oversight

Tenant Opportunity Program Grantees, DCHA, Washington, DC

Published by the Department of Housing and Urban Development, Office of Inspector General on 2000-03-30.

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

                                                                  Issue Date
                                                                    March 30, 2000
                                                                  Audit Case Number
                                                                    00-AO-201-1001




TO: Lee A. Palman, Director, Office of Public Housing, 3GPH


FROM: Saundra G. Elion, District Inspector General for Audit, Capital District, 3GGA

SUBJECT: Tenant Opportunity Program Grantees
         District of Columbia Housing Authority
         Washington, DC

At the request of the District of Columbia Housing Authority, we completed a review of seven
Tenant Opportunity Program grantees in Washington, DC. We determined that the grantees lacked
the knowledge and technical skills to manage TOP grant funds in accordance with Federal
requirements.

Within 60 days, please provide us with a status report on each recommendation made in this
report. The status report should include: (1) the corrective action taken; (2) the proposed
corrective action and the date to be completed; or (3) why the action is considered unnecessary.
Also, please provide us copies of any correspondence or directives issued because of this audit.

We are providing copies of this report to each grantee included in this review and to the DC
Housing Authority. If you have any questions, please contact me or Joan S. Hobbs, Assistant
District Inspector General for Audit, on (202) 501-1330.
Executive Summary
We completed an audit of seven Tenant Opportunity Program (TOP) grantees in Washington, DC.
Our audit objective was to determine whether the seven grantees (James Apartments, Kentucky
Courts Senior, Fort Lincoln, Knox Hill Senior, Horizon House Senior, Hopkins Apartments, and
Garfield Terrace) managed TOP grant funds in accordance with Federal requirements. Our
review covered the period January 1998 through September 1999.

We found that these seven TOP grantees lacked the knowledge and technical skills to manage their
grants. Specifically, the grantees:

       •   Did not have adequate controls over their grant funds;
       •   Did not establish financial management systems;
       •   Did not retain adequate accounting records;
       •   Did not follow proper procurement procedures; and
       •   Paid consultants for services not performed.

We attribute these conditions to the lack of adequate monitoring and training of TOP grantees by
the HUD DC Field Office and the DC Housing Authority. As a result, the seven TOP grantees
spent $144,038 on ineligible and unsupported items.

Recommendations

We are recommending that the following actions be taken to correct TOP grantee performance
deficiencies:

       •   Recover ineligible and unsupported costs of $144,038 unless documentation is
           obtained for the unsupported costs or unsupported payments are explained adequately
           and documented;
       •   Provide grantees with technical assistance on managing checkbooks, retaining source
           documents, and establishing procurement procedures;
       •   Require grantees to establish financial management systems to manage and account for
           TOP funds;
       •   Instruct TOP grantees to monitor the services provided by consultants and make
           payments after services are provided;
       •   Periodically verify future grant draw down requests against the source documents; and
       •   Inform the Grants Management Center of the inability of these TOP grantees to manage
           grant programs.




                                                 Page ii                        00-AO-201-1001
Table of Contents

Management Memorandum                                             i


Executive Summary                                                ii


Introduction                                                     1


Finding

     TOP Grantees Lacked the Knowledge and
     Technical Skills to Manage Grants                          3


Management Controls                                            11

Appendices
      A Summary of Ineligible and Unsupported Costs            12
      B Ineligible and Unsupported Costs for Grantees           13
      C Auditee Comments                                       20
      D Distribution                                            36




                                 Page iii               00-AO-201-1001
Introduction
The overall purpose of the Tenant Opportunity Program (TOP) grant was to prepare residents to
manage their housing projects and provide opportunities for economic development, self-
sufficiency, improved living conditions, and enhanced social services for residents.1 During
FYs 1994 and 1995, HUD (through a competitive process) awarded TOP grants to 31 DC Housing
Authority (DCHA) resident councils. Each resident council (TOP grantee) was awarded about
$100,000 that they could use to fund a variety of programs based on the needs of the residents in
their respective public housing projects.

In 1995, HUD created the concept for the District of Columbia Technical Assistance Organization
(DCTAO) to assist the grantees in administering the TOP grants. The DCTAO was based on the
premise that a centralized organization could provide technical assistance and coordinate services
among the resident council members for less cost and with minimal duplication of effort.
However, the DCTAO was terminated in 1997 because it did not provide adequate services to its
members. We reviewed the operation of the DCTAO and presented our results in Audit Report
No. 97-AO-201-1001, dated February 26, 1997.

The HUD DC Field Office (DCFO) has overall responsibility for monitoring the TOP grantees’
progress. This responsibility includes providing technical assistance when needed, authorizing
grant fund draw downs based on line-items approved in the work plan and budget; and identifying
appropriate training sources. Because of the changes in focus and staffing, the DCFO requested
DCHA hire a coordinator to assist the grantees with day-to-day operations.

The DCHA TOP Coordinator was hired in October 1998 to provide TOP grantees with
information on relevant training to administer the grant, as well as to provide assistance to ensure
compliance with applicable regulations.

On January 1, 1998, the seven TOP grantees included in our review had a total of $495,728
remaining on their TOP grants as reflected on the Line of Credit Control System (LOCCS). These
grantees spent $274,861 during the period January 1998 through September 1999. The grantees
obtained their funds by periodically submitting payment vouchers to the DCFO for approval. After
the payment voucher was approved, the funds were direct deposited into the TOP grantee’s
checking account. The status of the TOP grant funds we reviewed are as follows:




1
 The Resident Opportunities and Self Sufficiency (ROSS) grant program will replace the TOP grant in FY 2000.
The purpose of the ROSS grant is to provide funding for supportive services, resident empowerment activities and
activities to assist residents in becoming economically self-sufficient.

                                                          Page 1                               00-AO-201-1001
                                                                                   Introduction




                                       Status of TOP Grant Funds

                                                           LOCCS
                                       Total Grant         Balance         Spent From
              TOP Grantees                Award            at 1/1/98     1/1/98-9/30/99

              James                     $ 97,000           $ 82,164        $ 32,391
              Kentucky Courts            100,000             77,600          51,245
              Fort Lincoln               100,000             74,747         43,234
              Knox Hill                  100,000             74,746         32,672
              Horizon House              100,000             63,262         34,520
              Hopkins                    100,000             63,056         20,476
              Garfield Terrace           100,000             60,153         60,322*

              Total                     $697,000           $495,728        $274,860


              *Garfield Terrace spent more funds than their LOCCS balance because they
              had funds in their checking account from a prior period.




                                     Our audit objective was to determine whether the grantees
Audit objectives,                    managed TOP grant funds in accordance with Federal
scope, and                           requirements. The scope of our review was limited to seven
methodology                          TOP grantees (James Apartments Resident Council,
                                     Kentucky Courts Senior Resident Council, Fort Lincoln
                                     Resident Council, Knox Hill Senior Resident Council,
                                     Horizon House Senior Resident Council, Hopkins
                                     Apartments Resident Council, and Garfield Terrace
                                     Resident Council). To accomplish our objective, we
                                     reviewed grantee files maintained in the DCFO and
                                     interviewed appropriate DCFO staff, grantee personnel, and
                                     grantee consultants and contractors. We also examined the
                                     grantees’ accounting records including bank accounts,
                                     checks, receipts, invoices and contracts.

                                     Our audit covered the period January 1, 1998, through
                                     September 30, 1999. The field work was performed from
                                     July through December 1999. We conducted our audit in
                                     accordance with generally accepted government auditing
                                     standards.


                                                 Page 2                         00-AO-201-1001
                                                                                         Finding


TOP Grantees Lacked the Knowledge and Technical Skills to
                     Manage Grants

The seven TOP grantees included in our review lacked the knowledge and technical skills to
manage their grants in accordance with Federal requirements. The grantees did not have adequate
controls over their grant funds, did not establish financial management systems, did not have
adequate accounting records, did not follow proper procurement procedures, and paid consultants
for services that were not performed. We attribute these conditions to the lack of adequate
monitoring and training of the TOP grantees by HUD and DCHA. As a result, the grantees spent
$144,038 on ineligible or unsupported items.


                                    The FYs 1994 and 1995 notice of funding availability
 Criteria                           (NOFA) for TOP grants were published in the Federal
                                    Register on May 13, 1994, and March 1, 1995, respectively.
                                    The NOFAs state that the purpose of the TOP grant is to
                                    expand the range of the resident managed activities so that
                                    residents can set priorities based on the needs in their
                                    communities. These grants are to be used to fund training
                                    and other tenant opportunities, such as the formation of
                                    resident councils, identification of the relevant social
                                    support needs, and the securing of that support for residents
                                    of public housing. The NOFAs state that ineligible activities
                                    include such items as entertainment, purchase/rental of land
                                    or vehicles, payment of salaries of resident council staff, and
                                    fraudulent or wasteful expenditures. Activities for which
                                    funds from other sources are being provided or have been
                                    requested, can not be paid for with TOP grant funds.

                                    The Office of Management and Budget Circular A-110 dated
                                    November 19, 1993, titled Uniform Administrative
                                    Requirements for Grants and Agreements with
                                    Institutions of Higher Education, Hospitals and other
                                    Non-Profit Organizations, describes the requirements for
                                    financial management systems. Basically, grantees are
                                    required to maintain accurate, current, and complete
                                    financial records; records that identify the source and
                                    application of funds; and effective controls over and
                                    accountability for all funds.

                                    The seven grantees did not have adequate controls over TOP
 Controls over grant                grant funds. We found that the grantees spent $144,038 or
 funds not adequate                 52 percent of their available funds on ineligible or
                                    unsupported items, did not safeguard checkbooks, did not

                                                 Page 3                           00-AO-201-1001
                                                    Finding


reconcile bank accounts regularly, wrote checks to cash, and
allowed paid consultants to have access to the checkbook
and prepare documentation to support the draw down of
grant funds. Specifically:

•    The seven grantees spent $35,304 of TOP funds on
     ineligible items including a harbor cruise, a Christmas
     party, big screen televisions, subscriptions to cable
     television, a Las Vegas training trip, stipends to board
     members, digital cameras, and a bank account and
     employee health and life insurance premiums for a
     janitorial business (see Appendices A and B).

•    The seven grantees spent $108,734 for which they did
     not have any supporting documentation. In some cases
     the grantees could not even provide copies of checks
     or the completed check stubs to show to whom and for
     what the TOP funds were used. For example, over
     half ($28,724) of the funds Kentucky Courts spent
     during the audit period could not be accounted for
     because they had neither receipts, checks nor check
     stubs. An additional $19,716 was supported by check
     stubs but no receipts. The Kentucky Courts Resident
     Council blamed the consultant for the missing records.
     Allegedly, all documentation was lost when the
     consultant’s basement flooded.

•    Hopkins did not properly safeguard the TOP grant
     checkbook. As a result, the daughter of the Resident
     Council President stole $3,500 of TOP grant funds by
     forging checks. The former Hopkins Resident Council
     President filed a police report but no formal charges
     were made and the funds were not recovered. The
     DCFO, upon learning about the incident from the
     grantee, froze the remaining TOP grant funds of the
     resident council. Hopkins also maintained a duplicate
     set of checks. Although the extra set of checks was
     never used, the Council President could not explain
     why they needed a duplicate set of checks. We also
     observed that a complete series of checks was missing
     from the TOP checkbook but no explanation was given
     for those missing checks.

•    Hopkins did not routinely reconcile it's TOP grant
     checking account. As a result, checks were written for
     $1,610 in excess of the bank balance.

          Page 4                         00-AO-201-1001
                                                                            Finding



                       •    James wrote a $500 check to “cash” to pay for a
                            Christmas party. When asked about this expense, the
                            Resident Council President stated that the check
                            written against the TOP account was made in error.

                       •    The consultants for Kentucky Courts, Hopkins, Horizon
                            House, Fort Lincoln and Garfield Terrace regularly
                            had access to the checkbooks and prepared the
                            requests for draw downs of grant funds from LOCCS.
                            However, monitoring and controlling grant funds was
                            outside the scope of the contracts for these consultants.

                       The seven TOP grantees did not establish financial
Financial management   management systems to track and monitor their grant funds.
systems not            Instead, the grantees used a checkbook ledger system and
established            relied on HUD and the LOCCS program to maintain their
                       grant balances. Although TOP grant funds could be used to
                       hire a consultant to establish and maintain a financial
                       management system that included budgeting, accounting, and
                       auditing, the grantees chose not to use the funds for this
                       purpose. One grantee, Fort Lincoln, purchased automated
                       financial management software, but did not use it. As a
                       result, the grantees had little accountability over their TOP
                       funds.

                       The grantees did not retain adequate accounting records and
Accounting records     documentation to support expenditures related to the TOP
not adequate           grant. For example, Kentucky Courts and Hopkins did not
                       retain any source documents such as invoices, time sheets,
                       checks or bank statements to support expenditures related to
                       the grant.

                       In general, the TOP grantees did not follow proper
Proper procurement     procurement procedures and did not maintain complete and
procedures not         proper documentation to support the process used in
                       purchasing consultant services, equipment and furniture.
followed               Specifically, none of the grantees documented the number of
                       quotes received, their evaluation of the quotes, the cost
                       estimates and/or price analyses, or the basis for selecting
                       their consultants. Consequently, we could not determine
                       whether the $46,886 Kentucky Courts, Horizon House, Fort
                       Lincoln, and Garfield Terrace paid for consultant services
                       was a fair and reasonable price and the most qualified
                       consultant was selected.


                                 Page 5                         00-AO-201-1001
                                                                            Finding


                        Grantees also made computer and furniture purchases
                        without maintaining evidence (such as price quotations from
                        various vendors) to show that they obtained the most
                        competitive prices. James spent $10,534 on six computers
                        and over $6,000 on furniture, including a large screen
                        television. Fort Lincoln spent $3,338 on a large screen
                        television. Horizon House spent $4,188 on two computers.
                        Since the grantees did not maintain supporting
                        documentation, we could not determine whether TOP grant
                        funds were used effectively.

                        Some consultants hired by the grantees did not always
Consultants paid for    provide the contracted services for which they were paid.
services not provided   For example:

                        •    Kentucky Courts and Garfield Terrace paid the same
                             consultant $16,309 and $18,000, respectively. This
                             consultant was hired to provide an assessment of the
                             problems and social issues at the respective housing
                             projects; provide training for the residents to become
                             self sufficient; provide technical assistance needed by
                             the residents; and to assist the resident council in
                             applying for other resource opportunities. However,
                             neither the grantee nor the consultant could provide any
                             evidence that these services had been provided. In
                             addition, the consultant had no receipts for purchases
                             she made on behalf of the grantee. According to the
                             office manager at Kentucky Courts, the consultant spent
                             2 hours a week at the site but did not provide any of
                             the services for which she was hired; yet, Kentucky
                             Courts paid her $1,000 a month.

                        •    Fort Lincoln paid $1,150 to a consultant to apply for
                             non-profit status for the resident council.      The
                             consultant did not complete and file the application
                             with the IRS but received full payment.

                        The DCFO and DCHA did not provide adequate training and
Training and            monitoring to the grantees. Upon the elimination of the
monitoring not          DCTAO in 1997, each grantee became solely responsible
adequate                for managing its remaining grant funds. Since the grantees
                        clearly did not have the knowledge, understanding or
                        experience to properly account for the grant funds, DCFO
                        arranged additional training for TOP grantees, including four
                        of the seven in our review.


                                  Page 6                         00-AO-201-1001
                                                                      Finding


                   For a few months after the elimination of the DCTAO,
                   DCFO sent out informative newsletters with helpful tips on
                   managing the grant. Helpful tips included discussions on
                   procurement requirements, such as obtaining three quotes for
                   major procurements and instructions on not writing checks to
                   “cash;” retaining supporting documentation; and establishing
                   a financial management system.           However, DCFO
                   recognized that those efforts were not sufficient to resolve
                   the problems the grantees were having and in 1998, HUD
                   requested DCHA hire a coordinator to oversee the day-to-
                   day operations of the TOP grantees. The memorandum of
                   understanding between DCHA and the resident councils
                   states that the TOP coordinator will provide technical
                   assistance and training. We found that the TOP coordinator
                   had not provided adequate technical assistance and training
                   to the grantees to improve accountability over the grant
                   funds.

                   The DCFO did not effectively monitor the requests for grant
                   draw downs and as a result, approximately 52 percent of the
                   amount spent during the period of our review was on
                   ineligible or unsupported items.



  Schedule of Amounts Spent and Ineligible and Unsupported Costs
            from January 1998 through September 1999

                                       Ineligible and
                       Spent           Unsupported
TOP Grantees       1/1/98-9/30/99           Costs          Percentage

Garfield Terrace      $ 60,322           $ 25,758               43
Kentucky Courts         51,246             51,246              100
Fort Lincoln            43,234             15,719               36
Horizon House           34,520             11,278               33
Knox Hill               32,672              7,497               23
James                   32,391             12,848               40
Hopkins                 20,476             19,692               96

Total                $274,861            $144,038               52




                             Page 7                        00-AO-201-1001
                                                                     Finding


                   The LOCCS requests and the supporting documents did not
                   always provide sufficient details of the expenses for which
                   the grantees were requesting reimbursement. During our
                   review, we found that approval for draw downs of funds
                   was given even though details of the expenditures were not
                   provided. In one case, the justification for reimbursement
                   did not show the true expenditure. For example, Garfield
                   Terrace spent $2,890 to set up a janitorial business and pay
                   health and life insurance premiums for employees of this
                   business yet Garfield Terrace showed the expense on their
                   details for the draw down as procurement of computers.

                   Given the significance of the problems found, we believe
Conclusion         that none of the grantees we reviewed should be allowed to
                   participate in the new ROSS grant program until they can
                   demonstrate that they have the capability to manage grant
                   programs.



Auditee Comments   HUD agreed with the finding but disagreed with our
                   assessment of the cause and some of the recommendations.
                   The HUD Director of Public Housing, DCFO, stated, “we
                   very strongly disagree with your statement that the
                   conditions found were due to ‘lack of adequate monitoring
                   and training of TOP grantees by the HUD DC Field Office
                   and the DC Housing Authority’.” Comments pertaining to
                   the training and site visits include: (1) each of the seven
                   grantees attended mandatory training in FYs 1994, 1995 or
                   1996 prior to being allowed to draw down funds; (2) 44 on-
                   site visits were made to 31 DC resident councils between
                   August 26, 1997, and April 20, 1999; and (3) the DCHA
                   TOP Coordinator made 117 visits to the seven grantees
                   between October 29, 1998, and September 16, 1999, and
                   provided two group training sessions on financial
                   management and preparing semi-annual reports.

                   The Director urged us “to remember that until the TOP
                   grants were approved, these groups had had little to no
                   experience in dealing with large sums of money. They were
                   not experienced in dealing with the business world or with
                   government rules. Many had never even had a personal bank
                   account and were not conditioned to living within a
                   framework of regulations and obviously, they resorted to
                   unstructured practices when not under the direct supervision
                   of the DCFO or DCHA.”

                            Page 8                             00-AO-201-1001
                                                                         Finding



                    The DCFO agreed with only $13,862 of the $35,304
                    ineligible costs presented in Appendix B of the report.
                    Detailed comments were also provided for each TOP
                    grantee.

                    We have included DCFO’s response in its entirety as
                    Appendix C.



OIG Evaluation of   Had adequate training and monitoring been provided to the
Auditee Comments    grantees, we would not have found the number of problems
                    we did during this review. We recognize that training was
                    provided to the original resident council board members,
                    however, many of the board members changed during the
                    grant period and the new members were not always
                    provided adequate training. The 44 on-site monitoring visits
                    the DCFO made to 31 grantees means the seven grantees we
                    reviewed were probably visited once or twice during the
                    20-month period. Two visits were not sufficient for these
                    grantees. Even though the DCHA TOP Coordinator made
                    numerous visits to the grantees, the visits made little impact
                    on management of the grants.

                    We agree with the DCFO that the grantees had little to no
                    experience in dealing with large sums of money. It is for
                    this reason that we believe they should not be put in a
                    position to manage future grants without the capacity to do
                    so.

                    We discussed our results on ineligible and unsupported
                    costs with the DCFO Senior Revitalization Specialist
                    responsible for the TOP grants before we issued the draft
                    report and had agreement on these costs until we received
                    the DCFO’s comments. We classified many of the items as
                    ineligible because the grantees could not show that the items
                    were used for TOP activities. Recommendation 1A requests
                    recovery of these costs unless documentation is obtained or
                    an adequate explanation is provided. Therefore, until a
                    review of the documentation is made by the DCFO, the
                    monetary amounts will remain as presented in this report.




                          Page 9                              00-AO-201-1001
                                                                  Finding



Recommendations   We recommend that you ensure:

                  1A. Recovery of ineligible and unsupported costs of
                      $144,038 unless documentation is obtained for the
                      unsupported costs or unsupported payments are
                      adequately explained and documented.

                  1B. Each grantee is provided with adequate technical
                      assistance on managing checkbooks, retaining source
                      documents, and using proper procurement procedures.

                  1C. Each grantee establishes a financial management
                      system to manage and provide accountability over
                      TOP funds.

                  1D. TOP grantees monitor their consultants and make
                      payments after services are provided.

                  1E. Future grant draw down requests are periodically
                      verified against source documents before approval of
                      funds is given.

                  1F. The Grants Management Center is informed of the
                      inability of these TOP grantees to manage grant
                      programs.




                       Page 10                          00-AO-201-1001
Management Controls
In planning and performing our audit, we considered the management controls of the TOP grantees
in order to determine our audit procedures but not to provide assurance on internal controls.

Management controls include the plans, methods, and procedures adopted by management to
ensure that the resources used are consistent with laws, regulations, and policies; that resources
are safeguarded against waste, loss, and misuse; and that reliable data is obtained, maintained, and
fairly disclosed in reports.


                                      We determined that administrative and accounting controls
 Relevant Management                  in the following areas were relevant to our audit objective:
 Controls
                                      •     financial controls over program funds,

                                      •     cash receipts and disbursements, and

                                      •     management controls over eligibility of program
                                            expenditures.

                                      We assessed all relevant control areas identified above.


                                      A significant weakness exists if management controls do not
 Significant Weaknesses               give reasonable assurance that the entity’s goals and
                                      objectives are met; that resource use is consistent with
                                      laws, regulations, and policies; that resources are
                                      safeguarded against waste, loss, and misuse; and that
                                      reliable data is obtained, maintained, and fairly disclosed.
                                      Based on our review, significant weaknesses exist with
                                      controls over grant funds, cash receipts and disbursements,
                                      and eligibility of program expenditures. These weaknesses
                                      are discussed in the finding.




                                               Page 11                               00-AO-201-1001
                                                               Appendix A


Summary of Ineligible and Unsupported Costs
   TOP Grantees       Ineligible      Unsupported    Total

   Kentucky Courts    $ 2,806          $ 48,440     $ 51,246

   Garfield Terrace     5,957            19,801       25,758

   James                6,787            6,061        12,848

   Hopkins              3,500            16,192       19,692

   Fort Lincoln         7,735            7,984        15,719

   Horizon House        4,427            6,851        11,278

   Knox Hill            4,092             3,405        7,497

   Total              $35,304          $108,734     $144,038




                            Page 12                       00-AO-201-1001
                                                                           Appendix B


Ineligible and Unsupported Costs for Grantees
                                Kentucky Courts

                                     Ineligible       Unsupported   Notes

Cleaning fee                                            $   900      1
Missing checks                                           28,724      1
Internet                                                    340      1
Salary - office manager                                   1,460      1
Salaries to board member                 $2,640                      2
Food                                         99                      2
Consultant                                               17,016     1, 3
Cable TV                                    67                       4

Total                                    $2,806         $48,440




Notes
1. No documentation
2. Ineligible under TOP
3. Procurement procedures not followed
4. Entertainment




                                            Page 13                  00-AO-201-1001
                                                                             Appendix B



                                       Garfield Terrace

                                         Ineligible    Unsupported     Notes

Typing services                                           $ 1,500        1
Office supplies                                               266        1
Training                                                       35        1
T - Shirts                                 $     181                     2
Salaries to board members                      1,786                     2
Child development training                     1,100                     3
Bank account for janitorial business           2,000                     4
Insurance premiums                               890                     4
Consultant                                                 18,000        5

Total                                      $5,957         $19,801




Notes
1. No documentation
2. Ineligible under TOP
3. Trainer not licensed
4. Activity not related to TOP
5. Procurement procedures not followed




                                           Page 14                   00-AO-201-1001
                                                                          Appendix B



                                          James

                                         Ineligible   Unsupported       Notes

Transportation                                          $     750         1
Telephone                                                     766         1
Software                                                      364         1
Training instructor                                           450         1
Consultants                                                 3,731         2
Furniture and office supplies            $4,632                           2
Large screen television                   1,605                          2, 4
Janitorial services                          50                           3
Christmas party                             500                           4

Total                                    $6,787          $6,061




Notes
1. No documentation
2. Procurement procedures not followed
3. Operating expense
4. Entertainment




                                         Page 15                    00-AO-201-1001
                                                                Appendix B



                               Hopkins

                             Ineligible   Unsupported   Notes

Office training                             $ 370         1
Office cleaning                                465        1
Babysitting                                     30        1
Transportation                                 250        1
Office Secretary                             2,400        1
Flyer                                        1,050        1
Telephone                                      100        1
Stamps                                          50        1
Supplies                                        50        1
Transportation to training                      13        1
Office supplies                                936        1
Missing checks                              10,478        1
Forged Checks                $3,500                       2

Total                        $3,500        $16,192



Notes
1. No documentation
2. Stolen funds




                                Page 16                 00-AO-201-1001
                                                                       Appendix B



                                    Fort Lincoln

                                     Ineligible    Unsupported     Notes

 Office furniture                                   $1,158           1
 Filing fee - bylaws                                    45           1
 Telephone                                             336           1
 Office supplies                                        75           1
 Large Screen TV/VCR                     $3,338                     2, 3
 Cable TV                                   246                      2
 Sewing & piano lessons                   2,025                      3
 Consultant                                          5,870           3
 Filing fee - nonprofit status                         500           4
 Iron bars                                1,100                      5
 Training instructor                         75                      6
 Office equipment                            60                      7
 Computer upgrades                          891                      8

 Total                                   $7,735     $7,984




Notes
1. No documentation
2. Entertainment
3. Procurement procedures not followed
4. Services not rendered
5. Building Improvements
6. Overpayment
7. Duplicate shredder
8. Excess cost




                                         Page 17                 00-AO-201-1001
                                                                              Appendix B



                                   Horizon House

                                       Ineligible      Unsupported    Notes

Computer installation                                   $    481        1
Transportation for training                                   25        1
Books                                                        345        1
Cable TV                                 $ 41                           2
Copier                                    1,380                        3, 8
Consultant                                                  6,000       3
Computer accessories                         70                         4
Alarm system                                422                         4
CD writer                                   322                         5
Digital camera                              955                         5
Domain name                                  70                         5
Web hosting                                 175                         5
Trip to Las Vegas                           882                         6
Printer repair                              110                         7

Total                                    $4,427         $6,851




Notes
1. No documentation
2. Entertainment
3. Procurement procedures not followed
4. Items purchased but not used
5. Items used for non TOP purpose
6. Trip not pre-approved
7. Repair of printer purchased prior to award of TOP
8. Duplicate purchase




                                         Page 18                     00-AO-201-1001
                                                                             Appendix B



                                        Knox Hill

                                        Ineligible    Unsupported     Notes

 Office equipment                                       $ 750            1
 Training                                                 525            1
 Paint services                                           100            1
 Miscellaneous                                            100            1
 Computer peripherals                                     180            1
 TV and stereo                            $1,733                         2
 Harbor cruise                             1,784                         2
 Cable TV subscription                       440                         2
 Office cleaning                             135                         3
 Consultant                                              1,750           4

 Total                                    $4,092        $3,405




Notes
1. No documentation
2. Entertainment
3. Resident council members paid for services
4. No timesheets or support for consultant services




                                          Page 19                   00-AO-201-1001
                                                                                        Appendix C


Auditee Comments




                                                             IN REPLY REFER TO: 3GPH-MFD


March 23, 2000


MEMORANDUM FOR: Saundra Elion, District Inspector General for Audit, Capitol
                    District, 3GGA

FROM: Lee A. Palman, Director, Office of Public Housing, 3GPH

SUBJECT:       Draft Report - Tenant Opportunity Program
               District of Columbia Housing Authority
               Washington, DC


       Attached is our response to the draft report of your audit of seven Tenant Opportunity
Programs operated by resident councils in the Washington, DC metropolitan area.

        We are thoroughly dismayed with this draft report. We spent a considerable amount of
time over a period of seven months discussing the intricacies of the TOP and providing
documents for Agent Chandra Dey. At no time during the audit process did Agent Dey indicate that
all our work would result in a negative report. When we met with you and Agent Dey on February
23, 2000, for four hours, we felt that you further understood and we were also under the
impression that there would be considerable changes in the second draft. As I wrote to you in my
e-mail on February 29, 2000, I couldn’t believe how few differences there were in the two draft
versions. Consequently, if your final report is not substantially changed from this draft, I feel it
only fair that a copy of this response be forwarded to each entity on the cc: list.

       Throughout the report, the OIG appears to take credit for discovering the theft of checks at
Hopkins and the issues surrounding Dr. Betty Ezuma, when, in fact, we found the problems, took
immediate and decisive action, and made certain that the OIG was informed of both the problems
we discovered and the action we took. Be assured, that whenever we were made aware of
problems, this office took action.


                                               Page 20                              00-AO-201-1001
                                                                                       Appendix C




         We agree with your conclusion that the seven grantees lacked the knowledge and technical
skills to effectively manage their grants. We strongly disagree, however, that your
recommendations will supply the needed resolution. Considering the time and training effort
already invested in these programs by the DCFO and the DCHA, we do not believe that the TOP
grantees would have benefited from more training and technical assistance.


       Our response covers each area of the report in detail. If you have questions regarding this
response, please call Mary Dunn, Senior Revitalization Specialist, at (202) 275-9200, extension
3174.




cc: Kenneth Darnall
     Special Agent in Charge
     Capitol District




                                           Page 21                              00-AO-201-1001
                                                                                       Appendix C



FINDING: The seven TOP grantees included in our review lacked the knowledge and
technical skills to manage their grants in accordance with Federal requirements. The
grantees did not have adequate control over their grant funds, did not establish financial
management systems, did not have adequate accounting records, did not follow proper
procurement procedures and paid consultants for services not performed.

       While we agree that your Finding is accurate, again, we very strongly disagree with your
statement that the conditions found were due to “the lack of adequate monitoring and training of
TOP grantees by the HUD DC Field Office and the DC Housing Authority”. HUD provided a
multitude of training opportunities and although the DC Housing Authority was under no
requirement to do so, they also provided training and volunteered a staff person to work with these
groups beginning in November 1998.

        Each of the seven grantees attended a mandatory training session provided by HUD
Headquarters prior to their being allowed to draw funds. These sessions covered program
requirements, financial management, and program goals. The FY 1994 grantees met in Atlanta,
Georgia and the FY 1995 grantees met in Orlando, Florida. An additional week’s session was
held in Cleveland, Ohio in FY 1996 and focused on the basic financial aspects of the program.
Grantees were taught to write checks, reconcile bank statements, how to procure supplies and
equipment, how to document their purchases , and how to keep necessary records. This training
was sponsored by HUD Headquarters and used trainers from the EDTEC consulting firm.

       Four of the seven resident councils were included in a group selected by HUD
Headquarters in 1998 to attend a two-day session led by EDTEC. This training was followed by a
succession of on-site visits and intense hands-on training conducted by the EDTEC Consultant for
approximately six months in 1999.

         In addition, DCFO provided sessions on General TOP Training, Use of the LOCCS, and
the Preparation of Semi-Annual Reports, as well as, an over-view to the three groups not included
of the training provided by EDTEC. The on-site training was meant to assure that the grantees had
completed required steps of their grants and that their records documented their appropriate use of
the TOP funds.

         Between August 26, 1997 and April 20, 1999, our logs show a total of forty-four on-site
visits to the thirty-one DC resident councils. Each of these visits was used to provide procurement
information, assistance with budgets, program regulations, and at one time or another touched on
every aspect of the TOP. Between April, 13, 1998 and September 24, 1999, telephone logs show
a total of one hundred and thirty-three messages from these seven groups alone. This does not
include the number of times we initiated the calls or when their calls were answered directly.
Each of the returned calls was to address some aspect of TOP program management.




                                           Page 22                              00-AO-201-1001
                                                                                          Appendix C



        From January, 1998 through October, 1998, the DCFO produced and distributed a monthly
newsletter that was written on a level intended to appeal to and instruct resident councils on the
operation of TOP. It’s purpose was to deliver information in a method that could be easily
assimilated by the groups for which it was intended.

        By early 1998, HUD was completing a reorganization effort and staff members who had
been working in specialty fields were reassigned to general duties. Offices were downsized and
some staff were shifted to other offices. With the increased workload and decreased staff, this
office found it necessary to segment staff time according to the dollar value of programs. At the
same time realizing that while it was not a high dollar program, TOP was vulnerable, we
persuaded the DCHA to volunteer an employee to work hands-on with the TOP grantees.

        DCHA added the TOP Coordinator to their staff in late October, 1998. According to
DCHA logs this employee made 117 visits to the seven TOP resident councils between October
29, 1998 and September 16, 1999. The DCHA TOP Coordinator instructed individual groups,
particularly the Senior groups, Knox Hill, Fort Lincoln and James Apartments, with hands-on
procurement, financial records, and by arranging training efforts. DCHA also provided two group
training sessions on Financial Management and the preparation of Semi-Annual Reports during
1999.

       All of the above supports our position that an inordinate amount of time was spent
providing training and technical assistance an array of subjects involving TOP. Not only were
TOP grantees involved in the training activities, but we included TOP consultants who were
working for the DC grantees.

Controls over grant funds not adequate, page 4

•   Some of the items listed as ineligible are, in fact, eligible. Big screen televisions, cable
    subscriptions, and digital cameras are eligible. We agree that the other items are ineligible,
    but this office did not release funds for those ineligible purposes. Funds released for eligible
    purposes were diverted either knowingly or unknowingly by council officers for the ineligible
    activities. The harbor cruise was clearly ineligible and funds were not released by the DCFO
    for that purpose. The Christmas party should have been paid from another account held by the
    particular resident councils. That TOP account has been reimbursed.
•   We first alerted your office to the activities of this particular consultant in conversations with
    agents when the OIG was involved in a PHDEP inquiry in May 1998. We followed up with e-
    mail messages to David Niemiec dated 1/6/99 and 2/1/99. When we learned of the Kentucky
    Courts situation, we took immediate action by relieving the officers of any rights or duties
    connected to TOP, by restricting access to LOCCS by those persons, and by assisting the
    residents to reorganize. We called in the consultant and asked that all records be turned over
    to us. We were told the same story of the records having been destroyed in a flooded
    basement.




                                             Page 23                              00-AO-201-1001
                                                                                          Appendix C



•     The incident at Hopkins was first reported to us by the former President who had been
      replaced only a short time prior to the incident. As soon as we learned of the theft, we e-
      mailed the OIG ( Kenneth Darnall, 11/09/98) and froze the remaining TOP funds. We
      restricted the sitting President of any right or duty related to TOP. The resident council,
      however, refused to follow through and assign other members to leadership positions.
      Consequently, the Hopkins TOP account remains suspended.

Financial Management System not established

•     As stated earlier, all the TOP grantees received training that included basic financial
      management. The required Semi-Annual reports covering the period January, 1999 through
      June 1999 showed the following:

      James Apartments report dated 8/10/99
         1. Financial Management System in place - 2/99
         2. Completed Financial Management Training - 1/99
         3. Had received 501 status - 4/99

     Knox Hill report dated 6/30/99
         1. Financial Management System in place - yes
         2. Completed Financial Management Training - yes
         3. Had applied for 501 status - yes

    Horizon House report dated 7/28/99
         1. Financial Management System in place - 12/98
         2. System certified by CPA - 12/98
         3. Completed Financial Management Training - (no date given)
         4. Had received 501 status - 2/99

    Fort Lincoln report dated 7/30/99
          1. Financial Management System in place - 3/99
          2. Had received Financial Management Training - 2/99
          3. Applied for 501 status - 2/99

    Garfield report dated 7/15/99
          1. Financial Management System in place - 4/97
          2. System certified by a CPA - 7/98
          3. Completed Financial Management Training - 6/98
          4. Received 501 status - 1997

        The Hopkins Resident Council has not submitted a report for the past several reporting
periods. Kentucky Courts did acknowledge that they do not have a financial management system in
place even though early reports state that they did. We would like to point out that both these
groups used the same consultant during this time frame. We feel that this particular consultant

                                              Page 24                              00-AO-201-1001
                                                                                       Appendix C




was exceedingly lax in providing or procuring the systems these resident councils obviously
needed.

•   The $500 check that was written to pay for a Christmas party should have been written on the
    another account owned by the organization. It was a simple error made by the organization’s
    treasurer when that person came into office. The error was corrected on November 23, 1999,
    with the deposit of $500 drawn from the Resident Council account and deposited into the TOP
    account
•   It seems obvious that the resident councils, in spite of numerous financial management training
    efforts have not grasped either the mechanics nor understood the importance of the financial
    aspects of operating a grant program. Consequently, it would seem that when a consultant
    attempted to assist the grantee in an area not included in the scope of their work, they have
    actually provided additional assistance for which they may not have been paid.

Accounting records were not adequate

        All the grantees received training on the financial management aspects of their grants.
Prior to the election of the current president, Hopkins did have copies of invoices, checks and
bank statements. They were not properly filed and were, in fact, kept in boxes and bags. But they
did exist. The former President advised that she organized the records after an on-site visit by our
office and turned them over to a member of the newly elected Board when she left office. We have
previously mentioned the alleged destruction of the Kentucky Courts records in the home of their
consultant.

Proper procurement Procedures not followed

        This office has routinely instructed TOP resident councils and their consultants to use a
comparative procurement process when making purchases. We have provided a description of
acceptable methods of procurement in group training sessions, one-on-one conversations, in
resident council Board meetings and in newsletter issues. Not only have we have received enough
unsolicited examples of procurement practices in use by these groups to believe that it was being
done, but the DCHA TOP Coordinator was present when the bids were gathered for two of your
specific examples - James Apartments and Fort Lincoln. We can only offer that the groups either
did not understand what you were requesting or they somehow lost the documentation that they
gathered when planning their purchases.

        We do not believe that the expenditures listed for the items described are unreasonable and
we have enough examples of the kind of comparative pricing being done by TOP grantees to
believe that it was being done routinely.




                                            Page 25                             00-AO-201-1001
                                                                                       Appendix C



Consultants Paid for Services not Provided

•   Based on the Semi-Annual reports we received from these grantees, we had no reason to
    suspect that TOP grant activities at Kentucky Courts and Garfield Terrace were not
    progressing. When we first began to find the activities of this particular consultant to be
    suspect, we wrote (April 6, 1998) and asked that she report on the status of the grantees for
    which she worked . Her reply (April 28, 1998) indicated satisfactory progress was being
    made. Not being totally satisfied, we asked all of the eight grantees for which she was under
    contract to meet with us. The President of the Garfield RC did not attend, but the other seven
    did. In an open forum, we asked the groups about their relationship with the consultant, the
    services she was providing, and the fees she was charging. We gave them ample opportunity
    to inform/complain. No one did.

    As soon as we had positive knowledge of the conditions at Kentucky Courts, we stopped
    all grant activities until the resident council was reorganized and forbade further payment
    to the consultant. We also notified your office by e-mail to David Niemiec (cc: Joan Hobbs)
    on January 6, 1999 and February 1, 1999 of what we had learned.

        In the case of information received from the Kentucky Courts office manager, it seems
unusual that you would accept information from one person as fact without assessing the role that
person may have played in the incident or the relationship she may have had with those she was
accusing.

•   The Fort Lincoln Resident Council advised us that contrary to the information in your report,
    they received notification from the IRS that their application for non-profit status had been
    received by that Agency.

Training and Monitoring not Adequate

        As we stated previously, both the DCFO and the DCHA spent an extraordinary amount of
time and energy training the grantees and monitoring these programs. We refer you to the training
and technical assistance already mentioned. We must reiterate that DCHA was under no
obligation to provide any assistance to the TOP grantees and the DCFO did far more training and
monitoring than we were required to do. For instance, we were not required to edit the LOCCS
accounts, and while it increased the workload dramatically, we did so in order to have some
control over the purchase of ineligible items. At the same time, it was not possible to monitor
what was purchased once the money was released.

        The example you gave of the difference between a LOCCS request by Horizon House of
$4,900 and their supporting documentation of $11,000 is characteristic of the manner in which
Horizon approached LOCCS drawdowns. Ordinarily, they submitted a proposal and we would
eliminate the ineligibles before they actually made the request for funds. Rather than require them
to resubmit the same documents, we released the drawdown based on the result of our negotiation.



                                            Page 26                             00-AO-201-1001
                                                                                        Appendix C


          We urge you to remember that until the TOP grants were approved, these groups had had
little to no experience in dealing with large sums of money. They were not experienced in dealing
with the business world or with government rules. Many had never even had a personal bank
account. They were not conditioned to living within a framework of regulations and obviously,
they resorted to unstructured practices when not under direct supervision by the DCFO or DCHA.

Conclusion

        We appreciate the conclusion you reached, however, we don’t know how an organization’s
“ability to manage a grant” might be determined without observing how they manage a grant.
Therefore, restricting their participation in the ROSS program may not produce the results we
would like to see.

         We believe that a better structuring of the program’s ground rules will result in a better
program. We also believe that it is essential for a housing authority to be fundamentally involved
in this program from the time the proposals are written in order to have a successful program.

I.G. Recommendations:

1A. Ensure recovery of ineligible and unsupported costs of $143,038 unless documentation is
obtained for the unsupported costs or unsupported payments are adequately explained and
documented.

DCFO Comment: Our calculation reduced your ineligible figure from $35,304 to $13,862.
Because we did not have the opportunity to review their records, we have made very few changes
to the “unsupported” costs. We believe that we will be able to reduce that figure considerably as
well. Because these groups do not have another source of funds, it is not reasonable to expect us
to be able to collect any of the funds that were expended for whatever ineligible or unsupported
costs remain.

1B. Ensure that each grantee is provided with technical assistance on managing checkbooks,
retaining source documents and proper procurement methods.

DCFO Comment: We have provided an abundance of training to these groups already and since
these grants will have a deadline of August 1, 2000, we do not feel that further training will
produce the results we seek.

1C. Ensure that each grantee establishes a financial management system to manage and provide
accountability over TOP funds.

DCFO Comment: We will require each grantee to use a financial software program.



1D. Ensure that TOP grantees monitor their consultants and make payments after services are
provided.

                                            Page 27                              00-AO-201-1001
                                                                                    Appendix C



DCFO Comment: We will instruct each TOP grantee to monitor their consultants and make
payments to them after services are provided.

1E. Ensure that future grant draw down requests are periodically verified against source
documents before approval of funds is given.

DCFO Comment: We will continue to verify grant draw down requests against source
documents before approval of funds is given as we have done with approximately 40% of the
drawdowns.

1F. Ensure that the Grants Management Center is informed of the inability of these TOP grantees
to manage grant programs.

DCFO Comment: We will inform the Grants Management Center of your assessment and of our
response to that assessment.




                                          Page 28                            00-AO-201-1001
                                                                                       Appendix C



                                                                Appendix B
Ineligible and Unsupported Costs for Grantees_______________________________

                                      Kentucky Courts
                          OIG           DCFO           OIG
                        Ineligible     Ineligible     Unsupported       Notes

Cleaning fee                                  $ 900                      2
Missing checks                                 28,724                    2
Internet                                           340                   2
Salary-office manager                            1,460                   1
Salary Board member 2,640         2,640                                  2
Food                     99          99                                  2
Consultant                                      17,016                   1, 2
Cable TV                 67                                              1
                    _____________________________________
Total               $ 2,806     $ 2,739       $ 48,440

Notes:

1. Depending upon its use, cable TV is an eligible expense. Office Manager and Consultant
   salaries are eligible; there is no program requirement that time sheets be maintained. Internet
   access is eligible and encouraged.
2. Ineligible and unsupported items occurred during the tenure of Dr. Betty Ezuma. As soon as
   we learned of the conditions under her control, we notified your office and asked for
   assistance.




                                            Page 29                             00-AO-201-1001
                                                                                        Appendix C


Ineligible and Unsupported Costs for Grantees_______________________________


                                      Garfield Terrace

                                     OIG             DCFO          OIG
                                  Ineligible        Ineligible    Unsupported   Notes

Typing Services                                                   $ 1,500        1
Office supplies                                                       266        1
Training                                                               35        1
T-shirts                           181        181                                3
Salaries to board members        1,786      1,786                                3
Child Development Training      1,100                                            2
Bank account for business       2,000      2,000                                 3
Insurance premium                 890        890                                 3
Consultant                     ___________________                18,000         3

Total                          $ 5,957          $ 4,857          $ 18,000

Notes:

1. These are TOP eligible activities.
2. There is no program requirement that training be conducted only by licensed trainers,
    therefore this expense is not ineligible.
3. All other items listed as ineligible and unsupported occurred during the tenure of Dr. Betty
   Ezuma. (Your report shows the expenses for the janitorial business to be unrelated to TOP,
   while in reality, they are the very purpose of TOP. However, these particular, related items
   are not eligible ones.)




                                               Page 30                            00-AO-201-1001
                                                                                   Appendix C


Ineligible and Unsupported Costs for Grantees_______________________________


                                    James Apartments

                                   OIG         DCFO         OIG
                                 Ineligible   Ineligible   Unsupported     Notes

Transportation                                              $     750         1
Telephone                                                         766         1
Software                                                         364          1
Training instructor                                               450         1
Consultants                                                     3,731         2
Furniture and office supplies   $ 4,632     -0-                               2
Large screen television           1,605     -0-                               3
Janitorial Service                   50     -0-                               4
Christmas Party                     500     -0-                                      5
                                 ______________________________
                                $ 6,787     -0-        $ 6,061
Notes

1. These are eligible TOP expenses.
2. According to the DCHA TOP Coordinator, he was present when the resident council received
bids/proposals for the furniture and candidates for the consultant position. Procurement
    procedure was followed.
3. The television was purchased so that the resident council could offer low impact exercise
    classes for senior citizens. These classes are conducted two days each week for one hour
    sessions.
4. Regulations do not prohibit this kind of expenditure. We approved such expenditures so that
    at least one resident would experience employment and to promote order in the council’s
    surroundings.
5. The check to pay for this expense was written in error. We have documentation that the TOP
    account has been reimbursed




                                          Page 31                           00-AO-201-1001
                                                                                        Appendix C


Ineligible and Unsupported Costs for Grantees_______________________________


                                                 Hopkins
                                      OIG          DCFO        OIG
                                    Ineligible     Ineligible Unsupported       Notes

Office Training                                          $ 370                   1
Office Cleaning                                              465                 1
Baby-sitting                                                   30                1
Transportation                                               250                 1
Office Secretary                                           2,400                 1
Flyer                                                      1,050                 1
Telephone                                                    100                  1
Stamps                                                        50                  1
Supplies                                                      50                  1
Transportation to training                                    13                 1
Office supplies                                              936                  1
Missing checks                                           10,478                   2
Forged checks                     $ 3,500_____$ 3,500____________                 3

Total                              $ 3,500        $ 3,500    $16,192

Notes:

1. These are eligible TOP expenses. Former Hopkins President, Ms. Kahlima Sabur advised that
   documentation did exist for the RC’s financial activities prior to Ms. Sabur’s leaving office.
   Staff from DCFO worked with Ms. Sabor on organizing that documentation and trained her and
   the Vice President on acceptable financial practices. Ms. Sabor advised that she delivered the
   records to the newly elected President after the election.
2. We need clarification on the “missing checks”. Are these canceled checks?
3. Former Hopkins Resident Council President Kahlima Sabur advised us that the alleged
   perpetrator is in jail on a shoplifting charge. Ms. Sabur notified the Detective assigned to the
   theft/forgery action of her wherabouts and was told that a bench warrant for the theft/forgery
   would be served on her at the Municipal jail.




                                             Page 32                           00-AO-201-1001
                                                                                        Appendix C


Ineligible and Unsupported Costs for Grantees_______________________________

                                           Fort Lincoln
                                  OIG           DCFO         OIG
                                 Ineligible    Ineligible   Unsupported   Notes

Office furniture                                            $ 1,158       1, 2
Filing fee-bylaws                                                45        1
Telephone                                                       336        1
Office Supplies                                                  75        1
Large screen TV/VCR               3,338         -0-                       2
Cable TV                             246         -0-                       3
Sewing and Piano lessons          2,025          -0-                       4
Consultant                                                    5,850        4
Filing Fee - Nonprofit status                                   500        5
Iron Bars                         1,100           -0-                      6
Training Instructor                   75          -0-                     7
Office Equipment                     60          -0-                      8
Computer peripheral                 891           -0-          _____      9

Total                           $ 7,735          -0-         $7,984

Notes:

1. These are eligible TOP expenditures.
2. The DCHA TOP Coordinator affirms that he was present when the TV was planned and
   purchased and that he assisted the resident council in securing quotes for this item. The
   television was purchased for the purpose of providing physical fitness and nutrition classes
   for the senior residents who occupy the building. It was therefore, procured properly and for
   an eligible purpose.
3. Cable TV is an eligible item. Access to cable for these senior citizens allows them
   many educational opportunities they might otherwise not have access to.
4. As in #1, the DCHA TOP Coordinator advises that he was present and assisted the resident
   council when they secured quotes for these items.
5. The President of the Fort Lincoln Resident Council has advised that they have received
   notice from the IRS that that agency had received their application for Federal tax exemption.
6. The DCFO takes full responsibility for approval of the installation of iron bars. Given the
   location of public housing properties and the kind of equipment being purchased, it seems
   only reasonable to try to protect that equipment.
7. Resident council officers advised that they were unaware of any overpayment to a consultant,
   but as soon as that consultant is identified to them, they would ask for reimbursement.
8. Resident Council officers denied ever having a duplicate paper shredder. They produced
   their receipt and determined that they had been charged twice for the same item. They
   agreed to discuss reimbursement with the vendor.
9. According to the DCHA TOP Coordinator, the item(s) listed as a computer peripheral is not
   the 19” monitor used by the resident council, but is a printer, scanner, and fax machine.

                                              Page 33                             00-AO-201-1001
                                                                                          Appendix C


Ineligible and Unsupported Costs for Grantees_______________________________


                                            Horizon House
                                 OIG          DCFO         OIG
                               Ineligible    Ineligible   Unsupported   Notes

Computer installation                                        481          3
Transportation for training                                   25          3
Books                                                        345          3
Cable TV                            41         -0-                        1
Copier                           1,380         -0-                         3
Alarm System                       422         -0-                        2
 Domain name and Web
 Hosting                         1,522         -0-                        3
Consultant                                        6,000                   5
Computer accessories                 70    -0-                            3
Printer repair                      110    -0-                             4
Trip to Las Vegas                  882__ 882____________                  6
                                $ 4,427  $ 882    $6,851
Notes:

1. As stated previously cable TV is eligible and can be very useful, especially with senior
    as a method of providing training activities.
2. Horizon House has been undergoing renovations for the past two years. The alarm could not
    be installed until the renovation was completed.
3. These items are eligible. TOP purposes are defined in part as activities that include the
    identification of social support needs of residents and the securing of such support. In that
    context, the HH Resident Council use the digital camera to identify maintenance needs of
    residents and secure the repairs. It is also used in the preparation and distribution of building
    news for resident consumption. The web site was created to solicit funds for the continuation
   of TOP activities after TOP funds are expended.
4. Using TOP funds to repair equipment purchased prior to TOP is eligible.
5. Horizon House was contacted regarding the other items on this report. They assured us they
    had the information, but had not supplied it at the time of the writing of this response.
6. As you are aware, the DCFO refused payment of the expenses for this trip. In the opening
    meeting with these TOP grantees, the IG advised Mr. Winter and his consultant, that “if you
    don’t have it in writing (prior approval), you had better not go”. This is another example of
    the diverting of TOP funds from eligible expenses to ineligible ones.




                                              Page 34                             00-AO-201-1001
                                                                                        Appendix C


Ineligible and Unsupported Costs for Grantees_______________________________


                                              Knox Hill
                         IG         DCFO              IG
                       Ineligible   Ineligible     Unsupported              Notes

Office equipment                                    $     750        1
Training                                                  525        2
Paint services                          100               100        3
Computer peripherals                                      180        1
TV and stereo             1,733                                      4
Harbor Cruise             1,784    1,784                             5
Cable TV                    440                                      6
Office Cleaning             135                                      7
Consultant               ______________________1,750_                8

 Total                   $4,092      $1,884             $3,405

1. The DCHA TOP Coordinator was present when the comparison pricing was done for these
     items. He assisted the resident council in gathering the information and securing the quotes.
2. This payment made for financial management training. DCHA TOP Coordinator was
    involved in arranging for the training.
3. This is an ineligible item.
4. These items were purchased for use in exercise classes and nutritional training activities.
    Used in that context, they are eligible.
5. This item is clearly ineligible an no funds were released by the DCFO for this purpose.
6. Cable TV is eligible and can be useful in a variety of ways to provide training and as
    an information source for seniors.
7. Employment for a limited number of residents is possible provided those residents are not
elected Board members.
8. There is no requirement that a consultant provide timesheets for their time spent in
    providing their services.




                                              Page 35                            00-AO-201-1001
                                                                                  Appendix D


Distribution
Director, Office of Public Housing, 3GPH
DC Housing Authority, David Gilmore, Office of Receiver, 1133 North Capital Street, NW,
  Suite 200, Washington, DC 20002
President, Fort Lincoln Resident Council
President, Garfield Terrace Resident Council
President, Horizon House Senior Resident Council
President, Hopkins Apartments Resident Council
President, James Apartment Resident Council
President, Kentucky Courts Senior Resident Council
President, Knox Hill Senior Resident Council
Principal Staff
Secretary’s Representative, 3AS
Lorraine Richardson, Senior Community Builder, DC Area Office, 3GS
Assistant Deputy Secretary for Field Policy and Management, SDF, (Room 7108)
Deputy Chief Financial Officer for Finance, FF, (Room 2202)
Director, Office of Budget, FO, (Room 3270)
Audit Liaison Officer, 3AFI
Audit Liaison Officer, Office of Public and Indian Housing, PF, (Room 8202)
Departmental Audit Liaison Officer, FM, (Room 2206)
Acquisitions Librarian, Library, AS, (Room 8141)
Sharon Pinkerton, Deputy Staff Director, Counsel, Subcommittee on Criminal Justice, Drug
  Policy & Human Resources, B373, Rayburn House Office Bldg., Washington, DC 20515
The Honorable Fred Thompson, Chairman, Committee on Governmental Affairs, 340 Dirksen
  Senate Office Building, United States Senate, Washington DC 20510
The Honorable Joseph Lieberman, Ranking Member, Committee on Governmental Affairs, 706
  Hart Senate Office Bldg., United States Senate, Washington. DC 20510
The Honorable Dan Burton, Chairman, Committee on Government Reform, 2185 Rayburn
  Bldg., House of Representatives, Washington, DC 20515
Henry A. Waxman, Ranking Member, Committee on Government Reform, 2204 Rayburn Bldg.,
  House of Representatives, Washington, DC 20515
Ms. Cindy Fogleman, Subcommittee on Oversight and Investigation, Room 212, O’Neil House
  Office Bldg., Washington, DC 20515
Director, Housing and Community Development Issue Area, United States General Accounting
  Office, 441 G Street, NW, Room 2474, Washington, DC 20548
Steve Redburn, Chief, Housing Branch, Office of Management and Budget, 725 17th Street, NW,
  Room 9226, New Executive Office Bldg., Washington, DC 20503




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