oversight

London Metropolitan Housing Authority, Safeguarding Monetary Assets and Inventory, London, Ohio

Published by the Department of Housing and Urban Development, Office of Inspector General on 2001-03-22.

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

          AUDIT REPORT




 LONDON METROPOLITAN HOUSING AUTHORITY
  SAFEGUARDING OF MONETARY ASSETS AND
              INVENTORY

             LONDON, OHIO

               2001-CH-1005

             MARCH 22, 2001



          OFFICE OF AUDIT, MIDWEST
              CHICAGO, ILLINOIS



Exit                                 Table Of Contents
                                                                      Issue Date
                                                                         March 22, 2001

                                                                     Audit Case Number
                                                                         2001-CH-1005




TO:             Thomas S. Marshall, Director of Public Housing Hub, Cleveland Area Office

                    /signed/
FROM:           Dale L. Chouteau, District Inspector General for Audit, Midwest

SUBJECT:        London Metropolitan Housing Authority
                Safeguarding Monetary Assets And Inventory
                London, Ohio

We completed an audit of the London Metropolitan Housing Authority. The audit was conducted in
response to a request from the Coordinator of HUD’s Ohio State Public Housing Program Center. The
objectives of our audit were to: (1) determine whether the Housing Authority had sufficient controls for
safeguarding cash and other monetary assets and inventory; (2) review for indicators of possible waste,
loss, and misuse of cash or other monetary assets and inventory; and (3) establish, if appropriate, the
amount of any misappropriations, their causes, and the individuals involved.

We found that the Housing Authority’s controls over cash and other monetary assets and inventory
were weak. Specifically, the Authority improperly: paid its Executive Director $3,699 for time she did
not work for the Authority or time she spent on activities not related to the Authority’s operations; and
used $2,879 of Public Housing Drug Elimination Program funds to pay the City of London for baseline
police services and equipment that the City was required to provide at no cost to the Authority. The
Authority also: failed to maintain accurate payroll records regarding three employees’ vacation time; did
not review or adjust its utility allowances for over eight years; lacked documentation to support how its
current utility allowances were determined; did not sufficiently segregate the duties of its employees
responsible for cash receipts, tenant accounts, cash disbursements, and accounting transactions; failed
to maintain complete and accurate books of account regarding its equipment; did not conduct an
inventory of non-expendable equipment, improperly disposed of used equipment; and lacked an
acceptable cost allocation plan to support the allocation of costs among its programs.

Within 60 days, please provide us, for each recommendation made 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)




      Exit                                                                                      Table Of Contents
Management Memorandum


why action is considered unnecessary. Also, please furnish us copies of any correspondence or
directives issued because of the audit.

Should you or your staff have any questions, please have them contact me at (312) 353-7832 or Heath
Wolfe, Assistant District Inspector General for Audit, at (312) 353-6236 extension 2677.




2001-CH-1005                               Page ii


     Exit                                                                                  Table Of Contents
Executive Summary
We completed an audit of the London Metropolitan Housing Authority. The objectives of our audit
were to: (1) determine whether the Housing Authority had sufficient controls for safeguarding cash and
other monetary assets and inventory; (2) review for indicators of possible waste, loss, and misuse of
cash or other monetary assets and inventory; and (3) establish, if appropriate, the amount of any
misappropriations, their causes, and the individuals involved. The audit was conducted in response to a
request from the Coordinator of HUD’s Ohio State Office Public Housing Program Center.

The Housing Authority’s controls over cash and other monetary assets and inventory were weak. The
Authority: improperly paid the Executive Director $3,699 for time she did not work for the Authority or
time she spent on activities not related to the Authority’s operations; failed to maintain accurate payroll
records regarding three employees’ vacation time; used $2,879 of Public Housing Drug Elimination
Program funds to pay the City of London for baseline police services and equipment that the City was
required to provide at no cost to the Authority; did not review or adjust its utility allowances for over
eight years; lacked documentation to support how its current utility allowances were determined; did not
sufficiently segregate the duties of its employees responsible for cash receipts, tenant accounts, cash
disbursements, and accounting transactions; failed to maintain complete and accurate books of account
regarding its equipment, did not conduct an inventory of non-expendable equipment; improperly
disposed of used equipment; and lacked an acceptable cost allocation plan to support the allocation of
costs among its programs.


                                         The Housing Authority needs to improve its controls over its
  Controls Over Payroll Need             payroll process. The Authority improperly paid the Executive
  To Be Strengthened                     Director $3,699 for time she did not work for the Authority or
                                         time she spent on activities not related to the Authority’s
                                         operations. The Authority also did not maintain accurate
                                         payroll records regarding the vacation time for three employees.

                                         The Housing Authority did not follow HUD’s requirements,
  The Authority Needs To                 Office of Management and Budget Circular A-87, or its
  Improve Its Controls Over              Agreements with the City of London regarding the supplemental
  Supplemental Police                    police services program. The Authority used $2,879 of Public
  Services                               Housing Drug Elimination Program funds to pay the City of
                                         London for baseline police services and equipment that the City
                                         was required to provide at no cost to the Authority.

                                         The Housing Authority did not review or adjust its utility
  Tenants’ Rents Were                    allowances for over eight years. The Authority also lacked
  Excessive Because Utility              documentation to support how its current utility allowances
  Allowances Were Not                    were determined.       HUD’s regulations require housing
  Reviewed Or Adjusted                   authorities to document how utility allowances are determined

                                             Page iii                                         2001-CH-1005


     Exit                                                                                         Table Of Contents
Executive Summary


                               and to review the allowances annually to determine whether
                               adjustments are needed.

                               The Housing Authority did not maintain an effective control over
 The Authority Lacked          cash management. The Authority did not sufficiently segregate
 Sufficient Cash               the duties of its employees responsible for cash receipts, tenant
 Management Controls           accounts, cash disbursements, and accounting transactions.

                               The Housing Authority’s controls over equipment were weak.
 The Authority Needs To        Contrary to Federal requirements or the Housing Authority’s
 Improve Its Controls Over     Disposition Policy, the Authority did not: maintain complete and
 Equipment                     accurate books of account regarding its equipment; conduct an
                               inventory of non-expendable equipment; and properly dispose
                               of used equipment.

                               The Housing Authority did not have an acceptable cost
 The Authority Did Not         allocation plan to support the allocation of costs among its
 Sufficiently Allocate Costs   programs. Specifically, the Housing Authority did not charge
 To Its Various Programs       employees’ salaries and fringe benefits to all of the Authority’s
                               programs that received their services. The Authority also failed
                               to allocate non-salary costs to its various programs. Housing
                               authorities must allocate costs to benefiting grant programs.

                               We recommend that HUD’s Director of the Cleveland Area
 Recommendations               Office of Public Housing Hub assure that the Housing Authority
                               implements controls to correct the weaknesses cited in this
                               report.

                               We presented our draft findings to the Housing Authority’s
                               Executive Director and HUD’s staff during the audit. We held
                               an exit conference with the Authority on February 21, 2001.
                               The Authority agreed to implement corrective action to improve
                               its controls over supplemental police services, tenants’ utility
                               allowances, cash receipts and disbursements, equipment, and
                               the allocation of indirect costs. The Authority disagreed that the
                               Executive Director was improperly paid for some time not
                               worked or some time spent on activities not related to the
                               Authority’s operations. However, the Authority did not fully
                               address all of the time cited as improperly paid to the Director
                               nor did the Authority agree to implement controls over the
                               accrual of employees’ vacation time.



2001-CH-1005                         Page iv


     Exit                                                                               Table Of Contents
                                                 Executive Summary


       We included paraphrased excerpts of the Housing Authority’s
       comments with each finding. The complete text of the
       comments is in Appendix B with the exception of 21
       attachments that were not necessary for understanding the
       Authority’s comments. A complete copy of the Authority’s
       comments with the attachments was provided to the Director of
       HUD’s Cleveland Area Office of Public Housing Hub.




            Page v                                      2001-CH-1005


Exit                                                       Table Of Contents
Executive Summary




                    (THIS PAGE LEFT BLANK INTENTIONALLY)




2001-CH-1005                     Page vi


     Exit                                                  Table Of Contents
Table Of Contents

Management Memorandum                                                  i



Executive Summary                                                  iii



Introduction                                                       1



Findings

1     Controls Over Payroll Need To Be Strengthened                 3


2     The Authority Needs To Improve Its Controls
      Over Supplemental Police Services                           11


3     Tenants’ Rents Were Excessive Because Utility
      Allowances Were Not Reviewed Or Adjusted                    15


4     The Authority Lacked Sufficient Cash Management
      Controls                                                    19


5     The Authority Needs To Improve Its Controls Over
      Equipment                                                   23


6     The Authority Did Not Sufficiently Allocate Costs
      To Its Various Program                                      29



Management Controls                                               33



Follow Up On Prior Audits                                         37



                                Page vii                  2001-CH-1005


    Exit
Table Of Contents



Appendices

        A Schedule Of Ineligible Costs       39

        B Auditee Comments                   41

        C Distribution                       49




2001-CH-1005                     Page viii


     Exit
Introduction
The London Metropolitan Housing Authority was established under Section 3735.27 of the Ohio
Revised Code. The Authority contracts with HUD to provide low and moderate-income persons with
safe and sanitary housing through rent subsidies. A five member Board of Commissioners governs the
Authority. The Chairman of the Board is Harold Halloway. The Authority’s Executive Director is Jane
Yoder. The Authority's books and records are located at 179 South Main Street, London, Ohio.

As of February 2001, the Housing Authority operated three programs: (1) a Low-Income Housing
Program consisting of 100 units; (2) a Public Housing Drug Elimination Grant Program; and (3)
Comprehensive Improvement Assistance Program. The Low-Income Housing Program is designed to
provide housing to low and moderate-income individuals whose annual incomes does not exceed 80
percent of the median income for the surrounding community. HUD’s Drug Elimination Grant Program
provides grants to public housing authorities to reduce drug-related crime in and around public housing
sites. The Comprehensive Improvement Assistance Program funds capital improvements and related
management improvements in public housing developments to upgrade living conditions, correct physical
conditions, and achieve operating efficiency and economy.


                                       The audit objectives were to: determine whether the Housing
 Audit Objectives                      Authority had sufficient controls for safeguarding cash and other
                                       monetary assets and inventory; review for indicators of possible
                                       waste, loss, and misuse of cash or other monetary assets and
                                       inventory; and establish, if appropriate, the amount of any
                                       misappropriations, their causes, and the individuals involved.

                                       We conducted the audit at HUD’s Ohio State Office and the
  Audit Scope And                      Housing Authority’s office. We performed our on-site audit
  Methodology                          work between August 2000 and February 2001.

                                       To accomplish our audit objectives, we interviewed: HUD’s
                                       staff; the Authority’s officials, staff, Fee Accountant,
                                       Independent Public Accountant; the City of London’s Police
                                       Chief and the Officer assigned to provide supplemental police
                                       services to the Authority; the President of London’s Chamber
                                       of Commerce; a Customer Representative for Ohio Edison
                                       Power Company; the Manager of Ohio State University’s Farm
                                       Science Review; and three of the Authority’s tenants. We
                                       analyzed the following items: tenant files; cash disbursements
                                       and invoices; vendor files and contracts; Board meeting
                                       minutes; payroll records and personnel files; equipment records;
                                       cash receipts and general ledgers; tenant accounts receivable
                                       ledgers; the cost allocation plan; supplemental police services’

                                             Page 1                                        2001-CH-1005


     Exit                                                                                      Table Of Contents
Introduction


               invoices and reports; audited financial statements; and the
               Authority’s policies and procedures. We also reviewed:
               HUD’s files for the Authority; Sections 307, 309, and 401 of
               the Annual Contributions Contract between HUD and the
               Authority; Parts 24, 85, and 965 of Title 24 of the Code of
               Federal Regulations; Office of Management and Budget
               Circular A-87; the Cooperation and Intergovernmental
               Agreements dated February 26, 1962 and August 10, 1999,
               respectively, between the Authority and the City of London;
               HUD’s Notice of Funding Availability for the Public Housing
               Drug Elimination Program dated March 28, 1996; HUD
               Handbooks 7510.1 and 7511.1; and Sections 124.13 and
               124.134 of the Ohio Revised Code.

               The audit covered the period January 1, 1998 through July 31,
               2000. This period was adjusted as necessary. We conducted
               the audit in accordance with generally accepted government
               auditing standards.

               We provided a copy of this report to the Housing Authority's
               Executive Director and to the Chairman of the Board.




2001-CH-1005        Page 2


     Exit                                                          Table Of Contents
                                                                                              Finding 1


Controls Over Payroll Need To Be Strengthened
The London Metropolitan Housing Authority needs to improve the controls over its payroll process.
The Housing Authority improperly paid the Executive Director $3,699 for time she did not work for the
Authority or time she spent on activities not related to the Authority’s operations. The Authority also
did not maintain accurate payroll records regarding the vacation time for three employees.
Consequently, the Authority provided $3,920 in excessive vacation time to its employees. The
Authority's Board of Commissioners and its Executive Director did not exercise their responsibilities to
implement effective payroll controls. As a result, HUD and the Housing Authority lacked assurance that
funds were properly used.


                                       24 CFR Part 85.22(b) requires that State, local, and Indian
 Federal Requirements                  tribal governments follow Office of Management and Budget
                                       Circular A-87, Cost Principles for State, Local, and Indian
                                       Tribal Governments. 24 CFR Part 85.3 defines a local
                                       government to include any public housing agency.

                                       Office of Management and Budget Circular A-87, Attachment
                                       A, paragraph C(1)(a), requires that all costs be necessary and
                                       reasonable for proper and efficient performance and
                                       administration of Federal awards.

                                       The Annual Contributions Contract, Section 307(C), requires
                                       the London Metropolitan Housing Authority to maintain
                                       complete and accurate records with respect to employees'
                                       leave. Section 401(D) of the Contract says the Housing
                                       Authority may withdraw monies from the Low-Income Public
                                       Housing General Fund for the payment of low-income housing
                                       development costs and operating expenditures.

                                       HUD Handbook 7511.1, the Low-Rent Housing Accounting
                                       Guide, Chapter 3, Section 8, page 3, states that for the
                                       purposes of internal controls, payrolls are usually prepared by
                                       one employee, verified by another, and approved by an
                                       authorized official of the local authority.

                                       24 CFR Part 24 allows HUD to take administrative action
                                       against Housing Authority Executive Directors and Board
                                       members who violate HUD's requirements. The administrative
                                       action includes debarment, suspension, and limited denial of
                                       participation.

                                             Page 3                                        2001-CH-1005


     Exit                                                                                      Table Of Contents
Finding 1


                              The London Metropolitan Housing Authority’s Personnel
  Authority’s Personnel       Policies dated February 12, 1992 and March 6, 1995 permit
  Policies                    the Housing Authority’s Executive Director and its employees
                              to accrue vacation time according to Section 124.13 of the
                              Ohio Revised Code.

                              Section 124.13 of the Ohio Revised Code provides for the
                              following number of vacation time hours per pay period to each
                              employee based upon the number of years employed.

                                                              Vacation Hours Per Pay
                                   Years Of Employment                Period
                                             1-7                        3.1
                                            8-14                        4.6
                                           15-24                        6.2
                                        25 Or More                      7.7

                              Section 124.13 of the Ohio Revised Code defines a pay period
                              as 26 bi-weekly periods. Employees with less than one year of
                              employment do not receive any vacation time.

                              Public Housing Authority Commissioners have a responsibility
 Responsibilities Of Board    to HUD to ensure national housing policies are carried out, and
 Of Commissioners And         to the Authority’s Executive Director and employees to provide
 Executive Director           sound and manageable directives. The Commissioners are
                              accountable to their locality and best serve it by monitoring
                              operations to be certain that housing programs are carried out in
                              an efficient and economical manner.

                              The responsibility for carrying out the Commissioners' policies
                              and managing the Housing Authority's day-to-day operations
                              rests with the Authority’s Executive Director. In particular, the
                              Executive Director must maintain the Housing Authority's
                              overall compliance with its policies and procedures and
                              Federal, State, and local laws.

                              The Housing Authority improperly paid the Executive Director
 The Executive Director Was   $3,699 for time not related to the Authority. Between April 5,
 Improperly Paid              1999 and December 8, 2000, the Authority paid its Executive
                              Director for 80 hours of work every two weeks from the Low-
                              Income Housing and Comprehensive Improvement Assistance
                              Programs. However, during this time period the Executive


2001-CH-1005                       Page 4


     Exit                                                                             Table Of Contents
                                                              Finding 1


        Director did not work 80 hours every two weeks. The
        Director either did not work for the Authority or spent time on
        activities not related to the Authority’s operations.

        The following table shows by pay period: (1) the number of
        hours that the Executive Director either did not work for the
        Housing Authority or spent time on activities not related to the
        Authority’s operations; and (2) the improper wages paid to the
        Director.

                               Hours Not Worked Or
                              Spent On Non-Authority      Improper
             Pay Period              Activities            Wages
          4/5/99 to 4/16/99             2.20               $ 35.33
         4/19/99 to 4/30/99            10.08                161.94
          5/3/99 to 5/14/99             9.58                153.91
         5/17/99 to 5/28/99             1.50                 24.09
         5/31/99 to 6/11/99             5.00                 80.30
          8/9/99 to 8/20/99             5.00                 80.30
          8/23/99 to 9/3/99             1.00                 16.06
         9/20/99 to 10/1/99            31.00                500.11
       10/18/99 to 10/29/99            14.00                228.34
        11/1/99 to 11/12/99             1.50                 24.47
       12/13/99 to 12/24/99            16.00                260.96
         12/27/99 to 1/7/00             1.00                 16.31
          1/24/00 to 2/4/00             0.75                 12.23
          2/7/00 to 2/18/00            18.00                293.58
          2/21/00 to 3/3/00             9.00                146.79
          3/6/00 to 3/17/00             6.00                 97.86
         3/20/00 to 3/31/00            22.00                358.82
          5/1/00 to 5/12/00            18.00                293.58
         6/12/00 to 6/23/00            26.50                432.22
         7/10/00 to 7/21/00             5.00                 81.55
          7/24/00 to 8/4/00            18.00                293.58
          8/7/00 to 8/18/00             5.00                 81.55
         9/18/00 to 9/29/00             0.25                  4.08
       10/02/00 to 10/13/00             0.10                  2.80
       10/16/00 to 10/27/00             0.10                  2.80
        11/27/00 to 12/8/00             1.08                 15.40
             Totals                   227.64              $3,698.96




             Page 5                                        2001-CH-1005


Exit                                                           Table Of Contents
Finding 1


                             For example, the Housing Authority paid the Executive Director
                             for 22 hours of work that totaled $353 between September 21,
                             1999 and September 23, 1999. During this time period, the
                             Executive Director spent time selling concession food for the
                             local Kiwanis Club at Ohio State University’s Farm Science
                             Review. The time spent working at the concession stand did
                             not relate to the Authority’s operations. The payment was not a
                             reasonable and necessary expense of the Authority.

                             The Housing Authority’s Executive Director said she worked at
                             the concession stand as a volunteer. She said she was
                             representing the Housing Authority and did not believe that she
                             had to take vacation time from the Authority while she worked
                             at the concession stand. The President of the London Chamber
                             of Commerce, who promotes the Farm Service Review to
                             businesses in the City of London, said she did not see why the
                             Housing Authority would participate in the Review since it was
                             strictly an agricultural event. She said the Director’s work at
                             the concession stand did not relate to providing low-income
                             housing. The Executive Director properly took vacation time
                             from the Authority when she worked at the Farm Science
                             Review in September 2000.

                             We reviewed the Executive Director’s timesheets for the period
 The Director’s Timesheets   April 5, 1999 to December 8, 2000 to determine whether a
 Were Not Reviewed By        member of the Housing Authority’s Board of Commissioners
 The Board                   reviewed or approved the timesheets. None of the timesheets
                             contained any evidence that the timesheets were reviewed or
                             approved. The Vice-Chairman of the Authority’s Board of
                             Commissioners said he never reviewed the Executive Director’s
                             timesheets. He said he had no intention of reviewing them. The
                             Authority’s Chairman said he did not remember ever reviewing
                             the Director’s timesheets.

                             Public Housing Commissioners’ responsibilities include
                             monitoring the Executive Director to be certain that housing
                             programs are carried out in an efficient and economical manner.
                             The Commissioners’ monitoring should include periodically
                             reviewing the Executive Director’s timesheets to ensure that the
                             Director is being properly paid. As a result, HUD and the
                             Housing Authority lack assurance that funds were properly
                             used.


2001-CH-1005                      Page 6


     Exit                                                                           Table Of Contents
                                                                            Finding 1


                        The Housing Authority failed to maintain accurate payroll
The Authority Did Not   records regarding the vacation time for three employees. The
Keep Accurate Payroll   employees included the Executive Director, Administrative
Records                 Assistant, and the Maintenance Supervisor. The Annual
                        Contributions Contract between HUD and the Housing
                        Authority required the Authority to maintain accurate records
                        with respect to employees’ leave. However, this was not done.

                        The Housing Authority’s 1992 and 1995 Personnel Policies
                        allowed the Executive Director and the Authority’s employees
                        to accrue vacation time in accordance with Section 124.13 of
                        the Ohio Revised Code. Instead, the Authority followed
                        Section 124.134 of the Ohio Revised Code to accrue vacation
                        time. The following table shows the difference in how vacation
                        time is accrued between the two Sections.

                                                  Employment       Employment
                              Vacation Time         Years             Years
                              Hours Per Pay       Per Section      Per Section
                                 Period             124.13          124.134
                                   3.1               1 to 7           1 to 4
                                   4.6              8 to 14           5 to 9
                                   6.2             15 to 24         10 to 14
                                   6.9                              15 to 19
                                   7.7            25 Or More        20 to 24
                                   9.2                             25 Or More

                        We reviewed the Housing Authority’s payroll records for the
                        period January 12, 1996 to December 8, 2000 to determine
                        the amount of vacation time earned by the Authority’s
                        employees in excess of that allowed by Section 124.13 of the
                        Ohio Revised Code. The following table shows the excessive
                        vacation time accrued and the amount of excess vacation time
                        wages per the Authority’s records for each affected employee
                        as of December 8, 2000.




                             Page 7                                       2001-CH-1005


   Exit                                                                      Table Of Contents
Finding 1


                                                      Excessive           Amount Of
                                                     Vacation Time      Excess Vacation
                             Employee                  Accrued           Time Wages
                         Executive Director             203.27             $3,147.44
                       Administrative Assistant          64.45                645.77
                       Maintenance Supervisor            11.90                127.13
                              Totals                    279.62             $3,920.34

                            The Housing Authority’s Executive Director agreed that the
                            Authority was not following the correct Section of the Ohio
                            Revised Code when calculating employees’ vacation time. She
                            said she had no idea when the Authority started following
                            Section 124.134 of the Code. She also said the Authority had
                            followed Section 124.134 for several years.

                            The Housing Authority’s Fee Accountant said she was not
                            aware that the Authority’s Personnel Policies required its
                            employees to accrue vacation time according to Section 124.13
                            of the Ohio Revised Code. She said the Authority’s Executive
                            Director provided her Section 124.134 to follow regarding the
                            accrual of employees’ vacation time. As a result, the Housing
                            Authority provided excessive vacation time to its employees.


   Auditee Comments         [Excerpts paraphrased from the Housing Authority’s comments
                            on our draft finding follow. Appendix B, pages 41 to 43,
                            contains the complete text of the comments for this finding.]

                            The Housing Authority provided time sheets, the Executive
                            Director’s monthly calendars, and other documentation to
                            support the time paid to the Director between April 6, 1999
                            and August 11, 2000. The Authority claimed the Director
                            either worked or attended meetings during the workdays
                            between April 1999 and August 2000 that were cited in the
                            Office of Inspector General’s draft finding.

   OIG Evaluation Of        The documentation provided by the Housing Authority did not
   Auditee Comments         support the salary payments to the Executive Director for the
                            period between April 1999 and August 2000. For example,
                            the Authority’s response did not address the payments to the
                            Director for the following workdays: April 12, 13, 15, 16, 23,
                            26, 28, 1999; May 3, 5, 17, 21, 28, 1999; and October 21

2001-CH-1005                      Page 8


     Exit                                                                        Table Of Contents
                                                                         Finding 1


                    and 22, 1999. In addition, the Authority’s response did not
                    address the improper payments to the Director that were cited
                    in the draft finding for the period between August 12, 2000 and
                    December 8, 2000.

                    The Housing Authority claimed the Executive Director worked
                    all day during several workdays cited in our draft finding. The
                    workdays included: June 11, 1999; August 27, 1999; October
                    1, 1999; November 2, 1999; December 16 and 23, 1999;
                    March 7 and 17, 2000; May 2 and 5, 2000; June 20 and 21,
                    2000; July 21, 2000; and August 11, 2000. However,
                    documentation obtained during the audit showed that the
                    Director did not work or did not work all day during these
                    workdays. Therefore, the Housing Authority improperly paid
                    the Director for time she did not work or for time she spent on
                    activities not related to the Authority.


Auditee Comments    The Housing Authority agrees that it used the wrong vacation
                    time for three employees. The miscalculation of the three
                    employees’ vacation time was not intentional. The hiring dates
                    used by the Office of Inspector General for calculating two
                    employees’ vacation time were wrong. The correct hire dates
                    are March 12, 1990 for the Executive Director and April 8,
                    1985 for the Maintenance Supervisor.

                    The Office of Inspector General’s schedule of vacation leave
                    for the Housing Authority’s Administrative Assistant did not
                    reflect the change in leave hours accrued until April 5, 1999.
                    However, the Assistant changed the rate of vacation leave
                    accrued effective January 24, 1999. Therefore, there is an
                    additional 7.5 hours of excessive vacation time that was not
                    reflected in the calculation of the Administrative Assistant’s
                    vacation leave.

OIG Evaluation Of   The Housing Authority’s Executive Director provided us
Auditee Comments    documentation during the audit that showed she was hired on
                    July 29, 1992 and the Maintenance Supervisor was hired on
                    June 10, 1977. Based upon the documentation, we calculated
                    the excessive vacation time accrued for the two employees.
                    The Housing Authority did not provide documentation to show
                    that the start dates used to calculate the Executive Director’s


                         Page 9                                        2001-CH-1005


 Exit                                                                     Table Of Contents
Finding 1


                     and the Maintenance Supervisor’s excessive vacation time was
                     incorrect.

                     As for the calculation of the excessive vacation time accrued by
                     the Housing Authority’s Administrative Assistant, we used the
                     Assistant’s timesheets that showed the vacation time accrued
                     per pay period. The Authority did not provide documentation
                     to support that an additional 7.5 hours of excessive vacation
                     time was accrued by the Assistant.



   Recommendations   We recommend that the Director of the Cleveland Area Office
                     of Public Housing Hub assure that the London Metropolitan
                     Housing Authority:

                     1A.     Establishes procedures and controls to follow HUD's
                             requirements, Office of Management and Budget
                             Circular A-87, and/or the Authority’s Personnel Policy
                             regarding: (1) payments to employees based upon the
                             number of hours worked; and (2) the accrual of
                             employees’ vacation time.

                     1B.     Requires the Executive Director to reimburse the
                             Housing Authority $3,699 for the improper payroll
                             payments received. If the Director does not reimburse
                             the Housing Authority for the improper payments, then
                             Authority should reimburse its Low-Income Housing
                             and Comprehensive Improvement Assistance Programs
                             $3,699 from non-Federal funds.

                     1C.     Reduces the Executive Director’s, Administrative
                             Assistant’s, and the Maintenance Supervisor’s payroll
                             records for the excessive vacation time accrued
                             between January 12, 1996 and December 8, 2000.

                     1D.     Recalculates its employees’ vacation time for the period
                             February 12, 1992 to January 11, 1996 and makes any
                             adjustments as necessary. If an employee lacks the
                             necessary vacation time to cover the excessive time
                             cited in this finding and/or from the recalculation, then
                             the Housing Authority should reimburse HUD from
                             non-Federal funds for the appropriate amount.


2001-CH-1005               Page 10


     Exit                                                                    Table Of Contents
                                                             Finding 1


       We also recommend that the Director of the Cleveland Area
       Office of Public Housing Hub:

       1E.     Pursues administrative action against the Housing
               Authority’s Executive Director based upon the
               information cited in this finding as permitted by 24 CFR
               Part 24.

       1F.     Pursues administrative action against the Housing
               Authority’s Board of Commissioners if within six
               months they do not improve their oversight of the
               Authority’s operations.




             Page 11                                      2001-CH-1005


Exit                                                          Table Of Contents
Finding 2


   The Authority Needs To Improve Its Controls
       Over Supplemental Police Services
The London Metropolitan Housing Authority did not follow HUD’s requirements, Office of
Management and Budget Circular A-87, or its Agreements with the City of London regarding the
supplemental police services program. The Housing Authority used $2,879 of Public Housing Drug
Elimination Program funds to pay the City of London for baseline police services and equipment that the
City was required to provide at no cost to the Authority. The Housing Authority lacked sufficient
procedures and controls over the supplemental police services program. As a result, HUD funds were
not efficiently and effectively used.


                                       HUD’s Notice of Funding Availability for the Public Housing
  Federal Requirements                 Drug Elimination Program dated March 28, 1996 required
                                       supplemental police services to be over and above the local
                                       police department’s current level of baseline services. Baseline
                                       services are ordinary and routine services provided to residents
                                       as part of the overall city deployment of police services.
                                       Baseline services include patrols, police officer responses to
                                       911 communications and other calls for service, and
                                       investigative follow-up of criminal activity.

                                       24 CFR Part 85.22(b) requires that State, local, and Indian
                                       tribal governments follow Office of Management and Budget
                                       Circular A-87, Cost Principles for State, Local, and Indian
                                       Tribal Governments. 24 CFR Part 85.3 defines a local
                                       government to include any public housing agency.

                                       Office of Management and Budget Circular A-87, Attachment
                                       B, Section 23(a)(5), says the general costs of government
                                       services normally provided to the general public, such as fire
                                       and police, are not allowable expenses.

                                       The Cooperation Agreement dated February 26, 1962,
  Cooperation And                      between the London Metropolitan Housing Authority and the
  Intergovernmental                    City of London, required the Housing Authority’s residents to
  Agreements’ Terms                    receive the same services as other City residents at no
                                       additional cost to the Authority or its residents.

                                       The Intergovernmental Agreement dated August 10, 1999,
                                       between the Housing Authority and the City, required the City

2001-CH-1005                                 Page 12


     Exit                                                                                     Table Of Contents
                                                                                    Finding 2


                           to provide the equipment necessary to carry out the
                           supplemental police services program.

                           Contrary to HUD’s Notice of Funding Availability and the
The Authority Improperly   Cooperation and Intergovernmental Agreements, the Housing
Paid For Baseline Police   Authority used Public Housing Drug Elimination Program funds
Services And Equipment     to pay the City of London for baseline police services and
                           equipment that were not related to the Authority’s supplemental
                           police services program or were required to be provided by the
                           City at no cost to the Authority. Baseline police services are
                           services that the local government must provide to the Housing
                           Authority and its residents at no cost, such as 911 emergency
                           calls and calls for service.

                           Between January 1, 2000 and July 31, 2000, the Housing
                           Authority spent $2,879 in Public Housing Drug Elimination
                           Program funds for a police officer to respond to 911 emergency
                           calls and calls for service, a police uniform, and a police bike.
                           The funds included $879 for the calls and $2,000 for the police
                           uniform and bike.

                           The 911 emergency calls and the calls for service were not
                           related to the supplemental police services provided to the
                           Housing Authority. The supplemental services were to include
                           officer patrols for all of the Authority’s family and senior housing
                           communities in order to augment the City’s normal police
                           patrols.

                           The City was required to provide the equipment necessary to
                           carry out the supplemental police services, such as the police
                           uniform and bike.

                           The Housing Authority’s Executive Director and the Resident
                           Initiatives Coordinator, who were responsible for reviewing the
                           supplemental police services invoices, said they did not review
                           the invoices to determine whether the City invoiced the
                           Authority for baseline services or equipment. The Executive
                           Director said she was not aware that the City was to provide
                           the equipment necessary to carry out the supplemental police
                           services program. As a result, HUD funds were not efficiently
                           and effectively used.



                                 Page 13                                         2001-CH-1005


   Exit                                                                              Table Of Contents
Finding 2



   Auditee Comments     [Excerpts paraphrased from the Housing Authority’s comments
                        on our draft finding follow. Appendix B, page 44, contains the
                        complete text of the comments for this finding.]

                        The Housing Authority will establish procedures and controls
                        with the City of London to ensure that supplemental police
                        services are properly monitored and maintained. The Authority
                        will request the City to reimburse $2,879 for the baseline police
                        services, bike, and the uniform that were improperly paid. If
                        the City does not reimburse the Housing Authority, the
                        Authority will reimburse its Public Housing Drug Elimination
                        Program $2,879 from non-Federal funds.

    OIG Evaluation Of   The Housing Authority needs to assure that once the
    Auditee Comments    procedures and controls are established that they will ensure the
                        Authority’s supplemental police services meet HUD’s
                        requirements, Office of Management and Budget Circular A-
                        87, and the Housing Authority’s Agreements.



    Recommendations     We recommend that the Director of the Cleveland Area Office
                        of Public Housing Hub assure that the London Metropolitan
                        Housing Authority:

                        2A.     Requires the City of London to reimburse the Housing
                                Authority $2,879 for the baseline police services and
                                equipment that were improperly paid. If the City does
                                not reimburse the Housing Authority, then the Authority
                                should reimburse its Public Housing Drug Elimination
                                Program $2,879 from non-Federal funds.

                        2B.     Establishes procedures and controls over its
                                supplemental police services to ensure the services meet
                                HUD’s requirements, Office of Management and
                                Budget Circular A-87, and the Housing Authority’s
                                Agreements.




2001-CH-1005                  Page 14


     Exit                                                                       Table Of Contents
                                                Finding 2




       (THIS PAGE LEFT BLANK INTENTIONALLY)




                    Page 15                   2001-CH-1005


Exit                                             Table Of Contents
Finding 3


  Tenants’ Rents Were Excessive Because Utility
  Allowances Were Not Reviewed Or Adjusted
The London Metropolitan Housing Authority did not review or adjust its utility allowances for over eight
years. The Authority also lacked documentation to support how its current utility allowances were
determined. HUD’s regulations require housing authorities to document how utility allowances are
determined and to review the allowances annually to determine whether adjustments are needed. The
Housing Authority’s Executive Director said she did not review the Authority’s utility allowances
because she was unsure how to perform the required analysis. Based on information we obtained from
the local utility company, we estimated that the Housing Authority’s tenants paid $196,000 in excessive
rental payments over the past eight years because the utility allowances were not adjusted.


                                       Residents of public housing authorities generally pay 30 percent
  HUD’s Regulations                    of their incomes for rent less an allowance for resident-
                                       purchased utilities. As utility allowances are adjusted, residents’
                                       rents are increased or decreased based upon the allowances.

                                       24 CFR Part 965.502(a) requires public housing authorities to
                                       establish allowances for resident-purchased utilities. Part
                                       965.502(b) says housing authorities are to maintain
                                       documentation to support the basis for tenants’ utility
                                       allowances. 24 CFR Part 965.507(a) requires public housing
                                       authorities to review at least annually the basis on which utility
                                       allowances were established and, if necessary, establish revised
                                       allowances.

                                       The Housing Authority’s current utility (electric) allowances
 Utility Allowances Were               were established in February 1992. The Authority had not
 Not Analyzed For Over                 reviewed or revised its utility allowances since that time.
 Eight Years                           Tenants were not required to pay for gas or water and sewer
                                       service. The Authority’s Executive Director said she did not
                                       perform an analysis of the utility allowances because she was
                                       uncertain how to do it.

                                       To determine whether the Housing Authority’s current utility
                                       allowances were sufficient, we contacted Ohio Edison Electric
                                       Company to obtain the average utility costs for the Authority’s
                                       units. Ohio Edison provided the average yearly electric costs
                                       for two of the Housing Authority’s units in each of its bedroom
                                       sizes, excluding the Authority’s two five bedroom units. We

2001-CH-1005                                 Page 16


     Exit                                                                                        Table Of Contents
                                                                                  Finding 3


                           averaged the utility costs for the two units in each bedroom size
                           to determine the actual average utility costs incurred by the
                           Authority’s tenants. The following table shows the unit size, the
                           Authority’s current utility allowances, the average utility costs
                           per unit, and the amount of excess utility costs per unit paid by
                           the Authority’s tenants.

                                                 Current
                                                  Utility      Average        Excess
                                  Unit Size      Allowanc       Utility       Utility
                                                     e          Costs          Costs
                                  Efficiency        $12          $29            $17
                                One Bedroom          16           31             15
                                Two Bedroom          16           43             27
                                    Three            19           38             19
                                  Bedroom
                                Four Bedroom         23            75            52

                           Based upon the Housing Authority’s current utility allowances
                           and the average utility costs, the Authority’s tenants
                           cumulatively paid an estimated $2,038 a month or
                           approximately $24,456 a year in excess rents. Given the
                           Housing Authority’s utility allowances were not reviewed or
                           adjusted for over eight years, the Authority’s tenants paid
                           approximately $195,648 in excess rents during this time.

                           The Housing Authority did not have documentation to support
The Authority Lacked       how its tenant utility allowances were determined. The Housing
Documentation To Support   Authority’s current Executive Director said the Authority’s
Its Utility Allowances     utility allowances were established under the former Executive
                           Director’s tenure. She said she had not performed an analysis
                           of the current utility allowances and she lacked documentation
                           to support the Authority’s calculation of the current utility
                           allowances.


 Auditee Comments          [Excerpts paraphrased from the Housing Authority’s comments
                           on our draft finding follow. Appendix B, page 45, contains the
                           complete text of the comments for this finding.]

                           The Housing Authority agrees that sufficient documentation was
                           not maintained to support how its current utility allowances
                           were determined. The Authority is willing to work with HUD to

                                Page 17                                        2001-CH-1005


   Exit                                                                            Table Of Contents
Finding 3


                       develop procedures and controls to ensure utility allowances
                       are reviewed annually and documentation is maintained to
                       support the calculation of the allowances. The Authority
                       requests assistance from HUD on reimbursing the current
                       tenants for the excess rents they paid due to the insufficient
                       utility allowances.

   OIG Evaluation Of   The Housing Authority needs to assure that once the
   Auditee Comments    procedures and controls are established that they ensure the
                       tenants’ utility allowances meet HUD’s regulations. In regards
                       to the Housing Authority’s request for HUD to assist in
                       reimbursing the current tenants for the excess rents they paid,
                       the Authority already received the funds necessary to reimburse
                       the tenants through the excessive rents. Therefore, the
                       Authority should not receive any financial assistance from HUD.
                       The Authority should reimburse the current tenants from non-
                       Federal funds for the excess rents they paid once a current
                       utility allowance is conducted.



   Recommendations     We recommend that the Director of the Cleveland Area Office
                       of Public Housing Hub assure that the London Metropolitan
                       Housing Authority:

                       3A.     Establishes procedures and controls to ensure tenants’
                               utility allowances are reviewed annually and maintain
                               documentation to support how the allowances are
                               calculated as required by HUD’s regulations.

                       3B.     Conducts utility allowance reviews to cover the period
                               between February 1992 and March 2001.

                       3C.     Reimburses the current tenants from its tenant rental
                               collections or other non-Federal funds for the excess
                               rents they paid, once the utility allowance reviews are
                               conducted.




2001-CH-1005                 Page 18


     Exit                                                                    Table Of Contents
                                                Finding 3




       (THIS PAGE LEFT BLANK INTENTIONALLY)




                    Page 19                   2001-CH-1005


Exit                                             Table Of Contents
Finding 4


            The Authority Lacked Sufficient Cash
                   Management Controls
The London Metropolitan Housing Authority did not maintain an effective control over cash
management. The Authority did not sufficiently segregate the duties of its employees responsible for
cash receipts, tenant accounts, cash disbursements, and accounting transactions. The Housing
Authority's Board of Commissioners and its Executive Director did not exercise their responsibilities to
implement effective cash management controls, and their failure to do so increased the risk of loss or
misuse of funds.


                                       Management controls comprise the plan of organization,
 Management Control                    methods, and procedures adopted by management to ensure
 Requirements                          the safeguarding of resources against waste, loss, and misuse.
                                       Important features of an adequate management control system
                                       include:

                                       ·   Control should be established early in a transaction and
                                           carried through to completion;

                                       ·   No person should have complete control over all phases of
                                           any significant transaction;

                                       ·   Work should flow from one employee to another without
                                           ever returning to an employee; and

                                       ·   Record keeping should be separate from the operations of
                                           handling and custody of assets. For example, the
                                           bookkeeping function should be separate from the
                                           collection of funds and the issuance of receipts. An
                                           employee who collects rents and issues receipts for rental
                                           payments should not be responsible for recording the rent
                                           payments and making adjustments to tenant accounts.

                                       Public Housing Authority Commissioners have a responsibility
 Responsibilities Of Board             to HUD to ensure national housing policies are carried out, and
 Of Commissioners And                  to the Authority’s Executive Director and employees to provide
 Executive Director                    sound and manageable directives. The Commissioners are
                                       accountable to their locality and best serve it by monitoring
                                       operations to be certain that housing programs are carried out in
                                       an efficient and economical manner.

2001-CH-1005                                 Page 20


     Exit                                                                                      Table Of Contents
                                                                                   Finding 4


                          The responsibility for carrying out the Commissioners' policies
                          and managing the Housing Authority's day-to-day operations
                          rests with the Authority’s Executive Director. In particular, the
                          Executive Director must maintain the Housing Authority's
                          overall compliance with its policies and procedures and
                          Federal, State, and local laws.

                          The Housing Authority did not properly segregate duties over
Duties Were Not           cash receipts and tenant collections.         The Authority’s
Sufficiently Segregated   Administrative Assistant performed various activities without
                          adequate internal checks and balances. Although the Authority
                          has only five employees, there were enough employees to
                          segregate duties so that no one individual had complete control
                          over cash receipts and tenant accounts receivable.

                          The Housing Authority’s Administrative Assistant performed the
                          following functions: received and processed tenant applications,
                          prepared tenant leases, posted rent payments to tenants’
                          accounts, posted transactions to tenants’ accounts receivable,
                          received rent payments from tenants, prepared and made bank
                          deposits, received payments from coin operated laundry
                          machines, prepared the cash receipt forms and forwarded them
                          to the Authority’s Fee Accountant, prepared the tenants’ rent
                          roll, prepared the collection register, maintained the petty cash
                          and change fund, and sorted the mail. Thus, the Authority’s
                          Administrative Assistant effectively had complete control over
                          all phases of cash receipts and tenant accounts.

                          The Administrative Assistant’s complete control over cash
                          receipts and tenant accounts provided her with the opportunity
                          to misuse or divert Authority’s funds by approving ineligible
                          tenants for housing assistance, approving excessive amounts of
                          assistance, mishandling tenants’ security and rent payments,
                          and/or making fictitious entries to the tenant accounts receivable
                          ledger when receiving payments from tenants. We found no
                          indication that the Housing Authority’s Administrative
                          Assistant took advantage of this opportunity to divert the
                          Authority’s funds. The Authority’s Executive Director said
                          the Authority lacked sufficient staff to segregate the duties of the
                          Administrative Assistant. However, as previously mentioned,
                          the Authority had a total of five employees which was sufficient
                          to segregate the Assistant’s duties so that she did not have


                                Page 21                                         2001-CH-1005


   Exit                                                                             Table Of Contents
Finding 4


                       complete control over cash receipts and tenant accounts
                       receivable.

                       The Housing Authority did not properly segregate employees’
                       duties over cash disbursements and accounting transactions.
                       The Authority used a fee accountant to maintain its books of
                       accounts and to prepare and issue checks. The Fee
                       Accountant had access to blank checks and the check-signing
                       machine. The Accountant also prepared checks, posted and
                       maintained the cash receipts ledgers, prepared adjusting journal
                       entries, and prepared the monthly bank reconciliations.

                       Although the Authority’s Executive Director received a monthly
                       list of checks and the bank statements, the Director did not
                       balance or reconcile the bank statements to the checks issued.
                       Instead, the Authority’s Executive Director merely reviewed the
                       balance on the bank statements and forwarded them to the Fee
                       Accountant. The Executive Director also did not sign-off on
                       adjusting journal entries. She said she lacked the necessary
                       time to review the Fee Accountant’s work. As a result, the
                       Accountant had an opportunity to misuse or divert the
                       Authority’s funds. However, we found no indication that
                       the Fee Accountant took advantage of this opportunity to
                       divert funds.


   Auditee Comments    [Excerpts paraphrased from the Housing Authority’s comments
                       on our draft finding follow. Appendix B, pages 45 and 46,
                       contains the complete text of the comments for this finding.]

                       The Housing Authority is willing to further segregate employee’s
                       duties. For example, the employee that receives and posts
                       rental payments will not count the cash receipts or make the
                       bank deposits.     The Authority would appreciate any
                       recommendations from HUD regarding the segregation of
                       employees’ duties.

   OIG Evaluation Of   The Housing Authority’s plan to further segregate employees’
   Auditee Comments    duties should improve its cash management controls if the
                       Authority ensures that no employee has complete control over a
                       significant transaction. For example, the Authority should not
                       allow the same employee to receive and post rental payments.


2001-CH-1005                Page 22


     Exit                                                                     Table Of Contents
                                                                      Finding 4


                 The Authority should ensure that employees’ duties are
                 segregated to provide checks and balances on all work.


Recommendation   We recommend that the Director of the Cleveland Area Office
                 of Public Housing Hub assure that the London Metropolitan
                 Housing Authority:

                 4A.     Segregates the duties of its employees to the extent
                         practical. No employee should have complete control
                         over a significant transaction. The duties should be
                         segregated to provide checks and balances on all work.




                       Page 23                                     2001-CH-1005


 Exit                                                                 Table Of Contents
Finding 5


   The Authority Needs To Improve Its Controls
                 Over Equipment
The London Metropolitan Housing Authority’s controls over equipment were weak. Contrary to
Federal requirements or the Housing Authority’s Disposition Policy, the Authority did not: maintain
complete and accurate books of account regarding its equipment; conduct an inventory of non-
expendable equipment; and properly dispose of used equipment. The Housing Authority's Executive
Director did not exercise her responsibilities to implement effective controls over equipment. She said
she was not aware of the Federal requirements or the Authority’s Disposition Policy regarding
equipment. As a result, the Authority’s equipment was susceptible to theft, loss, or misuse.


                                       Section 309 of the Annual Contributions Contract, between
 Federal Requirements                  HUD and the London Metropolitan Housing Authority,
                                       required the Authority to maintain complete and accurate books
                                       of account to permit the preparation of statements and reports
                                       in accordance with HUD’s requirements, and to permit a timely
                                       and effective audit.

                                       24 CFR Part 85.32(d)(1) requires: equipment records be
                                       maintained to include a description, identification number,
                                       source of the equipment, who holds title, the acquisition date,
                                       the cost of the equipment, and any ultimate disposition data
                                       including the date of disposal and sales price; an inventory be
                                       taken and the results reconciled with the property records at
                                       least once every two years; and a control system be developed
                                       to safeguard property from loss, damage, or theft.

                                       The Housing Authority’s Disposition Policy, dated May 4,
 Housing Authority’s Policy            1976, says that personal property will not be sold or exchanged
                                       for less than its fair value. If the estimated sales value of the
                                       property is less than $1,500, the Executive Director will
                                       negotiate a sale in the open market to ensure a fair return to the
                                       Authority.      Personal property will not be destroyed,
                                       abandoned, or donated without the prior approval of the Board
                                       of Commissioners.

                                       The Authority’s Disposition Policy also says the Executive
                                       Director will make every effort to properly dispose of excess
                                       personal property. If the property has no scrap value and a
                                       purchaser cannot be found, the Director will prepare a

2001-CH-1005                                 Page 24


     Exit                                                                                       Table Of Contents
                                                                                   Finding 5


                            statement listing the prospective bidders solicited and all other
                            efforts made to sell the property. The statement will include
                            recommendations as to the manner of disposition and be
                            referred to the Board for approval. A copy of the Board’s
                            approval, together with the complete documentation in support
                            of the destruction, abandonment, or donation, will be retained in
                            the Authority’s records.

                            The responsibility for carrying out the Board of Commissioners'
Responsibilities Of         policies and managing the Housing Authority's day-to-day
Executive Director          operations rests with the Authority’s Executive Director. In
                            particular, the Executive Director must maintain the Housing
                            Authority's overall compliance with its policies and procedures
                            and Federal, State, and local laws.

                            The Housing Authority did not: maintain complete and accurate
The Authority’s Inventory   property records; reconcile its inventory ledger to its general
Records Were Incomplete     ledger; and maintain subsidiary records of non-expendable
And Inaccurate              equipment.

                            The Housing Authority did not maintain complete and accurate
                            equipment records. The Authority’s subsidiary ledger was not
                            accurate and up to date. For example, an invoice showed the
                            purchase of a cordless drill for $109; however, the Authority’s
                            ledger showed a purchase price of $159. The Authority’s
                            ledger did not show the purchase price or date of purchase for
                            a hedge trimmer. In addition, the Authority lacked property
                            ledger records for office equipment purchased in December
                            1999 for $3,000. The equipment consisted of a video camera,
                            tripod, and a copier.

                            We reviewed the property ledger records for appliances
                            purchased and disposed of between August 1, 1997 and July
                            31, 2000. Of the two stoves and 18 refrigerators discarded,
                            we found that seven records were missing either the purchase
                            date or the cost of the appliance and no property records
                            existed for six discarded refrigerators. None of the property
                            records for 30 ranges and refrigerators purchased during 1998
                            and 1999 indicated the purchase price. The records for 20 of
                            the 30 ranges and refrigerators did not include the acquisition
                            date. Furthermore, the Authority did not complete property
                            records for all its office equipment and furniture.


                                 Page 25                                        2001-CH-1005


   Exit                                                                             Table Of Contents
Finding 5


               The Executive Director stated that she did not know that the
               property records were not up to date. She said the Authority
               was in the process of implementing a new inventory system that
               will maintain a property ledger record that includes a complete
               description and cost of equipment.

               The Housing Authority did not reconcile its inventory to its
               books and records. The Authority did not remove from the
               property account balance the cost of non-expendable
               equipment it replaced. Our review of the Authority’s books
               revealed that the Authority did not adjust the property accounts
               by over $4,000 for refrigerators and stoves discarded between
               August 1, 1997 and July 31, 2000. The Authority’s Fee
               Accountant said she was not aware that the appliances were
               discarded. As a result, the Authority’s assets were overstated
               since the discarded appliances were not removed from the
               books and records.

               The Housing Authority did not maintain subsidiary equipment
               records to support the non-expendable equipment accounts on
               the Authority’s books. Subsidiary equipment records are
               needed to identify specific equipment items to be accounted for
               when a physical inventory is taken. While property purchased
               for modernization projects was accounted for in the
               Comprehensive Improvement Assistance Program property
               accounts, the Authority only used one of the 14 account
               classifications identified in HUD Handbook 7510.1 to account
               for property purchased with Low-Income Housing operating
               funds.

               Our review of the Authority’s books of account for the period
               January 1, 1998 to July 31, 2000 revealed that appliance
               purchases were recorded to the Land, Structure, and
               Equipment account. Since all property acquired by the
               Authority is recorded to this account, we were unable to
               identify which assets were represented. The Authority did not
               use the accounts shown in the following table.




2001-CH-1005        Page 26


     Exit                                                             Table Of Contents
                                                                                 Finding 5



                                 Account Number                  Account Title
                                       1465.1             Dwelling Equipment
                                       1475.1             Non-Dwelling Office
                                                          Furniture and Equipment
                                         1475.2           Non-Dwelling Maintenance
                                                          Equipment
                                         1475.3           Non-Dwelling Community
                                                          Space Equipment
                                         1475.4           Non-Dwelling Computer
                                                          Equipment
                                         1475.7           Non-Dwelling Automotive
                                                          Equipment
                                        1410.18           Equipment Expended

                             The Authority’s Fee Accountant said she was not aware that
                             the subsidiary accounts were to be used to account for
                             property. As a result, the Housing Authority’s inventory
                             records were not complete and accurate.

                             Contrary to HUD’s regulation, the Housing Authority failed to
The Authority Did Not        conduct a physical inventory of its non-expendable equipment.
Perform An Inventory Of      The Authority performed an inventory of its maintenance
Non-Expendable               material and supplies in August 1999 and August 2000.
Equipment                    However, an inventory was not conducted of the Authority’s
                             office equipment and furniture. The Authority’s Executive
                             Director said she believed that the Authority was not required
                             to inventory the non-expendable equipment. She also said she
                             believed that the Authority’s records for non-expendable
                             equipment met the requirements of the bi-annual inventory.
                             Without a complete inventory, HUD and the Housing Authority
                             have no assurance that the Authority’s inventory records are
                             accurate.

                             The Housing Authority improperly disposed of equipment.
The Executive Director       Between August 1997 and November 1999, the Authority
Failed To Properly Dispose   discarded 18 refrigerators and two stoves. According to the
Of Stoves And                Authority’s Executive Director, the refrigerators and stoves
Refrigerators                were not in working condition. However, the Authority lacked
                             documentation to support that the appliances were inoperable.
                             The appliances were purchased between February 1987 and
                             July 1990.


                                  Page 27                                      2001-CH-1005


   Exit                                                                           Table Of Contents
Finding 5


                       The Housing Authority’s Executive Director did not obtain the
                       Board of Commissioners’ approval to discard the appliances.
                       She said she was not aware of the Authority’s Disposition
                       Policy that required her to obtain the Board’s approval. She
                       also said she did not attempt to sell the appliances to a dealer or
                       a salvage yard because she was not aware of any store that
                       would purchase used appliances and there was not a local
                       salvage dealer. While there was not a local salvage yard, there
                       was an appliance dealer within 20 miles of the Authority that
                       purchases used appliances. The Owner of Sayre’s Appliance
                       & TV said his store purchases used appliances. He said the
                       purchase price was based upon the appliance’s condition.
                       Without proper authorization for the disposition of equipment,
                       the Authority cannot be assured that the equipment was
                       disposed of efficiently and economically.



   Auditee Comments    [Excerpts paraphrased from the Housing Authority’s comments
                       on our draft finding follow. Appendix B, page 48, contains the
                       complete text of the comments for this finding.]

                       The Housing Authority will establish procedures and controls to
                       ensure that it follows the Authority’s Disposition Policy, the
                       Annual Contributions Contract, and HUD’s regulation regarding
                       equipment. With the implementation of the Authority’s new
                       computer system, the system will aid in maintaining complete
                       and accurate books and accounts for equipment. The Authority
                       plans to work with its Independent Public Accountant and the
                       Fee Accountant to reconcile the Authority’s equipment records.

   OIG Evaluation Of   The Housing Authority needs to assure that the procedures it
   Auditee Comments    plans to establish will ensure the Authority’s controls over
                       equipment meet its Disposition Policy, the Annual Contributions
                       Contract, and HUD’s regulation. The procedures should also
                       ensure that the Authority (1) maintains complete and accurate
                       books, accounts, and records for equipment; (2) performs
                       inventories of all equipment and reconciles the results with the
                       Authority’s records; and (3) disposes of equipment properly.


    Recommendation     We recommend that the Director of the Cleveland Area Office
                       of Public Housing Hub assure that the London Metropolitan
                       Housing Authority:

2001-CH-1005                 Page 28


     Exit                                                                        Table Of Contents
                                                            Finding 5


       5A.     Establishes procedures and controls to ensure that the
               Authority follows its Disposition Policy, the Annual
               Contributions Contract, and/or HUD’s regulation
               regarding: (1) maintaining complete and accurate
               books, accounts, and records for equipment; (2)
               performing inventories of all equipment and reconciling
               the results with the Authority’s records; and (3)
               disposing of equipment properly.




             Page 29                                     2001-CH-1005


Exit                                                         Table Of Contents
Finding 6


     The Authority Did Not Sufficiently Allocate
           Costs To Its Various Programs
The London Metropolitan Housing Authority did not have an acceptable cost allocation plan to support
the allocation of costs among its programs. Specifically, the Housing Authority did not charge
employees’ salaries and fringe benefits to all of the Authority’s programs that received their services.
The Authority also failed to allocate non-salary costs to its various programs. Housing authorities must
allocate costs to benefiting grant programs. While the Housing Authority’s Executive Director said she
was aware that the Authority needed to allocate indirect costs to its various Programs, she was unable
to establish a cost allocation method. As a result, neither HUD nor the Housing Authority had
assurance that costs charged to the Authority’s various programs were reasonable in relation to the
benefits they received.


                                       24 CFR Part 85.22(b) requires that State, local, and Indian
 Federal Requirements                  tribal governments follow Office of Management and Budget
                                       Circular A-87, Cost Principles for State, Local, and Indian
                                       Tribal Governments. 24 CFR Part 85.3 defines a local
                                       government to include any public housing agency.

                                       Office of Management and Budget Circular A-87, Attachment
                                       A, requires State, local, and Federally-recognized Indian tribal
                                       governments to establish principles to provide that Federal
                                       awards bear their fair share of costs. Attachment C of the
                                       Circular states in part that governments need a process
                                       whereby costs can be assigned to benefited activities on a
                                       reasonable and consistent basis. The cost allocation plan
                                       provides that process. All cost and other data used to
                                       distribute the costs included in the plan should be supported by
                                       formal accounting and other records that support the propriety
                                       of the costs assigned to Federal awards.

                                       The Housing Authority did not have an acceptable cost
 The Authority Lacked An               allocation plan. The Authority’s plan did not address the costs
 Acceptable Plan                       of its employees’ salaries and fringe benefits.

                                       The Authority charged 100 percent of the salaries and benefits
                                       for the Maintenance Supervisor, Administrative Assistant, and
                                       the Resident Initiative Coordinator to the Public Housing
                                       Program. However, the three employees spent time on the
                                       Authority’s other programs. Housing authorities are required to

2001-CH-1005                                 Page 30


     Exit                                                                                      Table Of Contents
                                                                               Finding 6


                        allocate costs to benefiting grant programs. The following table
                        shows the Executive Director’s estimates of time spent on each
                        Program by the three employees and the percentage of their
                        time charged.

                                                           Percentage Of Time
         Employee       Estimated Time Spent On Programs        Charged
       Maintenance      • 90 Percent-Public Housing        • 100 Percent
       Supervisor       • 10 Percent-Comprehensive            Public Housing
                            Improvement Assistance
       Administrative   • 90 Percent-Public Housing        • 100 Percent
       Assistant        • 10 Percent-Comprehensive            Public Housing
                            Improvement Assistance
       Resident         • 50 to 60 Percent-Public Housing  • 100 Percent
       Initiative       • 40 to 50 Percent- Public Housing    Public Housing
       Coordinator          Drug Elimination

                        The Housing Authority did not properly charge the cost of the
                        Executive Director’s salary and fringe benefits to the benefiting
                        grant programs. For Fiscal Year 2000, the Authority charged
                        the Director’s salary and benefits to the Public Housing and
                        Comprehensive Improvement Assistance Programs. The
                        charges were based upon time records maintained by the
                        Director. However, the Executive Director also spent time on
                        the Public Housing Drug Elimination Program. The time
                        records did not show the Director’s time on the Drug
                        Elimination Program. The Authority’s Director said she spent
                        between five and 10 percent of her time on the Public Housing
                        Drug Elimination Program.

                        The Authority did not allocate non-salary costs such as
                        electricity, water, property hazard insurance, fidelity bond
                        insurance for its office, and accounting services provided by a
                        fee accountant to all of the benefiting programs. The Authority
                        allocated all of the non-salary costs to the Public Housing
                        Program. The Housing Authority’s office was occupied by all
                        of the Authority’s employees. Additionally, the Authority’s Fee
                        Accountant provided accounting services for the Public
                        Housing, Comprehensive Improvement Assistance, and the
                        Public Housing Drug Elimination Programs. Therefore, the
                        Public Housing Program incurred costs that were not related to
                        its Program.


                             Page 31                                        2001-CH-1005


Exit                                                                            Table Of Contents
Finding 6


                       The Housing Authority’s Executive Director said she was aware
                       that the Authority needed to allocate costs to its various
                       programs. However, the Director said she did not know how
                       to establish a cost allocation method. The Executive Director
                       did not request any assistance from HUD or the Fee
                       Accountant in establishing an allocation method.

                       As a result, the Housing Authority and HUD lacked assurance
                       that costs charged to the Authority’s various programs were
                       reasonable in relation to the benefits they derived.



   Auditee Comments    [Excerpts paraphrased from the Housing Authority’s comments
                       on our draft finding follow. Appendix B, page 46, contains the
                       complete text of the comments for this finding.]

                       The Housing Authority agrees that it did not properly allocate
                       salary and non-salary costs to the benefiting programs. The
                       Authority plans to request assistance from its Fee Accountant
                       and HUD in developing a new cost allocation plan.

   OIG Evaluation Of   The planned action by the Housing Authority to develop a cost
   Auditee Comments    allocation plan, if implemented, should ensure that indirect costs
                       are properly allocated to benefiting programs if the plan meets
                       Office of Management and Budget Circular A-87. Once the
                       plan is developed, the Authority should reallocate the indirect
                       costs that were charged to the Public Housing Program for
                       Fiscal Year 2000.


    Recommendations    We recommend that the Director of the Cleveland Area Office
                       of Public Housing Hub assure that the London Metropolitan
                       Housing Authority:

                       6A.     Develops a cost allocation plan in accordance with
                               Office of Management and Budget Circular A-87.

                       6B.     Reallocates the indirect costs charged to the Public
                               Housing Program for Fiscal Year 2000 to the other
                               benefiting programs, once the cost allocation plan is
                               developed.



2001-CH-1005                 Page 32


     Exit                                                                       Table Of Contents
                                                Finding 6




       (THIS PAGE LEFT BLANK INTENTIONALLY)




                    Page 33                   2001-CH-1005


Exit                                             Table Of Contents
Management Controls
In planning and performing our audit, we considered the management controls of the London
Metropolitan Housing Authority in order to determine our auditing procedures, not to provide assurance
on the controls. Management controls include the plan of the organization, methods, and procedures
adopted by management to ensure that its goals are met. Management controls include the processes
for planning, organizing, directing, and controlling program operations. They include the systems for
measuring, reporting, and monitoring program performance.



                                       We determined the following management controls were
  Relevant Management                  relevant to our audit objectives:
  Controls
                                       •   Program Operations - Policies and procedures that
                                           management has implemented to reasonably ensure that a
                                           program meets its objectives.

                                       •   Validity and Reliability of Data - Policies and procedures
                                           that management has implemented to reasonably ensure that
                                           valid and reliable data are obtained, maintained, and fairly
                                           disclosed in reports.

                                       •   Compliance with Laws and Regulations - Policies and
                                           procedures that management has implemented to
                                           reasonably ensure that resource use is consistent with laws
                                           and regulations.

                                       •   Safeguarding Resources - Policies and procedures that
                                           management has implemented to reasonably ensure that
                                           resources are safeguarded against waste, loss, and misuse.

                                       We assessed all of the relevant controls identified above.

                                       It is a significant weakness if management controls do not
                                       provide reasonable assurance that the process for planning,
                                       organizing, directing, and controlling program operations will
                                       meet an organization’s objectives.

                                       Based on our review, we believe the following items are
 Significant Weaknesses                significant weaknesses:

                                       •   Program Operations.


                                           Page 33                                        2001-CH-1005


     Exit                                                                                      Table Of Contents
                                                 Management Controls


           The Housing Authority was not operated according to
           program requirements.           Specifically, the Authority:
           improperly paid the Executive Director $3,699 for time she
           did not work for the Authority or time she spent on
           activities not related to the Authority’s operations; did not
           maintain accurate payroll records regarding three
           employees’ vacation time; used $2,879 of Public Housing
           Drug Elimination Program funds to pay the City of London
           for baseline police services and equipment that the City was
           required to provide at no cost to the Authority; failed to
           review or adjust its utility allowances for over eight years;
           lacked documentation to support how its current utility
           allowances were determined; did not sufficiently segregate
           the duties of its employees responsible for cash receipts,
           tenant accounts, cash disbursements, and accounting
           transactions; failed to maintain complete and accurate
           books of account regarding its equipment; did not conduct
           an inventory of non-expendable equipment; improperly
           disposed of used equipment; and did not have an
           acceptable cost allocation plan to support the allocation of
           costs among its programs (see Findings 1, 2, 3, 4, 5, and
           6).

       ·   Validity and Reliability of Data

           The Housing Authority did not maintain: accurate payroll
           records regarding three employees’ vacation time; and
           complete and accurate books of account regarding its
           equipment (see Findings 1 and 5).

       ·   Compliance with Laws and Regulations

           The Housing Authority did not follow HUD’s regulations
           and/or Office of Management and Budget’s Circular A-87
           regarding payroll expenses, supplemental police services,
           tenants’ utility allowances, equipment, and the cost
           allocation plan (see Findings 1, 2, 3, 5, and 6).

       ·   Safeguarding Resources

           The Housing Authority improperly: paid the Executive
           Director $3,699 for time she did not work for the Authority

            Page 35                                        2001-CH-1005


Exit                                                           Table Of Contents
Management Controls


                      or time she spent on activities not related to the Authority’s
                      operations; and used $2,879 of Public Housing Drug
                      Elimination Program funds to pay the City of London for
                      baseline police services and equipment that the City was
                      required to provide at no cost to the Authority (see Findings
                      1 and 2).




2001-CH-1005           Page 36


     Exit                                                                  Table Of Contents
                                              Management Controls




       (THIS PAGE LEFT BLANK INTENTIONALLY)




                    Page 37                           2001-CH-1005


Exit                                                     Table Of Contents
Exit   Table Of Contents
Follow Up On Prior Audits
The Office of Inspector General issued an audit report on the London Metropolitan Housing Authority
on November 21, 1991 pertaining to the safeguarding of monetary assets (Audit Case Number 92-CH-
209-1005). The report contained two findings. The recommendations for the two findings were
closed. Both findings are repeated in this report.


   Report Number 92-CH-209-1005                                   This Report

Internal Controls Need To Be Strengthened              The Authority Lacked Sufficient Cash
(Finding 1).                                           Management Controls and The Authority
                                                       Needs To Improve Its Controls Over
                                                       Equipment (Findings 4 and 5).

Reasonableness Of Program Costs Were                   Controls Over Payroll Need To Be
Not Adequately Documented (Finding 2).                 Strengthened and The Authority Did Not
                                                       Sufficiently Allocated Costs To Its
                                                       Various Programs (Findings 1 and 6).

The latest single audit for the Housing Authority covered the fiscal year ended September 30, 1999.
The report contained no findings.




                                             Page 39                                       2001-CH-1005


     Exit                                                                                     Table Of Contents
Follow Up On Prior Audits




                       (THIS PAGE LEFT BLANK INTENTIONALLY)




2001-CH-1005                        Page 40


     Exit                                                     Table Of Contents
                                                                                           Appendix A

Schedule Of Ineligible Costs

                       Recommendation
                           Number              Ineligible Costs 1/

                               1B                     $3,699
                               2A                      2,879
                              Total                   $6,578


1/          Ineligible costs are costs charged to a HUD-financed or insured program or activity that the
            auditor believes are not allowable by law, contract, or Federal, State, or local policies or
            regulations.




                                            Page 39                                      2001-CH-1005


     Exit                                                                                      Table Of Contents
Appendix A




               (THIS PAGE LEFT BLANK INTENTIONALLY)




2001-CH-1005                Page 42


     Exit                                             Table Of Contents
                                                                                           Appendix B

Auditee Comments
                              The London Metropolitan Housing Authority
                                         179 So. Main St.
                                       London, Ohio 43140
                                          740-852-1888


Mr. Heath Wolfe
U>S> Dept. of HUD
77 W. Jackson Blvd. Room #2646
Ralph H. Metcalfe Federal Bldg.
Chicago, IL. 60604

02/13/01

Dear Mr. Wolfe:

Subject: Response to Draft findings

      The Executive Director has reviewed your findings regarding tardy and absent time from work.
The following is a statement including time sheet, monthly calendars and other supportive documentation
for your review.

April 6, 7, & 8, 1999 - OHAC Spring Conference
04/7/99       Wednesday - 4 hrs. over
04/14/99      Welfare to work grant 4 hrs. over
04/17/99      Welfare to work grant 4 hrs. over
04/22/99      on flight from Washington D.C.
04124/99      Welfare to work grant 8 hrs. over

05/06/99      ORAC Meeting

06/11/99      Worked all day

08/13/99      Meeting in Columbus with Auditor

08/27/99     worked all day

Sept. 8, 9, & 10, 1999 Fall Conference started on Wednesday approx. 4 hrs. over
Sept. 21/22 & 23, 1999 No evidence found on calendar that the Executive Director
worked Farm Science Review.



                                            Page 41                                      2001-CH-1005


     Exit                                                                                     Table Of Contents
Appendix B


10/01/99 Worked all day - off the day before.
Oct. 13, 14 & 15 Sharp Insurance Risk Pool Conference in Cincinnati. Approx. 4brs.
over time and ½ for Wednesday 10/13/99
11/01/99 worked until 6:00p.m. 1hr over
11/02/99 worked all day

Nov. 3, 4, & 5, 1999 Directors Retreat - Sawmill Creek Wednesday 4 hrs. over

12/16/99       worked all day
1223/99        worked all day

01/03/2000 worked all day
01/31/2000 worked all day

02/17/2000 off sick, payroll in so took off next pay 02/22/00
02/18/00   off sick, payroll in so took off next pay 02/24/00
02/21/00   Holiday - went to Reac Training - 4 hrs. over

03/02/2000 Directors Meeting/Insurance Meeting
03/07/00 worked all day
03/17/00 worked all day
03/29/00 Wednesday - worked 8:00 to 12:00
03/30/00 payroll in took it off next pay, see 04/03/00
03/31/00 payroll in took it off on next pay see 04/04/00

05/02/00       worked all day
05/05/00       worked all day
05/09/00       took sick leave-- 8hrs.

06/12/00       In Cleveland for Board meeting - Sharp Insurance risk pool.
06/20/00       worked all day
06/21/00       worked 8:00 - 12:00
06/22/00       worked all day

07/15/00       worked Saturday 3:00 - 7:00 4hrs. over
07/21/00       worked all day

08/03/00       OHAC in Portsmouth Ohio for Directors meeting
08/04/00       OHAC in Portsmouth Ohio for Directors meeting
08/11/00       worked all day

Enclosed you will find a chart of overtime that the Executive Director worked during the period of time
specified by your agency. The figures represented in the chart do not reflect the actual overtime

2001-CH-1005                                  Page 44


     Exit                                                                                       Table Of Contents
                                                                                             Appendix B


incurred as we are a small agency. A total of (5) five employees, we are on call twenty four hours a day
requiring all employees including the Executive Director to take calls by residents needing assistance on
the week-ends.

      The Housing Authority agrees that it used the wrong vacation time for three employees. This
mistake was NOT intentional.

       Regarding the Executive Directors time schedule, the date hired was wrong. Instead of 07/29/92
as stated in your schedule, it should have been 03/12/90. According to Ohio Revised Code 124.13
after 8 years of service employees receive 4.62 in vacation time, your schedule did not reflect the 4.62
increase. On March 12, 1998 the Executive Director should have accrued 4.62 in vacation time.

      The schedule of vacation for Dour Reed stated his date of employment was 06/10/77. His
correct date of employment is 04/08/85.

       Regarding the schedule of vacation for Diane Pickens, in looking back through the time records
for Mrs. Pickens, she had inadvertently written her start date of employment as 01/24/94, thinking that
the increase for vacation was for 5 years of service, increased her vacation time effective 01/24/99. In
going over your records you did not reflect the change until 04/05/99 and it was actually changed on
01/23/99. Therefore, there is an additional 7.50 hours that needs to be reflected.


Sincerely,

/signed/

Jane Yoder
Executive Director




                                              Page 45                                        2001-CH-1005


     Exit                                                                                        Table Of Contents
Appendix B


                             The London Metropolitan Housing Authority
                                        179 So. Main St.
                                      London, Ohio 43140




Mr. Heath Wolfe
U.S. Department of HUD
Office of Inspector General
77 West Jackson Boulevard. Suite 2646
Chicago, Illinois 60604-3507


February 8, 2001

Dear Mr. Wolfe,

The London Metropolitan Housing Authority will establish procedures and controls with the City of
London to ensure that police services are properly monitored and maintained to comply with HUD
regulations, Office of Management and Budget Circular A87 and the Housing Authority’s agreement
with the City.

The Housing Authority will ask the City to reimburse the Housing Authority for the amount of the
overpayment for supplemental police services, bike and uniform.
If the City does not reimburse the Housing Authority the Authority will use non- federal funds to
reimburse the Drug Elimination program.




Sincerely,

/signed/

Jane Yoder
Executive Director




2001-CH-1005                                  Page 46


     Exit                                                                                      Table Of Contents
                                                                                             Appendix B


                              The London Metropolitan Housing Authority
                                         179 So. Main St.
                                       London, Ohio 43140
                                          740-852-1888


Mr. Heath Wolfe
Assistant District Inspector General
U.S Department of HUD
77 West Jackson Boulevard Suite 2646
Chicago, Illinois 60604-3507

12/29/00

Dear Mr. Wolfe,

Subject: Response to Draft Findings

The Executive Director was unaware of the requirement for annual review of utility allowances until
recently and that she was studying a utility allowance guidebook because she was uncertain of how to
do it. The London Metropolitan Housing Authority agrees that adequate documentation was not
maintained concerning current U.A's and is willing to work with HUD to develop procedures and
controls to ensure utility allowances are reviewed annually and documentation is maintained to support
calculations. We would also ask for support from HUD on reimbursement to current tenants.

The Housing Authority does not agree that the Administrative Assistant solely performed all functions
regarding tenant accounts. The Housing Authority has five employees, three office personnel and two
maintenance personnel. Maintenance duties preclude that department from performing tenant accounts
related functions as they maintain 100 units of Public Housing. This is a small Housing Authority, the
Executive Director, Administrative Assistant and Resident Coordinator share the following duties and
responsibilities: receives and processes tenant applications, prepares tenant leases, receives and posts
rent payments to tenants accounts and prepares and makes bank deposits. The Housing Authority
trained the Resident Coordinator on the functions listed above to prepare for the possibility of receiving
Section 8 welfare to work. The Executive Director and the Administrative Assistant together review all
applications for admissions, including evictions. The Executive Director reviews and approves all tenant
files pertaining to interim and annual re-certifications.

Accounts payable
The Fee Accountant does not have complete control over accounting functions. The Executive Director
prepares and approves cash disbursements for the accountant. The accountant then maintains the
books as follows: After receipt of invoices from the Housing Authority, the accountant checks the
calculations and assigns account numbers for each invoice. Tiffany Yoha of the accountants' staff inputs,
runs and prepares all checks for mailing. Tiffany prepares check registers and approval form for checks

                                              Page 47                                        2001-CH-1005


     Exit                                                                                        Table Of Contents
Appendix B


and records checks into cash disbursements journal. She then gives the checks back to the accountant
for final review and the accountant gives them to clerical staff to take to the post office. The Housing
Authority returns the approval form signed by the Chairman and Director.

Payroll
After receiving approved timesheets from the Housing Authority, the accountant reviews vacation/sick
time/comp time balances and calculations. Tiffany then inputs, runs and prepares all checks. Tiffany
prepares the check register and approval form and records checks into the cash disbursement journal.
Then either the accountant or Tiffany FedEx's the checks to the Housing Authority.

General Ledger
Cash receipt sheets for all deposits completed by the Housing Authority staff are copied and sent to the
accountant. She records the deposits into the cash disbursement/receipt journal. The accountant
prepares monthly tenant rental entry based on information sent by the Housing Authority. Tiffany posts
all receipts and has the computer dump all disbursements into the general ledger. Tiffany prepares and
prints the monthly ledger and sends a copy to the Housing Authority. Bank reconciliation's are
prepared by either the accountant or Denise VonStein of the accountants' staff.

The accountant prepares all HUD fiscal year end reports and prepares the general ledger for year-end
closing.

The Executive Director did not say she lacked time to review the fee accountants' work regarding
adjusting journal vouchers. The Executive Director said she was in phone contact with the fee
accountant concerning all adjustments, but did not physically sign any journal voucher entries. The
Executive Director will sign all journal vouchers after consultation with the fee accountant.

The Housing Authority is willing to further segregate employee's duties i.e.. The person receiving and
posting rental payments will not count the money or make bank deposits. Two people will sign off on
posted rental payment transactions. One person shall be in charge of taking applications and entering
the information into the computer.

We would appreciate and welcome any recommendations from HUD concerning segregation of
employee's duties.

The Housing Authority agrees it did not allocate non salary cost such as electricity, water, property
hazard insurance, fidelity bond insurance also for fee accounting services and two employees the
Maintenance Supervisor and Administrative Assistant for actual time. The Drug Elimination Program
allocated and paid $3200.00 for the Resident Initiatives Coordinator based on actual time spent. We
will request assistance from the fee accountant and HUD to develop a new cost allocation plan to
address these issues.




2001-CH-1005                                  Page 48


     Exit                                                                                       Table Of Contents
                                           Appendix B


Sincerely,

/signed/

Jane Yoder, Executive Director




                                 Page 49   2001-CH-1005


     Exit                                     Table Of Contents
Appendix B


                               The London Metropolitan Housing Authority
                                          179 So. Main St.
                                        London, Ohio 43140
                                           740-852-1888

Mr. Heath Wolfe
U.S. Dept. of HUD
Ralph H. Metcalfe Federal Building
77 W. Jackson Boulevard, Suite 2646
Chicago, IL. 60604-3507

02/16/2001

Dear Mr. Wolfe,


        The London Metropolitan Housing Authority has recently installed a computer generated
Property Management System. The system includes but is not limited to the following:

           Unit system information on flooring, painting, roofing and dwelling equipment
           Inspection and extermination information
           Work order system interfaces to allow the unit number and address to be retrieved and placed
           on the work order automatically.
           Project Information.
           Fixed Asset System
           Physical Inventory and Materials Inventory
           Key Control report
           Unit maintenance report
           Unit painting report
           Purchase orders

        The Housing Authority will establish procedures and controls to ensure it follows the Disposition
Policy, the Acc Contract, and HUD’s regulations. The implementation of the new system will aid in
maintaining complete and accurate books, accounts, records of equipment, and inventories. We will
work with the accountant and the Independent Public Accountant to reconcile records and the
disposing of equipment.

Sincerely,

/signed/

Jane Yoder
Executive Director

2001-CH-1005                                   Page 50


     Exit                                                                                       Table Of Contents
                                                                               Appendix C

Distribution
Acting Secretary's Representative, Midwest (2)
Senior Community Builder/State Coordinator, Ohio State Office
Director of Public Housing Hub, Cleveland Area Office (2)
Coordinator of Public Housing Program Center, Ohio State Office
Secretary, S (Room 10000)
Chief of Staff, S (Room 10000)
Acting Assistant Secretary for Administration, A (Room 10110)
Acting Deputy Assistant Secretary for Administrative Services, Office of the Executive
        Secretariat, AX (Room 10139)
Acting Assistant Secretary for Congressional and Intergovernmental Relations, J (Room
        10120)
Acting Deputy Assistant Secretary for Intergovernmental Relations, JI (Room 10234)
Director of Departmental Equal Employment Opportunity, U (Room 2112)
Senior Advisor to the Secretary, Office of Public Affairs, W (Room 10132)
Acting Special Counsel to the Secretary, S (Room 10226)
Deputy Chief of Staff, S (Room 10226)
Deputy Chief of Staff for Policy and Program, S (Room 10226)
Deputy Chief of Staff for Intergovernmental Affairs, S (Room 10226)
Deputy Assistant Secretary for Public Affairs, W (Room 10222)
Special Assistant for Inter-Faith Community Outreach, S (Room 10222)
Executive Officer for Administrative Operations and Management, S (Room 10220)
General Counsel, C (Room 10214)
Deputy General Counsel for Housing, Finance, and Operations, CA (Room 10240)
Assistant General Counsel, Midwest
Acting Assistant Secretary for Housing-Federal Housing Commissioner, H (Room 9100)
Assistant Secretary for Policy Development and Research, R (Room 8100)
Acting Assistant Secretary for Community Planning and Development, D (Room 7100)
Executive Vice President of Government National Mortgage Association, T (Room 6100)
Assistant Secretary for Fair Housing and Equal Opportunity, E (Room 5100)
Chief Procurement Officer, N (Room 5184)
Acting Assistant Secretary for Public and Indian Housing, P (Room 4100)
Acting General Deputy Assistant Secretary for Public and Indian Housing, P (Room 4100)
Deputy Assistant CFO for Financial Management, FM (Room 2206)
Deputy Assistant Secretary for Public and Assisted Housing Delivery, PH (Room 4202)
Deputy Assistant Secretary for Administration and Budget/CFO, PC (Room 4234)
Audit Liaison Officer for Public and Indian Housing, PF (Room 5156)
Chief Information Officer, Q (Room 8206)
Director of Departmental Operations and Coordination, I (Room 2124)
Acting Chief Financial Officer, F (Room 2202)
Deputy Chief Financial Officer, F (Room 2202)
Director of Audit Coordination/Departmental Audit Liaison Officer, FMA (Room 2206)

                                       Page 51                                 2001-CH-1005


 Exit                                                                                    Table Of Contents
Appendix C


Director of Risk Management, FMR (Room 2214)
CFO Audit Liaison Officer, FMA (Room 2206)
Audit Liaison Officer, 3AFI (2)
Acting Director of Enforcement Center, V (200 Portals Building)
Acting Director of Real Estate Assessment Center, X (1280 Maryland Avenue, SW,
        Suite 800)
Director of Multifamily Assistance Restructuring, Y (4000 Portals Building)
Assistant Deputy Secretary for Field Policy and Management, SDF (Room 7108)
Acquisitions Librarian, Library, AS (Room 8141)
Deputy Staff Director, Counsel, Subcommittee of Criminal Justice, Drug Policy & Human
        Resources, B 373 Rayburn House Office Building, 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 Building, United States Senate, Washington DC 20510
Honorable Dan Burton, Chairman, Committee on Government Reform, 2185 Rayburn
        Building, United States House of Representatives, Washington DC 20515
Henry A. Waxman, Ranking Member, Committee on Government Reform, 2204 Rayburn
        Building, United States House of Representatives, Washington DC 20515
Ms. Cindy Sprunger, Subcommittee on Oversight and Investigations, Room 212, O'Neil
        House Office Building, Washington DC 20515
Associated Director of Resources, Community, and Economic Development Division,
    United States General Accounting Office, 441 G Street N.W., Room 2T23, Washington
    DC 20548 (Attention: Stanley Czerwinski)
Steve Redburn, Chief of Housing Branch, Office of Management and Budget, 725 17th
    Street, N.W., Room 9226, New Executive Office Building, Washington DC 20503
Executive Director, London Metropolitan Housing Authority (2)
Chairman of the Board of Commissioners, London Metropolitan Housing Authority




2001-CH-1005                          Page 52


 Exit                                                                               Table Of Contents