Issue Date: December 9, 2002 Audit Case Number: 2003-AO-1002 TO: Charles H. Williams, Director, Office of Multifamily Housing Assistance Restructuring, HY [Signed] FROM: Saundra G. Elion, Director, Headquarters Audits Division, GAH SUBJECT: Congressionally Requested Audit of the Outreach and Training Assistance Grants Awarded to the National Housing Trust INTRODUCTION We completed an audit of the Outreach and Technical Assistance Grants (OTAGs) awarded to the National Housing Trust (NHT). The audit identified that NHT properly accounted for the direct costs charged to the OTAGs. However, NHT overcharged the OTAGs over $29,000 for employee services and included indirect costs in its billing rates that had not been approved. In addition, NHT did not maintain records to account for non-billable hours and received $946 in duplicate payments. However, we did not identify any costs related to lobbying activities. Our report contains seven recommendations to address the issues identified in the report and other recommendations to strengthen management controls over the grantees. Section 1303 of the FY 2002 Defense Appropriations 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 OTAGs and Intermediary Technical Assistance Grants (ITAG) administered by the Office of Multifamily Assistance Restructuring. Consistent with the Congressional directive, we reviewed the eligibility of costs with particular emphasis on identifying ineligible lobbying activities. Our objective was to determine whether NHT expended Section 514 grant funds for only eligible activities as prescribed in MAHRA, the Notice of Funding Availability (NOFA), the Grant Agreement, or other HUD requirements to further the Mark-to-Market Program. Because Section 514 specifically prohibits the use of grant funds for lobbying Congress, we also evaluated whether NHT expended funds for 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 NOFA, the OTAG grant agreements, HUD’s requirements for grant agreements for nonprofit entities, and Office of Management and Budget’s guidance on the allowability of cost for nonprofit grantees. Additionally, we reviewed: applicable sections of the FY 2002 Department of Defense Appropriations Act; IRS Publication 557, “Tax Exempt Status for Your Organization;” NHT’s applications, project activities, and quarterly and financial reports. NHT was awarded $474,800 for 21 grants to conduct outreach and technical activities in 14 states. We reviewed a representative selection of 11 of the 21 grants (52 percent) awarded to NHT. During our audit period NHT expended $336,660 of OTAG funds for activities related to all 21 grants. Of the $336,660, $172,235 or 51 percent was expended on OTAG activities for the 11 grants in our sample. We also reviewed the salaries charged to all 21 OTAGs. The audit covered the period October 1, 1998, through May 31, 2002. We performed the fieldwork at NHT’s Office in Washington, DC, from June through August 2002. We conducted the audit in accordance with Generally Accepted Government Auditing Standards. We appreciate the courtesies and assistance extended by the personnel of the NHT during our review. We provided our draft report to NHT for their comments on November 18, 2002. On November 25, 2002, NHT provided their written comments. NHT acknowledges and concurs with the report findings, is prepared to repay all ineligible funds that they received, and has engaged a CPA firm to establish its indirect cost rate. In addition, NHT will not make any draw down request under the OTAG program until OMHAR approves its indirect cost rate. We summarized NHT’s written comments to our draft report after each finding and included the complete text in Appendix B. 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 me at (202) 708-1342. SUMMARY Our audit identified that NHT properly accounted for the direct costs charged to the OTAG. However, NHT: (1) overcharged the OTAGs over $29,000 for employee services; (2) included unallowable and questionable costs in its indirect cost pool; (3) did not maintain records of employee’s total activities; and (4) received $946 in a duplicate payment. We did not find any activity or cost related to lobbying. 2 BACKGROUND The Multifamily Assisted Housing Reform and Affordability Act of 1997 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 NOFA in FY 1998 and a second in FY 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 NOFA 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 their jurisdictions. The OTAG NOFAs 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. HUD regulations at 24 Code of Federal Regulations part 84 contain the uniform administrative requirements for grants between HUD and nonprofit organizations. The regulations (24 CFR 3 84.27) require that nonprofit grantees utilize the Office of Management and Budget (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 cost charged to the grant, the Circular establishes restrictions for indirect costs, and specific methods and record keeping to support the allocation of costs. The Circular also establishes the unallowability of costs associated with Federal and state lobbying activities. Simply stated, the use of Federal funds for any lobbying 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 enactment or modification of any actual or pending legislation by propaganda, demonstrations, fundraising drives, letter writing, or urging members of the general public either for or against the legislation (Grassroots Lobbying). NHT was established in January 1986 to preserve the existing stock of federally assisted housing throughout the United States for long-term low and moderate income use. NHT received 21 OTAGs (7 in FY 1998 and 14 in FY 2000) to provide outreach and technical assistance activities in 14 states. The total amount awarded for the grants in FY 1998 was $255,000 and $219,800 in FY 2000. The period of performance for the grants was 3 years. The grantees’ requirements were defined in the NOFA. OTAG grantees had to identify their specific jurisdiction and the activities they would undertake to accomplish their objectives. Some of the activities included: § Identifying residents and resident groups living in eligible Mark to Market and enforcement properties with rents greater than market rents; § Providing outreach and training to tenants to explain the Mark to Market Program and residents’ homeownership options; § Organizing residents of eligible low-income housing so the tenants can effectively participate in the Mark to Market process; § Establishing an information clearinghouse as a resource to resident organizations, community groups, and potential purchasers within their assign jurisdiction; and § Assisting tenants and others approved by HUD to understand their rights under the Section 8 renewal or opt-out process. In addition to the OTAGs, NHT received four ITAGs and $1,617,000 from non-Federal sources. The majority of NHT’s support came from grants, consulting income, and interest on notes receivables. For example, NHT received $585,000 from the Fannie Mae Foundation and $735,000 from the Ford Foundation. NHT received annual financial audits of their activities for the years ending June 30, 1998, through 2001. The auditor rendered an unqualified opinion for each of the four years. 4 FINDING 1 OVERCHARGES OF INDIRECT COSTS MADE TO GRANTS NHT overcharged the OTAGs for employee services. These overcharges occurred because NHT used budgeted amounts for the indirect costs included in the billable rate calculations for each employee. As a result, $29,436 of OTAG funds were improperly used. In accordance with OMB Circular A-122, Attachment B, Paragraph 7, “Compensation for Personal Services,” reasonable compensation and fringe benefits to employees are grant- fundable costs. Compensation for employees on federally sponsored work will be considered reasonable to the extent that it is consistent with that paid for similar work in the organization's other activities. OMB Circular A-122 also states that budget estimates do not qualify as support for charges to the grant. NHT overcharged the OTAGs because the billing rates charged to the grants exceeded the actual billing rates1 as determined by NHT. The individual billing rates NHT used to charge the OTAGs were based on NHT’s projected operating budgets, not actual expenses. However, during our review, NHT realized it should have made adjustments to its billing rates (to reflect actuals) and took action to correct this deficiency. NHT’s corrective action resulted in the preparation of new billing rate schedules2 that were based on the actual costs incurred for indirect activities. Table 1 shows the difference between the OTAG charges and the actual billing rates that caused NHT to overcharge the OTAGs by $29,436 during the period July 1998 through March 2002. 1 NHT’s methodology for calculating actual billing rates is discussed in Finding 2. 2 On August 20, 2002, NHT prepared four new billing rate schedules for the period July 1998 through June 2002. The schedules included the billing rates for all NHT professional staff (these schedules were not restricted to employees who charged the OTAGs). 5 Table 1: Overcharges to OTAGs Actual Rate Billing Billed to Hours Year Employee Rate 1 OTAGs 2 Difference Billed Overcharges 3 1999 1 $ 59.00 $ 70.00 $ 11.00 167.80 $ 1,845.80 2 120.00 130.00 10.00 38.46 384.60 3 71.00 70.00 (1.00) 20.50 (20.50) 4** 60.00 60.00 1.40 84.00 2000 1 63.00 70.00 7.00 430.46 3,013.22 1~ 63.00 80.00 17.00 99.25 1,687.25 2 138.00 130.00 (8.00) 138.06 (1,104.48) 5 97.00 130.00 33.00 16.00 528.00 2001 1 62.00 80.00 18.00 999.10 17,983.80 2* 148.00 130.00 (18.00) 202.32 (3,641.76) 3 78.00 85.00 7.00 15.00 105.00 4** 60.00 60.00 16.00 960.00 2002 1 67.00 80.00 13.00 667.33 8,675.29 2* 141.00 130.00 (11.00) 195.56 (2,151.16) 3 87.00 100.00 13.00 83.00 1,079.00 5 119.00 120.00 1.00 7.80 7.80 Total $ 29,435.86 **Administrative Staff salaries and benefits are included in Indirect Costs. ~ Employee #1 charged 2 different rates. * Rate excludes car allowance. 1 Rate NHT calculated based on actual costs. 2 Rate NHT charged OTAGs based on projected operating budgets. The billing rate includes the annual salary, fringe benefits and payroll taxes, and indirect costs for NHT’s employees. 3 Charges through March 2002. These funds could have been used to further the Mark-to-Market Program by providing training to residents and tenant organizations. AUDITEE COMMENTS The Executive Director for NHT agrees with our audit finding regarding the overcharges and unallowable costs and is prepared to immediately repay $29,436 to HUD. In regard to Recommendation1B, the Executive Director states that he believes this recommendation has been resolved by the program methodology established by NHT in cooperation with its CPA firm, Reznick, Fedder and Silverman (RF&S). Actual expenses, rather than budgeted expenses will be utilized in establishing NHT’s indirect cost rate. RF&S will perform an annual audit of this rate for compliance with the OMB Circular and NHT will submit this rate to OMHAR for approval. With OMHAR approval and the use of actual audited 6 expenses, NHT intends to meet its burden of controls. In addition, NHT will not make any draw requests under the OTAG program prior to obtaining OMHAR approval on its cost allocation plan. OIG EVALUATION OF AUDITEE COMMENTS We believe the actions NHT has taken and plans to take should correct the identified deficiencies; therefore, we revised Recommendation 1B. RECOMMENDATIONS We recommend that the Director of OMHAR: 1A. Require NHT to repay the $29,436 in overcharges made to the OTAGs. 1B. Obtain documentation assuring that NHT has developed an indirect cost rate in compliance with OMB Circular A-122 as outlined in their response. If you are unable to obtain such assurances in a timely manner, consider suspending future grant funding. 7 FINDING 2 INDIRECT COSTS NOT IN COMPLIANCE WITH OMB CIRCULAR A-122 NHT’s indirect cost pool included unallowable and questionable costs. This occurred because NHT did not comply with the requirements of OMB Circular A-122. As a result, we could not determine the extent to which the indirect costs may have been overstated. OMB Circular A-122 provides that if a nonprofit organization decides to claim indirect costs, it must have an approved indirect cost rate. A nonprofit organization, such as NHT, which has not previously established an indirect cost rate with a Federal agency, must submit an indirect cost proposal to that agency immediately after notification of an award, and in no event should the proposal be submitted later than 3 months after the effective date of the award. OMB Circular A-122 also describes the types of allowable costs that may be included in indirect costs, the conditions under which costs may be claimed, and the various methods that nonprofit organizations can use for allocating indirect costs. NHT established annual billing rates for each of its program staff members3 as a means of recovering operating costs. The billing rates included annual salary, benefits, and payroll taxes as well as a pro rata share of indirect costs for each program staff member. These costs (direct and indirect) were divided by 1600 hours, the annual billable hours, to determine the individual billing rates. We concluded that the direct costs (annual salary, benefits, and payroll taxes) were reasonable and supported; however, we could not verify the reasonableness of the indirect costs claimed and the base used to calculate the billable rates. Initially, NHT used budgeted amounts for indirect costs, but during our review, revised those costs to show actual expenses, and to comply with OMB Circular A-122. However, after making these corrections, NHT still did not submit an indirect cost proposal to OMHAR for approval as required by the Circular. NHT’s indirect cost consisted of an overhead pool that included the expenses shown in Table 2. 3 Program staff included all professional personnel. Administrative and temporary staff were included as indirect costs. 8 Table 2: Indirect Costs Included in the Billing Rates 1999 2000 2001 2002 Office Rent/Storage $ 50,261 $ 58,227 $ 81,477 $ 97,491 Administrative Staff 11,209 40,716 59,347 72,233 Administrative Temps 19,495 8,778 10,454 18,099 Consultants-Personnel 2,922 Computer Assistance 5,643 3,863 2,608 10,365 Maintenance/Rent/Repair 1,813 1,984 2,146 3,000 Legal/Accounting/Payroll 4,841 8,802 25,520 18,358 Insurance 5,112 5,389 5,835 7,064 Travel/Meetings 17,199 14,441 11,431 9,153 Subscriptions/Dues/Misc. 4,796 5,226 4,767 5,933 Telephone 6,321 8,053 15,123 13,563 Office Supplies 8,900 13,655 9,978 9,886 Postage/Shipping 2,102 1,651 2,735 2,352 Printing & Copying 2,090 9,420 7,187 12,156 State Franchise Taxes 195 325 190 417 Resident Services 16,326 48,638 28,763 Interest on Loans 20,500 25,124 25,000 24,375 Depreciation 7,200 7,224 8,183 8,183 Actual Indirect $184,003 $261,516 $271,981 $344,313 Costs While we did not examine supporting documentation for each line item in NHT’s indirect cost calculation, we did identify certain costs that should not have been included in the indirect cost pool. · Unallowable Costs. OMB Circular A-122 states that interest on loans is unallowable; therefore, the interest ($94,999) should be excluded from the indirect cost pool. · Questionable Costs. NHT billed the OTAGs directly for telephone, travel and meetings, and printing and copying expenses. The OTAGs included in our sample were charged $30,884 for these costs. These and any other similar costs directly charged to specific funding sources should be excluded from the indirect cost pool before allocating them to all projects. · Allocation Bases. More than one base may be appropriate for NHT. For example, a more reasonable base for allocating office rent would be square footage, in lieu of equally distributing it among professional employees. Also, allocating indirect costs based on 1600 hours may have inflated the billing rates. NHT used 1600 hours as the base for calculating the annual billable rates for each employee. We believe NHT should have used 2,080 (the total annual billable hours an employees can work) less the actual time for vacation, holiday, sick, and personal leave as the base for determining each employee’s annual billing rate. NHT should obtain an approved indirect cost rate because NHT has multiple funding sources, many of which are not on a reimbursable basis such as the OTAGs and ITAGs. HUD is NHT’s only Federal funding source. Private entities, such as the Ford Foundation and the Fannie Mae Foundation, are not charged the same billing rates as those charged to the OTAGs. According to 9 the NHT Controller, the grants from private sources have different rates because they are not cost reimbursable. Consequently, we have no assurance that the indirect costs charged to the OTAGs represent a fair and equitable distribution of NHT’s costs. As a result of these deficiencies, we could not determine the reasonableness of the indirect costs (included in the billing rates) that NHT charged to the OTAGs. AUDITEE COMMENTS The Executive Director and RF&S concur that interest on loans should not have been included in NHT’s billing rates. The Executive Director further states that RF&S did not discover any other unallowable costs in the overhead pool. Furthermore, RF&S has developed an indirect cost rate method that complies with the OMB Circular. Upon approval by OMHAR, NHT will utilize the rate in all applications for grant funds. On behalf of NHT, RF&S calculated $6,329 in overcharges made to the OTAGs from 1999 through 2002 because NHT included interest on loans in its overhead pool. NHT is prepared to repay this amount immediately as interest on loans has been deducted from all staff overhead for the 4 years of the grant. The Executive Director states that with the help of RF&S’ compliance audits, there will be no more recurrence of this type of misstep. OIG EVALUATION OF AUDITEE COMMENTS We acknowledge that NHT has taken preliminary corrective actions to comply with OMB Circular A-122 and to address the intent of our finding. However, to ensure that NHT fully implements the requirements, we revised our recommendations. RECOMMENDATION We recommend that the Director of OMHAR: 2A. Ensure that NHT submits its indirect cost proposal for approval by December 31, 2002. 2B. Require NHT to repay the $6,329 in unallowable interest on loans charged to the OTAGs. 2C. Review NHT’s indirect cost proposal and determine the reasonableness of the proposed allocation methodology. Recover any additional excessive, unallowable, and unsupported charges to the grants (that were not specifically addressed in this report). 10 FINDING 3 EMPLOYEES’ TOTAL ACTIVITIES NOT ACCOUNTED FOR NHT did not maintain records of employees’ total activities. Specifically, NHT did not record non-billable hours worked by employees. This occurred because NHT only required its staff to maintain hours that were billed and reimbursed by a client. As a result, NHT may not have properly accounted for hours charged to OTAG activities. OMB Circular A-122 places specific salary recordkeeping requirements on the grantee. The grantee must maintain personnel activity reports that account for the total activity for which an employee is compensated for in the fulfillment of obligations to the organization. The report must reflect an after the fact determination of actual activity for each employee. Grantees must also maintain reports reflecting the distribution of activity of each employee (professionals and nonprofessionals) whose compensation is charged, in whole or in part, directly to awards. Although NHT has the capacity to capture total time by employee, it only maintained records of billable hours worked by each employee. “Timeslips” (an automated timekeeping system) was used to record and track the professional staff members’ project-specific work for third party clients or specific funding sources. Timeslips not only captured the hours worked but calculated the amount to be charged to each project based on established billable rates. NHT’s employees did not account for hours spent performing non-billable activities. According to NHT’s President, the staff was not required to enter hours that could not be billed back to a client as this process was time consuming and non-productive to enter hours into Timeslips for charges that would not be reimbursed. From July 1998 through March 2002, NHT charged a total of 3,098 hours for five4 employees who performed activities relating to the 21 OTAGs. Table 3 shows the number of hours each employee charged to OTAG. Table 3: Total Hours Charged to OTAGs Employee Years Total 1999 2000 2001 2002 1 168 530 999 667 2,364 2 38 138 202 196 574 3 21 - 15 83 119 4 1 - 16 - 17 5 - 16 - 8 24 Total Hours Charged by NHT 3,098 NHT’s President stated that the vast majority of the staff time was spent performing non-billable activities that were not project specific or designated to benefit any particular funding source. These activities included community and nonprofit educational programs and forums, fund 4 NHT’s staff consisted of from four to eight professional employees. 11 raising, administration, and public benefit work. However, it should be noted that these activities are indirect costs that were included in the billable rate calculation. NHT’s policy to not require employees to account for non-billable hours is contrary to the requirements of OMB Circular A-122 which specifically requires that all time be accounted for. As a result, NHT employees may have charged HUD for hours spent performing activities unrelated to the grant. AUDITEE COMMENTS NHT has revised its timekeeping policy to include a more comprehensive timekeeping system. The Executive Director of NHT will require employees to maintain detailed timesheets to record all daily activity. OIG EVALUATION OF AUDITEE COMMENTS The proposed timekeeping system appears to be comprehensive and in compliance with OMB Circular A-122. RECOMMENDATION We recommend that the Director of OMHAR: 3A. Ensure that NHT prepares and maintains salary recordkeeping reports in accordance with OMB Circular A-122. 12 FINDING 4 DUPLICATE PAYMENT RECEIVED NHT received $846 as a duplicate payment for the same activities. This duplicate payment occurred because adequate controls had not been established for reviewing and approving payment requests. As a result, OTAG funds were disbursed unnecessarily, and could have been put to better use by providing additional regional outreach activities. 24 CFR, part 84.21(3), “Standards for Financial Management Systems,” states that recipients’ financial management systems shall provide for effective controls over and accountability for all funds, property, and other assets. The NHT Controller advised us that she encountered problems when she initially attempted to make an electronic draw down for $846. Because she did not believe the transaction had been accepted, she did not send a payment voucher to OMHAR for approval. However, she did inform the OMHAR official responsible for approving vouchers of this and was told he would take care of the problem. OMHAR released the $846 to NHT’s account; but, according to the Controller, NHT never received notification. Therefore, the Controller submitted the $846 voucher along with six other vouchers for payment the following month. OMHAR approved this voucher, thereby creating the duplicate payment. OMHAR should have controls to prevent grantees from receiving payments without submitting vouchers. NHT acknowledged that it received this duplicate payment and agreed to adjust its next payment voucher by $846 to account for the overpayment. AUDITEE COMMENTS The Executive Director concurs with our conclusion and agrees to repay $946 for the duplicate payments received. This repayment includes an administrative error of $846 and a duplicate billing of $100 for a conference fee charged twice to the Wisconsin OTAG. OIG EVALUATION OF AUDITEE COMMENTS We were aware of the additional $100 duplicate payment and agree that this amount should also be included as a duplicate payment. We revised our recommendation to include this change. RECOMMENDATION We recommend that the Director of OMHAR: 4A. Request NHT to remit $946 to HUD. 13 MANAGEMENT CONTROLS In planning and performing our audit, we considered the management controls relevant to NHT’s Section 514 program to determine our audit procedures, not to provide assurance on the controls. Management controls include the plan of organization, methods, and procedures adopted by management to ensure that its goals are met. Management controls include the processes for planning, organizing, directing, and controlling program operations. They include the systems for measuring, reporting, and monitoring program performance. We determined that the following management controls were relevant to our audit objectives: · Identification of projects and activities eligible for assistance, · Controls and documents to support costs of assistance provided, and · Controls and procedures over the reporting of activities and cost. 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: · Ineligible costs and duplicate payments charged to the grant, · Indirect cost pool included unallowable and unsupported costs, and · Salary and time records did not comply with OMB Circular A-122. FOLLOW-UP ON PRIOR AUDITS The Office of Inspector General performed no previous audit of the National Housing Trust. 14 Appendix A SCHEDULE OF QUESTIONED COSTS Recommendation Type of Questioned Costs Number Ineligible 1/ Unsupported 2/ 1A $29,436 2B 6,329 4A 946 Total $36,711 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. 15 Appendix B AUDITEE COMMENTS 16 17 18 19 Appendix C EXTERNAL REPORT DISTRIBUTION Sharon Pinkerton, Senior Advisor, Subcommittee on Criminal Justice, Drug Policy & Human Resources, B373 Rayburn House Office Bldg., Washington, DC 20515 Stanley Czerwinski, Director, Housing and Telecommunications Issues, U.S. General Accounting Office, 441 G Street, NW, Room 2T23, Washington, DC 20548 Steve Redburn, Chief Housing Branch, Office of Management and Budget, 725 17th Street, NW, Room 9226, New Executive Office Bldg., Washington, DC 20503 Linda Halliday (52P), Department of Veterans Affairs, Office of Inspector General, 810 Vermont Ave., NW, Washington, DC 20420 William Withrow (52KC), Department of Veterans Affairs, OIG Audit Operations Division, 1100 Main, Rm 1330, Kansas City, Missouri 64105-2112 The Honorable Joseph Lieberman, Chairman, Committee on Government Affairs, 706 Hart Senate Office Bldg., United States Senate, Washington, DC 20510 The Honorable Fred Thompson, Ranking Member, Committee on Governmental Affairs, 340 Dirksen Senate Office Bldg., United States Senate, Washington, DC 20510 The Honorable Dan Burton, Chairman, Committee on Government Reform, 2185 Rayburn Bldg., House of Representatives, Washington, DC 20515 The Honorable Henry A. Waxman, Ranking Member, Committee on Government Reform, 2204 Rayburn Bldg., House of Representatives, Washington, DC 20515 The Honorable Barbara A. Mikulski, Chairman, Subcommittee on Veterans Affairs, Housing and Urban Development and Independent Agencies, Hart Senate Office Bldg., United States Senate, Washington, DC 20510 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 Jennifer Miller, Professional Staff, House Appropriations Committee 20
Congressionally Requested Audit of the Outreach and Training Assistance Grants Awarded to the National Housing Trust
Published by the Department of Housing and Urban Development, Office of Inspector General on 2002-12-09.
Below is a raw (and likely hideous) rendition of the original report. (PDF)