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 THIS PAGE LEFT BLANK INTENTIONALLY 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 THIS PAGE LEFT BLANK INTENTIONALLY 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. Page 21 2001-BO-1004 Appendix A THIS PAGE LEFT BLANK INTENTIONALLY 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 THIS PAGE LEFT BLANK INTENTIONALLY 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 THIS PAGE LEFT BLANK INTENTIONALLY 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 Page 27 2001-BO-1004 Appendix D THIS PAGE LEFT BLANK INTENTIONALLY 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)