Telephone: (617) 565-5259 http://www.hud.gov/oig/oigindex.htm Fax: (617) 565-6878 l 1 U.S. Department of Housing and Urban Development New England Office of District Inspector General for Audit, 1AGA Thomas P. O’Neill ,Jr. Federal Building Room 370 10 Causeway Street Boston, Massachusetts 02222-1092 October 26, 2000 Audit Memorandum 01-BO-202-1801 MEMORANDUM FOR: Donna Ayala, Office of Public Housing, 1APH FROM: Stephen D. King, Acting District Inspector General, Office of Audit, 1AGA SUBJECT: Review of Complaint Waterville Housing Authority Waterville, Maine As requested by your office, we performed an audit survey of the Waterville Housing Authority’s (WHA) Operations. Our objectives were to determine the validity of a complaint identifying six issues brought by a former WHA employee, and to identify any other indicators of problems or deficiencies in WHA’s operations, particularly those conditions that may be indicators of fraud, waste and mismanagement. Our review confirmed the following conditions alleged by the complainant. However, there was no evidence that these conditions continued to exist at the time of our audit survey. • The complainant stated that WHA maintenance employees were allowed to purchase items for personal use at local businesses and charge them to WHA’s account, thereby receiving a 20 percent discount on the price. WHA employees either paid in cash at the time of purchase, or they reimbursed WHA for the purchased item(s) when the invoice was received from the vendor. Our review concluded that this practice occurred prior to February 1999, however, it has not occurred since that time. The WHA Executive Director stated that, although she permitted this practice to continue until 1999, she eliminated it after the complainant was terminated. • The complainant stated that WHA maintenance personnel plowed snow and performed other maintenance and repair work at the residence of the Executive Director (using WHA purchased material). Our review determined from statements made by the Executive Director and the Physical Plant Manager, that maintenance personnel plowed snow at the residence for many years. However, there was no documentation available (maintenance work orders) indicating that this practice occurred. We found no evidence that WHA employees performed any other maintenance work at the Executive Director’s residence. • The complainant stated that WHA staff personnel did not adequately account for money collected from coin-operated laundry machines in the housing developments. During our review, the WHA Fiscal Officer stated that some laundry machines were not producing as much income as others prior to 1999. According to the Fiscal Officer, after the complainant turned over his keys to the machine coin boxes in the fall of 1998, the income increased on the machines in question and has remained steady since that time. No records were maintained on the income levels prior to February 1999. Therefore, we were unable to verify the statement of the Fiscal Officer. We found no evidence that confirmed the existence of the following conditions cited by the complainant: • The Executive Director and Board members purchased WHA equipment and appliances at little or no cost. • WHA failed to prepare and submit required financial reports to HUD in a timely manner, and had difficulty paying its bills. Our review, however, identified the following condition that continues to exist: • WHA has not established proper inventory controls over its fixed assets, such as equipment items and appliances. Within 60 days please give us, for the recommendation in this memorandum, a status report on: (1) the corrective action taken; (2) the proposed corrective action and the date to be completed; or (3) why action is considered unnecessary. Also, please furnish us copies of any correspondence or directives issued because of this review. If you or your staff have any questions, please contact our office at (617) 565-5259. 2 Background The Waterville Housing Authority (WHA), located at 60 Elm St., Waterville, Maine, has a staff of 13 employees. The Executive Director is Ms. Terri E. Connatser. WHA has 192 Public Housing Units; 388 Section 8 certificates; 72 Section 8 vouchers; and 15 Moderate (MOD) Rehab units. In FY 1999, WHA received $ 2.9 Million in total funding; $ 991,000 for WHA Owned Housing; $ 1.4 Million for Section 8 Certificates and Vouchers; and an additional $ 544,000 for Other Programs (two properties managed by agreement with Maine State Housing Authority, Augusta, Maine). The Total Maintenance costs for WHA in FY 1999 were $ 236,589, including $ 107,285 for the Maintenance staff. The FY 1999 salary for the Maintenance Supervisor (Physical Plant Manager) of $38,174 was charged as Administrative costs. Scope and Methodology To accomplish our objectives, we interviewed cognizant HUD personnel in the Office of Public and Indian Housing. We also reviewed WHA background information on file at the HUD offices in Boston, Massachusetts and Manchester New Hampshire. At WHA, we interviewed management personnel. We evaluated controls and procedures over fixed assets, materials and supplies. We also determined whether WHA complied with pertinent requirements pertaining to contracting and procurement. We reviewed WHA bank accounts and controls over cash receipts. We reviewed the duties and procedures relating to the maintenance staff, particularly with regard to controls over timekeeping and work orders. We reviewed the Physical Inspection Reports for all WHA managed properties. Our review was conducted in August 2000, and included the operations of WHA from January 1998 to September 2000. Review Results Our review determined that, of the problem areas identified by the complainant, only one remained unresolved; the controlling and safeguarding of fixed assets. WHA’s internal controls in this area are inadequate and need to be improved. Section 309 of the Annual Contributions Contract (ACC) requires WHA to maintain complete and accurate books of account and records. Records must be kept of all personal property, including annual inventories of all equipment. Accurate inventories are necessary to safeguard against the loss, misuse, or waste of WHA equipment. 3 WHA’s Fixed Assets (Land, Structures, and Equipment) as of June 30, 1999 totaled $7.43 million, including $369,259 in equipment and appliances. WHA does not maintain inventory controls over non-expendable items such as equipment and appliances. WHA does not maintain a listing of inventory on hand nor do they perform a physical count of the items on an annual basis. Also, WHA has neither prepared nor maintained property ledger cards, and has not ensured that items of equipment and appliances have inventory control tags. Without proper controls over fixed assets, there is limited assurance that the assets have not been lost or stolen. WHA management personnel stated that the previous Physical Plant Manager had not established proper controls over fixed assets, and, that they recognized this issue was a significant deficiency in WHA’s operations.. The lack of annual inventories, tagging all items of equipment, and maintaining complete and accurate property records, prevents WHA from properly safeguarding assets and from ensuring that the amounts recorded on the books and the financial statements are accurate. Recommendation We recommend that you: 1. Require WHA to establish and implement inventory control procedures for all WHA fixed assets, including equipment and appliances. 4 Attachment A Distribution Secretary, S., Room 1000 (1) Deputy Secretary, SD, Room 10100 (1) Chief of Staff, S., Room 10000 (1) Office of Administration, S, Room 10110 (1) Acting Assistant Secretary for Congressional and Intergovernmental Relations. J, Room 10120 (1) Deputy Assistant Secretary for Public Affairs, W., Room 10222 (1) Deputy Assistant Secretary for Administrative Services, Office of the Executive Secretariat, S, Room 10220 (1) Deputy Chief of Staff, S, Room 10226 (1) Deputy Chief of Staff for Policy, S, Room 10226 (1) Deputy Chief of Staff for Programs, S, Room 10026 (1) Special Counsel to the Secretary, S, Room 10234 (1) Senior Advisor to the Secretary, S, Room 10222 (1). Special Assistant for Inter-Faith Community Outreach, S, Room 10222 (1) Executive Office for Administrative Operations and Management, S, Room 10220 (1) General Counsel, C., Room 10214 (1) Assistant Secretary for Housing/Federal Housing Commissioner, H, Room 9100 (1) Assistant Secretary for Policy Development and Research, R, Room 8100 (1) Assistant Secretary for Community Planning and Development, D, Room 7100 (1) Assistant Deputy Secretary for Field Policy and Management, SDF, Room 7108 (2) Office of Government National Mortgage Association, T, Room 6100 (1) Director, Office of Departmental Equal Employment Opportunity, Room 10126 (1) Chief Procurement Officer, N, Room 5184 (1) Assistant Secretary for Public and Indian Housing, P, Room 4100 (1) Director, Office of Departmental Operations and Coordination, I, Room 2124 (1) Office of the Chief Financial Officer, F, Room 2202 (1) Chief Information Officer, Q, Room 3152 (1) Director, Enforcement Center, V, 200 Portals Building (1) Director, Real Estate Assessment Center, X, 1280 Maryland Avenue, SW, Suite 800 (1) Director, Office of Multifamily Assistance Restructuring, Y, 4000 Portals Building (1) Director, Office of Budget, FO, Room 3270 (1) Inspector General, G, Room 8256 (1) Deputy Inspector General, G, Room 8256 (1) Assistant Inspector General for Audit, GA, Room 8286 (1) Deputy Assistant Inspector General for Audit, GA, Room 8286 (1) Assistant Inspector General for Investigation, GI, Room 8272 (1) Director, Program Research and Planning Division, GAP, Room 8180 (1) 5 Attachment A Director, Financial Audits Division, GAF, Room 8286 (1) Director, Information Systems Audit Division, GAA, Room 8172 (1) Counsel to the Inspector General, GC, Room 8260 (1) Central Records, GF, Room 8256 (4) Semi-Annual Report Coordinator, GF, Room 8254 (1) Office of Inspector General Webmaster - Electronic format Public Affairs Officer, G, Room 8256 (1) Acquisitions Librarian, Library, AS, Room 8141 (1) District Inspector General (Districts 2 - 11) Secretary’s Representative, 1AS (2) Appropriate Special Agent-In-Charge, 1AGI (1) Primary Field Audit Liaison Officer, 3AFI (2) (Cianci) Headquarters Audit Liaison Officer, Management Analysts, PF (2) Departmental Audit Liaison Officer, FM, Room 2206 (2) Auditee (2) Armando Falcon, Director, Office of Federal Housing Enterprise Oversight,1700G Street, W, Room 4011, Washington, DC (1) Deputy Staff Director, Counsel, Subcommittee on Criminal Justice, Drug Policy & Human Resources, B373 Rayburn House Office Building, Washington, DC 20515 (1) The Honorable Fred Thompson, Chairman, Committee on Governmental Affairs, 340 Dirksen Senate Office Building, United States Senate,Washington, DC 20510 (1) The Honorable Joseph Lieberman, Ranking Member, Committee on Governmental Affairs, 706 Hart Senate Office Bldg., United States Senate, Washington, DC 20510 (1) The Honorable Dan Burton, Chairman, Committee on Government Reform, 2185 Rayburn Bldg., House of Representatives, Washington, DC 20515 (1) The Honorable Henry A. Waxman, Ranking Member, Committee on Government Reform, 2204 Rayburn Bldg., House of Representatives, Washington, DC 20515 (1) Ms. Cindy Fogleman, Subcommittee on Oversight and Investigations, Room 212, O’Neill House Office Building, Washington, DC 20515 (1) Steve Redburn, Chief, Housing Branch Office of Management & Budget, 725 17th Street, NW, Room 9226, New England Executive Office Building, Washington, DC 20503 (1) Stanley Czerwinski, Associate Director, Resources, Community, and Economic Development Division, United States General Accounting Office, 441 G Street, NW, Room 2T23, Washington, DC 20548 (1) 6
Review of Complaint, Waterville Housing Authority, Waterville, Maine
Published by the Department of Housing and Urban Development, Office of Inspector General on 2000-10-26.
Below is a raw (and likely hideous) rendition of the original report. (PDF)