oversight

Palm Beach County Division of Human Services Supportive Housing Grant, West Palm Beach, Florida

Published by the Department of Housing and Urban Development, Office of Inspector General on 2000-12-08.

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

                                                           Issue Date
                                                                   March 30, 2001
                                                           Audit Case Number
                                                                   2001-AT-1004




TO:           Gloria Cousar, Acting General Deputy Assistant Secretary, Office of
                 Public and Indian Housing, P




FROM:         Nancy H. Cooper
              District Inspector General for Audit-Southeast/Caribbean, 4AGA


SUBJECT:      Puerto Rico Public Housing Administration
              HOPE VI Program, Comprehensive Grant Program, and Economic Development
                and Supportive Services Program
              San Juan, Puerto Rico

This report presents the results of our efforts to audit the Puerto Rico Public Housing
Administration’s (PHA) Housing Opportunities for People Everywhere (HOPE) VI Program.
The HOPE VI Program was directed toward revitalization of an area known as the New San Juan
Gateway. We also reviewed the PHA’s Comprehensive Grant Program (CGP) and the Economic
Development and Supportive Services Program (EDSS) as they related to the revitalization
initiative. We conducted the review in response to Department of Housing and Urban
Development (HUD) officials’ concerns about the PHA’s financial management of the HOPE VI
grants.

Within 60 days, please give us a status report for each recommendation in the report on: (1) the
corrective action taken, (2) the proposed corrective action and a planned implementation date, or
(3) why action is not considered necessary. Also, please furnish us copies of any correspondence
or directives issued as a result of the audit.

Should you or your staff have any questions, please contact me or Sonya D. Lucas, Assistant
District Inspector General for Audit, at (404) 331-3369. We are providing a copy of this report
to the Puerto Rico Department of Housing and the PHA.




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Executive Summary
We attempted to audit the HOPE VI Program of the Puerto Rico Public Housing Administration
to revitalize the New San Juan Gateway. We reviewed the HOPE VI Implementation and
Planning grants, and related funding from the Comprehensive Grant Program and the Economic
Development and Supportive Services Program. We conducted the audit work in response to
HUD officials’ concerns about the PHA’s financial management of the HOPE VI Program.

In general, our audit objective was to determine whether the PHA properly administered HOPE
VI, CGP, and EDSS funds assigned to the Gateway initiative. Our audit disclosed a total
breakdown of the PHA’s administration of the New San Juan Gateway Project. The PHA lacked
effective management and accounting controls over its Federal funds and did not effectively
monitor the activities of its project manager, Carrero and Associates. Due to the unreliability of
the amounts reported in the grant program accounts, we were unable to determine total program
expenditures. The HOPE VI grants and related funds were essentially unauditable. However, at
the request of HUD, we attempted to determine the application of funds and compliance with
program regulations. We identified $5.4 million of ineligible expenditures, $10.5 million of
unsupported costs, and $3.8 million in cost efficiencies (see Appendix A).

Our audit disclosed:

•    The PHA failed to provide full and open competition when it awarded a sole source contract
     to the project manager of the Gateway project and did not perform a price or cost analysis
     when procuring the services. In addition, the PHA made payments in excess of the contract
     limits and did not maintain proper disbursement control. We also determined that the PHA
     acquired property on which to develop replacement housing that was still sitting vacant after
     5 years. The former PHA management was inept and appeared to make no attempt to
     monitor the activities of its project manager. As a result, HUD has no assurance that services
     were acquired at the most beneficial terms and that the funds were used in an economical,
     efficient, and effective manner. Of the $28.3 million disbursed as of August 2000, we have
     questioned a total of $12.1 million spent from these two grants.

•    Carrero and Associates did not comply with Federal or the PHA’s procurement requirements.
     It did not: (1) follow established procedures, (2) use the proper procurement methods, (3)
     maintain procurement files, and (4) perform price or cost analyses. The project manager
     obtained goods and services without full and open competition, charged unrelated and
     unnecessary costs to the HOPE VI project. We identified ineligible costs of $736,031 and
     unsupported costs totaling $196,206 (see Appendix C). This occurred because the PHA
     failed to monitor the activities of its project manager as required. As a result, HUD has no
     assurance that goods and services were obtained at the most advantageous terms.




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•    Carrero and Associates did not follow proper procurement procedures in contracting with its
     subcontractor, Freeman and Associates. Instead, Carrero selected the firm as a sole source
     without justifying the lack of competition or the validity of the cost. Further, the PHA did
     not review invoices submitted by Carrero for the services provided by Freeman. Had it done
     so, the PHA would have found unnecessary, unrelated, and unsupported charges. The PHA
     was negligent in its oversight of Carrero. We identified $10,508 of ineligible costs and
     $923,542 as unsupported.

•    The PHA failed to properly administer payments of CGP funds. It approved $3.8 million as
     project management fees without proper solicitation of the vendor and without cost analysis
     and justification. In addition, the PHA did not maintain adequate documentation to support
     the disbursements to Carrero and Associates, paid excessive charges, and failed to obtain
     proper approval prior to disbursement. These actions occurred because PHA’s management
     disregarded Federal procurement requirements and did not establish adequate internal
     controls over payments. In the absence of proper support, the PHA is liable for $3.8 million
     ($1.7 million paid as of May 1999) for improper project management fees and $326,260 for
     other unsupported costs.

•    The PHA had no system of internal control. It had an inadequate accounting system,
     inadequate disbursement control and recordkeeping, and commingled cash from the various
     grants. It failed to meet matching state requirements, and used Federal funds to overcome a
     shortfall in state funds. The PHA executed no inventory control over purchases of goods and
     services for the HOPE VI Program and failed to monitor its project manager. This situation
     existed, in our opinion, because the PHA’s management was unprepared or incapable of
     administering the program and disregarded program requirements. Consequently, the HOPE
     VI grants were unauditable, millions in costs are questionable or unsupported, and HUD has
     no basis for assurance of economy or efficiency of this project.

We recommend that you declare the PHA in default of its grant agreements for the HOPE VI
Program and take the necessary steps to oversee completion of the Gateway initiative as planned.
We also recommend that you take administrative action against former PHA officials who
disregarded program requirements and failed to take corrective action on known deficiencies.
We have questioned over $19.8 million in costs which the PHA must repay from non-Federal
sources or justify. Finally, we recommend that you work closely with the newly appointed PHA
administration to rebuild its management and internal controls systems.

We provided copies of the draft report to the PHA and HUD on February 2, 2001. We discussed
the report with the officials at the exit conference on February 8, 2001. The PHA provided
written comments on March 12, 2001. Top officials in both the Puerto Rico Department of
Housing and the PHA have been replaced. The new administration is working to implement
programmatic reform and to create internal controls to safeguard the integrity of its programs.
The PHA response is limited by the fact that the new administration has had, as we did,




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significant difficulty in locating many of the documents pertaining to the HOPE VI Program.
The PHA is committed to continue to work to resolve this problem. The letter responds to the
recommendations and sets forth the action being taken by the new administration to correct the
deficiencies found at the PHA. The PHA’s comments are summarized in the findings and
included in their entirety as Appendix F.




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Management Memorandum                                              i


Executive Summary                                                 iii


Introduction                                                      1


Findings

1    The PHA Failed to Properly Administer its HOPE VI
     Implementation and Planning Grants                            7


2    The Project Manager Disregarded Program Requirements          19


3    The PHA Paid Ineligible and Unsupported Costs for
     Professional Services of a Subcontractor                      25


4    The PHA Made Improper Payments from the CGP Grant                31


5    The PHA Failed to Maintain an Adequate Financial
     Management System                                            35



Management Controls                                               41


Follow-Up On Prior Audits                                         43




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Appendices
       A   Schedule of Ineligible and Unsupported Costs and Cost Efficiencies          45
       B   Summary of HOPE VI Disbursement Deficiencies (Finding 1)                    47
       C   Summary of Procurement Deficiencies (Finding 2)                             49
       D   Summary of Public Relations Charges (Finding 2)                             51
       E   Summary of CGP Disbursement Deficiencies (Finding 4)                        55
       F   Auditee Comments                                                            57
       G   HUD Comments                                                                63
       H   Distribution                                                                67



Abbreviations:
CFR            Code of Federal Regulations
CGP            Comprehensive Grant Program
EDSS           Economic Development and Supportive Services
FY             Fiscal Year
HOPE           Housing Opportunities for People Everywhere
HUD            Department of Housing and Urban Development
PHA            Puerto Rico Public Housing Administration
OIG            Office of Inspector General
OMB            Office of Management and Budget




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Introduction
Public housing and urban renewal programs first started in Puerto Rico in 1938. By 1957 the
Puerto Rico Urban Renewal and Housing Corporation, the PHA’s predecessor, was created by
Commonwealth Law No. 88 for the purpose of reorganizing those programs. In 1972, the
government of Puerto Rico established the Department of Housing (Law 97 of June 10, 1972).
Under this law, the Puerto Rico Urban Renewal and Housing Corporation was attached to the
Department of Housing, and the powers and faculties of the Board of Directors were transferred
to the Secretary of Housing.

The PHA was created in 1989 and placed under the direction of the Puerto Rico Department of
Housing for the purpose of creating an efficient and flexible administration of public housing
(Law 66 dated August 17, 1989). In 1991, the Puerto Rican Government dissolved the Puerto
Rico Urban Renewal and Housing Corporation and transferred the powers and faculties of its
Public Housing Program to the Puerto Rico Public Housing Administration. The PHA
Administrator is appointed by the Puerto Rico Secretary of Housing. The PHA is the second
largest public housing agency in the nation. As of July 1, 2000, it had 328 housing projects with
56,393 units scattered throughout Puerto Rico.

The PHA has a long history of management problems. In 1981, HUD designated its predecessor
agency as “financially troubled.” In 1985, the agency was determined by HUD to be
“operationally troubled” because of serious financial, administrative, and project maintenance
deficiencies. These deficiencies were not corrected. As a result, in 1991, HUD imposed severe
sanctions on the agency by freezing about $308 million of unobligated funds. In 1992, the
Governor of Puerto Rico transferred the PHA’s modernization and development programs to the
Puerto Rico Public Building Authority to act as an agent for the PHA. Also, all project
management functions were contracted to private management agents. PHA staff was
dramatically reduced from over 4,500 to under 100 employees. Its role was reduced to an “asset
manager” responsible for accounting for and reporting on the use of Federal funds and
overseeing management agent activities.

HUD rated the PHA as troubled until December 1996. However, in November 1997 HUD
determined that only the PHA’s modernization program remained troubled. In the latest fiscal
year (FY) 1999 review, HUD cited the PHA’s continuing financial management problems and
need for corrective actions, but designated only the modernization program as troubled.




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Introduction

The FY 1997 and 1998 Single Audit reports contained findings similar to findings in this report.
They cited the PHA for: (1) not properly monitoring the activities of its project manager, (2) not
properly safeguarding and organizing accounting records, (3) processing adjusting journal entries
without supporting documentation, (4) commingling program funds, (5) not keeping supporting
documents for disbursements, and (6) making disbursements without approval by the authorized
official. The FY 1998 report disclosed that although the PHA is working towards correcting
prior year findings, the total amount of unresolved questioned costs from FY 1992 to FY 1998 in
Single Audit reports alone totaled $18.7 million.


                                     Previous OIG audits have disclosed continued serious
 Previous OIG reviews                weaknesses in the PHA’s ability to manage its procurement
                                     and related financial management systems. Our most
                                     recent report, No. 00-AT-201-1003 dated March 6, 2000,
                                     identified $21.8 million of ineligible costs and $4.1 million
                                     in cost efficiencies. We recommended declaring the PHA
                                     in substantial default and placing the PHA on a
                                     reimbursement basis for funding.

                                     HUD established the HOPE VI Program for the purpose of
HHOPE VI Program                     revitalizing severely distressed or obsolete public housing
                                     developments. Permitted activities include major
                                     reconstruction, rehabilitation and other physical
                                     improvements,      replacement      housing,   management
                                     improvements, planning and technical assistance,
                                     community service programs and supportive services, and
                                     the planning for any such activities.

                                     The PHA was selected to participate in the HOPE VI
                                     Implementation Program on November 19, 1993, under the
                                     FY 1994 Appropriation and awarded $50 million. In May
                                     1995, HUD awarded the PHA a $400,000 HOPE VI
                                     Planning grant to plan the strategy for selected public
                                     housing projects. In addition, $33.4 million in CGP funds
                                     and $1 million of EDSS funds were assigned. All funds
                                     were to be directed at the revitalization of the New San
                                     Juan Gateway.

                                     In April 1995, the PHA contracted with Carrero and
                                     Associates, Inc. d/b/a PROGRESSA to administer and
                                     implement its HOPE VI Program. Through subsequent
                                     contract amendments, Carrero and Associates was
                                     authorized to administer the supplemental funds assigned to




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                                                              Introduction

                    the initiative.    The responsibilities were to procure
                    suppliers, bill the PHA for completed work, and pay the
                    suppliers. The activities of the revitalization of Gateway
                    included:

                    •   Rehabilitation of 360 units at Manuel A. Perez,
                    •   Demolition of 40 units at Manuel A. Perez,
                    •   Demolition of high-rise buildings at Crisantemos I
                        and II,
                    •   Construction of 80 units (40 elderly) of
                        replacement housing at Crisantemos I,
                    •   Construction of 40 units of replacement housing at
                        Manual A. Perez,
                    •   Acquisition of Berwind property for construction of
                        959 units of replacement housing.

                    The HOPE VI Planning and Implementation grants and the
                    Economic Development and Supportive Services grant are
                    governed by their respective grant agreements. Title 24,
                    Code of Federal Regulations (CFR), part 968 governs the
                    CGP. Title 24 CFR 85 governs the procurement activities
                    and associated management controls. Also, all grantees and
                    subgrantees must comply with the cost principles contained
                    in the Office of Management and Budget (OMB) Circular
                    A-87.

                    The Gateway project expenditures totaled about $38.4
 Program            million. At August 15, 2000, HUD’s Letter of Credit
 disbursements      Controls System showed that the PHA had disbursed $28.6
                    million of HOPE VI and EDSS Program funds. The CGP
                    funds disbursed for the Gateway project could not be
                    determined from the system. Based on the PHA records, as
                    of January 13, 2000, the amount of CGP funds disbursed
                    was $9.8 million. The following table summarizes the
                    grants and disbursed amounts.




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Introduction

                                                                    Budgeted        Disbursed
                                    Grant                           (million)        (million)
                          HOPE VI - Implementation                     $50.0           $27.91
                          HOPE VI - Planning                               .4               .41
                          CGP                                            33.4             9.82
                          EDSS                                            1.0               .31

                          Totals                                         $84.8          $38.4
                      1
                          As of August 15, 2000.
                      2
                          As of January 13, 2000. The PHA’s accounting system did not segregate
                          expenditures by project. The information was obtained from the most
                          recent data available from the PHA records.


                     The majority of the disbursements made by the PHA were
                     to Carrero and Associates, who in turn made disbursements
                     to various vendors.

                     HUD Headquarters officials informed us that the Gateway
                     project was behind schedule. There was an agreement
                     pending for the PHA to turn the project over to HUD for
                     completion. It appeared HUD planned to hire someone to
                     manage the remaining phases of the project. We did not
                     evaluate the progress of the project. Our focus was on the
                     concern that the PHA did not have accurate records
                     detailing the costs. That concern was valid, and we found it
                     necessary to compile data in order to perform our audit.


                     Our objectives were to determine whether the PHA: (1)
 Audit objectives,   properly administered its HOPE VI, CGP, and EDSS funds
 scope, and          assigned to the Gateway project, (2) properly monitored its
 methodology         project manager, Carrero and Associates, and (3) complied
                     with applicable rules and regulations of the programs. We
                     also assessed whether the PHA and Carrero and Associates:
                     (1) followed procurement policies and procedures that
                     complied with HUD requirements, (2) adequately
                     determined the need for goods and services, and (3) had
                     adequate controls to ensure receipt of goods and services
                     and to preclude duplicate payments.




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                                                                    Introduction

                          To accomplish our objectives, we:

                          •   reviewed applicable laws, regulations, and other
                              program related requirements,
                          •   evaluated HUD internal correspondence, monitoring
                              reports and Independent Public Accountant audit
                              reports,
                          •   interviewed responsible HUD, PHA, and project
                              management officials and contractors,
                          •   made site visits to dwelling units and a community
                              center and verified the delivery of various goods,
                          •   examined procurement and disbursement records and
                              contract files, and
                          •   assessed related management controls.

                          We judgmentally selected 34 disbursements made by the
                          PHA from April 1995 through January 2000 totaling $12.2
                          million. In general, we examined: (1) HOPE VI
                          Implementation grant and CGP disbursements over
                          $300,000 and other judgmentally selected disbursements,
                          (2) HOPE VI Planning grant disbursements over $25,000,
                          and (3) EDSS disbursements exceeding $5,000. The
                          disbursements examined were as follows:

                                                      Disbursements
                               Grant                    Examined          Amount
                    HOPE VI-Implementation                 12            $7,560,200
                    CGP                                      8            4,329,863
                    HOPE VI-Planning                         7              223,292
                    EDSS                                     7               93,006

                                 Total                        34        $12,206,361

                          In addition, we judgmentally selected and reviewed the
                          procurement and related support for $1.9 million in charges
                          made by the project manager.

                          Our review was conducted at the PHA and project manager,
                          Carrero and Associates’ offices in San Juan, Puerto Rico.
                          The audit primarily covered the period of April 1995
                          through December 1999. We extended the audit coverage
                          as appropriate. We conducted our audit in accordance with
                          generally accepted government auditing standards.




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Introduction

                     During the period covered by our audit, Miguel Rodriguez
                     and John Blakeman served as PHA Administrators and
                     Carlos Vivoni, Ana Carmen Alemany, and Carlos Gonzales
                     served as Secretaries of the Puerto Rico Department of
                     Housing. As a result of the November 2000 election, a new
                     administration has taken over. The PHA administration in
                     office as of date on this report was not responsible for
                     creating the conditions cited in the findings of this report.




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                                                                                   Finding 1


  The PHA Failed to Properly Administer its
 HOPE VI Implementation and Planning Grants
The PHA failed to provide full and open competition when it awarded a sole source contract to
the project manager of the Gateway project and did not perform a price or cost analysis when
procuring the services. In addition, the PHA made payments in excess of the contract limits and
did not maintain proper disbursement control. We also determined that the PHA acquired
property on which to develop replacement housing that was still sitting vacant after 5 years. The
former PHA management was inept and appeared to make no attempt to monitor the activities of
its project manager. As a result, HUD has no assurance that services were acquired at the most
beneficial terms and that the funds were used in an economical, efficient, and effective manner.
Of the $28.3 million disbursed as of August 2000, we have questioned a total of $12.1 million
spent from these two grants.


                                     The November 1994 Implementation Grant Agreement
 Criteria                            requires the Authority to comply with procurement
                                     guidelines contained in 24 CFR 85.36. Section (c) (1)
                                     requires all procurement transactions to be conducted in a
                                     manner providing full and open competition. Section (f)
                                     (1) requires the grantees and subgrantees to perform a cost
                                     or price analysis in connection with every procurement
                                     action. Section (b) (9) requires the grantees to maintain
                                     sufficient records to detail the significant history of each
                                     procurement. Section (d) (4) (i) states that procurement by
                                     noncompetitive proposals may be used only when award of
                                     a contract is infeasible under small purchases procedures,
                                     sealed bids or competitive proposals, and one of the
                                     following circumstances applies: (a) the item is available
                                     only from a single source, (b) the public exigency or
                                     emergency for the requirement will not permit a delay
                                     resulting from competitive solicitation, (c) the awarding
                                     agency authorizes noncompetitive proposals, and (d) after
                                     solicitation of a number of sources, competition is
                                     determined inadequate.

                                     Article XIII of the Grant Agreement states that the PHA
                                     must keep records in accordance with 24 CFR 85.20 that
                                     facilitate an effective audit to determine compliance with
                                     program requirements, and which fully disclose the amount
                                     and disposition of funds received under the HOPE VI grant,
                                     including sufficient records that document the
                                     reasonableness and necessity of each expenditure.


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Finding 1

                          On September 18, 1995, the PHA and HUD entered into a
                          HOPE VI Planning Grant Agreement. Article IV.5 of the
                          Grant Agreement provides that the grantee will not
                          commingle HOPE VI grant funds with funds from any
                          other sources. Article IV.8 states the grantee will comply
                          with, and be subject to, the requirements, policies, and
                          standards set forth in 24 CFR 85. Article VIII.1(a) requires
                          that the grant funds are to be used in accordance with the
                          budget that was attached to the Grant Agreement.

                          On April 1, 1995, the PHA awarded Carrero and Associates
   Improper procurement   (as a sole source) a 3-month contract, renewable up to a
   process                maximum of 2 years to administer a 1994 $50 million
                          HOPE VI Implementation grant. The fees for the services
                          were not to exceed $2.88 million for the 2-year period. On
                          January 19, 1996, 10 months later, the PHA amended its
                          contract with Carrero and Associates. It extended the
                          contract through June 30, 2000, and increased the
                          maximum compensation to $7.2 million. The contract
                          amendment also authorized supplemental funding for the
                          Gateway project as follows:

                                           Program                        Amount
                           CGP                                           $30,897,876
                           Section 8 Rental Certificates                   2,286,600
                           Section 8 Rental Vouchers                       1,230,244
                           EDSS                                            1,000,000
                           1995 HOPE VI Planning Grant                       400,000

                                             Total                       $35,814,720

                          The procurement process was seriously flawed. In a letter
                          dated November 4, 1994, Carrero and Associates informed
                          the former PHA Administrator of its intent to submit a
                          competitive proposal for project manager in response to a
                          request for proposal planned for issuance by the PHA. On
                          November 28, 1994, before the request for proposal was
                          issued, the former PHA Administrator requested HUD’s
                          approval of a sole source contract with Carrero and
                          Associates, as project manager, in an effort to expedite the
                          implementation of the HOPE VI grant. He said the
                          selection was based on the firm’s knowledge and
                          experience in new developments and modernization of
                          public housing. The PHA also told HUD that no other



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                                                                        Finding 1

                         firms in Puerto Rico could perform the work. HUD
                         approved the request on March 9, 1995, on the condition
                         that the PHA perform a cost analysis and ensure that the
                         final cost was competitive and justifiable.

                         Although the PHA claimed that Carrero and Associates was
                         the only knowledgeable and experienced firm, it did not
                         provide any support or document its efforts to contact other
                         sources. The cost proposal submitted by Carrero and
                         Associates dated February 25, 1995, stated that it would
                         contract with five external consultants, as part of its team,
                         specializing in the areas of construction management,
                         economic development, relocation, community services,
                         and communications. The fact that external consultants
                         were needed indicated that Carrero and Associates did not
                         have the capacity or experience to perform the work and
                         that it was not the only source available to conduct the
                         work as claimed by the PHA.

                         The PHA officials stated that they did not have any
                         procurement files related to the procurement of Carrero and
                         Associates as project manager. The PHA did not provide
                         evidence that a cost analysis was performed or that the $7.2
                         million in fees to be charged by Carrero and Associates was
                         competitive and justifiable.        This was contrary to
                         requirements of 24 CFR 85.36 and HUD’s instructions.

                         The PHA did not establish adequate internal controls to
 Payments in excess of   monitor and track payments to Carrero and Associates to
 contract limits         assure they were in accordance with the terms of the
                         contract. PHA officials acknowledged the lack of controls
                         and informed us that the only way to know the amount of
                         fees paid would be to examine all the disbursements made,
                         separating the fees from other costs. Therefore, we
                         compiled the invoices and estimated that Carrero and
                         Associates billed the PHA at least $11.4 million in
                         management fees between April 1995 and March 2000 as
                         follow:




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Finding 1

                      Project Management (1)                                        $9,812,710
                      Administrative Fees (2)                                          160,584
                      Contract Management Fees (3)                                     663,640
                      Reimbursements (4)                                                50,272
                      Reference Materials (5)                                            9,965
                      Consultants (6)                                                  792,401

                                              Total                                $11,489,572

                             Notes:
                        (1) Staff Salaries of Carrero and Associates
                        (2) Administrative fee charged on utilities, stipends paid to volunteers,
                             supplies, equipment, etc.
                        (3) 15 percent fee charged on work billed by consultants
                        (4) Items such as airfare, apartment rent, relocation costs, etc. of Carrero
                             and Associates
                        (5) Copies, maps, etc.
                        (6) Consulting services contracted by Carrero and Associates included in
                             the cost proposal

                     As of March 2000, the PHA had disbursed $11.2 million to
                     Carrero and Associates, leaving an unpaid balance of
                     $240,033. This was $4 million over the contract limit of
                     $7.2 million. We estimated the PHA reached the full
                     contract amount as early as November 1997. The excess
                     charges to the HOPE VI Program occurred because the
                     PHA was negligent in monitoring the payments to its
                     project manager.

                     Although the PHA was informed in May 1999 by one of its
                     consultants of the excess payments, it took no action until
                     March 2000 when it contracted with a public accounting
                     firm to reconstruct payments to Carrero and Associates.
                     The report, issued on June 27, 2000, concluded that Carrero
                     did not maintain a complete general ledger that adequately
                     identified the source and application of the funds. Also, the
                     accountant could not trace deposits and expenses to the
                     general ledger. The report did not state the amount billed
                     by Carrero. The report stated that payments totaling
                     $289,806 made by the PHA to Carrero could not be traced
                     to Carrero’s books.

                     We consider the $4,049,539 over the contract limit to be
                     ineligible.




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                                                                                            Finding 1

                                             We analyzed 11 disbursements by the PHA from the HOPE
     Inadequate                              VI Implementation grant for goods and services. Ten
     disbursement controls                   disbursements were to Carrero and Associates, who in turn
     –Implementation grant                   made disbursements to various vendors. In addition, we
                                             reviewed Carrero’s invoices from April 1995 to November
                                             1997. The PHA’s controls were not effective because it:
                                             (1) paid invoices that were not properly supported, (2) paid
                                             excessive administrative and contract management fees, (3)
                                             paid for costs not incurred, (4) paid unreasonable expenses,
                                             and (5) allocated costs to incorrect accounts.

                                             •    Invoices Not Properly Supported Disbursements
                                                  made by the PHA were not properly supported. Seven
                                                  disbursements consisting of 16 invoices did not contain
                                                  sufficient support to document the reasonableness and
                                                  necessity of the charges. For example, Carrero and
                                                  Associates submitted an invoice that consisted of
                                                  adjustments to prior 1996 and 1997 invoices. The
                                                  adjustment resulted in an additional charge of $84,583.
                                                  The documents submitted by Carrero and Associates
                                                  did not provide detail to support how the adjusted
                                                  amounts were determined. The documentation only
                                                  contained information about the previous bill’s old
                                                  amount and what the correct amount should have been.
                                                  In another example, the PHA paid invoice no. 1C-1058
                                                  which included a change order that resulted in a net
                                                  increase of $5,450; however, there was no
                                                  documentation explaining the nature of the change.
                                                  Consequently, $248,841 is unsupported (See Appendix
                                                  B, footnote 2).

                                             •    Excess Administrative and Contract Management
                                                  Fees     Carrero and Associates charged the PHA
                                                  $521,561 for administrative and contract management
                                                  fees between April 1995 and November 19971 as
                                                  follows:




1
 Period in which the contract limit of $7.2 million was reached.
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                                                          Contract
                                          Administrative Management       Total
                     Apr-Dec 1995              -            $107,681     $107,681
                     Jan-Dec 1996              $25,560       247,471      273,031
                     Jan-Nov 1997                34,554      106,295      140,849

                        Total                   $60,114     $461,447     $521,561

                         Administrative fees were charged for stipends, utilities,
                         supplies, and furniture purchased for the project by
                         Carrero and Associates.         Management fees were
                         charged for work performed and billed by consultants.
                         The fees ranged from 10 to 15 percent. For example,
                         Carrero and Associates submitted an invoice for
                         October 16 - 31, 1996, which included $11,174 for
                         contract management fees, and a 10 percent
                         administrative fee of $1,536 added as a percentage of:
                         (a) salaries and stipends paid to volunteer program staff,
                         (b) office and maintenance supplies, (c) utilities, (d)
                         rent, etc.

                         We found that various consultants were billing an
                         administrative fee for work that they subcontracted.
                         Carrero and Associates billed the PHA for those
                         consulting services plus its own 15 percent fee. For
                         example, in October 1995, COMMUNICAD, Inc.
                         submitted invoice number 1034 for $4,629 related to a
                         Washington, DC trip. The invoice included a charge of
                         $621 for dinner arranged by a subcontractor, MAPA
                         Communications, Inc. MAPA added a 15 percent
                         “agency fee” of $93 to the invoice. COMMUNICAD
                         billed Carrero and Associates for the $714 dinner costs
                         charged by MAPA plus its administrative fee of $126
                         (18 percent).     In November 1995, Carrero and
                         Associates billed the PHA $840 charged by
                         COMMUNICAD, plus $126 (15 percent) for its
                         contract management fees. In total, an additional $345
                         (56 percent) in fees was charged to the HOPE VI
                         Program for a $621 dinner.

                         In another example, COMMUNICAD submitted
                         invoice number 1080 for $45,419 related to the
                         implosion of Crisantemos I. The invoice included a




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                                      charge     of    $4,500    for  helicopter   services.
                                      COMMUNICAD billed Carrero and Associates the
                                      $4,500 plus an administrative fee of $1,000 (22
                                      percent). In August 1996, Carrero billed the PHA
                                      $5,500 charged by COMMUNICAD, plus $825 (15
                                      percent) for contract management fees. Accordingly, an
                                      additional $1,825 (41 percent) in fees was charged to
                                      the HOPE VI Program for helicopter services that
                                      should have cost $4,500.

                                      These transactions are considered a “cost plus a
                                      percentage of cost” and are prohibited by 24 CFR
                                      85.36. As a result of the excessive fees charged, the
                                      PHA paid Carrero and Associates ineligible fees of
                                      $521,561.

                                  •   Costs Not Incurred Our test of the payroll records
                                      disclosed that Carrero and Associates charged the PHA
                                      in excess of the actual amount it incurred for payroll.
                                      For example, time and attendance records reflected that
                                      some employees worked overtime during the pay period
                                      of June 16 - 30, 1997. Carrero and Associates billed the
                                      PHA for all the hours included on the employees’
                                      timesheets including the overtime. However, payroll
                                      records reflected that these employees were not paid
                                      overtime. Accordingly, the PHA paid $5,650 that its
                                      project manager never incurred as follows:

                                                                            Hours
                                                                             Billed
                                                      Total     Hours      in Excess
                                            Hourly    Hours    Paid Per    of Actual      Estimated
                        Position             Rate     Billed   Payroll     Payment        Overcharge
               Dir. Operational              $77.91   110.50       86.67         23.83         $1,857
               Field Off. Assist. Admin.      25.96   105.50       86.67         18.83            489
               Senior Planner                 57.69   103.50       86.67         16.83            971
               Dir. Planning                  72.12   100.00       86.67         13.33            961
               Human Resources                43.29    90.50       86.67          3.83            166
               Accountant                     34.62    88.50       86.67          1.83             63
               Training Specialist            40.41    97.50       86.67         10.83            438
               Community Coordinator          25.96    95.00       86.67          8.33            216
               Community Organizer            17.31    88.00       86.67          1.33             23
               F/O Administrator              36.35    99.50       86.67         12.83            466

                        Total                         978.50     866.70        111.80       $5,650.00




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                     •   Unreasonable Expenses         Although Carrero and
                         Associates was established in Puerto Rico, the PHA
                         paid invoices for airfare, apartment lease
                         ($1,600/month), automobile rental ($750/month), meals
                         and incidentals ($750/month), and relocation expenses.
                         Between April 1995 and November 1995, the PHA paid
                         the following:

                                          Description                   Amount
                           Airfare                                      $17,059
                           Apartment Lease                               12,800
                           Automobile Rental                              6,000
                           Meals and Incidentals                          6,000
                           Relocation Expenses                            8,413

                                             Total                      $50,272

                         Disbursements made by the PHA did not contain
                         documentation that the expenditures were necessary and
                         reasonable for the project. Without such evidence, the
                         $50,272 was unsupported.

                     •   Costs Allocated to Incorrect Accounts We identified
                         $383,769 in charges that were allocated to incorrect
                         accounts or where the cost allocation was not
                         supported. For example, expenditures related to the
                         rehabilitation of a temporary facility were charged to
                         management improvements (account 1408).             The
                         correct account was non-dwelling structures (account
                         1470). In addition, administration (account 1410) was
                         improperly charged with legal and public relations costs
                         incurred by Carrero and Associates. The costs to be
                         charged to the administration account were those
                         incurred by PHA staff, not its contractors.

                         HUD cited similar deficiencies on April 20, 2000, and
                         disallowed over $1 million in similar costs improperly
                         charged to the administration account. Improper
                         allocation of costs resulted in inaccurate project
                         financial information.




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                         On May 1997, the PHA acquired property on which to
PHA acquired a parcel    develop replacement housing with $3.2 million of HOPE
of land which was not    VI funds. The property was originally acquired in 1967
used                     with Commonwealth funds by the predecessor housing
                         authority, the Puerto Rico Urban Renewal and Housing
                         Corporation. The current PHA purchased the property from
                         the trustee (a Commonwealth entity) in charge of
                         liquidating the assets of the Puerto Rico Urban Renewal
                         and Housing Corporation. Although the acquisition was
                         made in 1997, development had not taken place at the site.

                         We examined 7 transactions totaling $223,292. Neither the
 Inadequate              PHA nor the project manager maintained accurate and
 disbursement controls   current accounting records as required in 24 CFR 85.20.
 – Planning grant        The review disclosed that the PHA: (1) disbursed funds
                         with inadequate supporting documents, (2) made adjusting
                         journal entries without adequate support, and (3)
                         commingled its HOPE VI Planning and Implementation
                         grant funds.

                         •   Missing or Inadequate Support The PHA did not
                             provide disbursement vouchers and supporting
                             documents for 2 of the 7 disbursements (check numbers
                             182 and 39771) totaling $82,988. The supporting
                             documentation for check numbers 17 and 31 totaling
                             $28,363 and $25,246 respectively, was not sufficient to
                             determine the eligibility of the charges. The supporting
                             documentation for check number 378 for $25,445 and
                             check number 380 for $28,801 included charges for
                             personnel not approved in the HUD budget.

                         •   Unsupported Journal Entry On February 28, 1998,
                             the PHA prepared a three-page journal entry
                             reclassifying $75,984 in costs between the HOPE VI
                             Planning and Implementation grants.         The PHA
                             financial consultant said the Planning grant
                             expenditures were improperly charged to the
                             Implementation grant, and vice versa. In the journal
                             entry, there was an adjustment transferring $14,499 in
                             costs to the Implementation grant. The entry was




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                           to reclassify costs to agree with the HOPE VI Planning
                           grant budget approved by HUD. The three-page journal
                           entry was not properly documented and did not clearly
                           show that the reclassification of expenditures between
                           the two grants was correct. The final entry appeared to
                           be an arbitrary charge to the Implementation grant
                           simply to correct the budget overrun in the Planning
                           grant.

                        The Planning Grant expired on May 8, 1998. The closeout
 Grant closeout audit   procedures for the HOPE VI Program require an audit of
 not conducted          expended grant funds in accordance with OMB Circular A-
                        133. HUD reviews the audit report to determine whether
                        expenditures are allowable, activities were completed in
                        accordance with the grant agreement, and all Federal
                        requirements were satisfied. The PHA did not provide
                        evidence that this audit was conducted as instructed in
                        HUD’s May 11, 1998, letter. As a result, the PHA cannot
                        assure that funds expended under its Planning grant were
                        in accordance with program requirements. Consequently,
                        the $400,000 in Planning grant was unsupported.

                                          *    *      *    *      *

                        It is clear from the PHA’s records that it failed to properly
                        administer the HOPE VI grants. Its procurement of the
                        project manager was improper, it failed to oversee that
                        project manager, and it failed ensure propriety of
                        expenditures. Consequently $4.5 million is ineligible, $7.3
                        million is unsupported, and $240,033 will be ineligible if
                        paid. These deficiencies are material and constitute a
                        default of Article XVIII of the Grant Agreement.



 Auditee Comments       “. . . without the records and files of the [PHA] and its
                        consultant, there is no means by which this Adminstration
                        can justify or explain the questioned disbursements.
                        However, the [PHA] is in the process of reorganizing the
                        [PHA] in order to create the internal controls and
                        management needed to prevent this type of situation from
                        occurring in the future.




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                    “. . . [PHA] will not be managing its programs by
                    contractors, as had been the practice under the previous
                    administration. Instead, the [PHA] is creating program
                    offices, procurement offices, and financial offices to
                    manage and run its programs with permanent career staff.
                    This will allow the [PHA] to develop expertise and
                    institutional knowledge which will facilitate the [PHA] in
                    the administration of its programs, including the HOPE VI
                    grant for New San Juan Gateway.

                    “[The PHA] believes that the 1994 HOPE VI grant
                    agreement should not be declared in default. The [PHA]
                    will have in place by August 31, 2001 the necessary staff to
                    properly implement and manage the HOPE VI grant.

                    “The [PHA] is preparing a [request for proposal] to retain a
                    certified public accounting firm to provide this
                    information.”

                    (The draft report’s Finding No. 5 was merged with Finding
                    No. 1.)


                    The new administration at the PHA is in the process of
OIG Evaluation of   implementing steps to correct the deficiencies. We will
Auditee Comments    provide the PHA the opportunity to review the relevant
                    documents in our possession to assist in responding to the
                    recommendations.




Recommendations     We recommend that you:

                    1A.     Declare the PHA in default of its 1994 HOPE VI
                            Implementation Grant Agreement and take
                            necessary steps to oversee completion of the
                            Gateway initiative.

                    1B.     Require approval from HUD’s Office of General
                            Counsel for all future sole source contracts by this
                            PHA.

                    1C.     Determine, by comparison to similar modernization
                            or development projects, the reasonableness of
                            project management fees of $7.2 million.


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                     1D.   Require the PHA to reimburse HUD $4,049,539 of
                           Implementation grant costs from non-Federal
                           sources for the ineligible payments over the contract
                           limit.

                     1E.   Require the PHA to reimburse HUD $521,561 of
                           Implementation grant costs from non-Federal
                           sources for the ineligible fees (this amount is
                           included in the project management fees of
                           $7,200,000).

                     1F.   Require the PHA to reimburse HUD $5,650 of
                           Implementation grant costs from non-Federal
                           sources for costs not incurred by Carrero (this
                           amount is included in the project management fees
                           of $7,200,000).

                     1G.   Request justification for the $248,841 of
                           unsupported Implementation grant costs or recover
                           from non-Federal funds.

                     1H.   Determine the proper disposition of remaining
                           obligated invoice amounts of $240,033 for
                           ineligible project management fees.

                     1I.   Require the PHA to formally develop plans for use
                           of the acquired parcel of land (Berwind) or sell the
                           property and return funds to HUD.

                     1J.   Request justification for the $400,000 of
                           unsupported Planning grant costs or recover from
                           non-Federal funds.

                     1K.   Require the PHA to obtain a closeout audit of
                           HOPE VI Planning grant to assess the eligibility of
                           the Planning grant costs.




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     The Project Manager Disregarded Program
                  Requirements
Carrero and Associates did not comply with Federal or the PHA’s procurement requirements. It
did not: (1) follow established procedures, (2) use the proper procurement methods, (3) maintain
procurement files, and (4) perform price or cost analyses. The project manager obtained goods
and services without full and open competition and charged unrelated and unnecessary costs to
the HOPE VI project. We identified ineligible costs of $736,031 and unsupported costs totaling
$196,206 (see Appendix C). This occurred because the PHA failed to monitor the activities of
its project manager as required. As a result, HUD has no assurance that goods and services were
obtained at the most advantageous terms.


                                    The November 1994 Grant Agreement requires the
 Criteria                           Authority to comply with procurement guidelines contained
                                    in 24 CFR 85. Part 85.36 (c) (1) requires all procurement
                                    transactions to be conducted in a manner providing full and
                                    open competition. Section (f) (1) requires the grantees and
                                    subgrantees to perform a cost or price analysis in
                                    connection with every procurement action. Section (b) (9)
                                    requires the grantees to maintain sufficient records to detail
                                    the significant history of each procurement. Section (d) (4)
                                    (i) states that procurement by noncompetitive proposals
                                    may be used only when award of a contract is infeasible
                                    under small purchases procedures, sealed bids or
                                    competitive proposals, and one of the following
                                    circumstances applies: (a) the item is available only from a
                                    single source, (b) the public exigency or emergency for the
                                    requirement will not permit a delay resulting from
                                    competitive solicitation, (c) the awarding agency authorizes
                                    noncompetitive proposals, and (d) after solicitation of a
                                    number of sources, competition is determined inadequate.

                                    The Grant Agreement, Article XIII, also states that the PHA
                                    must keep records in accordance with 24 CFR 85.20 that
                                    facilitate an effective audit to determine compliance with
                                    program requirements, and which fully disclose the amount
                                    and disposition of funds received under the HOPE VI grant
                                    and the reasonableness and necessity of each expenditure.




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                     Paragraph 3 of the contract between Carrero and Associates
                     and the PHA states that the contractor will comply with all
                     Federal and state laws, regulations, and ordinances
                     applicable to the terms of the contract.

 Procurement         Public Relations Services Carrero and Associates charged
 deficiencies        the PHA $720,744 for public relations services, associated
                     with its April 1995 contract. The scope of the contract
                     work consisted of consulting in the areas of “public affairs,
                     community and media relations, and private and public
                     sector information materials.” The scope also included
                     “assistance in the economic development procurement.”

                     The services were procured from COMMUNICAD, Inc. as
                     a sole source vendor, yet there was not a procurement file
                     to support the noncompetitive procurement or the cost.
                     Accordingly, Federal and PHA procurement requirements
                     were not followed. As evidenced by the invoices, the work
                     was not necessary for the administration of the HOPE VI
                     project. The activities were targeted to promote the
                     government and for entertainment purposes, rather than
                     providing a direct service to the targeted community.

                     Attachment B of OMB Circular A-87 does not allow the
                     costs of entertainment. It also provides the following as
                     unallowable advertising and public relations costs,

                     •   Costs of displays, demonstrations, and exhibits,
                     •   Costs of meeting rooms,
                     •   Salaries and wages of employees engaged in setting up
                         and displaying exhibits, making demonstrations, and
                         providing briefings,
                     •   Costs of promotional items and memorabilia, including
                         models, gifts, and souvenirs, and
                     •   Costs of advertising and public relations designed to
                         promote the governmental unit.

                     Furthermore, the Housing Department already had a
                     communications office that could have performed these
                     tasks. The charges of $720,744 were ineligible (see
                     Appendix D).




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                    Our review disclosed the following examples:

                    •   Unnecessary and/or Unsupported Charges We
                        examined COMMUNICAD invoices and the majority
                        were not supported. Some included charges that were
                        not necessary or reasonable for the administration of the
                        program, such as breakfasts for congressional staff
                        ($1,019), flower arrangement for a HUD official ($73),
                        dinner for Commonwealth officials ($840), press
                        conference luncheon ($1,770), 4,082 T-shirts/polo
                        shirts, key chains, pins, and caps ($35,166), framed
                        posters for the governor and other officials ($1,662),
                        photography and video services ($19,857), recognition
                        plaque ($202), helicopter services ($27,412), large TV
                        screens ($3,059), catering services ($45,252),
                        tents/stages ($12,679), stationery and business cards
                        ($1,330),    breakfast meetings with PHA officials
                        ($1,430), coordination for League of United Latin
                        American Citizens convention ($1,406), Request For
                        Quotations for a state project (Villa Panamericana)
                        ($30,275), and meeting at a restaurant ($1,206).

                    •   Charges Over Contract Limit The February 1995
                        contract between Carrero and Associates and
                        COMMUNICAD specified a monthly retainer of
                        $6,600. COMMUNICAD billed $22,998 in excess of
                        the contract amount, without any explanation or
                        support.

                         Invoice     Invoice        Fee      Fee Per    Excess
                         Number        Date       Charged    Contract   Amount
                          1032      10/06/1995     $13,075     $6,600    $6,475
                          1035      11/06/1995      13,680      6,600     7,080
                          1043      12/06/1995      11,643      6,600     5,043
                          1051      01/09/1996      11,000      6,600     4,400

                           Total                   $49,398    $26,400    $22,998

                        Carrero and Associates did not have controls to ensure
                        that all charges were in compliance with the contract
                        prior to submitting the invoices to the PHA.




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                     Passenger Van The project manager bought a 15-
                     passenger van to be used by the volunteer program and
                     charged the PHA $31,222. The van was registered to
                     Carrero and Associcates who has since filed Chapter 11
                     bankruptcy.

                     The PHA regulations require that a procurement of $10,000
                     or more must be advertised and bid.            Instead, the
                     acquisition was done through the solicitation of quotes. An
                     official of Carrero and Associates stated that there was an
                     urgency in acquiring the vehicle and a public bid would
                     take too long. The project manager obtained three quotes,
                     but the lowest quote was not selected. According to the
                     officer of Carrero, the reason for not selecting the lowest
                     quote was that the vehicle would not be available from the
                     dealer for up to 6 months. However, the file did not
                     contain any support for the selection or that there was an
                     emergency for the purchase.

                     During the same month, the PHA issued a purchase order
                     for acquisition of a similar 15-passenger van for $22,822.
                     Had Carrero followed the PHA’s procurement policy, they
                     could have acquired the vehicle at a much lower price.
                     Accordingly, the excessive charges of $8,400 were
                     ineligible.

                     Computer Equipment Carrero and Associates acquired
                     $65,514 in computer equipment. Despite PHA regulations
                     that require a procurement of $10,000 to be advertised and
                     bid, Carerro obtained four quotes. The project manager
                     said they used the abbreviated process because there was an
                     urgency to open the small business and employment center
                     and a public bid would take too long. PHA provided no
                     evidence that the opening of the center constituted an
                     emergency. Costs of $65,514 were unsupported.

                     Legal Services Carrero and Associates charged $12,527
                     for legal services. The services appeared to relate to tenant
                     relocation and court action, but the relationship to the
                     HOPE VI project could not be identified. There was no
                     procurement file to document the necessity and
                     reasonableness of the services and therefore support the
                     costs.




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                    Photocopier Carrero and Associates charged the PHA
                    $8,205 for the acquisition of a photocopier. The equipment
                    was for the small business and employment center.
                    However, Carrero and Associates did not maintain a
                    procurement file showing the full procurement history and
                    that it was acquired at the most advantageous terms. We
                    determined that a cheaper machine could have been
                    purchased for $1,395 based on the Puerto Rico General
                    Services Administration list. Accordingly, the excess
                    charges of $6,810 were ineligible.

                    Office Rehabilitation Work Between December 1997 and
                    March 1998, Carrero and Associates charged the PHA
                    $118,165 for the rehabilitation of a rented facility used as
                    the temporary small business and employment center. The
                    rehabilitation completed on the rented property included
                    items such as air conditioners $21,775, installation of walls
                    $14,700, acoustic ceiling $10,620, 18 mahogany doors
                    $9,000, windows with mahogany frame $2,130; kitchen
                    furniture $1,500, and electrical locks $1,000.

                    In April 1996, Carrero and Associates entered into the lease
                    agreement contract for $1,000 per month.                 The
                    revitalization tasks of the Gateway project were scheduled
                    for completion by June 2000 when the center would move
                    to new facilities. The improvements made to the rented
                    facilities were equivalent to 9 years of lease charges. These
                    types of leasehold improvements were extravagant for a 4-
                    year lease and inappropriate for a Federal program.
                    Accordingly, the charges of $118,165 were unsupported.

                    Utility Bill Carrero and Associates charged the PHA for an
                    electric bill on a residential unit in the Municipality of
                    Guaynabo. The account was in the name of one of
                    Carrero’s employees. The $77 utility bill did not relate to
                    the HOPE VI project and was ineligible.


                    “Safeguards and internal controls will be implemented.
Auditee Comments    The Office of Procurement will be fully staffed and the
                    Procurement Manual is being amended and will be
                    controlling for all future procurements.”




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                     The new administration at the PHA is in the process of
 OIG Evaluation of   implementing steps to correct the deficiencies.
 Auditee Comments


 Recommendations     We recommend that you:

                     2A.   Take administrative action against responsible PHA
                           management officials who failed to properly
                           monitor Carrero and Associates.

                     2B.   Require the PHA to reimburse the ineligible costs of
                           $736,031 paid for excessive and unnecessary
                           expenditures.

                     2C.   Request justification for the $196,206 of
                           unsupported grant costs or recover from non-
                           Federal funds.

                     2D.   Require the PHA to file appropriate liens with the
                           bankruptcy court to protect its interests in assets
                           purchased with HUD funds.




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      The PHA Paid Ineligible and Unsupported
         Costs for Professional Services of a
                    Subcontractor
Carrero and Associates did not follow proper procurement procedures in contracting with its
subcontractor, Freeman and Associates. Instead, Carrero selected the firm as a sole source
without justifying the lack of competition or the validity of the cost. Further, the PHA did not
review invoices submitted by Carrero for the services provided by Freeman. Had it done so, the
PHA would have found unnecessary, unrelated, and unsupported charges. The PHA was
negligent in its oversight of Carrero. We identified $10,508 of ineligible costs and $923,542 as
unsupported.


                                    Article XIII of the HOPE VI Grant Agreement, “Record
 Criteria                           keeping/Access Requirements/Audits,” provides that the
                                    grantee will keep records in accordance with 24 CFR 85.20
                                    that facilitate an effective audit to determine compliance
                                    with program requirements, and which fully disclose the
                                    amount and disposition of funds received including
                                    sufficient records that document the reasonableness and
                                    necessity of each expenditure.

                                    Title 24 CFR 85.36 (c) (1) requires all procurement
                                    transactions be conducted in a manner providing full and
                                    open competition; Section (f) (1) requires the grantees and
                                    subgrantees to perform a cost or price analysis in
                                    connection with every procurement action; Section (b) (9)
                                    requires the grantees to maintain sufficient records to detail
                                    the significant history of each procurement; and Section (d)
                                    (4) (i) states that procurement by noncompetitive proposals
                                    may be used only when award of a contract is infeasible
                                    under small purchases procedures, seal bids or competitive
                                    proposals and one of the following circumstances applies:
                                    (a) the item is available only from a single source; (b) the
                                    public exigency or emergency for the requirement will not
                                    permit a delay resulting from competitive solicitation; (c)
                                    the awarding agency authorizes noncompetitive proposals;
                                    and (d) after solicitation of a number of sources,
                                    competition is determined inadequate.




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                     Paragraph 3 of the April 1, 1995, contract between the PHA
                     and Carrero and Associates states that the contractor agrees
                     to comply with all the Federal and state laws, regulations,
                     and ordinances applicable to the terms of the contract.

                     Our review of Freeman’s contracts and invoices disclosed
                     improper contracting and questionable contract clauses.
                     Carrero and Associates contracted with Freeman and
                     Associates, a Minnesota based consulting firm, to provide
                     services related to the Gateway project. The services were
                     part of Carrero’s proposal to the PHA. The following
                     contracts were executed:

                               Contract                Hourly          Contract
                                 Date                   Rate           Amount
                              02/04/1995                         $75    $ 21,655
                              08/28/1995                         $75     127,995
                              06/26/1996                         $80     250,000
                              06/06/1997                         $80       4,400
                              06/27/1997                         $85     200,000
                              07/01/1998                         $95     200,000
                              07/01/1999                        $100     130,000
                                                        Total           $934,050

                     The February 4, 1995, contract was for relocation
                     consulting services. On August 28, 1995, Carrero and
                     Freeman signed an amendment that significantly expanded
                     the scope and value of the original contract. The
                     amendment included management improvement tasks in
                     addition to relocation services. The added tasks included
                     development of: (1) tenant selection and occupancy
                     policies, (2) a lease compliance handbook, (3) a
                     management agent operations handbook, and (4) analysis of
                     past subsidy calculations and a proposal to HUD for an
                     increase in the allowable expense level.




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                        From inception, Carrero contracted the services of Freeman
Improper procurement    without following the procurement procedures prescribed in
process and             24 CFR 85.36 or the PHA’s procurement regulations.
questionable contract   According to a Carrero official, Freeman was procured by a
                        non-competitive proposal. The procurement file did not
clauses
                        demonstrate that Freeman was the only source available,
                        the need for sole source procurement, or that the costs were
                        reasonable. All subsequent amendments and contracts were
                        made without competition or cost analysis.

                        Since the contract amendment of August 1995, the scope of
                        subsequent contracts did not change significantly, yet the
                        total contract amount increased by over $700,000. For
                        example, development of a management agent operations
                        handbook was in the August 1995 amendment and also in
                        the 1996, 1997, 1998, and 1999 contracts. Accordingly,
                        Freeman and Associates was given almost 5 years to
                        develop an operations handbook for management agents.
                        File documents indicated that all products relating to the
                        operations handbook, except an administration handbook,
                        were presented to the PHA on March 6, 1997. Why the
                        task was extended through the 1999 contract is unclear.

                        The 1995 amendment included three other management
                        improvement tasks that were unnecessarily extended
                        throughout the 5-year period of the contracts. A Carrero
                        official informed us that the tasks were completed as of
                        June 2000. This task to analyze past subsidy calculations
                        made for the PHA and develop a proposal to increase the
                        allowable expense level were not part of the HUD approved
                        revitalization plan. In fact, it was related to a lawsuit filed
                        against HUD and was clearly ineligible as a cost of a
                        Federal grant. We found one Freeman invoice from July
                        1995 for $2,700 for this work. We could not determine the
                        total amount Carrero charged in relation to the HUD
                        lawsuit because Freeman invoices were not adequately
                        supported.

                        We reviewed invoices totaling $632,457 for Freeman from
Review of invoices      February 1995 to December 1996 and from July 1997 to
                        June 1999. From February 1996, the invoices did not
                        contain sufficient detail to assess the eligibility. Our
                        review disclosed the following:




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                     Unsupported Reimbursable Expenses The invoices
                     submitted by Freeman and Associates consisted of two
                     charges - labor and reimbursable expenses. The labor
                     charges included hours worked for the period times the
                     applicable hourly rate. The reimbursable expenses included
                     hotel, meals, airfare, and mileage, etc. Freeman billed
                     $181,601 of reimbursable expenses, although $158,472 of
                     the charges did not contain sufficient supporting
                     documentation to assess the eligibility. Freeman invoices
                     only documented the support for the reimbursable
                     expenditures for the period of April 1995 to January 1996.
                     The other expenditures were not supported.

                     Non-HOPE VI Charges Freeman charged unrelated costs
                     to the HOPE VI Program. They included $1,875 for work
                     at the Crisantemos II site (a CGP project), $75 for technical
                     assistance to Carrero staff, and $3,512 for assistance in
                     preparing an application for the 1997 HOPE VI funds. The
                     PHA could have prevented the charges by adequately
                     reviewing Carrero’s invoices before payment.

                     Unnecessary Lodging for the Minnesota Firm The June
                     1996 through July 1998 contracts between Freeman and
                     Carrero allowed reimbursement for the lease of an
                     apartment including utilities, cable TV, household items,
                     maintenance, dry cleaning, etc. The lodging expenses were
                     paid based on the apartment’s actual monthly rent,
                     regardless of whether the consultants were in Puerto Rico
                     or not. We identified $79,187 in lodging charges.

                     The HOPE VI project paid for personal items, such as a
                     hair dryer, groceries, coffee table, beach chairs and other
                     household items. Freeman was reimbursed with HOPE VI
                     funds for these goods although they did not benefit the
                     project in any way. During 1995 and 1996, Freeman was
                     reimbursed at least $2,010 for the purchase of such personal
                     goods. Freeman was also reimbursed for airport luggage
                     carts, tips paid, etc. We could not determine the amount for
                     subsequent years because the invoices were not adequately
                     supported.




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                    Billing Errors Carrero did not adequately review the
                    subcontractor’s invoices. We identified four instances
                    where billing errors occurred resulting in an overcharge of
                    $336 to the program.

                    Deficient Monthly Progress Reports Freeman submitted
                    monthly progress reports to Carrero and Associates. The
                    description of the tasks performed was insufficient to
                    evaluate the reasonableness of hours charged during the
                    period. The narrative within the reports was generic and
                    contained only general information on the tasks performed.
                    The reports did not contain hours charged per task or dates
                    when the tasks were accomplished. Also, the number of
                    days per month spent by Freeman in Puerto Rico was not
                    included.     This made it impossible to assess the
                    reasonableness of fees and reimbursable expenses charged
                    by Freeman. Furthermore, not all monthly reports were
                    available for our review.

                    We question the charges from Freeman for its work on the
                    Gateway project totaling $10,508 as follows:

                      Nature of Ineligible Cost                        Amount
                      Preparation of 1997 HOPE VI application          $ 3,512
                      Lawsuit against HUD                                2,700
                      Work related to Crisantemos II project             1,875
                      Purchase of household goods                        2,010
                      Billing errors                                       336
                      Technical assistance to Carrero staff                 75
                                                             Total     $10,508

                    However, based on the lack of support for work performed
                    under the contract and the failure to follow the procurement
                    policy, we consider the remaining contract costs of
                    $923,542 unsupported.


                    “[PHA] is unable to contest this dollar figure at this time
Auditee Comments    due to lack of documentation. [The PHA] would appreciate
                    the opportunity to review any relevant documents in the
                    IG’s possession to assist . . . in responding to this
                    recommendation.”




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                     The OIG will provide the PHA the opportunity to review
 OIG Evaluation of   the relevant documents in our possession to assist in
 Auditee Comments    responding to the recommendations.




 Recommendations     We recommend that you:

                     3A.   Require the PHA to reimburse $10,508 of ineligible
                           costs from non-Federal funds paid to the consultant
                           for     unnecessary, unsupported, and unrelated
                           program expenses.

                     3B.   Request justification for the remainder of the
                           contract costs of $923,542.




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   The PHA Made Improper Payments from the
                 CGP Grant
The PHA failed to properly administer payments of CGP funds. It approved $3.8 million as
project management fees without proper solicitation of the vendor and without cost analysis and
justification. In addition, the PHA did not maintain adequate documentation to support the
disbursements to Carrero and Associates, paid excessive charges, and failed to obtain proper
approval prior to disbursement. These actions occurred because PHA’s management disregarded
Federal procurement requirements and did not establish adequate internal controls over
payments. In the absence of proper support, the PHA is liable for $3.8 million ($1.7 million paid
as of May 1999) for improper project management fees and $326,260 for other unsupported
costs.


                                     Title 24 CFR 85.20 (2) and (6) require that grantees
 Criteria                            maintain records to adequately identify expenditures and
                                     maintain accounting records supported by source
                                     documents. Section (3) requires grantees to maintain
                                     effective control and accountability for all grant and
                                     subgrant cash, real property, and other assets. Grantees and
                                     subgrantees must adequately safeguard all such property
                                     and assure that it is used solely for authorized purposes.

                                     The PHA failed to comply with procurement requirements
 Unsupported project                 by not providing full and open competition. In June 1999,
 manager fees                        the PHA amended its contract with Carrero and Associates
                                     extending the contract until August 2002. HUD did not
                                     approve the amendment. The amendment stated that $33.4
                                     million in CGP funds was assigned to the Gateway project
                                     and that Carrero and Associates was approved fees of $3.8
                                     million in CGP funds to administer the funds. The
                                     management fees were 12 percent of the CGP funds. The
                                     amendment also reflected that as of May 31, 1999, Carrero
                                     and Associates had billed the PHA $1,787,443 in CGP fees.

                                     Although the PHA Administrator and other officials were
                                     involved in the development of the fourth contract
                                     amendment, no one could provide information to support
                                     the amounts or the procurement process followed. The
                                     PHA did not provide any information showing how the




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                           contracted fee was determined or the reasonableness of the
                           charges. Therefore, the reported CGP expenditures of $1.7
                           million are considered unsupported. Also the PHA may
                           incur $2.1 million in additional unsupported costs if
                           corrective actions are not taken.

                           We reviewed CGP disbursements made by the PHA from
   Payment deficiencies    April 1995 to January 2000. The disbursements were to
   and other unsupported   Carrero and Associates for payment of management fees
   costs                   and goods and services on behalf of the PHA to carry out
                           the Gateway project. We selected 8 disbursements totaling
                           $4.3 million, representing 44 percent of the total amount
                           disbursed of $9.8 million. The 8 disbursements paid 54
                           invoices submitted by Carrero. We identified payment
                           deficiencies in each disbursement, which included 42 of the
                           invoices (see Appendix E). The deficiencies included the
                           following:

                                                                               No. of
                                               Deficiency                      Invoices
                            Improper cost allocation                               3
                            Invoices not properly approved as required            16
                            Expenses not properly supported                       28
                            Excessive/Questionable charges                        13
                            False statements/irregularities                        1

                           In addition to the unsupported project management fees, we
                           identified $326,260 of other unsupported costs. The
                           following examples illustrate some of the project
                           deficiencies:

                           Invoice No. IC-1443 The invoice pertained to architectural
                           services provided from September 1 to October 31, 1998,
                           by Arquitectos Diaz. The services were provided in
                           association with Domenech, Hicks and Krockmalnic
                           Architects, a Boston based firm, for the revitalization of the
                           Manuel A. Pérez project. Arquitectos Diaz charged $7,473
                           for “Consruction Doc. Phase II” but did not include any
                           supporting     documentation.          Other     unsupported
                           reimbursable expenses included reproduction and delivery
                           charges of $69.




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                    Invoices Nos. IC-1157 and 1160 The Carrero and
                    Associates invoices included program and construction
                    management services provided by Robert S. Prann. The
                    services included work related to the Villa Panamericana
                    and Las Orquideas public housing projects for March and
                    April 1998. The invoices totaled $31,348 and $35,792
                    respectively. However, the amount related to the housing
                    projects could not be determined. In January 1998, HUD’s
                    Headquarters Office of Public Housing notified the PHA
                    that no public housing funds could be used for the
                    disposition and redevelopment or the administration of
                    these two projects. Because adequate documentation was
                    not maintained to segregate the costs, we question the total
                    invoice amounts.

                    Invoice No. 1605 Carrero and Associates claimed its
                    $56,400 project management fees for August 1999 for the
                    management of the Gateway Project. Although the fees
                    claimed agreed with the contract payment schedule, a
                    required monthly report showing the progress of the project
                    and other documents indicating the services rendered were
                    not included in the PHA’s disbursement documentation.

                    In addition, Carrero and Associates claimed $1,696 as other
                    relocation costs. Of the costs, $850 was for lodging and
                    training for two of Carrero’s employees in Philadelphia and
                    Puerto Rico. An invoice for the hotel lodging totaling $762
                    was included. The other $88 was for a Basic Access
                    Program training course attended by another employee.
                    There was no support to show that these expenses related to
                    the Gateway Project.

                    Carrero included a $325 charge from Lanier Puerto Rico,
                    Inc., with no explanation for the charge.

                    Invoice No. IC-1431 The invoice noted that a $575 CGP
                    charge was for relocation coordination services provided by
                    Freeman and Associates at the Gateway Project in February
                    1999. However, the PHA’s disbursement voucher did not
                    contain documentation to support the charges of $285
                    ($95/hr. x 3 hrs.) and $290 for food, lodging, and
                    transportation by Freeman.




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                                       *   *   *    *    *    *

                     As a result of the deficiencies, HUD has no assurance that
                     CGP funds paid for the Gateway project were used by the
                     PHA in an effective, efficient and economical manner to
                     benefit low income persons.


                     The CGP program “. . . will have appropriate [PHA] staff
 Auditee Comments    to manage and oversee the program. The Executive Aide
                     for Management of Capital Improvement will administer
                     the capital improvement program, including the budget
                     needs and compliance with program requirements.”


                     The new administration at the PHA is in the process of
 OIG Evaluation of   correcting the deficiencies. The OIG will provide the PHA
 Auditee Comments    the opportunity to review the relevant documents in our
                     possession to assist in responding to the recommendation.



 Recommendations     We recommend that you:

                     4A.    Determine, by comparison to similar modernization
                            or development projects, the reasonableness of the
                            $1,787,443 paid as of May 1998 for project
                            management fees.

                     4B.    Determine the proper disposition of remaining
                            obligated contract amount of $2,105,817 for project
                            management fees.

                     4C.    Request justification for the $326,260 of
                            unsupported costs. Recover any unsupported costs
                            from non-Federal funds.




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      The PHA Failed to Maintain an Adequate
           Financial Management System
The PHA had no system of internal control. It had an inadequate accounting system, inadequate
disbursement control and recordkeeping, and commingled cash from the various grants. It failed
to meet matching state requirements, and used Federal funds to overcome a shortfall in state
funds. The PHA executed no inventory control over purchases of goods and services for the
HOPE VI Program and failed to monitor its project manager. This situation existed, in our
opinion, because of the PHA’s management was unprepared or incapable of administering the
program and disregarded program requirements. Consequently, the HOPE VI grants were
unauditable, millions in costs are questionable or unsupported, and HUD has no basis for
assurance of economy or efficiency of this project.


                                    The Grant Agreement, Article XIII provides that the PHA
 Criteria                           must keep records in accordance with 24 CFR 85.20 that
                                    facilitate an effective audit to determine compliance with
                                    program requirements, and which fully disclose the amount
                                    and disposition of funds received under the HOPE VI grant,
                                    including sufficient records that document the
                                    reasonableness and necessity of each expenditure.

                                    Title 24 CFR 85.20 provides that accurate, current, and
                                    complete disclosures of the financial results of assisted
                                    activities must be in accordance with financial reporting
                                    requirements of the program. In addition, it requires
                                    accounting records that adequately identify the source and
                                    application of funds provided for financially assisted
                                    activities.

                                    •   Inadequate Accounting Records              The project
                                        manager, Carrero and Associates, used an accounting
                                        system that did not segregate costs among the three
                                        Federal grant programs. The PHA’s accounting system
                                        was also inadequate. It could not provide a cost ledger
                                        for the HOPE VI funds documenting the line item
                                        numbers according to the HUD approved budget. In
                                        addition, the PHA and its project manager commingled
                                        the HOPE VI funds. In January 1999, Carrero opened
                                        one checking account for all federal funds. The PHA’s




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                         check register for the HOPE VI Program also showed
                         that HOPE VI Planning and Implementation grant funds
                         were commingled and did not identify the grant to
                         which expenditures related. This was contrary to its
                         grant agreement.

                         The PHA made journal entries on its books without any
                         support. For example, on April 15, 1998, the PHA
                         made an adjusting journal entry reclassifying $3.9
                         million of HOPE VI Program costs to various accounts.
                         The employee who made the adjustment stated that
                         there were no supporting documents to show which
                         transactions were affected or how the amounts were
                         determined.

                     •   Inadequate        Disbursement         Control       and
                         Recordkeeping Upon requesting HOPE VI records,
                         we were led to the storage area pictured below. It was
                         in total disarray, and the PHA did not have any
                         organization or index of the files maintained there. The
                         inadequacy of the records storage was also raised in the
                         1997 Single Audit Report issued in February 1999. The
                         PHA responded to that audit that a contract was
                         awarded to organize the documents on the sixth floor
                         and transfer them to an off-site warehouse. However,
                         as shown in the photograph taken in July 2000, the
                         storage area remained in total disarray.




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                    We noted numerous payment control weaknesses. We
                    reviewed 54 invoices for the CGP Program for the period of
                    June 1998 through December 1999 and identified 16
                    instances in which the responsible PHA official did not
                    properly approve the invoices. Nine HOPE VI invoices
                    were not stamped “paid” to avoid resubmission and
                    duplicate payment.

                    Findings 1-4 describe numerous examples of improper
                    disbursement control, lack of adequate documentation, and
                    payment of ineligible costs. Neither the PHA nor its highly
                    compensated project manager, Carrero and Associates,
                    maintained financial systems capable of administering such
                    large Federal grants. In total, these four findings include
                    $5.3 million in ineligible costs, $10.5 million in
                    unsupported costs and $2.3 million in costs to be
                    reprogrammed (cost efficiency).

                    •   Matching Requirements Not Documented The PHA
                        could not show that it complied with the matching
                        requirements contained in the HOPE VI Grant
                        Agreement. Article VIII of the agreement requires the
                        PHA to provide contributions for supportive services in
                        an amount equal to 15 percent of the HOPE VI grant
                        funds awarded for supportive services under the
                        Revitalization Plan. The latest HOPE VI budget
                        approved by HUD reflected $10 million budgeted for
                        supportive services.       Accordingly the matching
                        contribution should be $1.5 million. Article XVIII
                        provides that failure to obtain a matching contribution
                        constitutes a default by the PHA. The $1.5 million
                        remains owed.

                    •   HOPE VI Program Funds Used to Overcome
                        Shortfall in State Funds The PHA issued a resolution
                        on May 12, 1995, authorizing the disbursement of
                        $149,547 from the HOPE VI Program to pay for
                        services rendered by Carrero and Associates. The
                        resolution recognized, retroactively, debts and
                        expenditures before the HOPE VI contract was
                        executed. In this case, Carrero submitted the PHA an
                        invoice for work performed under a Commonwealth




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                         funded contract executed on December 16, 1994, that
                         exceeded the Commonwealth’s obligated contract limit.
                         Through the resolution, the PHA Administrator
                         authorized HOPE VI funds to pay the shortfall.
                         Accordingly, the $149,547 charged to the HOPE VI
                         grant was ineligible.

                     •   Inventory Controls Did Not Exist            The PHA
                         authorized its project manager to make certain
                         acquisitions related to the administration of the
                         Gateway project. However, it did not properly record
                         the goods acquired by Carrero and Associates. The
                         project manager charged the PHA for the acquisition of
                         office furniture and equipment, computers, copiers,
                         motor vehicle, etc. However, PHA officials stated that
                         the equipment was not included in the PHA’s inventory.
                         Accordingly, there were no controls to safeguard assets
                         acquired with Federal funds or to track the final
                         disposition.

                     The PHA’s financial system for HOPE VI was in complete
                     shambles. Cleaning up the accounts and establishing a
                     system of internal control will necessarily become a priority
                     of the incoming administration.


                     “. . . [The PHA] will no longer rely on private contractors to
 Auditee Comments    manage its programs. The reorganization will create two
                     new offices - Internal Auditor and Procurement, and
                     Strategic Planning and Special Projects. The hiring of
                     Phase I managers is anticipated to be completed by March
                     31, 2001. The Phase II hiring of support staff is anticipated
                     to be completed by August 31, 2001.               Acceptable
                     managerial and internal controls will be put in place.

                     “ . . The Office of Financial Administration will establish
                     appropriate procedures and internal controls to track grant
                     expenditures for open grants.”

                     (See auditee’s response to the draft report Finding No. 6).




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                    The new administration at the PHA is in the process of
OIG Evaluation of   implementing steps toward correcting the deficiencies. The
Auditee Comments    OIG will provide the PHA the opportunity to review the
                    relevant documents in our possession to assist in
                    responding to the recommendations.


                    We recommend that you:
Recommendations
                    5A.     Assist the new PHA administration in establishing
                            acceptable managerial and internal controls to
                            assure that grants expenditures are documented,
                            reasonable, and in accordance with grant and
                            program requirements.

                    5B.     Require the PHA to construct audit trails for all
                            undocumented Federal grants expenditures, and
                            review those costs to assure they are eligible and
                            reasonable.

                    5C.     Require the PHA to provide evidence of compliance
                            with the HOPE VI matching requirement of $1.5
                            million.

                    5D.     Require the PHA to reimburse ineligible costs of
                            $149,547 which it paid to cover the
                            Commonwealth’s shortfall.




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Management Controls
In planning and performing our audit, we considered the PHA’s management controls to determine
our audit procedures and not to provide assurance on those controls. Management is responsible
for establishing effective management controls to ensure that its goals are met.

Management controls include the plan of organization, methods and procedures adopted by
management to ensure that its goals are met. Management controls include the processes for
planning, organizing, directing, and controlling program operations. They include the systems
for measuring, reporting, and monitoring program performance.

We determined that the controls most relevant to our objectives pertained to the following:

   1. Procedures and practices used to accumulate and charge costs to the programs.

   2. Procedures used to comply with Federal and PHA’s procurement requirements.

   3. Procedures used to monitor activities of the project manager.

   4. Selection and award of contracts.

   5. Eligibility of grant activities.

   6. Procedures to ensure that personal property is properly accounted for and to maintain
      inventory control.

We assessed controls in place. We obtained an understanding of the PHA’s procedures and
HUD’s requirements, assessed control risk, and performed various substantive tests of the
controls.

A significant weakness exists if management controls do not give reasonable assurance that
resource use is consistent with laws, regulations, and policies; that resources are safeguarded
against waste, loss, and misuse; and that reliable data are obtained, maintained, and fairly
disclosed in reports.

Based on our review, we believe that significant weaknesses existed in all of the management
control areas mentioned above. The specific weaknesses are discussed in the findings.




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Follow-Up On Prior Audits
Prior audits have resulted in findings similar to ones in this report, which impacted the objectives
of this audit.

   •   An OIG audit report (No. 00-AT-201-1003 dated March 6, 2000) on the PHA
       procurement administration concluded that the PHA: (1) did not comply with Federal
       and agency procurement requirements and did not maintain control over the central office
       procurement activities, (2) paid about $4.9 million more than necessary for professional
       services provided by two contractors that were contracted without competition and
       without performing price and/or cost analysis, (3) did not maintain effective management
       controls to deter waste, abuse, and fraud, (it paid invoices without proper authorization or
       signed agreements, invoices that were not originals, invoices without proof of delivery,
       invoices that exceeded contract limits, unallowable advanced payments, and invoices
       without support), and (4) did not maintain adequate inventory. The report contained 4
       findings with 19 recommendations. At the time of this review, those findings were
       unresolved.

   •   Single audits of the Department of Housing including the PHA’s FY 1997 (issued August
       17, 1998) and 1998 (issued April 30, 1999) financial statements, management controls,
       and compliance performed by Price Waterhouse Cooper, LLP found numerous significant
       deficiencies. Based on those deficiencies, the firm disclaimed an opinion on the
       Department of Housing’s statements. However, in both Single Audit reports, the firm
       issued an adverse opinion on compliance. Among the deficiencies reported were that the
       PHA: (1) did not properly monitor its Program Manager administering its HOPE VI
       Program, (2) could not provide all requested disbursement vouchers and their supporting
       documents, (3) processed disbursements without approval of the authorized official, (4)
       commingled HOPE VI funds with other funds, (5) had inadequate accounting and
       reporting controls to enhance the preparation of timely and reliable statements and federal
       financial reports, (6) recorded adjustments in its books, without supporting
       documentation, and (7) did not properly safeguard important information and files. The
       prior year audits reported similar deficiencies. At September 22, 2000, all the findings
       remained open. HUD Caribbean Office staff was in the process of evaluating the
       corrective action plan included in the reports.

As discussed in the Findings and Recommendations section of this report, the above conditions
continued to exist. This report stresses the importance of developing and implementing
management controls to ensure that the conditions do not continue.




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                                                                                                   Appendix A


Schedule Of Ineligible and Unsupported Costs
and Cost Efficiencies


                                                                              Cost
                    Recommendation             Ineligible      Unsupported Efficiencies
                          1C                                     $7,200,000
                          1D                    4,049,539
                          1E                      521,561            (521,561)
                          1F                        5,650               (5,650)
                          1G                                           248,841
                          1H                                                           $240,033
                          1J                                           400,000
                          2B                      736,031
                          2C                                           196,206
                          3A                        10,508
                          3B                                          923,542
                          4A                                        1,787,443
                          4B                                                          2,105,817
                          4C                                           326,260
                          5C                                                          1,500,000
                          5D                     149,547
                         Total                $5,472,836         $10,555,081         $3,845,850


Ineligible - Costs not allowable by law, regulation, contract, or HUD or local agency policy.

Unsupported - Costs contested because they lack adequate documentation to support eligibility.

Cost Efficiency - An action to prevent an ineligible obligation or expenditure or to increase revenue.




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                                                                                                   Appendix B


Summary of HOPE VI Disbursement
Deficiencies (Finding 1)
 Check      Check     Invoice Number      Total Invoice         Improper     Cost Plus a      Not      Not Stamped
  No.        Date                           Amount               Account     Percentage     Properly       Paid
                                                                Allocation      Rate       Supported
    27     03/06/96          Feb-96         $ 301,965                             X            X           X

                                                         2
    212    12/31/96       I 96 URD I 06          4,926                           X                         X
                                                         2
                           96 URD-08            13,281                           X                         X
                          96 URD-1-11           13,612                                        X            X
                          96 URD-1-10               9,934                                     X            X
                          URD-1-10.2           128,109              X            X            X            X
                          URD 1-11.1            77,665                           X            X            X
                          URD-II-10.2               6,030           X                         X            X
                          URD-II-11.1               3,418           X                         X            X

    405    12/12/97         IC-1060             84,583                           X            X
                                                         2
                            IC-1057             46,849              X
                                                         2
                            IC-1058             17,510              X                         X
                                                            2
                            IC-1053                  960
                            IC-1054            173,205              X            X            X


    449    01/07/99         IC-1324            134,868              X            X            X
                            IC-1336            192,715              X            X            X
                            IC-1341             83,368              X            X            X


    469    05/11/99         IC-1466            158,770              X            X            X


    491    10/05/99         IC-1576                 5,262                                     X

                                                         2
    505    01/12/00         IC-1662           165,315                            X
                            IC-1645            162,766              X            X            X
                  Total                     $1,785,111             11            13           16           9




2
    Included in Finding 1: other vendors $248,841
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                                                                                                                    Appendix C


Summary of Procurement Deficiencies
(Finding 2)
                                                                                                                                          Costs Not
                                                                                        Improper                     No                    Related
      Vendor                                                                           Procurement       No         Price/                   to
       Name           Amount                                    Description of           Process     Procurement    Cost      Excessive   HOPE VI
                     Charged      Ineligible    Unsupported    Goods/Services             Used           File      Analyses   Charges      Project
COMMUNICAD          $ 720,744    $ 720,744                  Public relations and            X             X           X          X           X
                                                            coordination efforts,
                                                            souvenirs and flower
                                                            arrangements,
                                                            dinners and
                                                            breakfast for public
                                                            officials, etc.
Alberic Colon          31,222          8,400                15 Passenger Van for           X                                     X
Auto Sales                                                  volunteer program.
                                                            Title of vehicle
                                                            registered to Carrero
                                                            and Associates.
Hi-Tech                65,514                      $65,514 Computer                        X
Electronics                                                 Equipment for Small
                                                            Business Center.
Pietrantoni            12,527                       12,527 General Legal                   X             X            X          X           X
Mendez &                                                    Services related to
Alavarez                                                    relocation of tenants.
Xerox Corporation       8,205          6,810                   Coin operated copier        X             X            X          X
                                                               for Small Business
                                                               and Employment
                                                               Center.
ROALCA                118,165                       118,165    Rehab to temporary                                                X
Construction                                                   facilities for Small
                                                               Business Center.
                                                               (Improvements made
                                                               to private property.)
                                                               Included installation
                                                               of 18 mahogany
                                                               doors ($500 each),
                                                               air conditioning unit
                                                               ($21,775), acoustic
                                                               ceiling ($10,620),
                                                               installation of
                                                               wooden walls
                                                               ($14,700), etc.
AEE                        77             77                   Electricity Bill-                                                             X
                                                               Residential Unit of
                                                               an Employee of
                                                               Carrero and
                                                               Associates
      Total           $956,454       $736,031       $196,206                                5             3           3          5           3




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                                                                                                              Appendix D


Summary of Public Relations Charges
(Finding 2)
                                                                                                            Included      Souvenirs,
                                                                                                             Charges      Stationery,
                                                                                                           Not Related      T-shirts,
                                                                                     Charges                   to          and Other
Invoice                                                                                Not       Excessive HOPE VI       Unnecessary
  No.     Amount                      Invoice General Description                    Supported   Charges     Project         Items
 1013      $ 8,842   Monthly retainers for coordination efforts, maps, framing          X                                      X
                     Poster for Governor, photography services, aerial
                     photographs, etc.
 1014        5,463   Press kit, Maps, Poster Artwork, Progressa's Stationery,           X                      X              X
                     Photographs for former Housing Dept. Secretary (Vivoni),
                     Video Services, Subscription to the Harry Turner PR Report
 1015          341   Design Workshop, map copies                                        X
 1016          332   Framing 12 Posters                                                 X                                     X
 1020        8,651   Monthly retainers for coordination with DOH/AVP/HUD,               X                      X              X
                     artwork, reproduction of material, press kits, stationery &
                     business cards-Progressa, etc.
 1021        5,752   Printing Progressa's Stationery, Printing 500 NSJG Posters,        X                      X              X
                     Reproduction of Maps, Photographic and Video coverage
                     on Governor’s announcement on NSJG, Meeting with John
                     Soto (PRFFA) and Kevin Marchman (HUD), Meeting at
                     Los Chavales Restaurant Vivoni-Rodriguez-Progressa's
                     Team
 1022        3,322   Coordination of meeting with public housing resident,              X                      X              X
                     Frame four posters for VIPs, Coordination of Governor's
                     announcement of NSJG project including pre-event
                     meeting, etc.
 1023          792   Press kit for NSJG press release and audio/video cassettes,        X
                     general information kits, etc.
 1025        9,250   Monthly retainers for coordination with DOH/AVP/HUD,               X                      X              X
                     Press Interviews Coordination, Banners Design and Final
                     Art, Press Release On $400K Planning Grant Award, Press
                     Package Presentation for Governor's Infrastructure Council,
                     Coordination of DOH/AVP Booth at LULAC Convention.
 1025        3,308   Coordination of activities with HUD representative during          X                      X              X
                     1995 LULAC Convention, Assist in private tour of NSJG
                     for Vivoni/Cisneros, attendance of corporate event with Leo
                     Padilla, Ford Motor Co., Choco Mesa, Mary Cisneros,
                     NSJG stickers, Press Brief Material, Aerial Photographs,
                     etc.
 1025          666   NSJG mission material requested by DOH/AVP for                     X                      X              X
                     distribution at LULAC convention, Copy maps, etc.
 1026       23,310   Monthly retainers for coordination with DOH/AVP/HUD,               X
                     Fee for coordinating Fraternization Activity, Cash Advance
                     ($10,000) for activity expense (see invoice #1030 for related
                     expenses), Expense related to NSJG public relation
                     program, etc.
 1027        1,398   Salaries paid to volunteers during Fraternization Activity
 1028       11,172   Monthly retainers for coordination with DOH/AVP/HUD,               X                      X              X
                     logo sheets, stationery, posters, labels, expenses incurred
                     during meeting with DOH Communications Dir.,
                     Coordination of breakfast for Congressional Staff visiting
                     the island (see invoice 1031 for additional charges).
 1030        1,505   Fraternization Day Event-logos for T-shirts, 1,284 T-shirts,       X                                     X
                     15 walkie-talkies, flyers, baseballs, whistles, 15 water
                     coolers, lunches, name tags, supplies to decorate stage, etc.




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Summary of Public Relations Charges (Finding 2)


                                                                                                         Included      Souvenirs,
                                                                                                          Charges      Stationery,
                                                                                                        Not Related      T-shirts,
                                                                                  Charges                   to          and Other
Invoice                                                                             Not       Excessive HOPE VI       Unnecessary
  No.     Amount                     Invoice General Description                  Supported   Charges     Project         Items
 1031         269    Breakfast for 15 Congressional Staff members and PR             X                       X
                     Federal Affairs Administration at Ambassador Hotel (see
                     invoice #1028 for related charges).
 1032         27,034 Monthly retainers for coordination with DOH/AVP/HUD,            X           X                         X
                     Fee for Coordinating Fraternization Activity (see invoice
                     1026 for additional fee charged) Artwork-banners & flyers,
                     medals, Maps, Photographic Services, General Copies, etc.
 1032            975 NSJG stationery, Flyers, etc.                                   X                                     X
 1034         4,629 Expenses regarding Washington DC trip for meetings with                                 X              X
                     HUD officials and Congressional Hispanic Caucus, and
                     Coordination of meeting and attendance of events in
                     representation of NSJG (included floral arrangement to
                     Kevin Marchman, $840 dinner at Taberna del Alabardero
                     Rest. with Carlos Vivoni, Miguel Rodriguez, and Police
                     Superintendent Pedro Toledo)
 1035      14,591    Monthly retainers for coordination with DOH/AVP/HUD,            X           X          X              X
                     Shipping charges-caps, Trophies, Maps, NSJG Stationery,
                     Meeting with Ana Maria Montalvo, sound system,
                     refreshments, posters, stateside newspaper
 1036        5,086   NSJG T-shirts (360) and NSJG Polos (144)                        X                                     X
 1037        4,434   Deposit on water bottles, Breakfast with Jaime Fonalledas,      X                      X              X
                     Meeting US Developer/Wilma Inc., Event Meeting of
                     Fraternization Day Event-decorations, Housing Week
                     Event-decorations (banners, pencils, flowers, photographic
                     services, key chain, stickers, etc.)
 1039           594  Event Expenses-balloons, meals, ice, parking key chains,        X                                     X
                     NSJG Stationery, Maps, NSJG pin sample
 1043      13,653    Monthly retainers for coordination with DOH/AVP/HUD,            X           X                         X
                     Metro data copies of NSJG Maps, photography services
                     during events, Artwork flyers, NSJG Stationary and Logo
 1044        7,855   Event-HIV, Artwork-AE Design Service & Support                  X                      X              X
                     Services/Training Coordinator ad, Shipping Charges-NSJG
                     caps, NSJG sticker, RFP Publication, Publication of Supt.
                     Services/Training Coordinators Ad
 1045          867   Videos and Flyers                                               X                                     X
 1047       1,852    Video services for Villa Panamericana, 250 caps,                X                      X              X
                     shipping/duty charges on caps, artwork for pins
 1051     13,259     Monthly retainers for coordination with DOH/AVP/HUD,            X           X          X              X
                     video services for HIV and No More Violence Day,
                     Photography Services, Coordination meeting Vivoni-
                     Rodriguez, Flyers, NSJG logo, Maps, Aerial photos
 1054          704   Metro Data-maps "Economic Development", Training                X
                     Session at Ramos Antonini-Catering Services 12/12,12/13
 1057     20,638     Coordination Fees for communication efforts for                 X                      X
                     Crisantemos I & II, Villa Panamericana and Las Orquideas,
                     RFQ Brochure, Audiovisuals -10 copies of Channel 6 NSJG
                     news feature and demolition tape, Expenses for NSJG
                     Meetings, etc.
 1059     46,301     Coordination Fees for communication efforts for                 X
                     Crisantemos I & II, RFQ Villa Panamericana, Demolition
                     bid advertisement, NSJG Employment advertisement, Press
                     Briefing, etc.
 1060       6,067    Exhibit at State Capitol Building, Architects Luncheon,         X                      X              X
                     Photographic services, Breakfast Meetings with DOH/AVP
                     , etc.




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                                                             Summary of Public Relations Charges (Finding 2)


                                                                                                               Included      Souvenirs,
                                                                                                                Charges      Stationery,
                                                                                                              Not Related      T-shirts,
                                                                                        Charges                   to          and Other
Invoice                                                                                   Not       Excessive HOPE VI       Unnecessary
  No.     Amount                      Invoice General Description                       Supported   Charges     Project         Items
 1062      29,352   RFQ For Villa Panamericana, Printing, Ads, Aerial Photos,              X                       X
                    Press Conference
 1064      27,123   Coordination fee for communication efforts, Photographer,              X                      X              X
                    NSJG Administrative meetings, NSJG Banner and Podium
                    Banner, Press Kit.
 1065         517   HUD photocopies of photographs requested by Planning                   X                                     X
                    Department, Deposit on NSJG Field Office Signs,
                    Subscription Renewal
 1066         923   RFQ design and artwork for Villa Panamericana project (state           X                      X
                    funded activity)
 1068         649   NSJG Administrative Meeting, Pencils, NSJG Newsletter-                 X                                     X
                    Sacred Heart Reporters
 1070      21,250   Coordination fee for communication efforts, NSJG News                  X                      X              X
                    letter, Crisantemos II Demolition, Pin artwork, Newsletter
                    print
 1073      33,254   Coordination Fees for communication efforts, photographic              X                                     X
                    services Vivoni's Recognition Plaque, pins, NSJG meetings,
                    Press Clippings, Stationery, etc.
 1075      75,507   Coordination of internal/external communication efforts                X                      X              X
                    related to NSJG, Crisantemos I & II implosion event, 1,200
                    T-shirts & Polos, caps, 204 hard hats, pencils, catering
                    services, press kits, stages & tents, banners, sound system,
                    breakfast, etc.
 1078       4,589   Pens, Erasers, NSJG Gen. Inf. Kit, NSJG Pin artwork,                   X                                     X
                    Expenses for NSJG work team meetings, flyers, NSJG
                    Newsletter
 1079      76,730   Crisantemos II Implosion Event- sound system, artwork,                 X                      X              X
                    stages, tents, T-shirts, press conference, catering services,
                    banners
 1080      39,804   Crisantemos I Implosion- Catering services for meetings,               X                                     X
                    stages, tents, T-shirts, breakfast, chairs, tables, sound system,
                    dust masks
 1081      49,161   Coordination of internal/external communications efforts               X                      X
                    related to NSJG, coordination and execution of Crisantemos
                    II implosion
 1082      15,653   Crisantemos I meeting at DOH & police, notepads, aerial                X                                     X
                    video, breakfast, Large TV Screens, 1,600 caps, 1,094 T-
                    shirts, photographer, audiovisual, and event
                    staff/coordinators/supervisors
 1085      21,816   Coordination of internal/external communication services               X                      X              X
                    related to NSJG initiative, coordination and execution of
                    Crisantemos I & II implosion, labels, sound system,
                    implosion as-work, work team and staff meetings,
                    photographic services
 1087      10,032   Coordination of internal/external communications efforts               X                                     X
                    related to NSJG, photo services, press conference meeting at
                    Caribe Hilton $1,770. Work performed by third parties had
                    15-18% mark-up.
 1088      17,644   Coordination of internal/external communications efforts               X                      X              X
                    related to NSJG, photo & video services, printing services,
                    catering services, etc.




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Summary of Public Relations Charges (Finding 2)


                                                                                                             Included      Souvenirs,
                                                                                                              Charges      Stationery,
                                                                                                            Not Related      T-shirts,
                                                                                      Charges                   to          and Other
Invoice                                                                                 Not       Excessive HOPE VI       Unnecessary
  No.     Amount                       Invoice General Description                    Supported   Charges     Project         Items
 1091      14,711     Coordination of internal/external communications efforts           X                       X              X
                      related to NSJG, press release Crisantemos II clean up, photo
                      services, task force meeting, refreshments, name tags,
                      reproduction services, etc.
 1093      11,820     Coordination of internal/external communications efforts           X                                     X
                      related to NSJG, photo & video services, task force meeting
                      coordination, reproduction services, etc.
 1098       9,575     Coordination of internal/external communications efforts           X                                     X
                      related to NSJG, coordination of community fair,
                      coordination of radio program, orientation to PHA
                      communication dir., photo services, reproduction services,
                      etc.
 1099       7,722     Coordination of internal/external communication efforts,           X                      X              X
                      copies for survey, videos, diskette with Secretary Alemany
                      Changes, Design/Art for flyers and T-shirts
 Total     $720,744                                                                      50          4          28            41




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                                                                                                             Appendix E


Summary of CGP Disbursement Deficiencies
(Finding 4)

                                          Improper Invoice Not Expense Not    Excessive/        False
Check    Check      Invoice    Invoice      Cost     Properly    Properly    Questionable    Statement/        Amount
 No.      Date     Number      Amount     Allocation Approved   Supported      Charges      Irregularities    Unsupported
2560    06/27/98   IC-1155      $6,934
                   IC-1157      31,348       X                      X                                           $31,348(b)
                   IC-1160      35,792       X                      X                                            35,792(b)
                   IC-1164      58,834                              X             X                              48,630(b)
                   IC-1170      60,337                                                                                    0
                   IC-1180      43,257                              X                                            43,257(b)
                   IC-1192    105,816                               X             X                               105,816
2816    10/06/98   IC-1260      57,680                              X             X                                 40,859
                   IC-1261      26,904       X                                                                            0
                   IC-1266      21,108                              X                                               21,108
                   IC-1270      22,216                              X             X                                 22,216
                   IC-1271     291,594                              X             X              X                291,594
3244    05/12/99   IC-1413           95                             X             X                                  95(b)
                   IC-1418      31,603                              X             X                                 31,603
                   IC-1431          575                             X             X                                     (a)
                   IC-1433      28,101                                                                                    0
                   IC-1435      30,411                              X                                               30,411
                   IC-1442      17,433                              X                                            17,433(b)
                   IC-1443        9,094                             X             X                               7,542(b)
                   IC-1451      20,261                              X                                            20,261(b)
                   IC-1452      20,261                              X                                            20,261(b)
                   IC-1453      20,261                              X                                            20,261(b)
                   IC-1454      20,261                              X                                            20,261(b)
                   IC-1455      20,261                              X                                               20,261
                   IC-1465      46,618                              X             X                                 45,802
                   IC-1471    149,374                                                                                     0
                   IC-1439          550                                                                                   0
                   IC-1414       1,520                                                                                    0
                   IC-1449    638,479                                                                                     0
3551    09/28/99   IC-1559     57,388                   X           X                                               56,400
                   IC-1592       1,335                                                                                    0
                   IC-1596     280,302                                                                                    0
                   IC-1584      58,680                  X           X             X                                 57,099
3612    10/20/99   IC-1598    303,713                   X                                                                 0
                   IC-1599      76,209                  X                                                                 0
                   IC-1601       3,425                                                                                    0
                   IC-1605     58,097                   X           X             X                                 57,575
                   IC-1607       8,717                  X                                                                 0
                   IC-1608     68,487                   X                                                                 0
                   IC-1613    281,169                   X                                                                 0
3615    10/26/99   IC-1611    365,040                   X                                                                 0
                   IC-1617         675                  X                                                                 0




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Summary of CGP Disbursement Deficiencies (Finding 4)



                                         Improper Invoice Not Expense Not    Excessive/        False
Check    Check     Invoice    Invoice      Cost     Properly    Properly    Questionable    Statement/       Amount
 No.      Date     Number     Amount     Allocation Approved   Supported      Charges      Irregularities   Unsupported

 3735   12/22/99  IC-1614       8,717                   X                                                             0
                  IC-1641       8,717                   X                                                             0
                  IC-1664     106,953                   X                                                             0
                  IC-1668       8,717                   X                                                             0
                  IC-1670     228,720                   X                                                             0
                  IC-1671     238,224                   X                                                             0
 2634   07/31/98 IC-1168      122,972                                X           X                              122,972
                  IC-1172     103,228                                X                                          103,228
                  IC-1176       1,400                                                                                 0
                  IC-1184         750                                                                                 0
                  IC-1204      96,595                                X                                           96,595
                  IC-1205      24,658                                X                                           24,658
          Total      54     4,329,866       3           16           28         13               1            1,393,338
                 Note: (a) $575 was disallowed in Finding 3.
                         (b) $326,260 – other unsupported costs




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                              Appendix F


Auditee Comments




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HUD Comments




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                                                                               Appendix H


Distribution
Acting General Deputy Assistant Secretary for Public and Indian Housing, P (Room 4100)
Director, Puerto Rico Public Housing Administration
Secretary, S
Deputy Secretary, SD (Room 10100)
Chief of Staff, S (Room 10000)
Assistant Secretary for Administration, S (Room 10110)
Acting Assistant Secretary for Congressional and Intergovernmental Relations, J (Room 10120)
Deputy Assistant Secretary, Office of Public Affairs, S, (Room 10132)
Deputy Assistant Secretary for Administrative Services, Office of the Executive Secretariat, AX
    (Room 10139)
Deputy Assistant Secretary for Intergovernmental Relations,
Acting Deputy Chief of Staff, S (Room 10226)
Deputy Chief of Staff for Policy, S (Room 10226)
Deputy Chief of Staff for Programs, S (Room 10226)
Special Counsel to the Secretary, S (Room 10234)
Senior Advisor to the Secretary, S
Special Assistant for Inter-Faith Community Outreach, S (Room 10222)
Executive Officer for Administrative Operations and Management, S (Room 10220)
General Counsel, C (Room 10214)
Assistant Secretary for Housing/Federal Housing Commissioner, H (Room 9100)
Assistant Secretary for Policy Development and Research, R (Room 8100)
Assistant Secretary for Community Planning and Development, D (Room 7100)
Assistant Deputy Secretary for Field Policy and Management, SDF (Room 7108)
Office of Government National Mortgage Association, T (Room 6100)
Assistant Secretary for Fair Housing and Equal Opportunity, E (Room 5100)
Director, Office of Departmental Equal Employment Opportunity, U
Chief Procurement Officer, N (Room 5184)
Director, Office of Departmental Operations and Coordination, I (Room 2124)
Office of the Chief Financial Officer, F (Room 2202)
Chief Information Officer, Q (Room 3152)
Acting Director, HUD Enforcement Center, V, 1250 Maryland Avenue, SW, Suite 200
Acting Director, Real Estate Assessment Center, X, 1280 Maryland Avenue, SW, Suite 800
Director, Office of Multifamily Assistance Restructuring, Y, 1280 Maryland Avenue, SW, Suite
4000
Inspector General, G (Room 8256)




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Distribution


Secretary's Representative, 4AS
State Coordinator, Puerto Rico Area Office, 4NS
Director, Office of Public Housing, 4NPH
Audit Liaison Officer, 3AFI
Audit Liaison Officer, Office of Public and Indian Housing, PF (Room P8202)
Departmental Audit Liaison Officer, FM (Room 2206)
Acquisitions Librarian, Library, AS (Room 8141)
Counsel to the IG, GC (Room 8260)
HUD OIG Webmanager-Electronic Format Via Notes Mail (Cliff Jones@hud.gov)
Public Affairs Officer, G (Room 8256)
Stanley Czerwinski, Associate Director, Resources, Community, and Economic Development
   Division, U.S. GAO, 441 G Street N.W., Room 2T23, Washington DC 20548
The Honorable Fred Thompson, Chairman, Committee on Governmental Affairs,
  United States Senate, Washington DC 20510-6250
The Honorable Joseph Lieberman, Ranking Member, Committee on Governmental Affairs,
  United States Senate, Washington DC 20510-6250
The Honorable Dan Burton, Chairman, Committee on Government Reform,
  United States House of Representatives, Washington DC 20515-6143
The Honorable Henry A. Waxman, Ranking Member, Committee on Government Reform,
  United States House of Representatives, Washington, DC 20515-4305
Ms. Cindy Fogleman, Subcommittee on Oversight and Investigations, Room 212,
  O'Neil House Office Building, Washington, DC 20515-6143
Steve Redburn, Chief, Housing Branch, Office of Management and Budget, 725 17th Street, NW,
  Room 9226, New Executive Office Bldg., Washington, DC 20503
Sharon Pinkerton, Deputy Staff Director, Counsel, Subcommittee on Criminal Justice, Drug
  Policy and Human Resources, B373 Rayburn House Office Bldg., Washington, DC 20515
Armando Falcon, Director, Office of Federal Housing Enterprise Oversight, O, 1700 G Street, NW,
  Room 4011, Washington, DC 20552




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