oversight

Housing Program Administration and Operations of the Nampa Housing Authority, Nampa, Idaho

Published by the Department of Housing and Urban Development, Office of Inspector General on 2002-01-10.

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

       AUDIT REPORT




      HOUSING PROGRAM
ADMINISTRATION AND OPERATIONS
              OF THE
  NAMPA HOUSING AUTHORITY
         NAMPA, IDAHO


            2002-SE-1001
          JANUARY 10, 2002

  OFFICE OF AUDIT, NORTHWEST/ALASKA
         SEATTLE, WASHINGTON
                                                                 Issue Date
                                                                              January 10, 2002
                                                                 Audit Case Number
                                                                              2002-SE-1001




MEMORANDUM FOR:             Elizabeth J. Santone, Program Center Coordinator
                            HUD’s Portland Office of Public Housing, 0EPH

      (ORIGINAL SIGNED)
FROM: Frank E. Baca, District Inspector General for Audit, 0AGA

SUBJECT:       Final report of housing program administration and operations of the
               Nampa Housing Authority, Nampa, Idaho

At your request, we performed an audit of the Nampa Housing Authority’s housing program
administration and operations in which we addressed certain allegations of mismanagement,
misuse and abuse. The audit resulted in six findings, discussed in this report.

Within 60 days, please give us, for each recommendation in this report, a status report on:
(1) the corrective actions taken; (2) the proposed corrective action and the date to be completed;
or (3) why action(s) is considered unnecessary. Also, please furnish us with copies of any
correspondence or directives issued because of the audit.

Should you or your staff have any questions, please call me at (206) 220-5360.
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2002-SE-1001                    ii
Executive Summary

At your request, we performed an audit of the Nampa Housing Authority’s (Authority) housing
program administration and operations in which we addressed certain allegations of
mismanagement, misuse and abuse. Our objectives were to determine whether the:

   ·   Board of Commissioners:
       o properly monitored the Executive Director’s performance and activities, and
       o adequately oversaw the Authority's operations.
   ·   Executive Director:
       o accounted for his time, attendance and activities in accordance with program
          requirements,
       o adequately supported his mileage and travel claims, and
       o complied with program requirements when he sold personal items to the Authority;
   ·   Authority had reasonable controls over its rental receipts and security deposits; and
   ·   Board members appointed after May 1998 were properly selected.

Our audit results raised significant concerns about all these issues except the last. Overall,
we found that the Board did not adequately carry out its responsibilities to oversee the
administration and operations of the Authority. The Board did not provide adequate monitoring,
or adopt policies and procedures that are adequate or consistent with program requirements.
More specifically:

   Performance evaluations and salary reasonableness. The Authority does not have specific
   procedures for evaluating employee performance and determining the reasonableness of staff
   salaries. As a result, the Board substantially increased the Executive Director's salary
   without properly evaluating his performance or the reasonableness of the increases.

   Accounting for employees' time. The Board advised the Executive Director not to track his
   time, resulting in HUD grants paying for work on non-HUD activities. Also, the Authority
   charged employee salaries to HUD grants based on budget estimates rather than actual
   activities.

   Review of travel requests and claims. The Board did not always ensure that the Executive
   Director's travel was approved and claims were proper. Therefore, the Authority does not
   know if travel costs were necessary and reasonable.

   Compliance with procurement requirements. The Board did not exercise reasonable controls
   when it allowed the Executive Director to sell items to the Authority, resulting in conflicts of
   interest and questionable purchases.

   Safeguarding cash. The Board did not ensure the Authority had controls to safeguard tenant
   rent and security deposits, resulting in misappropriated funds. In addition, the Board did not
   take action to recover the misappropriated funds.



                                                iii                                2002-SE-1001
Executive Summary


We are recommending that HUD, (1) determine, in conjunction with the appropriate City of
Nampa officials, the proper administrative actions against the Board and the Executive Director,
(2) implement the necessary policies and controls to ensure the Authority is run efficiently, has
proper Board oversight, and complies with HUD requirements, and (3) require the Authority to
reimburse or provide support for questionable costs.

We provided the Board with a draft report at our exit conference on November 14, 2001 and
discussed the findings with the current Board of Commissioners and the former Board Chairman.
The Board responded with written comments to the draft report on December 7, 2001, generally
disagreeing with our findings but agreeing there is need for improvement. The Findings section
of this report summarizes and evaluates the Board’s comments. A copy of the Board’s full
response is included in Appendix B.




2002-SE-1001                                    iv
Table of Contents

Management Memorandum                                                               i


Executive Summary                                                               iii


Introduction                                                                        1


Findings
1.   The Board was not Actively Involved and Diligent in its Monitoring
     of Authority Operations                                                        5
2.   The Authority Needs to Evaluate Employee Performance and
     Ensure Salaries are Reasonable                                                 9
3.   The Authority Needs to Establish a Proper Payroll Distribution System      15
4.   The Authority Charged HUD Funds for Unsupported Travel and
     Local Mileage Costs                                                        21
5.   Procurement Requirements Not Followed                                      25
6.   The Authority Needs to Improve Management Controls to Safeguard
     Cash from Loss or Misuse                                                   29


Management Controls                                                             33


Appendices
     A. Schedule of Questioned Costs                                            35

     B. Auditee Comments                                                        37

     C. Distribution                                                            41



                                       v                             2002-SE-1001
Table of Contents




Abbreviations
   ACC              Annual Contributions Contract
   Authority        Nampa Housing Authority
   CFR              Code of Federal Regulations
   CIAP             Comprehensive Improvement Assistance Program
   HUD              Housing and Urban Development
   MCC              Mortgage Credit Certificate
   NHFC             Nampa Housing Finance Corporation
   OIG              Office of Inspector General
   OMB              Office of Management and Budget
   PHA              Public Housing Agency




2002-SE-1001                                 vi
Introduction

 Background                             In 1939, the Nampa Housing Authority in Nampa, Idaho
                                        was created for the purpose of providing decent, safe and
                                        sanitary living conditions for persons of low income. A
                                        five-member Board of Commissioners headed by Mr. Ray
                                        Wahlert, the Board Chairman, oversees the Authority. An
                                        Executive Director runs the Authority's day-to-day
                                        operations.

                                        The Authority currently manages 142 federally assisted
                                        low-income housing units. Per its Annual Contributions
                                        Contract (ACC) with the U.S. Department of Housing and
                                        Urban Development (HUD), the Authority agreed to at all
                                        times, operate each project solely for the purpose of
                                        providing decent, safe, and sanitary housing for eligible
                                        families in a manner that promotes serviceability, economy,
                                        efficiency, and stability of the projects.

                                        Over the last four fiscal years, HUD granted the Authority
                                        more than $1 million in Operating Subsidy, Comprehensive
                                        Improvement Assistance Program, and Capital Fund
                                        Program grants:

                                                               Fiscal Years
 Program Grants                              1998           1999       2000        2001       Totals
 Operating Subsidy                          $68,852       $ 77,907    $ 62,810   $ 78,973   $ 288,542
 Comprehensive Improvement Assistance
 Program (CIAP)                                            290,042                            290,042
 Capital Fund Program (Modernization)                                  303,127    309,038     612,165
    Totals                                  $68,852       $367,949    $365,937   $388,011   $1,190,749


                                        At your request for assistance, we performed an audit of the
 Objectives, Scope and                  Authority’s housing program administration and operations
 Methodology                            to address allegations of mismanagement, misuse and
                                        abuse. Our audit objectives, based on the allegations, were
                                        to determine whether the:

                                        ·   Board of Commissioners:

                                            o properly monitored the Executive Director’s
                                              performance and activities, and

                                            o adequately oversaw the Authority’s operations.

                                                      1                                     2002-SE-1001
Introduction


               · Executive Director:

                   o accounted for his time, attendance and activities in
                     accordance with program requirements,

                   o adequately supported his mileage and travel claims,
                     and

                   o complied with program requirements when he sold
                     personal items to the Authority;

               ·   Authority had reasonable controls over its rental
                   receipts and security deposits; and

               ·   Board members appointed after May 1998 were
                   properly selected.

               To achieve the audit objectives, we performed audit
               procedures that included:

               ·   Reviewing applicable federal criteria, including
                   regulations, contracts, Office of Management and
                   Budget Circulars, and HUD directives and guidelines.

               ·   Interviewing Portland Office of Public Housing staff to
                   obtain information on the Authority’s administration
                   and operation of HUD programs.

               ·   Interviewing Board members (former and current) and
                   reviewing Board minutes and other relevant records to
                   understand the Board's responsibility for monitoring the
                   administration and operation of the Authority.

               ·   Reviewing Idaho Code on Housing Authorities and
                   Cooperation Law, the Authority by-laws, and related
                   documentation to obtain an understanding of the
                   requirements for qualifying, selecting and appointing
                   nominees for Board seat appointments.

               ·   Reviewing the Authority by-laws to determine Board
                   procedures for conducting its business and exercising
                   its powers over the administration and operations of the
                   Authority.




2002-SE-1001              2
                                                 Introduction


·   Interviewing former and current Authority staff to
    obtain an understanding of the Authority’s practices for
    (1) timekeeping, (2) evaluating employee performance,
    (3) determining salary increases, (4) processing travel
    claims, (5) procuring items, (6) processing and
    adjusting tenant payments, and (7) accounting for costs
    charged to HUD grants.

·   Examining grant files and related documents to
    determine the Authority’s allocations of the Executive
    Director’s salaries for fiscal years 1998 through 2001.

·   Reviewing the Authority’s policies and related
    documentation to determine whether the:

    o Executive Director accounted for his time,
      attendance and activities in accordance with
      program requirements; adequately supported his
      mileage and travel claims; and followed program
      requirements when he sold items to the Authority.

    o Authority had reasonable controls over its rental
      receipts and security deposits.

·   Reviewing support for expenditures the Authority
    charged HUD grants for the Executive Director’s
    salaries, for procuring items from the Executive
    Director, and for travel and local mileage costs the
    Executive Director claimed.

The audit generally covered the period from May 1, 1998
through May 7, 2001. We extended the audit period as
appropriate during our review. We performed audit
fieldwork at the Authority’s office in Nampa, Idaho from
May to June 2001.

We conducted the audit in accordance with generally
accepted government auditing standards.




           3                                    2002-SE-1001
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2002-SE-1001                    4
                                                                                    Finding 1



The Board was not Actively Involved and Diligent in its Monitoring
                   of Authority Operations
Because the Board did not adequately carry out its responsibilities over the Authority’s
administration and operations, Authority activities were not administered in accordance
with program requirements, HUD grants were charged for questionable costs, and
Authority funds were misappropriated.


  The Board is charged with       Public Housing Agency (PHA) Commissioners delegate
  ensuring Authority              responsibility and authority to the Executive Director to act
  integrity and compliance        on their behalf. HUD expects PHA Commissioners to
  with HUD requirements           establish high ethical standards for the PHA staff, act as
                                  positive role models, and ensure the establishment of sound
                                  PHA internal controls and that Authority operations are
                                  conducted legally, with integrity and in compliance with
                                  federal and local laws.

                                  HUD’s Program Integrity Bulletin issued in November
                                  1990 states the roles and responsibilities of the PHA
                                  Commissioners. Specifically, the Commissioners are to:

                                  · Establish and approve by-laws, resolutions, and policies
                                    and procedures for internal and external monitoring
                                    controls and for detecting and preventing program
                                    fraud, waste, mismanagement and abuse.

                                  · Review and monitor budgets and other documents to
                                    ensure expenditures are in compliance with federal and
                                    local laws, and other requirements.

                                  · Ensure that the PHA is acting legally and with integrity
                                    in its daily operations.

                                  · Understand their responsibilities and roles in relation to
                                    the Executive Director.

                                  · Provide clear and concise policy guidelines to the
                                    Executive Director.

                                  · Perform their ultimate responsibility to (a) make policy
                                    decisions for determining how programs are
                                    administered, (b) obtain funds from various resources,
                                    and (c) protect funds needed to keep the PHA operating.



                                             5                                   2002-SE-1001
Finding 1


                                · Be responsible for the actions and decisions made
                                  by the Executive Director and the other PHA staff.

                                The Board did not adequately carry out all its
  The Board did not
                                responsibilities over the administration and operations
  adequately perform all its
                                of the Authority. Specifically, it did not:
  responsibilities over the
  administration and
  operations of the Authority   · Adequately evaluate and monitor the Executive
                                  Director’s performance, or maintain adequate
                                  documentation to support the reasonableness of his
                                  salary increases (see Finding 2).

                                · Adhere to HUD requirements for payroll accountability
                                  when it advised the Executive Director not to keep track
                                  of his time (see Finding 3).

                                · Properly review the Executive Director’s travel costs to
                                  ensure they were eligible, necessary, reasonable, and
                                  supported (see Finding 4).

                                · Exercise reasonable controls when the Executive
                                  Director sold items to the Authority (see Finding 5).

                                · Ensure that the Authority had adequate controls to
                                  protect HUD funds, or take action to recover
                                  misappropriated funds (see Finding 6).

                                Because the Board did not perform adequate oversight
                                over the Executive Director’s activities and Authority
                                operations, Authority activities were not always
                                administered in accordance with program requirements,
                                HUD grants were charged for questionable costs, and
                                Authority funds were misappropriated.

                                It should be noted that the Executive Director nominated
                                three of the Board members, who subsequently were
                                approved by the Mayor of Nampa with the concurrence
                                of the City Council.

  Auditee comments              Addressing the report as a whole, the Board wanted to
                                ensure that the record reflects and recognizes the
                                considerable improvements by Nampa Housing Authority
                                from 1998 to the present, including emerging from
                                bankruptcy to financial soundness, and going from a near-
                                failing performance rating to a high performer. The
                                Authority has progressed because of the Executive Director
                                and his staff's mutually agreed upon commitment to

2002-SE-1001                              6
                                                                                     Finding 1


                                   excellence. "We recognize that our Executive Director is
                                   weak in crossing the t's and dotting the i's. He has so been
                                   informed by the Board and he is very aware of the need to
                                   improve in this area."

                                   The Board did properly carry out its responsibilities relative
                                   to oversight of the operation and administration of the
                                   Authority; however, it recognized the need to improve.
                                   The Board will conduct site commissioner training for the
                                   Board, and has ordered written training materials.

                                   The Executive Director nominated three members (four if
                                   the resident representative is considered) of the current
                                   Board to the Mayor of Nampa, but the Mayor approved the
                                   appointment in public City Council meetings with the
                                   unanimous concurrence of the City Council for each
                                   nomination. The Board will do a better job of documenting
                                   the process in the future.

                                   Much of the Authority's improvement resulted from
 OIG evaluation of Auditee
                                   corrective actions taken after an OIG audit of the
 comments
                                   Authority's Indian Creek Child Care Center (report
                                   no. 98-SE-202-1002, dated June 3, 1998).

                                   Based on the findings discussed in this report, we disagree
                                   with the Board’s contention that it properly carried out its
                                   responsibilities relative to the operation and administration
                                   of the Authority. Further, we are concerned that the Board
                                   may not take the audit findings seriously, since it appears to
                                   believe that the issues reported are a matter of not "crossing
                                   t's," and "dotting i's."

                                   Regarding nomination and selection of Board nominees,
                                   the Executive Director nominated three Board members
                                   without documenting his nomination or selection process.
                                   The Authority however, maintained adequate
                                   documentation showing that it followed the Board-adopted
                                   resolution pertaining to the nomination and selection of a
                                   resident nominee.


Recommendations:
We recommend that you:

1A.   Determine, in conjunction with City of Nampa officials, the proper administrative actions
      to take against the Board and the Executive Director.

                                              7                                    2002-SE-1001
Finding 1



1B.    Require the Authority to develop and implement policies and procedures that will
       make the Board accountable for the Executive Director’s actions and ensure
       that the Authority operates in full compliance with HUD program requirements.




2002-SE-1001                                  8
                                                                                      Finding 2


          The Authority Needs to Evaluate Employee Performance and
                        Ensure Salaries are Reasonable
The Board substantially increased the Executive Director’s salary without properly
evaluating his performance or the reasonableness of the increases. This was because the
Authority does not have specific procedures for evaluating employee performance and
determining the reasonableness of staff salaries, and therefore has no assurance that its
employees perform satisfactorily and are paid reasonable salaries.


                                   The Annual Contributions Contract, federal regulations,
  Requirements for
                                   and various HUD Directives discuss the role and
  evaluating performance
                                   responsibilities of Public Housing Agency Commissioners,
  and determining if salaries
                                   emphasizing leadership, policy development and
  are reasonable
                                   monitoring functions. The Commissioners are ultimately
                                   responsible for Housing Authority operations, including
                                   monitoring the Executive Director and evaluating his
                                   performance. The Commissioners are also required to
                                   review and monitor budgets and other financial documents
                                   to ensure that expenditures (such as salaries paid to the
                                   Executive Director) meet federal as well as the Housing
                                   Authority’s own requirements.

                                   Per its Annual Contributions Contract with HUD, the
                                   Authority agreed to follow Office of Management and
                                   Budget Circular A-87 (Cost Principles for State, Local
                                   and Indian Tribal Governments), which explains how to
                                   determine the reasonableness of salaries charged to federal
                                   awards. Specifically, Attachment B, paragraph 11b of the
                                   Circular states that compensation is considered reasonable
                                   to the extent that it is consistent with that paid for similar
                                   work in other activities of the governmental unit. In cases
                                   where the kinds of employees required for federal awards
                                   are not found in the other activities of the governmental
                                   unit, compensation will be considered reasonable to the
                                   extent that it is comparable to that paid for similar work
                                   in the labor market in which the employing government
                                   competes for the kind of employees involved.
                                   Compensation surveys providing data representative of
                                   the labor market involved will be an acceptable basis for
                                   evaluating reasonableness.

                                   The Authority's Personnel Policy requires that all actions
                                   affecting employees shall be based solely on merit, ability,
                                   and justice. It also requires that all employees shall receive
                                   annual performance ratings and that such ratings shall be
                                   noted in employees’ service records and considered in

                                              9                                     2002-SE-1001
Finding 2


                              effecting personnel actions. An employee who does not
                              perform satisfactorily or who substantially violates
                              regulations shall be subject to dismissal without notice. It
                              further requires the Board to establish a Compensation Plan
                              showing the system for making periodic employee within-
                              range salary increases.

                              From May 1999 to October 2000 the Board granted
  The Board increased the     $15,000 in salary increases to the Executive Director
  Executive Director’s        without adequately evaluating his performance:
  salary without adequately
  evaluating and monitoring              Executive Director's salary
  his performance                        As of:              Salary
                                        09/01/98            $35,000
                                        05/01/99            $40,000
                                        05/01/00            $45,000
                                        10/01/00            $50,000

                              The Board could not provide any documentation to show
                              that it was annually evaluating the Executive Director’s
                              performance.

                              The evaluation of the Executive Director’s performance
                              appears to be a subjective process using unspecified criteria
                              done by a few Board members, rather than a formal process
                              using performance standards in which the entire Board
                              participates.

                              We interviewed all Board members to obtain their
                              perspective on the Executive Director’s most recent annual
                              performance period.

                              The Chairman of the Board stated he evaluates the
                              Executive Director's performance during Board meetings,
                              and that the Board meets the Executive Director twice a
                              week and rates him on rent collections, occupancy, and
                              condition of housing units.

                              Another Board member stated he used his own experience
                              and observations to monitor the Executive Director’s
                              performance. Specifically, he said he had looked at the
                              reports the Executive Director prepared on housing
                              improvements and the Authority’s HUD ratings. Also,
                              when he drives by the Authority, he observes that the
                              Executive Director’s car is usually parked there.



2002-SE-1001                            10
                                                                                 Finding 2


                               The other three Board members said they did not evaluate
                               or rate the Executive Director's yearly performance. Two
                               of the three said the Board, as a whole does not evaluate the
                               Executive Director's performance.

                               Some of the Board members told us that they believed the
                               Executive Director’s performance warranted the salary
                               increase because he had solved several operational issues
                               and improved the Authority’s financial situation. However,
                               the Board did not document this as part of a performance
                               evaluation. Further, at least one Board member was aware
                               of the Executive Director’s questionable activities, which
                               are discussed in this report.

                               To be reasonable, salaries must be comparable to that paid
The Board did not maintain
                               for similar work in other activities of the governmental
adequate documentation to
                               unit or in the labor market in which the employing
support the reasonableness
                               government competes for the kind of employees involved.
of the Executive Director’s
                               Compensation surveys providing data representative of
salary
                               the labor market involved will be an acceptable basis for
                               evaluating reasonableness.

                               The Board could not provide evidence that it obtained any
                               salary comparables prior to granting salary increases to the
                               Executive Director. When determining the amount of the
                               Executive Director’s salary increases, the Board Chairman
                               said he visited the internet sites of some of Idaho’s Housing
                               Authorities such as Twin Falls, Pocatello, and Boise to
                               obtain information on Executive Directors’ salaries. He
                               said he looked at these Authorities’ job listings for
                               Executive Director’s positions, which showed salary
                               ranges. However, the Chairman did not have
                               documentation to support this.

No performance ratings or      Based on the initial results, we expanded the scope to
basis for salaries for other   include other Authority employees. At the time of our
Authority employees            audit the Authority had nine employees excluding the
                               Executive Director. We found that, as was the case with
                               the Executive Director, the other Authority employees
                               did not receive annual performance evaluations, and the
                               Executive Director did not document the basis for their
                               merit increases or bonuses. Therefore, neither HUD nor
                               the Authority have assurance that these employees were
                               performing satisfactorily or that their salaries were
                               reasonable. The Authority Accountant stated that the
                               employees received salary increases based on the approved


                                          11                                  2002-SE-1001
Finding 2


                              Operating Budgets, although no formal annual performance
                              evaluations were performed or documented.

  The Authority does not      The Board has not evaluated the performance of the
  have specific procedures    Executive Director or his staff because it did not develop a
  for evaluating employee     process and procedures for implementing its Personnel
  performance or              Policy on employee yearly performance. Also, the
  determining the             Authority has not established or developed procedures for
  reasonableness of salary    implementing an employee compensation plan that should
  increases                   show the system for making their periodic salary increases,
                              and determining the reasonableness of their compensations.

                              The Board conducted a review in 2000 to determine the
  Auditee comments
                              adequacy of the Executive Director’s salary and benefits.
                              It considered the salary and benefits of other Executive
                              Directors in Idaho and the history of salaries and benefits
                              paid to previous Authority Executive Directors. Also, it
                              reviewed the results of a survey conducted in March 2000
                              and considered the accomplishments and improvements of
                              the agency over the previous year and the professional
                              certifications the Executive Director had obtained. The
                              results of the salary and benefit surveys were available at
                              the Authority. As a result, the Board determined that the
                              Executive Director warranted the salary increases. The
                              Board however recognizes the need to better document the
                              process and will do so in the future.

                              The Board just adopted a new Authority Personnel Policies
                              and Employee Handbook, and conducted a formal
                              performance evaluation of the Executive Director in
                              November 2001. In October 2001, each full-time employee
                              received an annual written evaluation from his/her
                              supervisor and a review of the employee job descriptions
                              was performed.

                              The Board further states that each year, the Executive
                              Director and staff have developed and published annual
                              goals for the Authority.

                              The Board's response is not entirely consistent with the
  OIG evaluation of Auditee   information provided OIG staff during the audit.
  comments
                              The Board minutes from May 20, 1999 to February 21,
                              2001 did not indicate that the Board ever discussed its
                              determination of the Executive Director’s salary increases
                              or the evaluation of his performance. Further, not all Board
                              members were aware of how the Executive Director was

2002-SE-1001                            12
                                                                                     Finding 2


                                   granted salary increases. Two of the five Board members
                                   (the two that had not been nominated by the Executive
                                   Director) told us that they did not participate in the
                                   determination of the Executive Director’s salary increases.
                                   One of these two Board members said that the three Board
                                   members that were nominated by the Executive Director
                                   decided to grant salary increases to the Executive Director
                                   without using salary comparables. The other Board
                                   member told us she does not know how the Authority
                                   determines employees’ salary increases.

                                   The Board's response stated the salary surveys were
                                   available in Authority files. However, when asked during
                                   the audit, neither the Board Chairman nor the Authority
                                   could not provide OIG staff with any documents showing
                                   that salary comparables were actually performed. The
                                   Board Chairman specifically told us that he did not save
                                   or keep copies of job listings showing the salaries of other
                                   Executive Directors.


Recommendations:
We recommend that HUD require the Authority to:

2A.   Develop and implement policies and procedures for objectively evaluating the
      performance of the Executive Director and other Authority employees, and for
      determining reasonableness of their salaries and salary increases.

2B.   Re-assess the salaries of the Executive Director and other Authority employees based
      on salary comparability and performance, and reimburse the appropriate HUD grants
      any excess from non-grant funds.

We also recommend you:

2C.   Monitor the Authority to ensure compliance with requirements regarding employee
      compensation.




                                              13                                  2002-SE-1001
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2002-SE-1001                   14
                                                                                                   Finding 3



                            The Authority Needs to Establish a
                            Proper Payroll Distribution System
The Authority does not know how much time the Executive Director spent on HUD-related
activities because the Executive Director did not adequately document his time spent on
different programs, including some non-HUD activities. Also, the Authority charged his
and other salaries to HUD grants based on budget estimates rather than actual time spent
on activities. Consequently, the Authority used HUD funds to pay for non-HUD activities,
and might have mischarged other salary costs.


                                            Section 5 of the Annual Contributions Contract between
     HUD requirements for
                                            the Authority and HUD requires the Housing Authority to
     time recording and payroll
                                            operate its projects in compliance with federal requirements
     distribution
                                            such as HUD regulations located at 24 CFR 85 and
                                            applicable Office of Management and Budget (OMB)
                                            Circulars.

                                            Federal regulations at 24 CFR 85.20(b)(6) requires that
                                            accounting records (i.e., payroll records) must be supported
                                            by source documentation such as time and attendance
                                            records. Also, 24 CFR Part 85.22(b) requires state and
                                            local governments to use OMB Circular A-87 when
                                            allocating costs to federal awards.

                                            OMB Circular A-87, Attachment B, paragraph 11.h.(4)
                                            states that for employees working on multiple activities, a
                                            distribution of their salaries or wages will be supported by
                                            personnel activity reports or equivalent documentation
                                            prepared at least monthly and signed by the employee.
                                            The documents must show the total activity for which the
                                            employee is compensated, coincide with one or more pay
                                            periods, and reflect an after-the-fact distribution of the
                                            actual activity for the employee. Budget estimates or other
                                            distribution percentages before services are performed
                                            cannot be used as a basis for allocating costs to federal
                                            awards. Also, the Circular states that to be allowable under
                                            federal awards, costs must be necessary and reasonable for
                                            the proper and efficient performance and administration of
                                            federal awards.

     Executive Director’s salary            The Authority received grants directly from HUD including
     allocated to different HUD             Operating Subsidy and Modernization1 grants. Also, the
     programs                               Authority’s Nampa Housing Finance Corporation (NHFC)


1
    Formerly called Comprehensive Improvement Assistance Program or CIAP, and now referred to as Capital Fund.

                                                         15                                     2002-SE-1001
Finding 3


                                          receives fees out of a Section 8 grant that HUD awarded to
                                          a property management firm.

                                          The Board approved the Authority’s Operating Budgets
                                          for fiscal years 1998 through 2001 showing the estimated
                                          allocations of the Executive Director’s salaries to different
                                          HUD programs:

                                               Executive Director's Salary Allocations
             Fiscal Year       Budgeted        Operating Section 8
               Ending           Salary          Subsidy     Program Modernization
               9/30/98         $35,000           75%          25%              0%
               9/30/99         $35,000           75%          25%              0%
               9/30/00         $40,000           75%          25%              0%
               9/30/01         $45,000           55%          15%             25%

            Note: The percentages for fiscal year ending 9/30/01 do not total 100 percent because the approved
            budget allocated 5 percent of the Executive Director’s salary to a program that the Authority did not
            receive funds for. HUD will probably move the 5 percent to the Operating Subsidy category.

                                          The Executive Director worked on HUD and non-HUD
 The Executive Director
                                          programs but did not adequately document his time spent
 did not adequately
                                          on each program. Although the Operating Budgets showed
 document his time spent
                                          the allocations of his yearly salaries to different HUD
 on different programs
                                          programs, the Executive Director’s time records or
                                          equivalent documents did not show actual allocations of his
                                          time for each of the programs. None of the 19 timesheets
                                          that the Executive Director prepared from May 1, 1998 to
                                          February 15, 1999 showed the actual hours spent for each
                                          HUD and non-HUD program or activity. The timesheets
                                          only showed the number of hours the Executive Director
                                          worked each day. After February 15, 1999, he stopped
                                          completing timesheets. According to the Executive
                                          Director, the only documents he maintains of his activities
                                          are the daily schedules in his electronic Palm Pilot;
                                          however, as discussed below these schedules were
                                          inadequate.

                                          The Executive Director said the Board advised him not to
                                          document how he spends his time. The Board Chairman
                                          said he advised the Executive Director not to keep track of
                                          his time because it is a waste of time. He also stated that
                                          the Executive Director does not need to maintain
                                          timesheets because he is an exempt employee. The
                                          Authority’s Payroll and Disbursement Policies and
                                          Procedures requires non-exempt (hourly-paid) employees
                                          to document their time. This requirement does not include

2002-SE-1001                                           16
                                                                                Finding 3


                             exempt employees and is inconsistent with HUD
                             requirements that all employees' time must be supported.

                             All of the Executive Director's salary was charged to HUD
HUD paid the Executive
                             grants even though he and other Authority employees
Director’s salary although
                             stated part of his time was related to non-HUD activities.
he spent part of his time
                             However, because the Executive Director did not
on non-HUD activities
                             adequately document how he spent his time, we could not
                             determine the amount of his salary that related to non-HUD
                             activities. From May 1, 1998 to April 30, 2001, the
                             Authority charged HUD funds with Executive Director
                             salaries totaling $122,254.

                             The Executive Director said he spends about 75 to 80
                             percent of his time at the Authority office, and makes up
                             his time spent on a non-HUD program by working late,
                             on weekends, or at home. He said the only documents he
                             maintains are the daily schedules in his electronic Palm
                             Pilot. The schedules however, were incomplete and did not
                             provide sufficient detail to account for his time. The Palm
                             Pilot daily schedules listed HUD-related activities such as
                             attending staff and Board meetings, and non-HUD-related
                             activities such as attending meetings at the American
                             Legion, Job Corps Council, Kiwanis, and taking his
                             personal vehicle in for service. Also, we could not
                             determine based on the schedules whether the Executive
                             Director actually performed the activities recorded in his
                             Palm Pilot.

                             We interviewed the other Authority administrative
                             employees and every one of them estimated that the
                             Executive Director has spent 50 percent or less of his
                             workday at the Authority office since he was hired. Also,
                             some of the employees said they observed the Executive
                             Director perform personal business during Authority hours.
                             For example, one Authority employee stated that the
                             Executive Director has taken days off to look after his
                             rental properties and has made non-business trips during
                             business hours, such as taking his car in for maintenance.

                             Another Authority employee said the Executive Director
                             spent time during Authority’s business hours on the non-
                             HUD Mortgage Credit Certificate (MCC) program. Under
                             the MCC program, the Executive Director's administrative
                             activities included implementing all aspects of the program,
                             to include but not limited to, filing a request for allocation
                             of available private activity bond authority, and executing

                                        17                                   2002-SE-1001
Finding 3


                               and delivering certificates. The Authority staff stated that
                               the Executive Director spent three to four hours per week
                               with its MCC program contractor after the implementation
                               of the program, and about two full weeks prior to the date
                               the program was implemented. According to a Board
                               resolution, the $125 fee per Mortgage Credit Certificate
                               from homebuyers should cover the costs associated with
                               the Executive Director’s MCC program activities.
                               However, more than a year after the program was
                               implemented the Authority had issued only two Mortgage
                               Credit Certificates, and no Authority funds were charged
                               against the MCC program.

                               The Authority charged HUD funds for salaries based on
  The Authority charges        the HUD-approved Operating Budgets rather than on actual
  salaries based on budgeted   time spent on activities as required by HUD. This practice
  amounts                      applies to all Authority employees, not only the Executive
                               Director. Although the other Authority employees only
                               worked on HUD programs, it is important to allocate time
                               to the different HUD programs not only for management
                               control purposes, but because HUD awards funds for
                               specific purposes and may place limits or restrictions on
                               charges to different activities, such as administrative costs.

 Salary costs are not          Because (1) the Executive Director did not keep track of
 adequately supported or       his time spent on HUD and non-HUD activities, and
 related to HUD activities     (2) the Authority charges salaries of Authority employees
                               based on budget estimates, an indeterminable amount of
                               the Executive Director's salary charges were for non-HUD
                               activities, and HUD has no assurance employee salaries
                               charged to HUD grants were related to the funded
                               activities.

 Auditee comments              The Board states that the Executive Director is an exempt
                               employee and as such was not required to keep track of his
                               time. However, beginning in April 2001, the Board
                               instructed the Executive Director to do so. This
                               requirement is also stipulated in the Authority’s new
                               Personnel Policies and Employee Handbook. The Board
                               also states that all employees will keep track of their time
                               by program/funding source.

 OIG evaluation of Auditee     The Board's actions should help resolve the issues reported
                               in the finding. The Board should be aware that neither
 comments
                               federal regulations nor OMB Circular A-87 exclude exempt
                               employees from the requirement to maintain supporting
                               payroll records.

2002-SE-1001                             18
                                                                                       Finding 3




Recommendations:
We recommend that HUD require the Authority to:

3A.   Determine the amount of Executive Director salary costs charged to HUD funds for non-
      HUD activities from May 1, 1998 to the present, and reimburse the appropriate HUD
      grants from non-grant funds.

3B.   Establish a payroll distribution system that will ensure correct allocation of employees’
      actual time spent on grant activities, and HUD grants are charged only for eligible and
      adequately supported salary costs.




                                                19                                  2002-SE-1001
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2002-SE-1001                   20
                                                                                     Finding 4



          The Authority Charged HUD Funds for Unsupported
                   Travel and Local Mileage Costs
The Executive Director did not always submit to the Board travel requests, claim forms, or
adequate supporting documents for his local mileage claims. Therefore, HUD funds might
have been charged for ineligible or unreasonable travel and mileage costs. Proper
oversight by the Board should have prevented this from happening.


  HUD and the Authority           The Authority is required under federal regulations at
  require that travel costs be    24 CFR 85.22(b) to follow cost principles for allowable
  supported                       costs as provided by OMB Circular A-87. Specifically:

                                  ·   To be allowable, costs must be adequately documented.

                                  ·   A cost is reasonable if it does not exceed that which
                                      would be incurred by a prudent person under the
                                      circumstances prevailing at the time the decision was
                                      made to incur the cost.

                                  ·   In determining the reasonableness of a given cost,
                                      consideration shall be given to whether the individuals
                                      concerned, acted with prudence in the circumstances
                                      considering their responsibilities to the governmental
                                      unit, its employees, the public at large, and the Federal
                                      Government.

                                  The Authority Policies and Procedures require employees
                                  to submit travel requests that include the purpose, period,
                                  and estimated travel costs. During travel, employees must
                                  record and sign all travel expenses. When claiming
                                  reimbursement, employees must submit to the Executive
                                  Director (or a Board member if the Executive Director)
                                  receipts and other supporting documents along with the
                                  expense claim forms. The Executive Director or Board
                                  member must review and approve travel expenses prior
                                  to reimbursement.

                                  The Authority reimbursed the Executive Director $6,931
  The Executive Director did
                                  for travel costs, including $5,068 for training-related travel
  not always submit travel
                                  and $1,863 for local mileage expenses using HUD funds.
  requests, claim forms, or
  supporting documents            The Executive Director traveled nine times to attend
                                  training classes conducted between May 1998 and
                                  March 2001. He did not prepare and submit the required
                                  travel requests for Board approval for this travel. Further,

                                              21                                   2002-SE-1001
Finding 4


                             the Executive Director did not always obtain Board
                             approval when claiming reimbursement for training or
                             local travel costs. Of the 33 expense claim forms (24 for
                             local mileage and 9 for training-related travel) that the
                             Executive Director submitted, he approved 8, and a Board
                             member approved 5. There was no approval for the other
                             20. In addition, the Executive Director did not maintain
                             adequate documentation to support the local mileage
                             claims; specifically, he did not indicate the purpose for
                             using his vehicle locally, nor specify whether the mileage
                             related to HUD or non-HUD activities. As a result, we
                             could not determine if the travel was necessary, reasonable,
                             or for eligible HUD activities.

                             The Board did not perform its oversight responsibility in
  Improved Board oversight
                             that it did not properly review the Executive Director's
  needed
                             travel costs to ensure they were necessary, reasonable,
                             and supported.

                             The Board non-concurs that any travel and local mileage
  Auditee comments
                             costs were for anything other than official PHA business.
                             For each local mileage reimbursement, the Executive
                             Director certified that each claim was for official business.
                             Each training course was for the benefit of the Authority,
                             and every mile claimed was for official business. For each
                             reimbursement, the claim form or expense report was
                             attached to the check, and a Board member signed the
                             check. The Executive Director did not approve his own
                             claims. However, the Authority must improve
                             administratively.

                             The Board agrees that Board members failed to sign claim
                             forms; however, it believes that after reviewing the claims,
                             signing the checks represented approval for payment. To
                             improve this process, the Authority has already established
                             a policy that no one can sign a check issued to him/herself
                             and the Board will ensure all claims and expense reports
                             are signed by a Commissioner.

 OIG evaluation of Auditee   Although the Executive Director certified that the mileage
 comments                    costs were for official Authority business, the mileage
                             reports and claim forms did not show whether the mileage
                             costs were for HUD-related activities. Our review results
                             indicated that the Executive Director performed both HUD
                             and non-HUD activities.



2002-SE-1001                           22
                                                                                     Finding 4


                                    The Board's response states the Executive Director did not
                                    approve his own claims. However, the audit found that the
                                    Executive Director signed 8 of 33 of his own claim forms
                                    from May 1998 to March 2001.

                                    The Board believes that after reviewing the claims, signing
                                    the checks represented Board’s approval. This implies that
                                    a Board member reviewed the claim forms submitted by
                                    the Executive Director. However, the claim forms did not
                                    always evidence review by a Board member.


Recommendations:
We recommend that HUD:

4A.   Require the Authority to determine the eligible, necessary, and reasonable amount of the
      Executive Director's travel costs and reimburse the appropriate HUD grants any excess
      over this amount from non-grant funds.

4B.   Ensure the Authority follows HUD travel requirements and its travel costs are eligible,
      necessary, reasonable, and adequately supported.




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2002-SE-1001                   24
                                                                                    Finding 5



                  Procurement Requirements Not Followed
The Executive Director did not comply with procurement standards and violated conflict of
interest requirements when he inappropriately sold items to the Authority. This resulted in
the Authority charging HUD grants $1,361 in ineligible procurement costs. The Board
Chairman could have prevented this by ensuring procurements complied with federal
requirements prior to signing checks issued to the Executive Director.


  HUD procurement and             Housing authorities must follow federal procurement
  conflict of interest            standards cited in Title 24 of the Code of Federal
  requirements                    Regulations (24 CFR 85.36). These standards provide a set
                                  of basic principles that each housing authority must adhere
                                  to when making purchases and establishing a procurement
                                  policy. Among other things the procurement standards
                                  require grantees to:

                                      · Review proposed procurements to avoid purchase of
                                        unnecessary or duplicative items (paragraph (b)(4)).

                                      · Maintain records sufficient to detail the significant
                                        history of a procurement, including the rationale for
                                        the method of procurement and the basis for the
                                        contract price (paragraph (b)(9)).

                                      · Provide for full and open competition for all
                                        procurement transactions (paragraph (c)(1)).

                                      · Perform a cost or price analysis in connection with
                                        every procurement transaction (paragraph (f)(1)).

                                  In addition, grantees must adhere to the procurement
                                  requirement that no employee, officer, or agent of the
                                  grantee shall participate in selection, or in the award or
                                  administration of a contract supported by federal funds if
                                  conflict of interest, real or apparent, would be involved.

  The Executive Director          The Executive Director did not adhere to procurement
  inappropriately sold items      standards when he inappropriately sold four items to the
  to the Authority                Authority. Specifically, the Executive Director violated
                                  conflict of interest provision, initiated a false purchase
                                  order, arbitrarily set purchase prices, and did not obtain
                                  proper authorization for the purchases, or always determine
                                  if the items were necessary.




                                             25                                  2002-SE-1001
Finding 5


               Computer Monitor

               The Executive Director sold a used 17-inch
               computer monitor to the Authority for $325.
               The Executive Director had personally bought
               the monitor the year before. He instructed the
               Authority Accounting Assistant to prepare a false
               purchase order. He set the purchase price because
               he said he did not have the receipt showing how
               much he actually paid for the item. Further,
               although the purchase order showed the name of
               the individual who the Executive Director claimed
               he bought the monitor from, the individual, now an
               Authority employee, stated that he did not sell a
               computer monitor to the Executive Director. The
               Executive Director stated, and the Authority
               Accountant confirmed, that he sold the monitor
               to the Authority to replace the Accountant’s non-
               functioning monitor.

               Digital Camera

               The Executive Director sold a used digital camera
               plus peripheral to the Authority for $535.43. He set
               the price for the digital camera because he said he
               could not find the receipt showing the actual
               purchase price. There was neither a purchase order
               prepared nor any indication that the Executive
               Director performed a need assessment when he sold
               the camera. The Executive Director said he sold an
               easy-to-use and less expensive digital camera to the
               Authority so they could easily access and print
               pictures without having to get a roll of film
               developed. The Executive Director and Accountant
               stated that the camera is rarely used.

               Vacuum Cleaner and Carpet Shampooer

               Without going through the Authority's procurement
               process, the Executive Director purchased these
               items then sold them to the Authority. On the day
               he purchased it, the Executive Director sold the
               vacuum cleaner to the Authority for $271.77,
               which was equal to the original purchase price.
               The Authority Accountant told us that the Authority
               needed to replace an old vacuum cleaner. Four
               days after purchasing it, the Executive Director sold

2002-SE-1001         26
                                                                              Finding 5


                                the carpet shampooer to the Authority for $229,
                                which was less than the total purchase price by
                                $12.49. Apparently the shampooer had been used
                                when sold to the Authority. The Authority did not
                                perform any need assessment prior to procuring the
                                item. The Executive Director told us that the carpet
                                shampooer was used to clean an Authority rental
                                unit.

                            The Board Chairman cosigned checks for these items
The Board Chairman did
                            without questioning the purchases, even though there were
not exercise reasonable
                            no purchase orders and the Executive Director was selling
controls
                            the items to the Authority. As such, the Board Chairman
                            did not exercise reasonable controls prior to cosigning these
                            checks.

                            The Executive Director violated procurement standards
The sales violated          when he falsified a purchase order, arbitrarily set purchase
procurement and conflict    prices, and failed to obtain competitive quotes.
of interest requirements    Additionally, the Executive Director had conflicts of
                            interest when he sold the items to the Authority because,
                            as an employee, he had a real financial interest in the
                            transactions.

Auditee comments            The Board took corrective action to ensure that the
                            Executive Director avoids conflicts of interest for future
                            purchases, by giving him a letter of admonishment and
                            placing him on probation for one year. However, the Board
                            believes the Executive Director had no intention to defraud,
                            and was acting in the best interest of the agency.

                            Neither the camera, vacuum cleaner, nor carpet shampooer
                            were purchased for the Executive Director’s own use.
                            These items were purchased in accordance with Authority
                            procurement policies. The Executive Director paid for the
                            equipment using his own funds because the Authority did
                            not have a corporate credit card. The vacuum cleaner and
                            carpet shampooer were needed items that were sold unused
                            to the Authority. The Authority is in the process of
                            procuring a corporate credit card for such use.

                            The Board states it believes the Executive Director had no
OIG evaluation of Auditee
                            intention to defraud and was acting in the best interest of
comments                    the agency. We disagree. The Executive Director
                            instructed the Authority Accounting Assistant to prepare
                            a false purchase order, and set the price for the computer
                            monitor and digital camera because he didn't have receipts

                                       27                                  2002-SE-1001
Finding 5


                                     showing the actual purchase price. In our opinion, this
                                     demonstrates intent to defraud and an official who is not
                                     acting in the best interests of the Authority.

                                     If, as the Board's response states, these items were
                                     purchased in accordance with Authority procurement
                                     policies, then the policies need to be revised to comply
                                     with federal procurement regulations.

                                     The Board states the Executive Director used his own funds
                                     to purchase the items because the Authority did not have a
                                     corporate credit card. This is not a valid reason: the
                                     purchases could have been paid for by check, or by using
                                     an Authority imprest fund.

                                     In our opinion, the Board response appears to trivialize and
                                     gloss over the serious issues raised in the finding.


Recommendations:
We recommend that HUD require the:

5A.    Authority to provide evidence that the items purchased were necessary and the amounts
       paid for the items were reasonable, and reimburse from non-grant funds, the appropriate
       HUD grants, any of the $1,361 that was unnecessary or unreasonable.

5B.    Board to ensure that Authority procurement procedures and the procurement transactions
       it approves comply with federal requirements, including conflict of interest requirements.




2002-SE-1001                                   28
                                                                                       Finding 6



       The Authority Needs to Improve Management Controls to
                Safeguard Cash from Loss or Misuse
Because the Authority did not establish or maintain reasonable procedures to control and
safeguard cash payments, $2,510 in tenants’ cash payments for rents and security deposits
is missing. Also, the Authority did not take meaningful action to recover the missing funds.
The evidence suggests the funds were misappropriated.


  HUD requires Housing             Federal regulations at 24 CFR 85.20, Financial
  Authorities to safeguard         Management Systems, states in paragraph (b)(3)
  assets through sound             that grantees must maintain effective control and
  management practices             accountability for grant cash.

                                   Office of Management and Budget Circular A-87,
                                   Attachment A, paragraph A (2)(a)(1) states housing
                                   authorities are responsible for the efficient and effective
                                   administration of federal awards through the application
                                   of sound management practices.

                                   The Authority did not have controls to adequately
  Control weaknesses result        safeguard tenants’ cash payments for rent and security
  in misappropriated funds         deposits. This lack of controls increased the risk that
                                   those funds could be lost or misused without detection,
                                   and resulted in the misappropriation of at least $2,510
                                   of Authority funds. Specifically, we found that:

                                   ·   The Authority had no written policies or procedures
                                       for receiving and receipting cash payments for tenant
                                       rent and security deposits. Consequently, any
                                       employee was able to receive cash payments from
                                       tenants and give out receipts.

                                   ·   The Authority did not use numbered receipts as a
                                       control to ensure all cash payments were controlled
                                       and deposited. Unnumbered receipts and cash
                                       collections were stored in a lockbox, which was usually
                                       unlocked during Authority operating hours. The cash
                                       box and the Authority’s copies of the receipts were
                                       accessible to all employees.

                                   · All employees knew each other’s computer passwords.
                                     There could be no accountability for the amount of
                                     money in the cashbox or the accuracy of the
                                     information in the Authority’s computer information
                                     systems.

                                              29                                   2002-SE-1001
Finding 6


                               · Adjustments to tenant rents were not reviewed and
                                 approved prior to inputting the correct tenant rents to
                                 the tenants’ ledger. In addition, adjustments were not
                                 reviewed for propriety or adequacy of supporting
                                 documents. The Executive Director did not thoroughly
                                 review the interim reexaminations that changed the
                                 amount of a tenant’s rent. Our review of reviewed and
                                 approved changes to tenant rental payments noted many
                                 instances where several months elapsed between the
                                 effective date of the rent change and the signature of the
                                 Executive Director. In addition, there were
                                 discrepancies in the documents themselves.

                               Authority officials told us steps have been taken to improve
                               its management controls over cash receipts and approving
                               changes to tenant rent payments; however, we have not
                               reviewed those controls.

                               The Authority did not take remedial actions after
  The Authority did not take   determining tenant cash payments were missing and an
  meaningful action to         employee had taken the money. It neither used the fidelity
  recover the missing funds    bond insurance to recover the missing cash, nor did it file
                               an official police report. The Executive Director said the
                               Authority has not filed a claim to date because of the
                               relatively small loss amount. He also said he told the
                               Board of the missing tenant cash payments and that the
                               Board agreed with him not to file a police report.

                               The Board concurs with the finding. On March 8, 2001,
  Auditee comments             the Executive Director issued an Internal Policy on
                               Accounts Receivable to correct the weakness. At the time
                               the HUD-OIG initiated its review, the Authority staff had
                               not completed its review of all accounts. Once that was
                               done, the Authority had no reason to believe that the HUD-
                               OIG could document additional losses. The Board
                               indicates that the Authority submitted a claim on
                               October 18, 2001 and was paid in full on November 7,
                               2001.

                               The Board also states that an informational report was filed
                               with the Nampa Police Department on March 20, 2001.

                               The Authority's actions should help resolve the issues
  OIG evaluation of Auditee
                               reported in this finding.
  comments




2002-SE-1001                             30
                                                                                      Finding 6




Recommendations:
We recommend that HUD:

6A.   Require the Authority to develop and implement controls to safeguard cash against loss
      and misuse, including procedures for:
      a. receiving and receipting tenant rents,
      b. restricting access to cash, and using numbered receipts,
      c. maintaining secure computer passwords, and
      d. reviewing and approving rent adjustments.

6B.   Confirm that the Authority recovered the $2,510 in missing funds, or else require the
      Authority to repay the missing funds from non-grant funds.

6C.   Ensure that the Authority takes or has taken appropriate action to hold the responsible
      individual accountable.




                                                31                                 2002-SE-1001
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2002-SE-1001                   32
                                    Management Controls
In planning and performing our audit, we obtained an understanding of the management controls
that were relevant to our audit. Management is responsible for establishing effective
management controls. Management controls, in the broadest sense, 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 the following management controls were
  Relevant controls                 relevant to our audit objectives:

                                    · Program Operations – Policies and procedures that
                                      management has implemented to reasonably ensure
                                      that a program meets its objectives.

                                    · 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.
  Scope of work
                                    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.

                                    We identified the following significant weaknesses in the
  Significant weaknesses            Authority's management controls:

                                    · The Authority Board did not adequately monitor the
                                      actions and decisions made by the Executive Director,
                                      or the Authority operations (Findings 1-6).

                                    · The Authority did not have adequate controls to
                                      safeguard cash from loss or misuse (Finding 6).




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2002-SE-1001                   34
                                                                                    Appendix A



                           Schedule of Questioned Costs

                    Recommendation Number                    Unsupported

                                5A                              $1,361
                                6B                               2,510
                                  Total                         $3,871


Unsupported amounts are not clearly eligible or ineligible, but warrant being contested for
various reasons, such as lack of satisfactory documentation to support eligibility.




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2002-SE-1001                   36
     Appendix B




37   2002-SE-1001
Appendix B




2002-SE-1001   38
     Appendix B




39   2002-SE-1001
Appendix B




2002-SE-1001   40
                                                                              Appendix C



Distribution
Mayor of the City of Nampa
Chairman of the Board, Nampa Housing Authority
Director, Northwest/Alaska Office of Public Housing, 0PH
Program Center Coordinator, HUD’s Portland Office of Public Housing, 0EPH
Principal Staff
Secretary’s Representative, 0AS
Assistant Secretary for Public and Indian Housing, P
Assistant General Counsel, 0AC
Audit Liaison Officer – Western Districts (Ft. Worth), 6AF
Departmental Audit Liaison Officer, PIH, PF
Director, Audit Coordinator Division, Departmental Audit Liaison Officer, FMA
Acquisitions Librarian, Library, AS
Ranking Member, Committee on Governmental Affairs, 340 Dirksen Senate Office Building,
  United States Senate, Washington, DC 20510
Chairman, Committee on Government Affairs, 706 Hart Senate Office Building,
  United States Senate, Washington, DC 20510
Chairman, Committee on Government Reform, 2185 Rayburn Building,
  House of Representatives, Washington, DC 20515
Ranking Member, Committee on Government Reform, 2204 Rayburn Building,
  House of Representatives, Washington, DC 20515
House Committee on Financial Services, 2129 Rayburn H.O.B., Washington, DC 20515
Senior Advisor, Subcommittee on Criminal Justice, Drug Policy & Human Resources,
  B373 Rayburn House Office Building, Washington, DC 20515
Subcommittee on Oversight and Investigations, Room 212, O’Neil House Office Building,
  Washington, DC 20515
Chief Housing Branch, Office of Management and Budget, 725 17th Street, NW, Room 9226,
  New Executive Office Building, Washington, DC 20503




                                            41                               2002-SE-1001