 1999. As an additional effort to strengthen access control, the Endeavor version control software was implemented in IDIS in mid-May 1999. These corrective actions do not respond to all of the problems GAO identified with IDIS security. For example, HUD has not provided assurance that the security officer has appropriate staff to carry out his responsibilities.

    Recommendation: GAO recommends that the Secretary of Housing and Urban Development, regardless f the decision on the future of IDIS, immediately take steps to ensure that access to IDIS is limited to authorized users and that those users have access levels appropriate to the duties they perform. Steps should also be taken to ensure that the security officer for IDIS is fully aware of the responsibilities that must be carried out and has the appropriate training and staff for those responsibilities.

    Agency Affected: Department of Housing and Urban Development

 

Explore the full database of GAO's Open Recommendations »

Jul 23, 2015

Jul 10, 2015

Jul 6, 2015

May 19, 2015

Apr 16, 2015

Apr 9, 2015

Mar 16, 2015

Feb 4, 2015

Oct 7, 2014

Aug 1, 2014

Looking for more? Browse all our products here