Issue Date: August 26, 2002 Audit Case Number: 2002-DE-1004 To: Charles H. Williams, Director HUD’s Office of Multifamily Housing Assistance Restructuring, HY FROM: Robert C. Gwin, Regional Inspector General for Audit, 8AGA SUBJECT: Congressionally Requested Audit of the Outreach and Training Assistance Grant Awarded to the Housing Advocacy Coalition, Colorado Springs, Colorado, Grant Number FFOT00008CO INTRODUCTION We completed an audit of the Housing Advocacy Coalition and the Community Resource Center’s Outreach and Training Assistance Grant. The Housing Advocacy Coalition and the Community Resource Center jointly submitted a grant application. The two non-profits share the grant as co-recipients, even though the HUD grant agreement identifies the Housing Advocacy Coalition as the grantee. The audit identified that the grantees over charged the grant at least $3,827 for salaries and did not comply with other requirements under the Office of Management and Budget’s Circular A-122, Cost Principles for Non-Profit Organizations. In addition, the grantees participated in lobbying activities, contrary to the enabling legislation and OMB Circular A-122. Our report contains seven recommendations to address the issues identified in the report and other recommendations to strengthen management controls over the grantees. Section 1303 of the 2002 Defense Appropriation Act (Public Law 107-117) requires the HUD Office of Inspector General to audit all activities funded by Section 514 of the Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA). The directive would include the Outreach and Training Assistance Grants (OTAG) and Intermediary Technical Assistance Grants (ITAG) administered by the Office of Multifamily Assistance Restructuring (OMHAR). Consistent with the Congressional directive, we reviewed the eligibility of costs with particular emphasis on identifying ineligible lobbying activities. In conducting the audit, we reviewed the grantees accounting records and interviewed responsible staff. We also reviewed the requirements in MAHRA, the OTAG Notice of Fund Availability, the OTAG grant agreement, HUD’s requirements for grant agreements for nonprofit entities, and Office of Management and Budget’s guidance on the allowability of cost for nonprofit grantees. The audit covered the period January 2001 through April 2002 for the OTAG grant and the period May 2000 through April 2001 for the Public Entity Grant (a Section 514 grant received from an Intermediary Technical Assistance Grant), awarded to the Community Resource Center. We performed the fieldwork at the Housing Advocacy Coalition located at 2023 East Bijou Street, Colorado Springs, CO 80909 and the Community Resource Center located at 655 S. Broadway, Suite 300, Denver, CO 80203 during April through June 2002. We conducted the audit in accordance with Generally Accepted Government Auditing Standards. We appreciate the courtesies and assistance extended by the personnel of the Housing Advocacy Coalition and Community Resource Center during our review. In accordance with HUD Handbook 2000.06 REV-3, within 60 days please provide us, for each recommendation without a management decision, a status report on: (1) the corrective action taken; (2) the proposed corrective action and the date to be completed; or (3) why action is considered unnecessary. Additional status reports are required at 90 days and 120 days after report issuance for any recommendation without a management decision. Also, please furnish us copies of any correspondence or directives issued because of the audit. Should you or you staff have any questions please contact me at (303) 672-5452. SUMMARY The Housing Advocacy Coalition and the Community Resource Center jointly submitted a grant application. The two non-profits share the grant as co-recipients, even though the HUD grant agreement identifies the Housing Advocacy Coalition as the grantee. Our audit identified that the grantees over charged the grant at least $3,827 for salaries and fringe benefits. The grantees also did not maintain salary records in accordance with OMB Circular A-122 Attachment B, paragraph 7. The grantees did not prepare a cost allocation plan per the guidance in OMB Circular A-122, Attachment A. Instead, the grantees charged costs based on a predetermined percentage or budget amount. Due to the lack of adequate salary records for the grantees, we could not determine the appropriateness of these allocated charges. According to the grantee’s reports to OMHAR, the grantees participated and organized activities directly lobbying staff members of Congress and the local government. Again, due to the lack of adequate time records, we could not make a determination of the total time expended for these activities. Our report contains recommendations to address the issues identified in the report and other recommendations to strengthen management controls over the grant. Page 2 BACKGROUND The Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA) established the Office of Multifamily Housing Assistance Restructuring (OMHAR) within HUD. Utilizing the authority and guidelines under MAHRA, OMHAR’s responsibility included the administration of the Mark-to-Market Program, which included the awarding, and oversight of the Section 514 Outreach and Training Assistance and Intermediary Technical Assistance Grants. The objective of the Mark-to-Market Program was to reduce rents to market levels and restructure existing debt to levels supportable by these reduced rents for thousands of privately owned multifamily properties with Federally insured mortgages and rent subsidies. OMHAR worked with property owners, Participating Administrative Entities, tenants, lenders, and others to further the objectives of MAHRA. Congress recognized, in Section 514 of MAHRA, that tenants of the project, residents of the neighborhood, the local government, and other parties would be affected by the Mark-to-Market Program. Accordingly, Section 514 of MAHRA authorized the Secretary to provide up to $10 million annually ($40 million total) for resident participation, for the period 1998 through 2001. The Secretary authorized $40 million and HUD staff awarded about $26.6 million to 40 grantees (a total for 83 grants awarded). Section 514 of MAHRA required that the Secretary establish procedures to provide an opportunity for tenants of the project and other affected parties to participate effectively and on a timely basis in the restructuring process established by MAHRA. Section 514 required the procedures to take into account the need to provide tenants of the project and other affected parties timely notice of proposed restructuring actions and appropriate access to relevant information about restructuring activities. Eligible projects are generally defined as HUD insured or held multifamily projects receiving project based rental assistance. Congress specifically prohibited using Section 514 grant funds for lobbing members of Congress. HUD issued a Notice of Fund Availability in fiscal year 1998 and a second in fiscal year 2000 to provided opportunities for nonprofit organizations to participate in the Section 514 programs. HUD provided two types of grants. The Intermediary Technical Assistance Grant (ITAG) and the Outreach and Training Assistance Grants (OTAG). The Notice of Fund Availability for the ITAG states that the program provides technical assistance grants through Intermediaries to sub- recipients consisting of: (1) resident groups or tenant affiliated community-based nonprofit organizations in properties that are eligible under the Mark-to-Market program to help tenants participate meaningfully in the Mark-to-Market process, and have input into and set priorities for project repairs; or (2) public entities to carry out Mark-to-Market related activities for Mark-to- Market-eligible projects throughout its jurisdiction. The OTAG Notices of Fund Availability states that the purpose of the OTAG program is to provide technical assistance to tenants of eligible Mark-to-Market properties so that the tenants can (1) participate meaningfully in the Mark-to-Market program, and (2) affect decisions about the future of their housing. OMHAR also issued a December 3, 1999 memorandum authorizing the use of OTAG and ITAG funds to assist at-risk projects. OMHAR identified these as non-Mark-to-Market projects where the owners were opting out of the HUD assistance or prepaying the mortgages. Page 3 HUD’s regulations at 24 Code of Federal Regulation Part 84 contain the uniform administrative requirements for grants between HUD and nonprofit organizations. The Regulation 24 CFR 84.27 require that nonprofit grantees utilize the Office of Management and Budget (OMB) Circular A-122, Cost Principles for Non-Profit Organization, in determining the allowability of cots incurred to the grant. OMB Circular A-122 outlines specific guidelines for allowability of charging salaries and related benefits to the grants and the records needed to support those salaries. For indirect cost charged to the grant, the Circular establishes restrictions for indirect costs, and specific methods and record keeping to support the allocation of costs. The Circular also establishes the unallowability of costs associated with Federal and state lobbying activates. Simple stated the use of Federal funds for any lobby activity is unallowable. OMB Circular A-122 identifies some example of unallowable activates of lobbying. These include any attempt to influence an elected official or any Government official or employee (Direct Lobbying) or any attempt to influence the enactment or modification of any actual or pending legislation by propaganda, demonstrations, fundraising drives, letter writing, or urging members of the general public either for or against the legislation (Grassroots Lobbying). The Housing Advocacy Coalition and the Community Resource Center jointly applied for an OTAG grant in fiscal year 2000. The Housing Advocacy Coalition received a HUD OTAG grant for $310,000 in February 2001. The Housing Advocacy Coalition and the Community Resource Center share the OTAG grant as co-recipients. The Housing Advocacy Coalition and the Community Resource Center expended $169,132 of the $310,000 grant during the period January 2001 through April 2002. We also reviewed a $20,000 Public Entity Grant; received by the Community Resource Center from Amador-Tuolumne of Sonora, California, a Section 514 Intermediary Technical Assist Grantee, for the period May 2000 through April 2001. The Community Resource Center received an annual financial audit of their activities for the two- year period ending December 31, 2001. The auditor provided an unqualified opinion for each of the two years. The auditor did not identify a cost allocation method used for the Federal and non-Federal activities sponsored by the Community Resource Center. The Housing Advocacy Coalition did not receive a financial audit, nor was one required. In addition to the OTAG grant, the Housing Advocacy Coalition and Community Resource Center received grants from non-Federal sources. For example, the Housing Advocacy Coalition received a $30,000 from the Catholic Conference and the Community Resource Center received $373,000 from earned income and an additional $142,000 from corporate and private foundations. Page 4 FINDING The Grantees Did Not Comply With HUD and OMB Requirements The Housing Advocacy Coalition and Community Resource Center assisted ineligible projects, charged salaries and fringe benefits in excess of actual costs, did not maintain adequate salary records, and did not adequately support the cost allocation method for charging indirect costs. In addition, the grantees charged prohibited and unallowable lobby activities to the grant. As a result, the grantees assisted ineligible projects, charged at least $3,827 in excessive salaries and benefit expenses, charged $9,070 in questioned accounting and auditing fees. We could not determine the actual amount of lobbying activities due to the lack of adequate salary records. The grantees neither read nor had a copy of the Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA) and relied on HUD to provide detailed guidance on program requirements. The grantees believed that the activities and records maintained complied with HUD’s requirements and that the lobbying activities were appropriate under HUD and Internal Revenue Service (IRS) guidelines. Project Eligibility The Section 514 (f) of the Multifamily Housing Assistance and Restructuring Act of 1997 provided funds to assist and provide an opportunity for tenants of the project, residents of the neighborhood, the local government, and other affected parties to participate effectively and on a timely basis in the restructuring process established by MAHRA. Section 512 of MAHRA defines the term eligible multifamily housing project to generally mean a property consisting of more than four dwelling units with rents that, on an average per unit or per room basis, exceed the rent of comparable properties in the same market area. Section 512 also requires that the project be covered in whole or in part by a contract for HUD project-based assistance under one of a number of HUD programs and be financed by a mortgage insured or held by the Secretary under the National Housing Act. MAHRA specifically excluded certain HUD projects, for example Section 202 projects. Given the Section 512 definition of eligible projects, we obtained a listing from HUD of the possible eligible projects. According to HUD’s records, 24,525 projects receive project-based assistance and are HUD insured or held by the Department. Of those projects, 389, or 1.59 percent are located in Colorado. The grantees did not maintain a listing of projects assisted with the OTAG and Public Entity Grant grants. We reviewed the grantees quarterly reports to OMHAR on assistance provided and the grantees limited time records. Based on those documents, we identified that the grantees assisted forty projects in Colorado. Both the Housing Advocacy Coalition and the Community Resource Center assisted 20 projects each for a total of forty projects. We compared the identified assisted projects to the list provided by HUD and identified that six of the 40 projects or 15 percent were not eligible for assistance under MAHRA. Due to the lack of summary salary records, we did not attempt to determine the amount of Section 514 assistance provided to these ineligible projects. Page 5 The grantees advised us that the list of eligible projects provided by HUD was not complete. Therefore, they relied on lists provided by the National Housing Law Project, or other sources. The grantees advised that they had not read MAHRA, nor were they aware of MAHRA’s definition for eligible projects. The grantees stated that they relied on HUD’s December 3, 1999 memorandum advising them they could assist at risk projects. The grantees interpreted this language to allow assistance to all HUD assisted projects and residents, especially if the owner plans to opt-out of the HUD project based assistance. The grantees advised that the focus of their activated was to organize the tenants to publicize and obtain public awareness of the loss of HUD assisted housing in the greater Denver and Colorado Springs area. The grantees also advised that if HUD tenants came to them for assistance, they provided assistance, based on the December 3, 1999 instructions. Compensation for Personnel Services OMB Circular A-122, Attachment B, Paragraph 7 Compensation for Personal Services states that reasonable compensation and fringe benefits to employees are grant fundable costs. The Circular also places specific salary record keeping requirements on the grantees. The grantees must maintain reports that accounts for the total activity for which an employee is compensated for in fulfillment of their obligations to the organization. The reports must reflect an after-the-fact determination of total actual activities performed by each employee. Budget estimates do not qualify as support for charges to the grant. Grantees must also maintain reports reflecting the distribution of activity of each employee (professionals and nonprofessionals) whose compensation is charged, in whole or in part, directly to awards. OMB also requires that the report be signed by the employee or a reasonable supervisor. In addition, in order to support the allocation of indirect costs, such reports must also be maintained for other employees whose work involves two or more functions or activities if a distribution of their compensation between such functions or activities is needed in the determination of the organization's indirect cost rate. The Housing Advocacy Coalition and the Community Resource Center did not maintain supporting employment records per the OMB Guidance. Instead, the employees prepared time sheet of only the hours chargeable to the grant. For example, a Community Resource Center employee working on the OTAG grant prepared a time sheet of day and hours chargeable to the grant. The employee also prepared a separate time sheet for hours charged to the Public Entity Grant received from the Intermediary Technical Assistance Grantee. The time sheet did not account for the total activities of the employee on a daily basis. Therefore, we could not determine what other activities the employee performed or which grant to charge for those activities. Both grantees compensated their employees based on a salary basis but charged the grants based on an hourly wage. The grantees used the time sheet to determine the number of hours to charge the grant. We reviewed the hourly wage charged to the grant to the employees’ hourly wage. Since the employee received a flat monthly salary, we estimated the hourly wage based on a 160 hours per month (one part time employee was calculated at 96 hours per month). Based on those estimate, we determined that the grantees charged the grants hourly wages in excess of the amount actually paid. For example, we estimated that two employees received an hourly wage Page 6 of $21.70 and $29.86, respectively. However, the grantee charged $25.00 and $35.00 per hour to the grant. The grantee charged the overages to both the HUD funded OTAG and Public Entity Grant grants. We estimated that between the two grants the grantee over charged about $1,709. The grantee used a flat rate of 23 percent of wages to calculate fringe benefits. The application of a flat rate estimate should not have been used, per the requirements of OMB Circular A-122. Moreover, due to the excess wage being charged to the grant, fringe benefits were also over charged. We estimated that due to the excessive wages alone the grantee over charged the grant $1,116. In addition, the grantee charged $1,001 for fringe benefits of an employee that did not receive compensation from the grant. We estimated the minimum over charges for fringe benefits to be $2,117. For these three areas, we identified that the grantee over charged the two HUD funded grants $3,827 for salaries and benefits. The grantees advised that they were not aware of the requirements nor did HUD notify them of the personnel and compensation requirements of OMB Circular A-122. Allocating Direct and Indirect Costs to the Grant The grantees also allocated certain costs to the grant to include telephone charges, accounting services, and audit costs. OMB Circular A-122 Attachment A provides guidance on the basic considerations for grant fundable costs and allocation of indirect cost. The guidance provides that the grantees shall support a cost allocation taking into account all activities of the organization. If the grantees do not have an approved cost allocation plan, the grantee shall summit an initial cost allocation plan within three months of receiving the award. The grantees neither prepared nor submitted to HUD a cost allocation plan after receiving the grant. Instead, the grantees used predetermined percentages or the amount budgeted in the grant application for the allocation of cost. As stated above the grantees did not maintain detailed time records for all employees and activities. Therefore, we could not determine if the cost allocations were reasonable or justified. For example, the grantees charged $302 per month for accounting services. The grantees based this amount on its grant application budget. Based on available records, we could not determine the appropriateness or reasonableness for this monthly charge. The grantees also charged a percentage of the total telephone bill to the grants. Again based on available records, we could not determine if the cost allocations were reasonable or justified. We identified that the grantees charged the grant at least $9,070 in questioned costs for accounting, auditing services and telephone charges, without a cost allocation plan. The grantees advised that they were not aware of the requirements nor did HUD notify them of the requirements of OMB Circular A-122. Lobbying MAHRA specifically prohibited the used of Section 514 funds to lobby members of Congress or their staff. OMB Circular A-122, Attachment B, Paragraph 25, Lobbying places additional Page 7 limitations on the grantee’s use of Federal funds for lobbying. Circular A-122 states that grantees may not use Federal funds to: · Attempt to influence any Federal or state legislation through an effort to affect the opinions of the general public or any segment thereof. This includes the introduction of Federal or State legislation; or the enactment or modification of any pending Federal or State legislation by preparing, distributing or using publicity or propaganda, or by urging members of the general public or any segment thereof to contribute to or participate in any mass demonstration, march, rally, fundraising drive, lobbying campaign or letter writing or telephone campaign. (Grassroots lobbying) · Any attempt to influence any legislation through communication with any member or employee of a legislative body or with any government official or employee who may participate in the formulation of legislation (Direct lobbying). · Providing a technical and factual presentation of information on a topic directly related to the performance of a grant, contract or other agreement through hearing testimony, statements or letters to the Congress or a State legislature, or subdivision, member, or cognizant staff member thereof, except in response to a documented request made by the recipient member, legislative body or subdivision. As identified in the background section, the Housing Advocacy Coalition and the Community Resource Center receive non-Federal funds. The allowability and use of these funds for lobbying activities would not be restricted by the guidance in OMB Circular A-122. We fully support the grantee's ability to organize and participate in activities not allowed for under OMB’s guidance. However, these activities, if supported directly or indirectly in either part or whole with Federal funds, must be allowable by OMB’s guidance to be grant fundable from the HUD OTAG or Public Entity Grant grants. We reviewed the grantees monthly activity reports and employees time sheet to identify meeting with legislative member or their staff. We also reviewed these reports for activities that did not meet the requirements of MAHRA and which may be considered Grassroots lobbying. We identified that the employees of the Housing Advocacy Coalition reported and charged time to the grants for meeting with Congressional staff from the House of Representatives and the Senate. For example, in the January – March 2001 quarterly report, the Housing Advocacy Coalition reported that they organized tenants to ask questions about housing in the city and state at a town meeting with the Honorable Joel Hefley of Colorado. The report also identifies another meeting with the Congressmen’s staff. The April, May, and June report identifies an April meeting with a member of Congressman’s staff at the Housing Advocacy Coalition offices to learn more about housing issues. The Housing Advocacy Coalition also reported in their July 2001 quarterly report a meeting with a housing aide to Senator Wayne Allard of Colorado. According to the Housing Advocacy Coalition, the purpose of the meeting was to present regional activities, specifically, the need for additional funding for the preservation of Section 8 project based assistance, and the need for additional project based assisted units. We identified that the time charged for these meeting was minimal. The grantees believed that these activities were eligible as regional activities, under the guidance in the December 3, 1999 instructions from OMHAR. However, these activities are specifically prohibited by MAHRA and OMB’s guidance. Page 8 We also identified that the Housing Advocacy Coalition and the Community Resource Center provided support for the Save Our Section 8 Coalition. The Coalition is a residents tenant-based group with the support of several non-profit organizations and community groups with a mission to preserve Section 8 housing and to develop plans and solutions to create more low-income housing and accessible housing through State and City legislation and policy. The support was in the form of staff time charged to the OTAG grant to assist the resident group in further the mission of the Save Our Section 8 Coalition. According to the guidance in OMB Circular A- 122, these activities represent Grassroots lobbying activities and are not grant fundable with Federal funds. These activities could be charged to the non-Federal sources of the grantees. For example, the July 2001 quarterly report that the Housing Advocacy Coalition continued its efforts to create a citywide coalition of HUD tenants to network and empower them to slow the loss of HUD housing through understanding national policy and acting together on pertinent Federal issues. We could not make a determination of the actual amount of time spent performing Grassroots lobbying, because of the lack of details in the employee’s time sheets. However, we noted that the resident groups of the projects assisted are the same resident groups that comprise the Save Our Section 8 Coalition. In addition, while performing our site work we overheard the staff planning strategies for the various projects assisted to participate in fundraising and letter writing campaigns related to Save Our Section 8 Coalition. The grantees also participated in teleconferences, conferences and paid membership dues to the National Alliance of HUD Tenants. According to the Alliance’s teleconference and conference agenda, activities consisted of items grant fundable under the grant and OMB’s guidance. The activities also consisted of unallowable lobbying activities. For example, part of the Alliance’s conference in October 2001 contained sessions of local and statewide strategy to cope with prepayment of the property. According to the conference information the session informing participant how to use state and local legislation to save Section 8 projects. Another session provided participants with information on creating local and citywide tenant coalition. Teleconference agenda identified that of the one hour and thirty minute planed for the teleconference only 5 minute related to the Mark-to-Market program. Based on OMB’s guidance, only that portion of the activity related to the purpose of the grant can be charged to the grant. In these examples, the grantees charged the full amount to the OTAG grant. Again, due to the lack of detailed records we could not determine the amount of unallowable lobbying activities being charged to the grant. We identified a total of $3,827 of ineligible salaries and fringe charges and questioned $9,070 of telephone, accounting and auditing charges. We could not determine the amount of funds expended for unallowable lobbying activities. The grantees advised that they did not read MAHRA nor were they aware of the specific requirements of OMB Circular A-122. The grantees believed that they complied with the requirements of the grant and OMHAR’s additional guidance in the December 3, 1999 memorandum. Specifically, those regional activities were allowed to preserve Section 8 Page 9 housing. Moreover, neither HUD officials at OMHAR nor the officials of the ITAG grantee questioned the funding requests. The grantees also advised that neither HUD nor the ITAG grantees performed an onsite review of their activities or methods for charging the grant. The grantees believes that the activities we identified as lobbying are in fact out reach activities to ensure that the tenant have a voice in the further of Section 8 housing and attempts to secure funding to allow tenants to purchase the projects. Furthermore, the grantees insists that assisting the tenants to have a voice in the future of HUD assisted housing and securing funding to purchase, the projects are within the scope of the grant. The grantees advised that they were not aware of the specific requirements on Lobbying in OMB Circular A-122 and were relying on the IRS’s publication 557 to define eligible lobbying activities. We advised the grantees that the IRS requirements only related to the non-profit entity maintaining its non-profit status. The OMB guidance applied to the allowability of using Federal funds for activities. The grantees also believed Grassroots activates directed to the local government to preserve Section 8 housing were fundable under the grant terms. AUDITEE COMMENTS AND OIG EVALUATION OF AUDITEE COMMENTS The grantees did not fully concur with the conclusions in the audit report. The grantees stated that they continue to be frustrated by information provided by OMHAR. The grantees also pointed out that OMHAR approved and accepted all voucher requests over the 16 months in question. The grantees believed that they provided assistance to only eligible projects, based on the December 3, 1999 memorandum from Ira Peppercorn, Director of OMHAR. The grantees specifically cited and highlighted the following paragraphs in that memorandum (Page 1, paragraphs 3,4, 5 and 6, Page 2, Paragraphs 1 and 2, Page 3, paragraphs 1, 2, 3 and the last paragraph of page 3 and first paragraph of page 4). The grantees believe and we concur that HUD did not provide clear guidance in determining the eligibility of the projects or providing a clear listing of eligible projects. We changed the recommendations to incorporate the grantee’s response. The grantees concurred that they over charged the grant for salaries and benefits, and that they lacked an approved cost allocation method. However, they disagree with the amount of the salary and benefit over charges. The grantees calculated that the over charges amounted to $2,311.87 not the $3,827 identified in the report. The grantees also provided a cost allocation method for the indirect costs. We plan to let HUD review the information and make a final determination related to the salary and benefit overcharges and the cost allocation plan. The grantees strongly disagreed that any of their OTAG funded activities constitute lobbying. The grantees state that the activities were eligible as regional OTAG activities or informational activities. As identified in the finding, we concluded that some of the funded activities constitute lobbying, as defined in OMB Circular A-122, and therefore, should not have been funded with Federal funds. We based our conclusions on OMB Circular A-122, the funded activities, records Page 10 reviewed, and interviews with the grantee’s staff and tenants involved. However, we did modify recommendation 1G to take into account the grantees comments. RECOMMENDATIONS We recommended that the Director of OMHAR: 1A. Require the Housing Advocacy Coalition and the Community Resource Center to support the assistance to the ineligible projects and refund the grant the cost associated with assistance to the ineligible projects. 1B. Require the Housing Advocacy Coalition and the Community Resource Center to repay the $3,827 in excess salaries and benefit charges. 1C. Require the Housing Advocacy Coalition and the Community Resource Center to maintain time records according to OMB Circular A-122. 1D. Require the Housing Advocacy Coalition and the Community Resource Center to submit a cost allocation plan and based on the plan adjust the $9,070 for telephone, accounting and auditing charges and repay any overcharges. 1E. Require the Housing Advocacy Coalition and the Community Resource Center to stop charging the grant for activities related to lobbying as defined by MAHARA and OMB Circular A-122. 1F. To establish policies and procedures for identifying eligible projects to ensure only eligible projects receive assistance from grantees. 1G. To establish policies and procedures for identifying grantees engaged in housing advocacy, to ensure Federal funds are not used to support direct or indirect lobbying activities. MANAGEMENT CONTROLS In planning and performing our audit, we considered the management controls relevant to the Housing Advocacy Coalition and the Community Resource Center’s Section 514 program to determine our audit procedures, not to provide assurance on the controls. Management controls include the plan of organization, methods, and procedures adopted by management to ensure that its goals are met. Management controls include the processes for planning, organizing, directing, and controlling program operations. They include the systems for measuring, reporting, and monitoring program performance. We determined that the following management controls were relevant to our audit objectives: · Identification of projects and activities eligible for assistance, · Controls and documents to support costs of assistance provided, and · Controls and procedures over the reporting of activities and cost. Page 11 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: · Lack of a system to fully support that only eligible projects were assisted with Section 514 funds, · Lack of polices and procedures to ensure that salaries and time records met the standards of OMB Circular A-122, · Lack of a cost allocation plan to charge shared costs, and · Lack of polices and procedures to ensure that lobbying activities are not directly or indirectly funded by Federal sources. FOLLOW-UP ON PRIOR AUDITS The Office of Inspector General performed no previous audit of the Housing Advocacy Coalition or the Community Resource Center. Page 12 Appendix A SCHEDULE OF QUESTIONED COSTS Recommendation Type of Questioned Costs Number Ineligible 1/ Unsupported 2/ 1B $3,827 1D $9,070 1/ Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity that the auditor believes are not allowable by law, contract or Federal, State or local policies or regulations. 2/ Unsupported costs are costs charged to a HUD-financed or HUD-insured program or activity and eligibility cannot be determined at the time of audit. The costs are not supported by adequate documentation or there is a need for a legal or administrative determination on the eligibility of the costs. Unsupported costs require a future decision by HUD program officials. This decision, in addition to obtaining supporting documentation, might involve a legal interpretation or clarification of Departmental policies and procedures. Page 13 Appendix B AUDITEE COMMENTS Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Appendix C EXTERNAL REPORT DISTRIBUTION Sharon Pinkerton, Senior Advisor, Subcommittee on Criminal Justice, Drug Policy & Human Resources, B373 Rayburn House Office Bldg., Washington, DC 20515 Stanley Czerwinski, Director, Housing and Telecommunications Issues, U.S. General Accounting Office, 441 G Street, NW, Room 2T23, Washington, DC 20548 Steve Redburn, Chief Housing Branch, Office of Management and Budget, 725 17th Street, NW, Room 9226, New Executive Office Bldg., Washington, DC 20503 Linda Halliday (52P), Department of Veterans Affairs, Office of Inspector General, 810 Vermont Ave., NW, Washington, DC 20420 William Withrow (52KC), Department of Veterans Affairs, OIG Audit Operations Division, 1100 Main, Rm 1330, Kansas City, Missouri 64105-2112 The Honorable Joseph Lieberman, Chairman, Committee on Government Affairs, 706 Hart Senate Office Bldg., United States Senate, Washington, DC 20510 The Honorable Fred Thompson, Ranking Member, Committee on Governmental Affairs, 340 Dirksen Senate Office Bldg., United States Senate, Washington, DC 20510 The Honorable Dan Burton, Chairman, Committee on Government Reform, 2185 Rayburn Bldg., House of Representatives, Washington, DC 20515 The Honorable Henry A. Waxman, Ranking Member, Committee on Government Reform, 2204 Rayburn Bldg., House of Representatives, Washington, DC 20515 Andy Cochran, House Committee on Financial Services, 2129 Rayburn H.O.B., Washington, DC 20515 Clinton C. Jones, Senior Counsel, Committee on Financial Services, U.S. House of Representatives, B303 Rayburn H.O.B., Washington, DC 20515 Page 26
Congressionally Requested Audit of the Outreach and Training Assistance Grant Awarded to the Housing Advocacy Coalition, Colorado Springs, Colorado, Grant Number FFOT00008CO
Published by the Department of Housing and Urban Development, Office of Inspector General on 2002-08-26.
Below is a raw (and likely hideous) rendition of the original report. (PDF)