Last week Halsey News was one of the first to publish the story that an audit by the Inspector General for the Department of Housing and Urban Development reported over $500 Billion in “accounting errors corrected.” Now speculation has been swirling as to the role of President Trump-appointed HUD Secretary Ben Carson’s role in this bombshell audit report since he was confirmed to his position a single day following the release of this report. There is also speculation that conservative media, including our own wonderful Stefanie MacWilliams (happy birthday Stef!), have been misusing the numbers or outright faking them. The truth lies a bit in between, and of course in the 126-page IG Audit Report available here. You could also save some time by reading our summary of the audit.
Ben Carson: The Man Behind The Report?
First let’s take a look at the logistics of Ben Carson being able have any role in the Inspector General’s audit and report. The report was released on March 1, 2017 with Ben Carson finally being confirmed the following day. The dates could just be a coincidence. Let’s explore the idea that the timing is suspect. Despite all of the news headlines about members of The Trump Transition Team having ties to Russia and President-elect Trump’s accusations that the outgoing President Obama administration made the transition difficult, very little is written up about how exactly the transition of power works in our administration, especially on an individual agency level. I found this from FederalNewsRadio:
Likewise, the transition documents don’t follow a one-size-fits-all approach. The incoming Labor secretary, Lu said, receives the most comprehensive briefing, and has to hit the ground running on day one, but other tiers of management receive a more nuts-and-bolts primer on their departments.
“You obviously have to prepare for a confirmation hearing and some of the immediate challenges and decisions that will face him or her in those first 30, 60, 90 days. That’s really at a much higher level than, let’s say, an assistant secretary at the Department of Labor who handles OSHA [Occupational Safety and Health Administration], where that person really needs to understand in granular details the workings of OSHA, but probably doesn’t need to know about other broader departmental issues and challenges,” Lu said. “It’s a bifurcated approach.”
Couple that with the Inspector General Act which states that the Inspector General serves under the general supervision of the Department Secretary and has a dual and independent reporting relationship to the Secretary and the Congress, and you begin to paint a picture that since the Inspector General does work with and under the Secretary of HUD, he may have also been working with the incoming Secretary of HUD Ben Carson. Since Ben Carson would be receiving a “comprehensive briefing” and over $500 billion in accounting errors isn’t exactly a trivial issue, it is safe to assume Ben Carson was aware of the massive accounting and legal issues within HUD. So he most likely knew, but did he order or coordinate for the report to be shown?
I looked back on HUDOIG.gov to see if a similar audit like this has been reported in March before. The verdict was a no. The title of this audit is “HUD’s Fiscal Years 2016 and 2015 (Restated) Consolidated Financial Statements Audit (Reissued).” I put emphasis on the restated and reissued because that is exactly what this report was. The report was originally released on November 15, 2016. The page where that report was now says this:
This page previously contained our independent auditor’s report on HUD’s fiscal year 2016 and 2015 (Restated) consolidated financial statements (OIG Audit Report 2017-FO-0004), issued November 15, 2016. In the report, one basis for our disclaimer of opinion was that HUD was unable to provide final consolidated financial statements and accompanying notes in a timeframe that would allow us to obtain sufficient, appropriate evidence to determine if they were free from material misstatement. After we issued our disclaimer of opinion, we continued our review of HUD’s financial statement presentation and notes and identified material pervasive errors…
As a result, we withdrew our previously issued independent auditor’s report which was included in this audit report and replaced it with the report included in audit report 2017-FO-0005. Our reissued independent auditor’s report removes the basis for disclaimer regarding our inability to review the final consolidated financial statements due to management imposed delays in completing the statements. However, while we audited the reissued consolidated financial statements and notes, our previous audit opinion of a disclaimer remains unchanged due to other material matters that were identified in our audit which continue to support our basis for a disclaimer of opinion.
Yes, they changed their original report. Why? Because of a lack of information. As it turns out, an apparent lack of $500 Billion worth of knowledge. I used the Wayback Machine, and a snapshot of this page was made on November 23, 2016. Attached was the original report, which can be found here. The original is 6 pages less, and has 0 mention of $516.4 billion in corrected accounting errors. Semi-annual reports released previously by HUD’s Office of the Inspector General also do not mention any accounting errors that need to be corrected that add up to over $500 billion. In summary, it is not known whether Ben Carson gave a green light to publish the massive figures in the audit, whether incoming Secretary Ben Carson was even aware of the massive figure prior to his confirmation whatsoever, and whether he had any communication with the HUD Inspector General prior to confirmation. While Ben Carson is an impressive surgeon, he wasn’t the accountant who found this issue. We can assume based on roles and transitional procedure that Ben Carson was made aware of this audit report prior to his confirmation. We have reached out to the HUD OIG for confirmation of what Ben Carson knew. The question remains whether he prompted the release of this audit. The Daily Wire is wrong to say that Ben Carson “ordered” and audit of the agency before even being confirmed. Even if he did, an audit of that scale would not be done in such a short period, so therefore he clearly did not. The Inspector General already had this information and was sitting on it, the unanswered question is whether the “Drain The Swamp” attitude of the Trump administration and appointment of Ben Carson had anything to do with this “restated” and “reissued” audit report.
Did HUD Lose $516.4 Billion?
No. Our own Stefanie MacWilliams had a birthday Periscope where she claimed that “HUD lost half a trillion dollars,” as that is the headline she has seen floating around conservative Twitter and media. She did claim she knew little about the issue, and she is not exactly wrong in using the term “lost.” While the corrected accounting errors on HUD’s financial statements numbered $516.4 billion, a net change of only $3 million effected HUD. The errors were “lost,” and then found and “correct” in this audit. What is still lost is the accompanying notes that shows the discrepancies between the ledgers and exactly what these errors are. As Stefanie MacWilliams said, this is a huge story that needs attention. Neither conservative media with inflammatory headlines claiming HUD actually lost $500 Billion and liberal media claiming there is no story here or that this is “fake news” will not bring justice to what is shown to be major accountability issue in a large government agency that could effect its performance on behalf of the most disadvantaged citizens. The real story here is that HUD has been holding back information on financial statements, notes, and legal documents to the point that for 3+ years the Inspector General is not able to properly audit HUD.
Basically, for 3 years and counting the Inspector General has been unable to audit the Department of Housing & Urban Development due to obstructions and incompetence. Whether the incompetence is on purpose is the issue at hand, and one that the House Oversight Committee and related sub-committees must get to the bottom of this so we can see the extent of possible mismanagement, and prevent future errors in the future.