1988 Financial Audit: Federal Housing Administration

GAO discussed its audit of the Federal Housing Administration's (FHA) financial statements. GAO noted that: (1) it was unable to express an opinion on the FHA financial statements because of uncertainties over potential losses from the diversion of property sales proceeds, overstatements of the values of foreclosed property, and the effects of other investigations; (2) FHA suffered major losses in its two largest funds; (3) the Department of Housing and Urban Development (HUD) failed to monitor functions involving large amounts of money that FHA delegated to third parties; (4) FHA does not have sufficient program-level information to properly manage its programs; (5) HUD internal controls over cash management and claims processing were weak; (6) HUD accounting staff did not maintain adequate documentation, perform general ledger reconciliations, or properly justify certain payments; and (7) HUD and FHA management did not take appropriate actions to correct weaknesses and problems that previous audits and investigations identified.