AUDIT REPORT
WEYMOUTH HOUSING AUTHORITY
WEYMOUTH, MASSACHUSETTS
2001-BO-1004
APRIL 2, 2001
OFFICE OF AUDIT, NEW ENGLAND
BOSTON, MASSACHUSETTS
Issue Date
April 2, 2001
Audit Case Number
2001-BO-1004
TO: Donna J. Ayala, Director, Office of Public Housing,
Massachusetts State Office, 1APH
FROM: William D. Hartnett, District Inspector General, Office of Audit, 1AGA
SUBJECT: Weymouth Housing Authority
Weymouth, Massachusetts
We performed an audit of the Weymouth Housing Authority (WHA) Low-Income Public Housing and
Section 8 programs. The objective of our review was to determine if the Authority has been operating
its programs in an efficient and effective manner.
The report contains three findings.
Within 60 days please give us, for each recommendation in this report, 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 the audit.
If you have any questions, please contact our office at (617) 565-5259.
Management Memorandum
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2001-BO-1004 Page ii
Executive Summary
We performed an audit of the Low-Income Public Housing and Section 8 Programs operated by the
Weymouth Housing Authority (WHA). Our objectives were to determine if the WHA was operating its
program in an efficient, effective and economical manner; and was complying with the terms and
conditions of its Annual Contributions Contract, applicable laws, and HUD regulations.
The WHA has not developed an equitable method of allocating
Audit Results costs between Federal and State programs. In addition, the
WHA allocated costs to a vacant Federal project in 1999. The
inequitable allocation of costs resulted in the Federal programs
being overcharged by approximately $78,000.
The WHA needs to improve its administration of the Section 8
Program by strengthening the procedures used for determining
rent reasonableness; documenting the third party verification
process; and conducting annual reexaminations in a timely
manner. Two of the conditions (determining rent
reasonableness and documenting the third party verification
process) had been previously reported as findings in a 1999
Field Office review. Due to the weaknesses in the WHA’s
administration of the Section 8 Program there is limited
assurances that the contract rents for the units are reasonable
and that HUD and the tenants are paying the proper share of
the rent.
The WHA inappropriately paid a former executive director
$3,382 for unused vacation and sick leave contrary to
personnel policies. The payment to the former executive
director included $1,804 for vacation pay that had not been
earned when he resigned and $1,578 in excess of the maximum
$1,000 the WHA allows for sick leave. The WHA allocated
$1,796 out of the $3,382 to Federal programs.
Page iii 2001-BO-1004
Executive Summary
We are recommending that the WHA: establish and implement
Recommendations an equitable cost allocation plan and reimburse the Federal
Programs for any amounts determined to be improperly
allocated; provide evidence that they are determining rent
reasonableness, performing third party verifications and
conducting annual recertifications; and reimburse the Federal
programs $1,796 which were charged with ineligible vacation
and sick leave payments made to the former executive director.
Findings and The findings were discussed with the WHA officials during the
Recommendations course of the audit. On February 8, 2001, we provided the
Discussed WHA a copy of the draft report for comment. We received the
WHA’s response on March 19, 2001.
We have included pertinent comments from the WHA’s
response in the findings section of the report. The WHA’s full
response is included as Appendix E.
2001-BO-1004 Page iv
Table of Contents
Management Memorandum i
Executive Summary iii
Introduction 1
Findings
1. WHA Needs to Develop An Equitable Method Allocating Costs 3
2. Section 8 Program Administration Needs Improvement 11
3. Ineligible Payments For Vacation and Sick Leave to Former
Executive Director 17
Management Controls 19
Appendices
A Schedule of Ineligible and Unsupported Costs 21
B Allocation of Salaries - 1998 23
C Allocation of Salaries - 1999 25
D Allocation of Salaries - 2000 27
E Auditee Comments 29
F Distribution 33
Page v 2001-BO-1004
Table of Contents
Abbreviations
ACC Annual Contributions Contract
CFR Code of Federal Regulations
HQS Housing Quality Standards
HUD Department of Housing and Urban Development
IPA Independent Public Accountant
LHA Local Housing Authority
MA Massachusetts
MRVP Massachusetts Rental Voucher Program
MSO Massachusetts State Office
OMB Office of Management and Budget
PHA Public Housing Authority
WHA Weymouth Housing Authority
2001-BO-1004 Page vi
Introduction
A five-member Board of Commissioners, chaired by Ernest Remondini, governs the Weymouth
Housing Authority (WHA). The Executive Director, Roland Moussally, is responsible for the
administration and WHA operations. The WHA office is located at 402 Essex Street, Weymouth, MA
02188.
The WHA is administering 159 units under the Section 8 Program and one project containing 40 Low
Income Public Housing units. A second project is currently undergoing partial demolition and
rehabilitation. The WHA is also administering 3 state projects containing 216 units and 111 units under
the State’s rental voucher program.
The purpose of our audit was to determine whether the WHA is
Audit Objectives operating in an efficient and effective manner. The specific
objectives were to determine whether:
1. WHA’s procedures established to administer the Section 8
Programs and Low Income Public Housing were adequate;
2. WHA’s tenant eligibility and subsidies were in compliance
with HUD’s directives; and
3. Complying with the terms and conditions of its Annual
Contributions Contract (ACC), applicable laws, HUD
regulations, and other applicable directives.
Audit Scope and To accomplish the audit objectives we:
Methodology
Ø Reviewed Federal requirements including the Code of
Federal Regulations, HUD Handbooks, Public and Indian
Housing Notices and Directives, OMB Circular, and the
WHA’s organizational and administrative structure,
administrative plans and personnel policies, and recorded
minutes of the Board of Commissioners meetings.
Ø Reviewed Independent Public Accountant (IPA) audit
reports, as well as monitoring reviews conducted by the
HUD Field Office.
Ø Examined the WHA’s accounting books and records.
Page 1 2001-BO-1004
Introduction
Ø Examined the WHA’s procedures and supporting
documentation for procurement.
Ø Reviewed the WHA’s rent reasonableness testing
procedures to determine if rents were reasonable and in
accordance with regulations.
Ø Examined tenant files to verify that tenants qualified as a
family; that tenants’ income was within income guidelines;
that Housing Assistance Payments (HAP) contracts were
calculated correctly; and to determine that recertifications
were performed on an annual basis.
Ø Interviewed staff at WHA concerning HUD policies and
procedures on Housing Quality Standards (HQS)
Inspections; rent reasonableness requirements, and third
party verification process.
Ø Examined Low Income Housing transfer list, waiting list,
and tenants account receivable.
Ø Conducted physical inspection on 10 units to ensure
compliance with HQS.
Ø Reviewed the Office of Public and Indian Housings files
maintained by the Massachusetts State Office (MSO)
pertaining to the WHA.
The audit was conducted between September 2000 and
November 2000, and covered the period January 1, 1999
through August 31, 2000. When appropriate the review was
extended to include other periods.
Our audit was conducted in accordance with generally
accepted government auditing standards.
2001-BO-1004 Page 2
Finding 1
WHA Needs To Develop An
Equitable Method Of Allocating Costs
The Weymouth Housing Authority (WHA) has not developed an equitable method of allocating costs
between its Federal and Massachusetts State Programs. The WHA’s method of allocation shifts costs
that are not fully funded by the State for its Programs to the Federal Programs. In addition, the WHA
allocated costs to a vacant Federal Project in 1999. As a result, the Federal Programs were charged in
excess of its fair share of the costs for payroll, payroll related, and some administrative costs.
24 CFR Part 85.22(b) requires State, local and Indian tribal
Equitable Allocation governments to follow the Office of Management and Budget
Method Required (OMB) Circular A-87, “Cost Principles for State, Local and
Indian Tribal Governments.” According to 24 CFR 85.3, a
local government includes any public housing agency.
OMB Circular A-87 establishes principles for determining the
allowable costs incurred by State and local governments. “The
principles are designed to provide that Federal awards bear
their fair share of cost recognized under these principles except
where restricted or prohibited by law.” (Attachment A,
paragraph A.1.)
Attachment A, paragraph C. “Basic Guidelines” of OMB
Circular A-87 provides in part:
Ø A cost is allocable to a particular cost objective if the goods
or services are chargeable or assignable to such cost
objective in accordance with relative benefits received.
Ø All activities that benefit from the governmental unit’s
indirect cost will receive an appropriate allocation of
indirect costs.
Attachment A, paragraph F. “Indirect Costs” of OMB Circular
A-87 provides in part:
Ø Indirect costs are those: (a) incurred for a common or joint
purpose benefiting more than one cost objective, and (b)
not readily assignable to the cost objectives specifically
Page 3 2001-BO-1004
Finding 1
benefited, without effort disproportionate to the results
achieved. To facilitate equitable distribution of indirect
expenses to the cost objectives served, it may be necessary
to establish a number of pools of indirect costs. Indirect
cost pools should be distributed to benefited cost objectives
on bases that will produce an equitable result in
consideration of relative benefits derived.
The WHA operates four programs: Federal Public Housing
Allocations Weighted More Program; State Public Housing Program; Federal Leased
Toward Federal Programs Housing Program (Section 8 Certificate and Vouchers); and
State Leased Housing Program (Massachusetts Rental Voucher
Program-MRVP).
The WHA inappropriately increased the allocations to the
Federal programs in three ways:
1. The State of Massachusetts established a maximum salary
amount that would be paid for certain positions. For
employees earning above the amount allowed by the State
the difference was charged to the Federal programs.
2. The State reduced the reimbursement for their MRVP
Program from $45 per unit per month to $25 per unit per
month. To absorb the reduction in funding from the State,
the WHA did not allocate all appropriate staff to the State’s
MRVP Program, increasing the costs allocated to the
Federal programs.
3. In 1999, the WHA allocated costs of five of its employees
on a unit basis. Included in the unit allocation for 1999
were 70 units from Cadman Towers even though that
project had been vacant since May 1998.
2001-BO-1004 Page 4
Finding 1
Maximum Salaries Allowed There were four WHA employees who were paid substantially
by the State more than the maximum allowed by the State. The maximum
salaries allowed by the State and the salaries actually paid for
the four employees in 1999 were:
Allowed By State Actual
Position Salary Difference *
Executive Director $44,224 $52,000 $7,776
Asst. Exec. Dir. $31,194 $37,539 $6,345
Receptionist – 1 $11,140 $14,777 $3,637
Receptionist – 2 $12,176 $20,683 $8,507
* Fully funded by the Federal Programs
The WHA’s Fee Accountant advised that to compensate for
the cap placed on salaries 3 separate allocations were
performed. The result of these allocations was to allocate
amounts to the State Programs based on the maximum salaries
allowed and to allocate the amount in excess to the Federal
Programs. This results in excessive amounts being charged to
the Federal Programs.
As noted above, OMB Circular A-87, Attachment A,
paragraph C.3.a. provides that, “A cost is allocable to a
particular cost objective if the goods or services involved are
chargeable or assignable to such cost objective in accordance
with relative benefits received.” Since the Federal Programs
did not receive any benefit from the additional salaries charged,
the additional salaries should not have been allocated to the
Federal Programs.
WHA’s Fee Accountant advised that the State reduced the
All Staff Not Allocated to reimbursement for the MRVP Program from $45 per unit per
State’s MRVP Program month to $25 per unit per month. In order to absorb this
reduction in funding the WHA had to reduce the allocation to
the MRVP Program and increase the allocation to the Federal
Programs. For the 3-year period 1998 to 2000, the salaries of
the Assistant Executive Director and one of the Receptionists
were not allocated to the MRVP Program. In addition, the
salary of the Staff Accountant was allocated on a much lower
amount than would be allocated on a unit basis for 1998 and
1999. In 2000, none of the Staff Accountants’ salary was
allocated to the MRVP Program.
Page 5 2001-BO-1004
Finding 1
As noted above, OMB Circular A-87, Attachment A,
paragraph C.3.b. provides that, “All activities which benefit
from the governmental unit’s indirect cost …will receive an
appropriate allocation of indirect costs.” The Federal Programs
should not be subsidizing the State Programs that are not
properly funded.
Cadman Towers, a 70-unit Federal Low Income Project, has
Cost Allocated to Cadman been vacant since May of 1998 pending partial demolition and
Towers in FY 99 rehabilitation. The Fee Accountant advised that they deducted
the units from the WHA’s allocation schedules for Fiscal Year
2000 because the project was vacant for such a long period.
The Fee Accountant agreed that the allocations could have
been reduced earlier by subtracting Cadman’s units from the
total units administered by the WHA.
During 1999, the WHA allocated the salaries of 5 employees to
Cadman Towers. OMB Circular A-87 provides that, “A cost
is allocable to a particular cost objective if the goods or services
are chargeable or assignable to such cost objective in
accordance with relative benefits received.” Since Cadman
Towers was vacant since May of 1998, we believe that very
little benefit was provided for Cadman Towers and therefore,
costs should not have been allocated to the project.
WHA’s allocation method for salaries for the 3-year period
Effect on Federal Program 1998 to 2000 inappropriately increased the allocation of costs
to the Federal Programs by approximately $78,000 not
including payroll related and other miscellaneous administrative
costs. See Appendices A, B, and C for details by year.
The WHA’s Fee Accountant advised us that the payroll related
costs, such as, retirement, payroll taxes, health, and
workmen’s’ compensation were allocated based on the same
allocation basis as were the staffs salaries. Therefore, to the
extent (percentage) that the Federal Programs were
overcharged for salaries, they would also be overcharged for
payroll related costs.
In addition, the WHA’s Fee Accountant also advised that
depending on the availability of funds from the MRVP Program
that some miscellaneous administrative costs would not be
2001-BO-1004 Page 6
Finding 1
allocated to that program even if they shared the benefit (items
such as office supplies).
Auditee Comments The WHA addressed their comments to the three ways
cited in the finding that they inappropriately increased
allocations to the Federal programs.
1. The State established a maximum salary for certain
positions. The WHA charged the difference to the
Federal programs.
The WHA generally agreed that the Federal programs
were charged the difference between the salaries
allowed by the State and the actual salary. However,
the WHA argued that this is a common practice
throughout the State and, therefore, the WHA cannot
be charged for improper allocations.
The WHA also stated that,
OMB Circular No. A-87 states “that each
governmental unit, in recognition of its own unique
combination of staff, facilities, and experience, will
have the primary responsibility for employing
whatever form of organization and management
techniques that may be necessary to assure proper
and efficient administration of Federal awards.”
2. The State reduced the reimbursement for their MRVP
Program from $45 per unit per month to $25 per unit
per month. The WHA increased the cost allocated to
the Federal programs to absorb the reduced State
funding.
The WHA agreed that additional costs were allocated
to the Federal programs to cover costs of the MRVP
Program. The WHA also noted that it is less costly to
administer the MRVP Program than it is to administer
HUD’s Section 8 Program, since the State has less
requirements. The WHA further stated that all housing
authorities in the State are having similar problems and
have had to make similar allocation decisions.
Page 7 2001-BO-1004
Finding 1
3. The WHA allocated costs of five of its employees on a
unit basis. Included in the allocations for 1999 were 70
units for Cadman Towers, which had been vacant since
May 1998.
The WHA disagreed with our conclusion that very little
benefit was provided for Cadman Towers considering it
was vacant since May 1998. The WHA stated that the
Executive Director spent numerous hours contacting
various officials, funding agencies, banks, community
builders; and HUD attempting to raise funds for
Cadman Towers. The WHA indicated that the
Assistant Executive Director and the receptionists made
calls and typed letters and reports to forward to various
agencies. The WHA also stated that, “The time
allocated to this project was inordinate; however,
the benefit to our constituency was restoring the
building to its useful purpose.”
OIG Evaluation of 1. We disagree with the WHA’s argument that, since it is
Auditee Comments a common practice by Housing Authorities to charge
Federal programs the difference in the actual salaries
paid, it is allowable. OMB Circular A-87 cannot be
interpreted to allow costs not allowed by the State to
be allocated only to the Federal programs. The
principles of OMB Circular A-87 were designed to
provide that Federal awards bear their fair share of
costs, not their fair share plus the fair share of costs
properly allocable to other programs.
2. Arbitrarily increasing the allocation to Federal programs
for shortfalls in other programs is not allowable under
OMB circular A-87.
3. While we agree staff time (particularly the Executive
Director) was expended on this project, we do not
believe that the unit basis is the proper method of
allocating costs, since the project was vacant for all of
1999. The WHA needs to develop an alternate
allocation method for 1999.
2001-BO-1004 Page 8
Finding 1
Recommendations We recommend that you require the Weymouth Housing
Authority to:
1A. Establish and implement an equitable cost allocation
plan.
1B. Reimburse the Federal Programs for any amounts
determined to be improperly allocated based on the
equitable cost allocation plan.
Page 9 2001-BO-1004
Finding 1
2001-BO-1004 Page 10
Finding 2
Section 8 Program
Administration Needs Improvement
The Weymouth Housing Authority (WHA) needs to improve its procedures in: 1) determining rent
reasonableness; 2) documenting third party verification of family income; and 3) conducting timely
annual recertifications. Conditions 1 and 2 were cited in a Field Office review conducted in May of
1999, but have not been corrected. The Executive Director was not aware that the corrective actions
for the previous findings were not being followed. He was aware that recertifications were not being
performed timely, however, there were no corrective actions taking place at the time of our review. As
a result, HUD has limited assurance that the contract rents for the units are reasonable and that HUD
and the tenants are paying their proper share of the rent.
Rent Reasonableness
Federal Regulations state that Public Housing Authority’s
Knowledge of Current (PHA) may not give approval for the family of the assisted
Rental Market Required tenancy, or execute a HAP contract, until the PHA has
determined the rent to owner is reasonable (24 CFR 982.305).
The PHA must take into consideration the location, type,
quality, amenities, facilities, and maintenance service of the unit
(24 CFR 982.503).
Furthermore, HUD requires that the PHA must have an overall
current knowledge of the rental market within its jurisdiction
and data on the rents being charged for specific units. The
PHA will have to conduct either telephone surveys, site visits,
or more extensive market surveys of available rental units. The
PHA will also have to determine the rents to unassisted units in
the same building or other comparable units owned by the
Section 8 Owner in order to certify that the contract rents are
reasonable (HUD Handbook 7420.7, Chapter 6-5 (b)
&(d)(1).
Page 11 2001-BO-1004
Finding 2
The Massachusetts State Office (MSO) of Public Housing
Rent Reasonableness Not conducted a review in March of 1999. The first finding
Documented contained in the report indicated, “The WHA does not
consistently apply rent reasonableness determinations. This
office found that the WHA utilizes a form, completed by
landlords, indicating that the rent for the proposed unit is
reasonable in relation to rents currently being charged by owner
for comparable unassisted units.” The Field Office
recommended, “In order to assess rent reasonableness, the HA
must conduct market surveys of available rental units and collect
data on ten (10) informational factors: (1) location, (2) size, (3)
type, (4) quality, (5) handicap accessibility, (6) amenities, (7)
facilities, (8) management and maintenance services, (9) data
available for occupancy, after construction or rehabilitation, and
(10) gross rent. …Once the requirements in the above
paragraph have been met, there are three (3) things that the
WHA must ensure for compliance with rent reasonableness:
First, that there is always documentation regarding a rent
reasonableness determination in every participant’s file both at
initial lease up as well as each annual recertification…”
In May of 1999, WHA responded to the Field Office review
stating, “The Weymouth Housing Authority is in the process of
conducting a market survey of available rental units and is
collecting data on the 10 informational factors. A copy of that
letter forwarded to local landlords is included for your review.
Once the data is collected the WHA certifies that it will ensure
compliance with rent reasonableness; the WHA certifies that: 1)
every participant file will have a rent reasonableness
determination in it…”
Our review of the ten Section 8 tenant files disclosed that seven
of them did not have the rent reasonableness determinations in
them. The other files did not require the rent reasonableness
procedures, because rent increases were not requested.
The Assistant Executive Director advised that the WHA tried to
obtain information on the current rents from Section 8 owners
and from other unassisted property owners. However, this
attempt was unsuccessful. The Assistant Executive Director
and the Leased Housing Coordinator advised that they believed
that they had a sound knowledge of the surrounding area and
could determine the reasonableness of proposed rents. The
2001-BO 1004 Page 12
Finding 2
Executive Director stated that the staff should be following the
procedures as stated in their response to the MSO review. The
Executive Director advised that he was under the impression
that his staff was following those procedures.
Third Party Verification
Federal Regulations require that PHA’s must obtain a third
Knowledge of Third Party
party verification of family income or must document in the
Verification Procedures
tenant files why third party verification was not available (24
Required
CFR 982.516).
The Field Office conducted a review in March of 1999. The
report cited a finding of the third party verification process. The
Third Party Verification Not
report indicated, “Some files did not have current third party
Documented
verification. In one case, the reviewer found that the participant
verified their own income.” The Field Office recommended,
“The WHA shall be more diligent in requiring third party
verification of familial status and income. It is of utmost
importance that the WHA obtain complete verification from all
applicants/participants and thoroughly document the methods
by which it has verified all pertinent information in the
applicant’s/participant’s files. Inaccurate information and
inadequate verification may result in incorrect levels of housing
assistance on behalf of the participant. The WHA must assure
this Office in writing that procedures have been implemented to
obtain and document third party verification in all tenants’ files.”
In May of 1999, WHA responded to the Field Office review
stating, “The WHA certifies that whenever possible current third
party verification will be in all participating files and that it will
thoroughly document the method by which it has verified all
pertinent information in the file.” A memo was forwarded to the
Assistant Director and Leasing Coordinator detailing the action
that will be taken to insure compliance.
Our review of ten (10) Section 8 tenant files disclosed that third
party verification had not been obtained for five tenants and the
tenant files did not document why third party verifications were
not obtained.
The Leased Housing Coordinator advised that the verification
of income requests are forwarded to employers. The Leased
Page 13 2001-BO-1004
Finding 2
Housing Coordinator stated that several of the verification
requests were not returned. She also stated that some tenants
do not want their employers to know they receive housing
assistance. In these cases, the Leased Housing Coordinator
used tenants pay stubs to verify family income. As noted, our
review disclosed that there was no documentation in the tenant
file to show why third party verification was not obtained. The
Executive Director advised that he was unaware that
procedures documented in the corrective action were not being
followed.
Annual Recertifications
Federal Regulations require that PHAs perform reexamination
Annual Recertification of family income and composition at least annually (24 CFR
Requirements 982.516)
Our review of the ten Section 8 tenant files revealed that seven
Annual Recertification Not of the tenant’s annual reexamination were not performed timely.
Performed Timely The recertifications were from one to over twelve months
overdue. The results are as follows:
Number of
Months Overdue Tenants Status of Recertifications
1 – 2 months 3 1 completed – 2 still in process
3 – 6 months 1 1 comp leted
6 – 12 months 1 1 completed
Over 12 months 2 1 completed – 1 still in process
The Leased Housing Coordinator stated that the two main
reasons for the untimely recertifications were: (1) the workload
of the Section 8 Program which included transferring tenants
from the certificate and voucher programs into the Housing
Choice Program; and (2) some recertification dates were
entered into the computer incorrectly and therefore the
computer could not identify those as being scheduled for
recertification. The Executive Director advised that he was
aware that recertifications were not timely and was in the
process of working with the Leased Housing staff to correct it.
2001-BO 1004 Page 14
Finding 2
The WHA recognized that it needed to improve its procedures
Auditee Comments
in: 1) determining rent reasonableness; 2) documenting third
party verification of family income; and 3) conducting timely
recertifications. The WHA stated that they would provide an
Action Plan that will insure all procedures are followed.
OIG Evaluation of HUD should review the Action Plan to assure that it adequately
Auditee Comments addresses all of the recommendations.
Recommendations We recommend that you require the Weymouth Housing
Authority to:
2A. Provide evidence that a current market survey of
private unassisted units in the area, including those
owned by Section 8 owners has been performed and is
adequate.
2B. Provide evidence that the third party verification
process is being properly obtained and documented in
all tenants’ files.
2C. Provide evidence that annual recertifications are being
performed timely.
Page 15 2001-BO-1004
Finding 2
2001-BO 1004 Page 16
Finding 3
Ineligible Payments For Vacation and
Sick Leave to Former Executive Director
Contrary to its own personnel policies the WHA paid $3,382 of excess vacation and unused sick leave
to a former executive director. As a result, those funds were not available for necessary and
appropriate housing expenditures.
The WHA’s Personnel Policy prescribes various personnel
WHA’s Personnel Policy procedures. The former executive director’s December 3,
Identifies Benefits Allowed 1996 employment contract stated that he should be entitled to
all benefits and conditions outlined in the personnel policies.
The WHA’s Personnel Policy states that an employee shall be
paid an amount equal to the vacation allowance earned in the
vacation year during which termination occurs.
The Board of Commissioners accepted the former executive
Vacation Pay director’s resignation with an effective date of January 13,
1999. Effective January 1, 1999 the WHA accrued 70 hours
of vacation pay on the executive director’s leave records. The
70 hours represented the total hours the executive director
would earn for 1999. Upon his resignation, the WHA paid the
executive director for a total of 105 hours, which included 35
hours carried over from 1998 and the entire 70 hours accrued
for 1999. However, since the executive director resigned
effective January 13, 1999, he only earned 3 hours of annual
leave for 1999 and therefore should have only been paid for 38
hours. The overpayment was calculated as follows:
Amount paid for vacation pay (105 hrs. @ $26.92) $2,827
Less Proper Payment for Vacation Pay (38 hrs. @ $26.92) $1,023
Overpayment $1,804
The WHA’s Personnel Policy provides that upon resignation
Sick Leave Pay the employee may receive cash reimbursement for 20 percent
of their accrued sick leave to a maximum of $1,000. The
former executive director had a balance of 191.56 hours and
was paid for 50 percent or the accrued hours or 95.78 hours.
The overpayment is calculated as follows:
Page 17 2001-BO-1004
Finding 3
Amount paid for unused Sick Leave (95.78 @ $26.92) $2,578
Less Proper Payment for unused Sick Leave (CAP @ 1,000) $1,000
Overpayment $1,578
The overpayment of $3,382 was allocated to all of the
Amount Allocated to Federal programs administered by the WHA. The WHA allocated
Programs $1,796 to the Federal programs and $1,586 to the State
programs. Details of the allocation by program are as follows:
Section 8
Programs Federal Owned Certification Section 8 Voucher State Owned State Leased
Percentage 21.9% 22.0% 9.2% 29.8% 17.1%
Amount $740.66 $744.04 $311.14 $1,007.84 $578.32
The WHA Staff Accountant advised that she was instructed by
the former executive director as to the hours he should be
reimbursed for annual and sick leave at his termination. There
was no other party at the WHA who approved the payment
other than the former executive director.
Auditee Comments The WHA advised that prior Executive Director believes that
he was entitled to the termination payment and asked how the
WHA should proceed.
OIG Evaluation of The WHA should be addressing the allowability of the
termination payment not the former Executive Director who
Auditee Comments
received the payments. Our recommendation remains for the
WHA to reimburse the Federal programs $1,796 from non-
federal funds.
Recommendations We recommend that you require Weymouth Housing Authority
to:
3A. Reimburse the federal programs $1,796 from non-
federal funds.
2001-BO 1004 Page 18
Management Controls
In planning and performing our audit, we considered the management controls used by the Weymouth
Housing Authority (WHA) that were relevant to our audit objectives. We considered the WHA’s
management control systems to determine our auditing procedures and not to provide assurance on
management controls.
Management Controls consist of a plan of organization and methods and procedures adopted by
management to ensure that resource use is consistent with laws, regulations, and policies; that resources
are safeguarded against waste, loss and misuse; and that reliable data is obtained maintained, and fairly
disclosed in reports.
We determined the following management controls were
Relevant Management relevant to our audit objectives:
Controls
Ø Financial Controls Over Program Funds
Ø Management Controls Over Program Expenditures
Ø Management Controls Over Procurement and Contract
Administration
Ø Management Controls Over the Leasing of Units
Ø Management Controls Over the Cost Allocation System
A significant weakness exists if management controls do not
Assessment Results 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 is
obtained, maintained, and fairly disclosed in the financial
statements and reports.
Our review identified significant weaknesses in the management
Significant Weaknesses controls over the cost allocation system and the management
controls over the leasing of units under the Section 8 Program.
These weaknesses are described in the Findings and
Recommendations section of this report.
Page 19 2001-BO-1004
Management Controls
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2001-BO-1004 Page 20
Appendix A
Schedule of Ineligible and Unsupported Costs
FINDING INELIGIBLE 1/ UNSUPPORTED 2/
1. Inequitable Allocation of Costs $77,638
3. Ineligible Vacation and Sick Leave Pay $1,796
1/ Ineligible amounts obviously violate law, contract, HUD or local agency policies, or regulations,
such as buying unneeded services or not depositing receipts..
2/ Unsupported amounts do not obviously violate law, contract policy, or regulation, but warrant
being contested for various reasons, such as lack of satisfactory documentation to support
eligibility and HUD approval.
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Appendix A
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2001-BO 1004 Page 22
Appendix B
Allocation of Salaries - 1998
PHA
Owned PHA Owned Leased Leased
Position Salary State Federal State Federal Total
Units 216 111 124 159 610
Exec. Director $50,472
WHA Allocation $15,053 $11,005 $8,632 $15,782 $50,472
Unit Allocation $17,872 $9,184 $10,260 $13,156 $50,472
Difference ($2,819) $1,821 ($1,628) $2,626 $0
Assitant Executive $36,053
Director.
WHA Allocation $12,148 $10,164 $0 $13,741 $36,053
Unit Allocation $12,766 $6,561 $7,329 $9,397 $36,053
Difference ($618) $3,603 ($7,329) $4,344 $0
Staff Accountant $27,321
WHA Allocation $9,481 $9,465 $1,152 $7,223 $27,321
Unit Allocation $9,674 $4,972 $5,554 $7,121 $27,321
Difference ($193) $4,493 ($4,402) $102 $0
Receptionist-1 $14,205
WHA Allocation $3,792 $6,206 $0 $4,207 $14,205
Unit Allocation $5,030 $2,585 $2,887 $3,703 $14,205
Difference ($1,238) $3,621 ($2,887) $504 $0
Receptionist-2 $11,368
WHA Allocation $0 $4,123 $1,337 $5,908 $11,368
Unit Allocation $4,025 $2,069 $2,311 $2,963 $11,368
Difference ($4,025) $2,054 ($974) $2,945 $0
Total Difference ($8,893) $15,592 ($17,220) $10,521 $0
Page 23 2001-BO-1004
Appendix B
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2001-BO-1004 Page 24
Appendix C
Allocation of Salaries - 1999
PHA PHA Owned
Owned Federal Leased Leased
Position Salary State State Federal Total
Units 216 41 124 159 540
Exec. Dir. $52,000
WHA Allocation $15,655 $11,244 $8,977 $16,124 $52,000
Unit Allocation $20,800 $3,948 $11,941 $15,311 $52,000
Difference ($5,145) $7,296 ($2,964) $813 $0
Assistant Executive
Director. $37,539
WHA Allocation $12,509 $10,822 $0 $14,208 $37,539
Unit Allocation $15,016 $2,850 $8,620 $11,053 $37,539
Difference ($2,507) $7,972 ($8,620) $3,155 $0
Staff Accountant. $28,410
WHA Allocation $9,860 $9,841 $1,198 $7,511 $28,410
Unit Allocation $11,364 $2,157 $6,524 $8,365 $28,410
Difference ($1,504) $7,684 ($5,326) ($854) $0
Receptionist-1 $14,777
WHA Allocation $3,944 $6,456 0 $4,377 $14,777
Unit Allocation $5,911 $1,122 $3,393 $4,351 $14,777
Difference ($1,967) $5,334 ($3,393) $26 $0
Receptionist-2 $20,683
WHA Allocation $4,310 $5,713 $2,472 $8,188 $20,683
Unit Allocation $8,273 $1,571 $4,749 $6,090 $20,683
Difference ($3,963) $4,142 ($2,277) $2,098 $0
Total Difference ($15,086) $32,428 ($22,580) $5,238 $0
Page 25 2001-BO-1004
Appendix C
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2001-BO-1004 Page 26
Appendix D
Allocation of Salaries - 2000
PHA
Owned PHA Owned Leased
Position Salary State Federal Leased State Federal Total
Units 216 41 111 159 527
Executive Director $52,000
WHA Allocation $18,857 $4,820 $9,659 $18,664 $52,000
Unit Allocation $21,313 $4,045 $10,953 $15,689 $52,000
Difference ($2,456) $775 ($1,294) $2,975 $0
Assistant Executive
Director. $37,494
WHA Allocation $13,009 $10,587 $0 $13,898 $37,494
Unit Allocation $15,368 $2,917 $7,897 $11,312 $37,494
Difference ($2,359) $7,670 ($7,897) $2,586 $0
Staff Accountant $28,429
WHA Allocation $17,960 $2,149 $0 $8,320 $28,429
Unit Allocation $11,652 $2,212 $5,988 $8,577 $28,429
Difference $6,308 ($63) ($5,988) ($257) $0
Receptionist-1 $14,786
WHA Allocation $8,921 $1,989 $0 $3,876 $14,786
Unit Allocation $6,060 $1,151 $3,114 $4,461 $14,786
Difference $2,861 $838 ($3,114) ($585) ($0)
Administrative. $20,700
Assistant
WHA Allocation $4,308 $0 $8,616 $7,776 $20,700
Unit Allocation $8,484 $1,611 $4,360 $6,245 $20,700
Difference ($4,176) ($1,611) $4,256 $1,531 $0
Total Difference $178 $7,609 ($14,037) $6,250 $0
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2001-BO-1004 Page 28
Appendix E
Auditee Comments
Page 29 2001-BO-1004
Appendix E
2001-BO 1004 Page 30
Appendix E
Page 31 2001-BO-1004
Appendix E
2001-BO 1004 Page 32
Appendix F
Distribution
Secretary, S
Office of Administration, S
Chief of Staff, S
Senior Advisor to the Secretary, S
Senior Staff Member, S
Deputy General Counsel for Housing Finance and Operations, S
Deputy Chief of Staff for Policy and Program, S
Executive Office for Administrative Operations and Management, S
Office of Government National Mortgage Association, T
Director, Office of Departmental Equal Employment Opportunity, U
Chief Procurement Officer, N
Director, Office of Departmental Operations and Coordination, I
Department of Enforcement Center, DEC
Office of the Chief Financial Officer, F
Deputy Chief of Staff for Intergovernmental Affairs, S
Chief Information Officer, Q
Director, Real Estate Assessment center, X, 1280 Maryland Avenue, SW, Suite 800
Director, Office of Multifamily Assistance Restructuring, Y
General Deputy Assistant Secretary for Housing, H
Inspector General, G
Deputy Assistant Inspector General for Audit, GA
Assistant Inspector General for Audit, GA
Assistant Inspector General for Investigation, GI
Acting Director, Program Research and Planning Division, GAP
Acting Director, Financial Audits Division, GAF
Director, Information Systems Audit Division, GAA
Counsel to the Inspector General, GC
Central Records, GF
Semi-Annual Report Coordinator, GF
Office of Inspector General Webmaster - Electronic format
Public Affairs Office, G
Acquisitions Librarian, Library, AS
District Inspector General (2-11)
Acting Secretary’s Representative, 1AS
Special Agent-In-Charge, 1AGI
Primary field Audit Liaison Officer, 3AFI
Management Analyst, PF
Departmental Audit Liaison Officer, FM
Auditee (2)
Page 33 2001-BO-1004
Appendix F
Armando Falcon, Director, Office of Federal Housing Enterprise Oversight, 1700G Street, NW, Room
4011, Washington, DC 20552
Sharon Pinkerton, Staff Director, Subcommittee on Criminal Justice, Drug Policy & Human Resources,
B373 Rayburn House Office Bldg., Washington DC 20515.
The Honorable Fred Thompson, Chairman, Committee on Governmental Affairs, 340 Dirksen Senate
Office Building, United States Senate, Washington, DC 20510
The Honorable Joseph Lieberman, Ranking Member, Committee on Governmental Affairs, 706 Hart
Senate Office Bldg., United States Senate, Washington, DC 20510
The Honorable Dan Burton, Chairman, Committee on Government Reform, 2185 Rayburn Bldg.,
House of Representatives, Washington, DC 20515
The Honorable Henry A. Waxman, Ranking Member, Committee on Government Reform, 2204
Rayburn Bldg., House of Representatives, Washington, DC 20515
Ms. Cindy Fogleman, Subcommittee on Oversight and Investigations, Room 212, O’Neill House Office
Building, Washington, DC 20515
Steve Redburn, Chief, Housing Branch, Office of Management & Budget, 725 17th Street, NW, Room
9226, New Executive Office Building, Washington, DC 20503
Stanley Czerwinski, Associate Director, Resources, Community, and Economic Development Division,
United States General Accounting Office, 441 G Street, NW, Room 2T23, Washington, DC 20548
2001-BO 1004 Page 34
Weymouth Housing Authority, Weymouth, Massachusetts
Published by the Department of Housing and Urban Development, Office of Inspector General on 2001-04-02.
Below is a raw (and likely hideous) rendition of the original report. (PDF)