Issue Date September 30, 2002 Audit Case Number 2002-PH-1006 TO: Charles H. Williams, Director, HUD’s Office of Multifamily Housing Assistance Restructuring, HY FROM: Daniel G. Temme, Regional Inspector General for Audit, Mid-Atlantic, 3AGA SUBJECT: AUDIT MEMORANDUM – Congressionally Requested Audit of the Outreach and Training Assistance Grant awarded to Legal Aid Bureau, Incorporated, Grant Number FFOT0020MD Baltimore, Maryland INTRODUCTION We completed an audit of the Legal Aid Bureau, Incorporated $450,000 Outreach and Training Assistance Grant (OTAG). The objectives of the review were to determine if the Legal Aid Bureau, Incorporated used Section 514 grant funds for only eligible activities as identified in the Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA), their agreements, and/or other requirements to further the Mark-to-Market Program. Also we wanted to determine if the Legal Aid Bureau, Incorporated expended Section 514 funds for any lobbying activities. MAHRA specifically identified lobbying as an ineligible activity. The audit identified that the grantee could not provide adequate support for $90,904 in disbursements it made for salaries and fringe benefits, and $22,676 in indirect costs. In addition, the grantee charged $3,198 of ineligible expenditures to the grant. We also noted the grantee did not comply with other requirements of the Office of Management and Budget’s (OMB) Circular A-122, Cost Principles for Non-Profit Organizations, which included using grant funds to participate in lobbying activities. Our report contains eight recommendations to address the issues identified in the report and to strengthen the grantee’s management controls. 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 Housing 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 grantee’s 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 or nonprofit entities, and Office of Management and Budget’s guidance on the allowability of costs for nonprofit grantees. The audit covered the period January 2001 through June 2002 for the OTAG grant awarded to Legal Aid Bureau, Inc. We performed the fieldwork at the Office of Legal Aid Bureau, Inc., located at 500 East Lexington Street, Baltimore, MD during June and July 2002. We conducted the audit in accordance with Generally Accepted Government Auditing Standards. We held an exit conference with the Executive Director of the Legal Aid Bureau on September 6, 2002. We appreciate the courtesies and assistance extended by the personnel of the Legal Aid Bureau, Incorporated 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 your staff have any questions please contact Christine Begola at (410) 962-2520. SUMMARY We found that Legal Aid Bureau, Incorporated (Legal Aid) did not maintain adequate accountability over its OTAG funds in accordance with OMB Circular A-122. Specifically, Legal Aid did not maintain personnel activity reports to support $90,904 in salaries and fringe benefits charged to the grant and disbursed $3,198 for ineligible expenditures, which included computers, entertainment and lobbying activities. In addition, the grantee did not prepare a cost allocation plan per the guidance in OMB Circular A-122, Attachment A, thus causing $22,676 in unsupported indirect costs to be allocated to the grant. Also, according to the grantee’s reports to OMHAR, the grantee participated in a number of teleconferences that included sessions on how the NAHT affiliates were to lobby legislators. Further, we identified an instance where the OTAG coordinator participated in a letter writing campaign in an attempt to influence HUD and local elected officials. Under OMB Circular A- 122, these activities are prohibited and any associated costs ineligible. However, since the grantee did not maintain detailed time records, we could not determine the actual amount of time and associated costs expended for these ineligible activities. 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 lobbying members of Congress. HUD issued a Notice of Fund Availability in fiscal year 1998 and a second in fiscal year 2000 to provide 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 state 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. 3 Title 24 Code of Federal Regulation (CFR) Part 84 contain the uniform administrative requirements for grants between HUD and nonprofit organizations. The regulations (24 CFR Part 84.27) require that nonprofit grantees utilize the OMB Circular A-122, Cost Principles for Non-Profit Organizations, in determining the allowability of costs 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 costs 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 activities. Simply stated, the use of Federal funds for any lobby activity is unallowable. OMB Circular A-122 identifies some examples of unallowable activities 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 introduction, enactment or modification of any pending legislation by propaganda, demonstrations, fundraising drives, letter writing, or urging members of the general public either for or against the legislation (Grassroots Lobbying). Legal Aid applied for an OTAG grant in fiscal year 2000 for $450,000, and was authorized $350,000 in January 2001, however, they did not start expending the grant until July, 2001. As of June 2002, $116,778 was expended against the grant. Legal Aid received an annual financial audit for their activities for the period ending December 31, 2001. The auditor provided an unqualified opinion for that year. In addition to the OTAG grant, Legal Aid received grants from other Federal and non-Federal sources. For example, from non-Federal sources, Legal Aid’s operations are funded through grants from the Maryland Legal Services Corporation. During fiscal year 2001, Maryland Legal Services Corporation provided Legal Aid $3,808,740 in funding. During that same time period, an organization funded by a non-profit corporation established by Congress, Legal Services Corporation, provided Legal Aid with $3,461,370 in funds. Legal Aid’s total funding from all sources for fiscal year 2001 was $14,367,308. FINDING: The Grantee Did Not Comply With HUD and OMB Requirements Contrary to the requirements of OMB Circular A-122, Legal Aid did not maintain adequate time records to support salary and benefit costs charged to the grant, nor did they maintain adequate documentation to support the cost allocation method it used to charge indirect costs to the grant. In addition, we identified a number of ineligible lobbying expenditures were charged to the grant. This occurred because the grantee simply did not have a full understanding of the requirements under the grant and related Federal Regulations. As a result, Legal Aid charged the grant $90,904 in unsupported salaries and benefits, $22,676 in unsupported allocated indirect costs, and another $3,198 in ineligible expenditures, which included computers, entertainment and lobbying activities. However, we could not determine the complete amount of lobbying activities due to the lack of adequate time records. When asked why the grantee did not follow OMB Circular A- 122, the Controller stated because they followed OMB Circular A-133, Audits of States, Local 4 Governments, and Non-Profit Organizations, they were not required to maintain a cost allocation plan, as noted in OMB Circular A-122. We could not determine how the Controller came to this incorrect conclusion. Compensation for Personal 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 grantee. Specifically, the grantee must maintain reports that: (1) account for the total activity for which an employee is compensated for in fulfillment of their obligations to the organization; (2) reflect an after the fact determination of actual activity for each employee; and (3) reflect the distribution of activity of each employee (professionals and nonprofessionals) whose compensation is charged, in whole or in part, directly to awards and requires the employee or a responsible supervisor to sign the report. Further, the OMB Circular states that budget estimates do not qualify as support for charges to the grant. 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. We found Legal Aid did not maintain detailed supporting employment records reflecting employees’ activity per OMB Circular A-122 guidance. Instead, all salary charged to the grant was based upon a percentage rate, calculated by using the number of employees assigned to the OTAG grant divided by the number of full time employees in the Support Unit Cost Center, in which the OTAG grant was located. This rate was then applied to all salaries charged to the Support Unit Cost Center to come up with the total salaries charged to the OTAG grant. The grantee explained this cost allocation method for salaries was made to provide for increased efficiency for the entire organization. However, when we tried to verify the allocation rate, the grantee’s Deputy Director told us the percentage rate used was based upon an educated guess of the hours charged by the employees working on the grant and not the actual hours. At the time of our review, five staff members were assigned to work on the grant on a full time basis. This included a law graduate, three paralegals, and an administrative assistant. The rest of the staff worked on the grant periodically, thus their time was estimated in order to arrive at an equivalent number of full time employees assigned to the grant. For example, in February 2002 the number of attorneys charged to work on the grant was 1.75. This represented one full time attorney and two other attorneys whose combined time accounted for ¾ of a full time employee equivalent. By using this allocation method, there was no accounting for the actual number of hours charged to the grant, especially for the lawyers that only worked on the grant periodically. When we attempted to verify the hours charged by the staff, we were told that the lawyers did not track their time using the amount of detail needed to support the grant. Also, the time sheets of the OTAG coordinator provided no detail and only annotated a flat eight hours per day were charged against the grant. Altogether, the grantee charged $90,904 in salary costs to the grant. OMB Circular A-122 states that all of the activity and the distribution of that activity must be documented for both professional and non-professional staff assigned to the grant. Based upon 5 the review of the time sheets, Legal Aid did not follow this requirement, and thus we question the entire $90,904. In our review, we tested the entire amount of salaries and benefits charged against the grant up to June 2002. Since the grantee didn’t maintain detailed time records, we reviewed the grantee’s quarterly reports to OMHAR to determine the types of activities the grantee was charging against the grant and if the work was completed only on eligible properties. While reviewing these reports we noted all properties listed were eligible properties. However, we also noted the OTAG coordinator charged time against the grant for activities that appeared to be completed in previous quarters. For example, in the September 2001 Mark-to-Market Activity Report, the coordinator documented under the “Analysis of Properties” section of the report she “visually assessed” seven properties for their “likelihood of Mark-to-Market participation”, charging 15 hours per property. Three of the properties listed, Foxwell Memorial, Fairfax Gardens and Glenarden I, are also listed on the December 2001 report under the same activity, with 15 hours being charged to the grant. In fact, two of the properties continue to be listed in the March 2002 report.1 The grantee disagreed with our interpretation of the information presented in the quarterly reports. The grantee said the OTAG coordinator performed different activities for the properties listed in successive reports under the category of “Analysis of Properties” and subcategory “visual assessment”. However, since these reports show evidence the assisted properties are receiving “direct outreach services”, in all three quarterly reports for this grant, we question why the OTAG coordinator would need to document that she was still trying to make a determination as to the properties likelihood to participate in the Mark-to-Market Program. Based on the OMHAR quarterly reports it appears this determination had already been made by the OTAG coordinator. Allocating Indirect Costs to the Grant The grantee also allocated certain costs to the grant that included travel, training, telephone, facilities cost and consumable supplies. OMB Circular A-122 Attachment A, provides guidance on the basic considerations for grant fundable costs and allocation of indirect costs. The guidance provides that the grantee must support a cost allocation that takes into account all activities of the organization. Unless different arrangements are agreed to by the agencies concerned, the Federal agency with the largest dollar value of awards with an organization will be designated as the cognizant agency for the negotiation and approval of the indirect cost rates. A non-profit organization that does not have an approved cost allocation plan must submit an initial cost allocation plan within three months of receiving the award. 1 These same properties are also noted in the “initial assessment” phase of the Quarterly reports under the first OTAG grant received by Legal Aid. A review of the prior grant reports note that Foxwell Memorial was originally “initially assessed” in September 2000, Glenarden I in March 2000 and Fairfax Gardens in July 2001. These reports also show that “direct outreach services” were being provided during the same time period. 6 When we requested a copy of the cost allocation plan, the grantee’s Controller simply provided the rates used to calculate indirect costs. The grantee explained these rates are based upon the number of staff assigned to a particular job category, made up of similar projects sharing in the same expenses. For example, in the first quarter of 2000, all of the project coordinator’s time and .21 full time equivalent attorney’s time was charged to the OTAG project. At the time there was 8.8 legal staff sharing costs in the support unit. Therefore, 1.21/8.8 of the costs or the unit were allocated to the OTAG grant. Although this plan appears to be reasonable, the rate is based upon the assumption the number of full time staff assigned to work on the OTAG grant is accurate. As we previously discussed, the grantee calculates the number of full time employee equivalents working on and charged to the grant, based on an educated guess. Since both the part time and full time staff do not maintain their time in accordance with OMB Circular A-122, we question the accuracy of any of the calculated salaries charged to the grant. We also noted the grantee never received approval from their cognizant agency to use this plan nor had they provided a copy of the cost allocation plan to HUD. The Controller stated Legal Aid did not have to complete a cost allocation plan in accordance with OMB Circular A-122 because they received an unqualified opinion on their audit under OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and, as such, were in full compliance with all Federal requirements. We found no sound basis as to how the Controller formulated this opinion since no provision under either Circular states a grantee is exempt from completing a cost allocation plan if they receive an unqualified opinion on their audit under the Single Audit Act. The grantee expended $25,874 in indirect expenditures charged to the grant from July 2001 to June 2002. The majority of these expenditures were accounted for in the categories of travel, equipment, training, management, and general type expenditures. The Notice of Fund Availability dated February 24, 2000 Section III C & D provides guidance on what types of expenditures are considered eligible and ineligible under this grant. For example, computer purchases are eligible with a reimbursement limit of $1,000 while entertainment, including food and beverages are ineligible expenses. In our review, we noted Legal Aid purchased six computers valued at $8,970 in December 2001 and allocated $3,356 to the OTAG grant. Per the Notice of Fund Availability only $1,000 can be allocated to the grant, thus $2,356 of the equipment is an ineligible expense. Also, we noted the grantee allocated entertainment costs (food, beverages and flowers) for the office coffee fund, OTAG resident meetings, and annual holiday parties to the grant. We also questioned telephone costs associated with an employee that did not work on the OTAG grant. In total, ineligible entertainment and telephone costs totaled $362. Since the grantee did not maintain detailed time records as required under OMB Circular A-122, we could not determine if the cost allocations applied by the grantee were reasonable. Thus, excluding the $2,718 in ineligible computer, phone and entertainment expenses, the remaining $22,676 of indirect expenditures is unsupported ($25,874 less $2,718). 7 Lobbying MAHRA specifically prohibited the use of Section 514 funds to lobby members of Congress or their staff. OMB Circular A-122, Attachment B, Paragraph 25, Lobbying, places additional limitations on the grantee’s use of Federal funds for lobbying. As identified in the background section, Legal Aid also receives non-Federal funds from a number of other sources. The allowability and use of these funds for lobbying activities would not be restricted by the guidance of OMB Circular A-122. We reviewed the grantee’s quarterly reports to OMHAR, travel vouchers, and staff time sheets to identify meetings with legislative members or their staff. We also reviewed these reports to determine if the grantee worked on activities that did not meet the requirements of MAHRA and to determine if these activities were considered Grassroots lobbying. We identified one instance where the OTAG coordinator participated in a Tenant Association meeting to begin a letter campaign to owners, the local housing authority, HUD, and the City’s Mayor to stop the prepayment and garner support for the preservation of the property. In addition, the grantee paid membership dues to, and participated in teleconferences, sponsored by the National Alliance of HUD Tenants (NAHT), which included ineligible lobbying activities. For example, the grantee provided examples of four different conference agendas identified as the teleconferences they had participated in. Specifically, these sessions included discussions on how the NAHT affiliates are to lobby both Democratic and Republican Senators to co-sponsor Preservation Matching. On average the teleconferences were scheduled to last one hour and thirty minutes with a substantial amount of time devoted to discussing lobbying issues, while only five minutes related to the Mark-to-Market Program. Based upon OMB’s guidance, only the portion of the activity related to the purpose of the grant can be charged to the grant and lobbying is not considered an allowable activity. However, the grantee charged the full amount to the OTAG grant. While reviewing the expenditures we noted a charge of $480 in association with the teleconference. The grantee explained that each grantee is requested to pick up the expenditure for the cost of the conference call; this charge represents the time Legal Aid picked up the charge. The grantee contends its staff did not engage in prohibited lobbying activities. We attempted to verify the grantee’s claim and determine the amount of unallowable lobbying activities being charged to the grant; however, since Legal Aid does not maintain adequate travel and time records, with the exception of the charge noted above, we could not determine the actual costs associated with these expenditures. We consider the teleconference cost to be ineligible because it involved lobbying activities. AUDITEE COMMENTS We provided our draft report to the grantees for their comments on September 9, 2002. The grantee provided their comments on September 20, 2002. A copy of the narrative portion of the 8 grantee’s response is attached in Appendix B. However, due to the overall volume of the grantee’s response, the attachments were not included in this audit memorandum. Except for Legal Aid’s concurrence that it was not permitted to charge $2,718 in computer and food costs to the grant, which it has agreed to reimburse HUD, Legal Aid strongly disagrees with the findings of our review. Specifically, they believe they are in full compliance with all Federal regulations relating to their accounting for the compensation of personal services, indirect costs and lobbying type activities. Legal Aid stated they maintain appropriate and adequate documentation to support the compensation for personal services and it meets the requirements of OMB Circular A-122. They believe since the auditors did not find any evidence to support that the work completed on the OTAG project was used for any other purpose, the time is supported. Legal Aid also noted they offered to provide the documentation to the auditors after the discussion draft was issued in order to clear up the finding, before the final report was issued. Further, Legal Aid stated their method of allocating costs to the grant is in compliance with OMB Circular A-122. However, they acknowledge their plan had not been submitted to their Cognizant agency or HUD for approval. Finally, Legal Aid strongly disagrees with our finding pertaining to lobbying activities. They state although their staff did attend NAHT conferences, they did not participate in any lobbying activities and used that time to meet with other OTAG project grantees to discuss their experiences. The grantee also contends that NAHT conference calls provide a further opportunity for the grantees to share their experiences and NAHT requested all grantees to share in the cost of the calls so everyone has the opportunity to gain from the information. Legal Aid also states that their employees did not participate in the discussions about lobbying on these calls and noted that their quarterly reports to OMHAR reflect these calls and HUD has never questioned the expense. As for the letter writing campaign in which the OTAG coordinator assisted, they assert it was an attempt to bring to their representative’s attention the fact that the district was in danger of losing affordable housing. OIG EVALUATION OF AUDITEE COMMENTS Except for our agreement on the ineligible computer and food expenses, we disagree with the grantee’s assessment of the review. However, based on our review of their comments and attachments, we made changes to the report where it was deemed necessary. We disagree with Legal Aid’s conclusion that they maintained their salary documentation in accordance with OMB Circular A-122 and that the records were available at the time of our review. As defined in the findings, we noted the grantee did not follow OMB Circular A-122 when accounting for staff compensation and we questioned several of the activities they performed. We do acknowledge after the discussion draft was issued the grantee offered to provide us the documentation they felt would clear the finding. However, this offer entailed the grantee estimating the time by reviewing emails, calendars, correspondence, etc. to satisfy the 9 audit issue over a two-week period. In our opinion, this estimate would still not satisfy the requirements of OMB Circular A-122. We are encouraged that the grantee has submitted their allocation plan to OMHAR for approval, and even did so prior to OMHAR making the request. However, as noted in the report we have concerns over how the calculation of full time equivalents is being calculated. Since the grantee’s full time equivalent calculation is based upon an educated guess and is used in determining the allocation of salaries and indirect costs to the grant, we believe there is a flaw in their methodology. Finally, based on the requirements of OMB Circular A-122 and grantee’s records, we believe our conclusions concerning the lobbying issues are fully supported and were presented in a balanced fashion in the report. RECOMMENDATIONS We recommended that the Director of OMHAR require Legal Aid Bureau, Incorporated to: 1A. Repay to HUD from non-Federal funds the $3,198 in ineligible computer, food, phone and lobbying expenditures that were charged to the grant. 1B. Maintain detailed time records in accordance with OMB Circular A-122. 1C. Provide proper support for all unsupported salary and benefit costs totaling $90,904, and repay to HUD from non-Federal funds amounts it cannot adequately support. 1D. Prepare and submit an acceptable cost allocation plan that fairly allocates indirect costs among funding sources, and based on the plan make appropriate adjustments to the $22,676 in indirect costs and repay to HUD from non-Federal funds any overcharges. 1E. Stop charging the grant for activities related to lobbying as defined by MAHRA and OMB Circular A-122. 1F. 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. We recommend that the Director of OMHAR: 1G. Restrict all remaining grant distributions to the Legal Aid Bureau, for this grant and any future grants, until the grantee demonstrates they have established the necessary policies and procedures to ensure they can administer the grant in accordance with OMB Circulars A-122 and the MAHRA. 1H. Make a determination on the lobby issues presented to determine if sanctions should be imposed as provided for in the 2002 Defense Appropriations Act. MANAGEMENT CONTROLS In planning and performing our audit, we considered the management controls relevant to the Legal Aid Bureau’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 10 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. 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 policies and procedures to ensure that allocation rates meet the standards of OMB Circular A-122, · Lack of policies and procedures to ensure that salaries and time records meet the standards of OMB Circular A-122, · Lack of policies and procedures to ensure that lobbying activities are not directly or indirectly funded by Federal sources. FOLLOW-UP ON PRIOR AUDITS This was the first audit the Office of Inspector General completed on the Legal Aid Bureau, Incorporated. 11 Appendix A SCHEDULE OF QUESTIONED COSTS Recommendation Type of Questioned Costs Number Ineligible 1/ Unsupported 2/ 1A $3,198 1C $90,904 1D $22,676 Total $3,198 $113,580 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. 12 Appendix B AUDITEE COMMENTS 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Appendix C DISTRIBUTION OUTSIDE OF HUD 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 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 31
Congressionally Requested Audit of the Outreach and Training Assistance Grant awarded to Legal Aid Bureau, Incorporated, Grant Number FFOT0020MD Baltimore, Maryland
Published by the Department of Housing and Urban Development, Office of Inspector General on 2002-09-30.
Below is a raw (and likely hideous) rendition of the original report. (PDF)