Information on the Mandated Transfer of HUD's Appropriation Law Function to the Chief Financial Officer
GAO-04-272R, Nov 21, 2003
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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.
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 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. 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. 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.