oversight

Settlement of Accounts of the Accountable Officers, HUD Region IX

Published by the Government Accountability Office on 1971-03-31.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

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Mr. Robert     H, Baida,       Regional    Administrator
Department     of Housing       and Urban Devekopment,                     Region     IX
450 Golden     Gate Avenue - Box 36003
San Francisco,      California          94102

Dear Mr.      Baida:

       Here is our report           on the       review   for the settlement                   of
accounts    of accountable          officers        of the Department     of               Housing
and   Urban    Development,        Region      IX,    San     Francisco,        California,

        The deficrencies        reported    were discussed      with your represen-
tatives    on January        29, l.971,    For the most part,       these   represen-
tative5    concurred       with our observations       and corrective       action
was either      taken or promised,          Our report    contains     recommendations
 for corrective       action     for those    findings  where concurrence          was
not obtained,

        Copies    of this       report   are also being     sent to the Secretary,
Assistant      Secretary        of Administration,       and the Director,  Office
of Audit      Department        of Housing      and Urban Development,

       Me wish to acknowledge            the coustesies       and cooperation       given
our representatives          during    the review,        Your comments      and advice
as to the action       taken      or contemplated       on the matters       in the
report   will    be appreciated,

                                                     Since rely        yours p

                                                //gg~*M4-m\
                                                     A. M, Clavellf
                                                     Wlegional Pfanager




                         50TH     ANNIVERSARY               1921-   1971 -
                                --Contents



INTRODUCTION

FINDINGS AND RECOMMENDATIONS                                   2

WEAKNESSESLN CONTROLS OVER RECEIPTS                            2
    Need for periodic review of collection    activities       2
    Undue delays in deposits of collections                    3

WEAKNESSESIN DISBURSE!\IENT CONTROLS                           5
    Subscription  renewal payments                             5
    Purchase orders issued after receipt    of goods and
      services                                                 5
    Untimely submission of travel  vouchers                    6
    Use of first  class air travel                             7

SECTION 1311 S'UPPLEMENTALAPPROPRIATIONS ACT, 1955             8

RECORDING OF ASSETS                                            9
    Need to insure timely posting of accounts receivable       9
    Need for project  status reviews and better coordination
      between program administration   and accounting
      division                                                 10
    Need to follow-up  on status of Public Works Planning
      Advances                                                 11
    Need for better internal   communications                  13

NEED FOR BETTER MANAGEMENTOF ACCOUNTABLEPERSONAL PROPERTY      15
                                                      THE SETTLEMENT                      OF ACCOUNTS OF

                                                              THE ACCOUNTABLE                    OFFICERS

                                       DEPARTMENT               OF HOUSING                AND URBAN DEVELOPMENT

                                                                              REGION            IX

                                                              SAN FRANCISC3,                    CALZFORNIA

                                                       FISCAL       YEARS 1967 THROUGH                         197c


                                                                        INTRODUCTION


            We have           completed               a review          for         the     settlement            of    accounts             of     the

accountable               officers               of     the     Department                 of    Housing        2nd Urban             Development,

Region        IX,        (formerly               Region         VI),      San Francisco,                     California.               Our         review

was made            pursuant             to      the     Budget         and Accounting                   Act,        1921      (31     U.S.C.             53),

and     the    Accounting                  and Auditing                 Act         of     1950      (31 U.S.C.            671,        The period

covered        by our            review           was fiscal              year             1967      through         fiscal          year      1970.

          Our review,                  which          was completed                  in     January          1971,      was directed

primarily            toward            evaluating               current            administrative                 procedures,                controls

and accounting                   practices,               and       included               such      tests      of     financial             trans-

actions        as we determined                          to     be appropriate,                       We also          elr.amined           into      the

activities               of     the      Office          of     Audit         at     Region          IX and were              able     to utilize

the    work         of    the         internal           auditors             in     certain          selected          areas,              We did

not    examine            the     program              activities              oi        Region       1.X extent           as thev           related

to    financial               transactions.
                                                     FINDINGS AND RECOMMENDATfONS
                                                                           ---
                Our review          for     the settlement            of accounts         of Region IX accountable

       officers       resulted            in the identification               of several           areas of financial

       management which we believe                        are in need of improvement.                     Each of these

       areas,      which fall             into     the general        categories         of (1) receipts,            (21 dis-

       bursements,          (3)     Section          1311 of the Supplemental                Appropriations           Act of

       1955,      (4) recording             of assets          and (51 management of accountable                      personal

       property,          are discussed              in the sections          which      follow.

       WEAKNESSESIN CONTROLSOVER RECEIPTS

                Department          of Housing          and Urban Development                CHUDI collection              pro-

       cedures       were not consistently                     followed      resulting       in a loss of control

       over     cash receipts              and a loss of interest                income to the Government.

       Need for       periodic_           review      of collection          activities -

                Sections          2-10~ and f of HUD Handbook 1911.1 require                              that      the

       Collection          Register,             HUD Form 235, be prepared                in duplicate           by the mail-

       room personnal.                   Copies of the Collection                Register          are retained       by the

       mailroom       and should             be compared on a test               basis at least           quarterly         with

       the Collection              Officer's          copies     in order      to detect           discrepancies.

                We found          that     the HUD Form 235 was not prepared                         at the mail          opening

       point      hut by the Collection                   Officer,        and that       the actual        log used and

       macntained          by mailroom             personnel       had not been compared to the HUD Form

       235 for more than two years,                            We took a random sample of 149 entries                             from
“,,,




       the fiscal          year 1970 mailroom                  register      of receipts           and found      one check for

       $5.25 which to date is unaccounted                             for,     Although       the dollar          amount in this
       case was small,              we believe          this      loss demonstrates           the need for           HUD to follow
       its     internal      control             procedures.
          We also            noted            that         Section             2-10h          of         HUD Handbook                   1911.1         requires

that      collections                   received                for      credit              to        other         Federal           agencies              shall        be

forwarded             and receipts                     obtained                and kept                  on file.                Prom        the     random          sample

of      149 records                of     receipts,                   we found               eight            collections                toralling              $13,902

which       were          mailed          from         HUD and                for      which             HUD did          not        secure          receipts.

          We believe                that            the        HUD regulations                           and      controls             are         adequate          to

safeguard             receipts                if     applied             and          consistently                    followed..                   We discussed

our      findings            and         conclusions                   with           responsible                    officials               who concurred                 in

our      views        and have                taken            measures               to assure                 safeguard               of    all      receipts,

Undue       delays            in    deposit                of     collections

          Section             2-3a(2)(cI                   of Handbook                   1911.1                requires             deposits           of      collec-

tions       daily,           and         in        no case            later           than         the         end of         the      workday          immediately

following             the         day of            collection.                                          -

          Out        of     our         sample            of    149 records                       of     receipts,               we found            that       39 checks

were      not        deposited                in     a timely                 manner.                  These         delays          varied           from      one check

for      $120,284             deposited                   one day             late,          to         one     check         for       $4,75        received             on

August          7,        1969,     and            on April             15,         1970,              returned          to      the     maker         for      a new

check,           The        new check                was received                      on April                 29 and not               deposited              until

June       30,       1970.          Tabulated                   below          are       the            statistics               on the            39 checks:
 Number                                                    Working           Days in Excess                                    Amounts  of
of Checks                                                        of         HUD Criteria                                         Checks

       12                                                                       1                                               $215,359
        3                                                                       2                                                   2,528
        6                                                                       3                                                 76,598
        2                                                                       4                                                      662
        1                                                                       5                                                        42
        3                                                                       6                                                   4,185
        2                                                                       7                                                       269
        1                                                                       8                                                   2,654
        1                                                                       9                                                   2,300
        1                                                                      23                                                        88
        3                                                                     24                                                   51,525
        1                                                                     36                                                         22
        1                                                                     62                                                         80
        1                                                                    155                                                          4
        1                                                                    172-k
       39                                                                                                                       $356,32:

 * Elapsed              working          days     calculated                up to         date       returned         to maker

             We also          found       two checks,               payable              to HUD for             $12,367,       which        were

 forwarded              to Washington               for         deposit.             Tn our          opinion,         HUD should            have

 deposited              the     checks       immediately                   upon      receipt           and forwarded             an advice           of

 deposit           to     Washington.

             We brought            the     above          weaknesses                to    the       attention         of    HUD supervisory

 personnel              and     they      have      instructed               Accounting                Division           personnel         to deposit

 all        collections            in     accordance               with      the         regulations.                In addition            supervisory

 personnel              have      been      instructed               to make             periodic          reviews         to assure          com-

 pliance           with        these      instructions.

 WEAKNESSES               TN DISBURSEMENT                  C9NTROL$

             Our     review        showed         several            different              types        of     disbursement-related

 practices              which      we believe               contribute               to an overall                 weakness           in   control

 of     disbursements.                    These      practices               fall         into       the      following        areas:

             --Subscription                renewal              payments

             --Purchase            orders         issued           after          rcccipt           o II goods       and     serv ices

             --Untimely            submission              of      travel           vouchers

             --Use        oC first          class         air      travel
Subscription                        renewal                payments

              We found               that            it      was HUD practice                               to     require             the       disbursing             office

to      return           all         Treasury                    checks          for            HUD subscription                          renewal           payments            to

HUD for              distribution,                               We were              told         that           this         was a control                  on sub-

scription                advance                 payments,

              We questioned                          the         benefits                  of    the        above             "control"            on the         basis         that

direct              mailing               to        the      payee         would,                in      fact,           provide             greater          control           over

these          checks.                    HUD supervisory                             personnel                   subsequently                   agreed         to     revise

their          subscription                          renewal              payment                practices                to provide                 for      direct       mailing

of      payment               checks.

Purchase               orders              issued                after          receipt                of     goods            and     services

              HUD Handbook                          1905.1             provides                 that        all      liabilities                   shaL1        be recorded

in      the         accounts               in        the         month          in     which             incurred.                    From a discovery                    sample

of      purchase                  orders,                 we noted              eleven             instances                   where       purchase             orders          were

issued              and recorded                          as obligations                         after            goods          or    services             had been

received.                     In     one case                    more       than            two months                   elapsed           after           receipt        of

goods          before               the         liability                 was posted                     to the           accounting                 records,

           The most                  current                 instance                 was the               case         of      David          Harris,        Jr.,

Graphic              Design.                   In         this         case          (1)        a purchase                order           was issued              on

December               29,          1970;            (2)         the      obligation                     of       funds          was posted                on December                29,

1970;          and          (3)      although                    the      receiving                    report            was also               dated       December            29,

1970,          it      itemized                     services              performed                    in August,                  September,               October,            and

November               of          1970.             The         receiving                  report            also        listed             invoice          dates       of

October              3rd       and October                        30,         1970,             which         appear             to    indicate             awareness            of

the      liabilities                       at        those             times.               Despite               this         awareness,                 no action        was

initiated,                   and          the        purchase              order                and recording                     of      the      liabi      lities       in        the

accounting                    records                were         not      made until                       December               1970.
              HUD supervisory                         personnel                 agreed           that         there             was a weakness                        in        the

procurement                 system,              and           suggested               that       a Regional                      circular               be issued                to

advise           all      personnel                   to       channel           all       procurement                      requirements                       through

the      procurement                  control                  point.

Untimely                submission               of        travel          vouchers

              We found            that          the        travel           vouchers              of         four         HUD travelers                        were        not

submitted                on a timely                   basis.               One traveler                          submitted              his         entire           fiscal

year          1969       travel           expenses--totalling                                 about               $950--in             July          1969.            We did

not      expand           our      discovery                     sample          in       this      area            because              the         HUD Office                  of

Audit          had       previously                   reported              in     October              1970            that          there          were       ineffective

procedures                to      obtain              timely            submission                of         travel             vouchers.

              We believe              that         untimely                 submissions                      of     travel             vouchers,                (1)

creates           an uneven                workload                 for      the          voucher             examiners,                      (2)      results             in

large          travel          advance             balances                outstanding,                       and         (3)         could          result           in

inaccurate                rememberance                      of      travel             data       and         submittal                  of         inaccurate               claims.

In      August           1970,        I-IUD issued                  Circular               2300.2,                 SF Supplement                       No.      5, requiri.ng

monthly           submissions                    of        travel          vouchers.                    If         enforced,              the          procedures                 called

for      in      this       instruction                        should        correct              the         above             problem.

Use of           first         class         air           travel

          We found                several              instances                 when first                   class             air      travel           between

Hawaii           and Guam was                    used           and approved.                       One traveler                         went          first          class

on nine           round           trips          between                Guam and Hawaii,                            resulting                  in      increased                 costs

to      the      Government                of      about            $3,000.                We also                 noted         that          the       Regional

Administrator                     has a blanket                         justification                        for        first          class           travel          for        all

trips          because            he has to                 uti.lize             flight           time             to    prepare               for      meetings.

              Section          3.6~        of      the          Standardized                     Covernmcnt                     Travel          Kcgulations                      (SGTKI

states          that        less         than          first            class          accommodations                           should          be used           except                when
      (1)      only          first          class          space       is     available,                   (2)         the     trave         ler's           hea lth

      requires               first          class,           and      (3)      required              for         reasons             of      sanitation,                    health,

      or comfort                when traveling                        to,      from,          or in         foreign                 areas.             HUD Travel

      Handbook               2300.2,           paragraph                27 has          the      same provisions.

                We were               told          that      it      was HUD Regional                           Office             policy            to     permit

      first          class           travel          between           Hawaii           and Guam because                             the       trip          takes          7-l/2

      hours.            Despite               the      time         factor,           we do not                  believe             that         general             use of

      first          class           air      transportation                    is     warranted,                       Flights              from          Hawaii           to      Guam
?IH

      are      made on domestic                            airlines           which           maintain                 adequate              standards                of      sanita-

      tion      and          comfort.                We also           question               the      reasonableness                          of      the         blanket            first
“II
      class          authorization                     of     the       Regional              Administrator,                         and recommend                         that       HUD

      take      action               to     ensure           that      all      travel           be accomplished                             in       accordance                  with

      the      Standardized                    Government                   Travel        Regulations.

      SECTION               1311       SUPPLEMENTAL                   APPROPRIATTONS                       ACT,         1955

                The HUD Office                         of     Audit          recently               completed                 its      audit           of

      unliquidated                     obligations                  and      found       weaknesses                     and         inaccurate                 reporting

      of unliquidated                         obligations.                     We noted              that         HUD has                 implemented                 some of

      the      audit           recommendations                        to     strengthen                internal                 controls               and procedures,

      and      for      this          reason           we limited               the      extent             of         our     review             in        this      area.

                 From our                  random           sample,          we found               that         in May 1969                   a purchase                   order

      was issued                 to        David       J.     Harris,           for      graphic                 art         services             in        the     amount            of

      $1,700.                Our review                of     expense           vouchers,                  however,                 showed            that         services

      costing               $1,375          were       performed               in     fiscal           year            1970 during                    the         period

      September                3,      1969         through           May 8,           1970.           Because                the      purchase                   order       was

      issued           in      May 1969.               these          expenses           were          obligated                    and      expensed                to the

      fiscal           year          1969      appropriation.
          The     Comptroller                     General              (3.5 Camp.             Gen,        319 - Appropriations                              -

Fiscal         Year      Obligations                     Maintenance                   Service            Contracts             - French                 Law -

Section          1311,          Supplemental                     Appropriations                      Act,         1955)determined                        that

maintenance               service               contracts               which          are     entered              into      near          t’he    end of             the

fiscal         year       for         services             to be performed                          in    the       succeeding                fiscal            year

are      contracts              for        continuous                  services            which          do not           represent               a bona          fide

need      of     the      fiscal               year      and          such       contracts               may not           be recorded                   as valid

obligations               against               the      ending           fiscal             year        funds.

          We believe                  that        the      David          J.      Harris            Graphic          Design           services,                 although

not      maintenance                  services,                fall       into         the     above            determination                     and were             not

bona      fide         needs          of       fiscal          year       1969.              We believe              that          future          year-end

procurements                   of     this        type         should            be thoroughly                    scrutinized                 to assure

classification                      of     expense             to appropriate                       fiscal          years.

RECORDING              OF ASSETS

          Our observations                            related            to      the      assets          carried            on Region              IX      financial

statements              fell          into        two categories.                            We found            that        (11      accounts              receivable

for      two appropriation                            funds       were           not      posted          in     a timely            manner,              and      (21

there       was a need                   for      better              coordination                  between          program           functions                 and

the      accounting                 division             so as to                insure        the        validity            of      selected              accounts

balances.

Need      to     insure             timely            posting            of accounts                 receivable

          Accounts              receivable                 for         two appropriation                          funds       were          not     posted             in

a timely          manner.                  As a result                  HUD assets                  as recorded               in      these         two general

ledger         balances               on June            30,          1970,       were        incorrect,                and any             financial              state-

ments       which         consolidate                    the          regional            rep:>rts           fo-r    the      period              then      ended

are      misstated.

          Our review                  of       transactions                   relating              to appropriation                        symSol
overpayments                      were       prepared              and rendered                       .as of      .June      30,      1970,         but      were

not      posted             to      the      accounting                  ledgers             as required                   by HUD regulations.                           As

a result               accounts              receivable              were             understated                and        the      grant         payments

account              was overstated                      by $23,513.64.

           In        the      Administrative                       Operations                   Fund,           we found             one invoice                 dated

October              1,     1970,          for     a damage               claim           of        $31,20       which          was not            posted         to     the

records              as of January                     13,      1971.             This          claim          was for            damages          suffered            in

fiscal              year      1968;          however,              the         actual           replacement                 value       was not            determined

until           receipt             of     the      invoice              in     August              1969.

           The delayed                     preparation                   of     the       claim            invoice          and delayed              posting

in      the         correct             fiscal         year        has         resulted               in    misstatements                  of      both      accounts

receivable                  and disbursements                            for      fiscal             year       1969        and accounts                  receivable

in      fiscal             year         1970,

           We brought                     these      observations                       to      the        attention            of    responsible                 HUD

personnel                  who took              steps        to    correct               the       matters.

Need for project
---                       status reviews
                                  -----v-     and better
 coordination      between propram        ,sdministration
                                               -
and accountingdivision
             --       -----

           We found                that          there       was poor              coordination                      between          HUD program                 ,snd

accounting                  activities.                   Our       test          of     Accounting                  Division           records            showed

that          (1)     the         Accounting              Division                did        not       follow-gp             ,.XI projects                with

accounts              outstanding                   For long              periods              of      time,         (2)     program            ad:ninistrators

also       failed             to make             follow-up               project              status           reviews,             and     (3)     projects

considered                  comoleted              ‘3~ program                  administrators                       and     carried            on financial

records              were         not      closed         out       because              tlu        Accounting               Division            was not

ad~d.sed             #as to        the       project            status.
Need    to       follow-up            on status
                                           l_l_----eP of Public                 Works       Planning         Ad,vances

        In       response            to    our      confirmation               requests         of     outstanding       balances

due HUD, many                local         public       agencies          responded             that      there      was no

intention           to   build            or use the           plans      paid       for      by HUD Public            Works       Planning

Advances          3rd    hence            their      records        showed         no liability              to   HUD.

        The       following               are     examples         of    the     responses             we received       and the

lack    of       follow-up            action         taken      by H3D.

            lo    Account            191.17--       - First        and -----
                                                                         Second            Planning        Advances      Billed.

                  Invoice     No. B-28-70      was dated       September     15, 1969, for
                   $3,575 and rendered         to the Val Vue Sewer District,
                  Washington,      Project     45-P-1036,         The invoice    was due and
                  payable     November     11, 1969; however,          as of September      30,
                   1970, the amount was still             outstanding      and no follow-up
                  collection      action    had been taken.

            2,    Account
                  --                 191.15         - First        and    Second           Planning        Advances.

                  Our    confirmations                  of     Account          191.15        showed:

                  a.     The city       of Richmond,   California,        received       a $30,000
                         advance      in 1945 (4-P-166).          In 1969, a central          city
                         construction        project was completed.            The local      public
                         agency      (LFA) contended     that     the 1945 plans         were not
                         applicable       or useful  for the project           actually      con-
                         structedm        As of December      31) 1970, HUD had not resolved
                         the matter       and the $30,000       was still      outstanding.

                  b.     The Town of Los Gatos,            California,     received       $3,750    in
                         advances    prior      to 1949 (4-P-201).         The town filed         a
                         resolution      in April      1970 requesting       relief     from the
                         liability,        As of December         1970, program      personnel      had
                         not resolved       this   issue and the entire            amount    is included
                         as a valid      advance     on the financial        records.

                  ca     The State      of Oregon Fish Commission           (35-P-67),        for which
                         HUD showed advances        outstanding         of $7,250      responded      that
                         they had no record       of this      project.       Furthermore,        the
                         HUD Portland      Office   was unable        to locate      the contract
                         project    file.

                  d.     HUD records  showed that     the City of Oakland,        Oregon
                          hasa $7,850  advance   outstanding      since   1949 (35-P-69).
                         The LPA did not respond      to our confirmation       request   and
                         in view of the time   lapse,      we question    the validity    of
                         the advance,




                                                                                            m
                    e,      School    District        No. 1, Butte,        Montana       (24-P-8)      notified
                            HUD in April        1959 that     they constructed              new facilities
                            to substitute         for the planned           project.        HUD still        carried
                            the $15,750        advance as outstanding                on .June 30, 1970,
                            Normally     when substitute         facilities           are built,       a deter-
                            mination      of liability       should       be made by program             adminis-
                            trators     as to the amount to be written                     off and/or        repaid.

                    f.       The city     of Ronan, Montana,     stated   that     it passed a
                             resolution     on July 6, 1968, requesting          relief   from
                             liability     on projects   24-P-42     for $3,500      and 24-P-65
                             for $2,750.      The amounts    were still     outstanding      at
                             June 30, 1970, and apparently          no determination        of lia-
                             bility     was made,

         3,         Account
                    --              131.11   Accounts                 Receivable        (Third         Planning
                    Advance         Program2

                    Our review   of this                  account    as of June 30,                    1970, showed               that
                    $4,733   in accounts                  receivable    were denied                    as liabilities                by
                    three  local   public                 agencies,     The denials                    are discussed                below:

                    a,       The Gila     Bend Sanitary     District    (P-Ariz.-3065)        was
                             invoiced      for $2,000    in February    1969,      The Town of
                             Gila    Bend responded      to our confirmation        request    and
                             stated    that    the sanitary    district    was dissolved       in
                             1962 and that        the town had no liability          to H’JD.

                    b.       Valley   County,    Montana    (P-Mont-3200)                             responded            that  the
                             HUD invoice      for $2,000 was incorrect                                and should             be about
                             $400 based on actual        bennfits     derived                           from the           1963 plans,

                    C”       The City of Talent,         Oregon,    in answer to our con-
                             firmation    request     to the South Talent        Sanitary
                             District   (P-Ore-31641,        denied    the correctness    of the
                             HUD accounts     receivable      of $1,400.      HUD subsequently
                             wrote off $467 in September            1970.

Need     for        Better         lnternal          Collununication
                                                        --           --

         In     addition             to    finding        a need         for     follow-up           on the       status         of    Public

Works      Planning              Advances,           there       is    also      a need       for     more     effective

communication                 between          program       and accounting                  personnel         once        any    project

status         is        known     to     have     changed        and      the     cSange       effects        accounting              records.

Due to         a breakdown                in     such   communication,               the      June       30,   1970        general        ledger

balances            for      the     Urban        Renewal        Prvgram         and Public           Works       Planning            Advance

Program,            were      misstated            at    least        by $211,000.
                                   L




           Urban          Renewal --- Programs                 (84x4034)
                                                                 --

           Projects              Alaska        R-24      (FS)      with       an advance                   of     $4,906,       and Alaska

R-27       with          an $83,871            advance          were       terminated                in     July      1965      and February

1968,           respectively;                 however,          no action          was taken                    to write        off        these

axounts            from      the        accounting             records.          As a result,                      Account        111.41,

Advances,                was overstated                by $88,777             and Account                   121.41,          Accrued         Interest

Receivable-Advances,                           was overstated                 by $14,967.

           Public          Works
                            --           Planning             Advance-Psyam                 (86X4113)

           In      our     review          of Account             191.12,        Planning                  Advances          (Third

Program),                we found          that       eight       third       program           planning              advance

projects             totalling             $107,175            were       determined            by ilUD to be invalid                          assets,

but     were        not      written           off     the       records         as of June                 30,      1970.        Although          the

local           public       agencies             were        advised       of    their         release              from     liability,            the

HUD Accounting                     Division           was not           so notified.

                                                                                         Valid  Asset
                                        As of b/30/70                                Determined      by                                    Amount of
ProJect
-     ----- N,o.                       Advance Outstanding                         Internal
                                                                                   --I_-        Letters                                Invalid
                                                                                                                                       ---em      Assots

P-Calif-                                  $ 10,802.71                                           --                                         rj 10,802.71
P-Calif-                                     6,579,03                                       $             292.11                               6,286.92
P-Calif-                                     5,902,54                                          --                                              5,902.54
P-Calif-                                     5,052.18                                          --                                              5,052.18
P-Calif-                                    36,OOO.OO                                         --                                              36,000.00
P-Calif-                                     5,050.oo                                          1,473.oo                                        3,577.oo
P-Calif-                                    16,536.06                                          4,ooo.oo                                       12,536.06
P-Utah           -3051                      27,018.OO                                     ---- --                                             27,018z

           Totals                                                                                                                          $107     175 --..c
                                                                                                                                           !. _: &-.-.A-  41 1
                                                                                                                                                   _-.-
           Corrections                  to write         off      these       amounts           were            made during            our     review,

or we were                told         corrections             would       be made by the                       applicable            HUD Iiegionsl

Office.
            We believe                that          the      Regional              Administrator                           should           take     action            to

assure         (1)        timely             and -periodic                  follow-up                   on the             status          of      Urban       Renewal

an*d Public               Works         Planning              Advances                  and         (21       coordination                   of     efforts           within

his        Region         between             program              operating               groups.                   Th3      Regional              Administrator

may wish             to    consider,                  as a control                      measure,                a semi-annual                      status.          report

from        each      Assistant                 Regions1               Administrator                          which          would          show the           various

phases         of        each       project               such      as follow-ups,                            completions,                   terminations,

reliefs           from          liability,                 final        closing,                   et     cetera.

NEED FOR BETTEtX M;ANAGEMENT
                   ----                                                                                    ,-
OF ACCOUNTABLE PERSONAL ---- PROPZRTY

            Our      review           has       shown a need                      for      better               management                 of      personal

property            as required                     by HIJD regulations.                                  Of 14 separate                        control

functions             required                for      the         management                  of       accountable                  personal              property,

only        three         are       currently                being          performed.                     These             are      (1)       identification

of     equipment             with            decals,             (2)    maintenance                       of        subsidiary               records           for

office         machines               and       (3)        obtaining               receipts                   for     assigned               property.

            Examples             of     HUD property                    requirements                       which             are     not        being        lnet

include:

            --annual             physical              inventory               and         reconciliation                           with

               subsidiary                    records          (last          performed                    Jule         30,         1967)

            --maintenance                     of      control           cards            for         various               classes           of

               equipment                 (n:,       posting            of     fiscal               year         1970         transactions)

            --quarterly                  reconciliation                      of         control               cards         with       the

               financial                records              (Last          performed                   lvlarch        31,         1967)

            We were          told            that      some or              the         reasons               for      the     deficiencies                   noted

in     managing            administrative                          property              were           the         lack      of     staff          and      the

priority            of     operational                     type        functions               s        ‘1’115 recent               reorganization                    was
also       mentioned,                  as well            as a Washington                   Central           Office       memoranzIum

waiving               the    HUD requirements                      for        the    June      30,       1970,         inventory.
                              +
           Wnile            we agree            that       current            operational             functions            of       the      Office          of

Adsinistration                       nay be of a more                     immediate            nature,           we do not                believe

they       are         necessarily                more      important               than      property           management.                     Further-

more,          because            of    the         deficiencies               noted        we cannot            express            an opinion              as

to      the         fairness           of     the      balance           of     $421,159.99              recorded             in    the      Adninistrative’

Property               Ledger          of     Region        IX at .June              30,      1970.           Also,       since           there       were        no

reconciliations                        of     inventory            to the           general          ledger           balances            since       June        30,

1967,          we express               no opinion               as to         th e fairness              of     the      fiscal           year       1968

and      1969          balances,

              In      view      of     our      observations                  and    the      findings           of     the        HUD internal

audit          group         which           identified            similar           problems            in     its     fiscal            year      1969

internal               audit,          we believe             that        an accurate                physical            inventory               should       be

taken              immediately,               and that           this         inventory          be reconciled                     dith      the      records

as required                  by HUD regulation,