April 3, 2018 // March 2018...
or March 2017
Whatever.
What was that second thing...?
Remember “Moonstruck?” Of course you do because it is indisputably one of the best movies of the last fifty years, probably one of the best movies of all time. Now that we have that out of the way, remember this scene in the confessional, when Loretta tries to downplay her bad news?
Loretta Castorini: Bless me, Father, for I have sinned. It has been two months since my last confession.
Priest: What sins have you to confess?
Loretta Castorini: Twice I took the name of the Lord in vain, once I slept with the brother of my fiancee, and once I bounced a check at the liquor store, but that was really an accident.
Priest: Then it's not a sin. But... what was that second thing you said, Loretta?
Remember that? That “second thing you said?” Believe it or not, we kept thinking about this scene as we reflected on the latest two weeks ago news. So let’s move on and see where that leads us.
Like everyone, we were outraged (outraged!!) and horrified (mostly that) to read the latest news of the malfeasance coming out of Washington, this time within the department of Housing and Urban Development (HUD.) How could this be true? How could so much go unanswered when it comes to spending and money and waste? How do people think they can possibly get away with something like this? Especially people in the current administration, whose leaders are under a microscope on a daily basis? Unbelievable, right?
We have to take moment here and thank Helen Foster, the HUD staffer who revealed this unbridled spending spree at HUD. For doing just that, she claims she lost her position and now works at the Treasury Department (her choice) while her claim is being investigated. According to Politico, she was instructed to overlook the $5,000 spending cap allowed by law for office decorating. In January, 2017, instead of following the proper channels for additional funds, she was told to simply “find the money” to purchase the furniture Secretary Ben Carson ostensibly ordered for his office.
She also – according to Politico - “raised questions about more than $10 million in 2016 budget shortfalls that occurred under the watch of her predecessor, a lifelong civil servant. Those concerns were ignored, she said.”
Remember how we started this? Here’s the Moonstruck scene again, including a few more lines…
Loretta Castorini: Bless me, Father, for I have sinned. It has been two months since my last confession.
Priest: What sins have you to confess?
Loretta Castorini: Twice I took the name of the Lord in vain, once I slept with the brother of my fiancee, and once I bounced a check at the liquor store, but that was really an accident.
Priest: Then it's not a sin. But... what was that second thing you said, Loretta?
Loretta Castorini: The one about once I slept with the brother of my fiancée?
Priest: That’s a pretty big sin.
Loretta Castorini: I know.
Priest: You should think about this.
Loretta Castorini: I know.
Somehow, we hear it more like this…
American Public: But…what was that second thing you said, Helen?
Helen: The one about the $10 million in budget shortfalls?
American Public: That’s a pretty big number.
Helen: I know.
American Public: We should think about this.
Helen: I know.
But wait! There’s more.
While we were all getting outraged (outraged!!) at the $31,000 “for a dining room table,” we all seemed to overlook this:
Testimony of
The Honorable David A. Montoya Inspector General
Office of Inspector General
U.S. Department of Housing and Urban Development
Testimony before the U.S. House of Representatives Committee on Appropriations
Subcommittee on Transportation, Housing and Urban Development, and Related Agencies
“HUD Oversight and Management Issues”
March 16, 2017
(To be fair, a year ago we were worked up about healthcare. And Russia. And the Muslim ban.)
Relax. We’re not going to quote the whole testimony. It’s fourteen pages of very dense, very acronym-heavy text and we’re not accountants. Unfortunately for all of us, it would appear that neither were the people charged with managing the budget at HUD in 2015 and 2016. Here are some of our favorite passages from the testimony (italics and bold courtesy of TWAN):
Despite having to disclaim on HUD’s fiscal year 2016 and 2015 financial statements and notes, OIG (Office of Inspector General) continued its review of the financial statements and notes and identified additional material errors and misstatements. The results of that review are contained in a recently released report and provide updates to the material weakness reported previously. The financial statements and accompanying notes contained material errors totaling $557 million and $278.5 billion, respectively. We identified significant differences in amounts presented between what was submitted to us on November 10, 2016 and certified by HUD as its “final” consolidated financial statements and what was published in HUD’s 2016 Agency Financial Report (AFR) just five days later.
Here’s another enlightening passage: (TWAN translation follows text within the parentheses)
We found that well over half of the financial statement notes contained errors with an approximate absolute value totaling $278.5 billion. Of the $278.5 billion in errors, $159.4 billion was due primarily to (1) incorrect data entry (garbage in), (2) omission of restated balances (garbage not corrected in the second pass), or (3) incorrect data provided by HUD’s component entities (FHA and Ginnie Mae) (more garbage in, this time from other government agencies). The remaining $119.1 billion were due to inappropriate rounding adjustments. (Please, please read that again. Our government at work.) We found several instances in which rounding was performed to the nearest billion and hundred billion instead of the nearest million as required. This practice caused amounts to not agree with supporting files or underlying FHA and Ginnie Mae information. (Jeez, ya think?) Some of the errors identified flowed through to other note line items or note columns and caused errors in the totals presented. (It’s so hard to catch those buggers!) The absolute value of these additional errors was not included in our total. (So, you’re telling us it’s probably a little more than $278.5 billion? Well….how much more? Just give it to us in round numbers. Oh wait…)
At this point, we have to recommend you just hop on over and read more if you can bear it. We read the whole thing and have the scars to prove it – we just can’t break it all down here or we might break down. It’s just that sad. And depressing. And unbelievable. Basically, we learned this about HUD's financial straits: We didn’t know whether it would work but we changed it up anyway. We changed providers, so that screwed us up. The staff was overworked, or didn’t know what they were doing or were new (or both) or weren’t told how to do the job, and also they were under an impossible deadline. And they informed the management about the challenges! Okay, okay, okay – don’t take our word for it. Here it is:
This move (the transition of HUD’s legacy general ledger application to a shared service provider) replaced known processes with undefined or untested processes. The transition also increased the workload on HUD’s financial reporting division, and in an attempt to remedy the issue, HUD’s management outsourced some of its roles to staff and contractors who were unfamiliar with HUD’s financial reporting processes and did not receive adequate training. Rushed implementation in order to meet transition deadlines set by management and inadequate monitoring contributed to the problems despite warnings that processes were not proceeding well. (When the financial variance runs into the hundreds of billions, characterizing that as “not proceeding well” is like reporting that the North Atlantic was a little chilly in April, 1912.)
Conclusion? From the “So Obvious It’s Ludicrous (S.O.I.L.)” file:
"The most recent [audit of this project], published in February 2017, found that HUD’s transition to the federal shared service provider did not significantly improve the handling of its financial management transactions." (Jeez, ya think?)
Okay, one last little bit from David Montoya and then we’ll call it done for now. Again, bold and italics, courtesy of TWAN. From his testimony:
Since 2003, HUD has spent more than $131 million on two separate projects to replace its core financial system. … Overall, funding constraints diminished HUD’s ability to integrate updated application systems and replace and deactivate legacy systems. Limited progress has been made in modernizing applications and enhancing capabilities to replace manual processes. As a result, many legacy systems remain in use. (Is anyone else picturing a green visor and an adding machine?) As workloads continue to gain complexity, it becomes challenging to maintain these legacy systems, which are 15 to 30 years old, [Lotus 1-2-3, anyone?] and ensure that they can support the current market conditions and volume of activity. The use of aging systems has resulted in poor performance, high operation and maintenance costs, and increased susceptibility to security breaches [in other words, government as usual.]
We can’t. We just can’t. Next thing we’ll hear about is the AOL connection repeatedly going down in The White House. While everyone was outraged (outraged!!) in March, 2018 about Dr. and Mrs. Carson basically outfitting themselves with a table that would look quite at home during a dinner party held at the palace of Versailles, in March, 2017 we seemingly overlooked testimony about HUD’s 2016 and 2015 accounting being off by about $300 billion dollars.
Let’s try this again:
American Public: But…what was that second thing you said, David A. Montoya?
David A. Montoya: The one about the $278.5 billion?
American Public: That’s a pretty big number.
David.A.Montoya: I know.
American Public: We should be outraged about this.
David A.Montoya: I know.