HUD rushing into shared services future, IG says

As the first cabinet-level agency to plan a move of its financial systems to a shared service provider, the Department of Housing and Urban Development is an important test case for government-wide plans to reduce the number of financial systems. But David Montoya, HUD's inspector general, is worried that the department’s plans are hurried, underfunded, and rely on creaky technology.

HUD has a checkered history when it comes to streamlining its financial systems. In 2012, the department terminated a nine-year project to establish an integrated financial management system called HIFMA, after spending $35 million. After HIFMA "sort of tanked," as Montoya put it, HUD launched a program called Core Financial Services to migrate key functions such as time and attendance, general ledger, cost accounting, purchasing, accounts payable and receivable and more to a shared services system run by Treasury's Bureau of Fiscal Service.

Lack of funding is one thing keeping Montoya up at night, he said at a Sept. 15 panel on shared services at an Association for Government Accountants conference. He said that so far HUD has received $4.5 million of $10 million appropriated for the project in fiscal 2014, and that cuts to 2015 and 2016 funding necessitated the reallocation of funds from other projects.

"It being the first cabinet-level department [to move to shared services], you'd think it would be fully funded, but it's not," Montoya said.

So far, the Office of Inspector General has released two audit reports on the implementation of the shared services plan. The first, from June 2015, warned that HUD's plan to migrate core financial services systems to Treasury's shared services platform by the end of fiscal 2015 or the first quarter of fiscal 2016 might be too ambitious. The second report, from September 2015, noted that the migration of the travel system to shared services resulted in errors appearing on HUD's general ledger. Additionally, Montoya noted, HUD hadn't implemented a reporting system, so when users found problems, there was no way to alert system administrators.

HUD has contested Montoya's findings, and in a few cases even sought changes to the way OIG findings were worded.

Where technology is concerned, HUD may be "putting the cart before the horse," Montoya said.

"We're dealing with some very old financial systems. Some of our financial systems still run on COBOL. Part of it is we're trying to transform these very old systems into a very new idea of shared services, and I'm not quite sure how well that's meshing," he said. "I personally would have rather seen them upgrade the systems to begin with before we then launch off into a shared services environment."

Montoya said that he thinks that HUD will complete its migration to shared services, but that an ambitious timeline and a lack of funding could result in more short-term hiccups. The success or failure of HUD's efforts, Montoya said, "obviously is going to impact how OMB is going to sell the idea of shared services to other agencies."