HUD Moves to Debar Texas CPA Firm for Deficient Auditing Procedures

December 9, 2002

WASHINGTON -- The Department of Housing and Urban Development today announced that it has proposed a five-year debarment of the certified public accounting firm Mike Estes, P.C., of Fort Worth, Texas. If finalized, the measure would prohibit the firm from doing new business with the federal government or federal funding recipients, including public housing authorities.

HUD has also proposed the debarment of company president, Mike Estes, for the same period. The proposed debarments are based on the firm's failure to follow professional auditing standards in the performance of audits for housing authorities in the following cities: St. Charles Parish, City of Crowley, City of Gibsland, Town of Ferriday, and City of Houma, La. and Henderson and Monahans, Tex.

"The Department intends to take any steps necessary to protect resources that are meant to benefit public housing residents," said Assistant Secretary Michael Liu, who heads up the agency's Office of Public and Indian Housing. The Single Audit Act of 1984 and the Single Audit Act Amendments of 1996 requires that housing authorities receiving more than $300,000 in federal funds conduct annual audits. These audits must be performed in accordance with generally accepted government auditing standards (GAGAS) and generally accepted auditing standards (GAAS). The Office of Management and Budget has implemented the Single Audit Act Amendments through OMB Circular A-133, which contains additional requirements for the annual audits.

HUD alleges that Mike Estes, P.C. did not follow these standards and audit requirements and, that the firm failed to properly plan and/or conduct these audits. This firm and its president have 30 days to oppose this proposed debarment.

SOURCE U.S. Department of Housing and Urban Development

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