Having 20+ years’ experience dealing with both governmental and not-for-profit agencies, I can honestly say that management letter comments (material weakness and significant deficiencies) constitute one of the most difficult parts of my job.  My clients have always been ultrasensitive towards these comments for fear of the perceptions the comments might cause funders and oversight agencies to have about the organization.

The U.S. Office of Inspector General issued its report on the United States Department of Housing and Urban Development’s (HUD) consolidated financial statements.  Click here for a copy of the report.  HUD was required to restate its previous year’s financial statements because of “pervasive material errors” identified.  The current year was not opined upon as a result of the inability to resolve several audit matters.  The audit report listed 11 material weakness, 7 significant deficiencies and five instances of noncompliance with applicable laws and regulations.

Given all of the issues identified above, I have two thoughts:  First, oversight organizations should hold themselves to a higher standard.  They sometimes are the judge and jury in many cases of findings.  You lose credibility when you, yourself, can’t get it right.  Secondly, organizations need to realize that having a finding isn’t the end of the world.  Embrace it, to learn and get better.  Of course, the finding has to be factual and correct.  But they do occur.  You are not the only organization to ever have a finding.

It will be interesting how HUD responds, and if there will ever be some type of acceptance of findings.

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