oversight

Congressionally Requested Audit of Section 514 Outreach and Training Assistance Grants Awarded to Indiana Coalition on Housing and Homeless Issues; Indianapolis, Indiana; Grant Numbers FFOT98008IN and FFOT00014IN

Published by the Department of Housing and Urban Development, Office of Inspector General on 2002-10-31.

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

                                                                Issue Date
                                                                        October 31, 2002
                                                                Audit Case Number
                                                                        2003-CH-1004




TO:            Charles H. Williams, Director of Multifamily Housing Assistance Restructuring,
                 HY



FROM:          Heath Wolfe, Regional Inspector General for Audit, Region V

SUBJECT:       Congressionally Requested Audit of Section 514 Outreach and Training
               Assistance Grants Awarded to Indiana Coalition on Housing and Homeless
               Issues; Indianapolis, Indiana; Grant Numbers FFOT98008IN and FFOT00014IN

                                       INTRODUCTION

We completed an audit of Indiana Coalition on Housing and Homeless Issues’ Section 514
Outreach and Training Assistance Grants. The audit identified that the Coalition: (1) lacked
documentation to support $14,113 in Grant funds disbursed; (2) improperly used $21,670 of
Outreach Grant funds to pay duplicative expenses and costs not related to the Grants; and (3) did
not maintain complete and accurate books and records for the Grants. Our report contains five
recommendations to address the issues identified in this audit.

Section 1303 of the 2002 Defense Appropriation Act, Public Law 107-117, directed HUD’s
Office of Inspector General to audit all activities funded by Section 514 of the Multifamily
Assisted Housing Reform and Affordability Act of 1997. The directive included the Outreach
and Training Assistance Grants and Intermediary Technical Assistance Grants administered by
HUD’s Office of Multifamily Housing Assistance Restructuring. Consistent with the
Congressional directive, we reviewed the eligibility of costs with particular emphasis on
identifying ineligible lobbying activities.

In conducting the audit, we reviewed Indiana Coalition on Housing and Homeless Issues’ policies
and procedures for the period October 1, 1998 to June 1, 2002. We also reviewed and evaluated the
Coalition’s: management controls over the Outreach and Training Assistance Grants; reliability of
computer-processed data; organizational structure; Board of Directors’ meeting minutes; general
ledgers; method used for allocating costs; and the Independent Auditor’s Report for January 1, 2000




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to December 31, 2001. In addition, we reviewed bank statements, cancelled checks, cash
receipts and disbursements ledgers, the Multifamily Assisted Housing Reform and
Affordability Act’s requirements, HUD’s Notices of Funding Availability and Grant
Agreements for the Outreach and Training Assistance Grants, 24 CFR Part 84, and Office of
Management and Budget Circulars A-110 and A-122. We tested 1,489 of the 3,409 (43
percent) financial transactions totaling $132,769 and all of the $312,766 in payroll expenses that
the Coalition charged to the Grants.

We reviewed Indiana Coalition on Housing and Homeless Issues’ records and HUD’s
records for the Coalition. We interviewed the Coalition’s staff and key staff from HUD’s
Office of Multifamily Housing Assistance Restructuring. Our audit covered the period
October 1998 to June 2002 for the two Outreach and Training Assistance Grants that the
Coalition received. We performed our on-site audit work between May and August 2002.
We conducted the audit in accordance with Generally Accepted Government Auditing
Standards.

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 have them contact Thomas Towers,
Assistant Regional Inspector General for Audit, at (313) 226-6280 extension 8062 or me at
(312) 353-7832.

                                          SUMMARY

Indiana Coalition on Housing and Homeless Issues did not administer its Outreach and
Training Assistance Grants in full compliance with Federal requirements. Specifically, the
Coalition:

   ·   Failed to maintain documentation to support Grant funds expended;
   ·   Inappropriately used Grant funds to pay duplicative expenses and costs not related to the
       Grants; and
   ·   Did not maintain complete and accurate books and records for the Grants as required by
       Office of Management and Budget Circular A-110.

                                       BACKGROUND

The Multifamily Assisted Housing Reform and Affordability Act of 1997 authorized HUD’s
Secretary to establish procedures to provide an opportunity for tenants of projects and other
affected parties to participate effectively and on a timely basis in the restructuring process
established by the Act. Section 514(f)(3)(A) of the Act states in part that the Secretary may
make obligations to tenant groups, nonprofit organizations, and public entities for building


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the capacity of tenant organizations for technical assistance in furthering any of the purposes
of the Act and for tenant services.

The Multifamily Assisted Housing Reform and Affordability Act of 1997 established HUD’s
Office of Multifamily Housing Assistance Restructuring to administer the Mark-to-Market
Program. The Office of Multifamily Housing Assistance Restructuring works with property
owners, participating administrative entities, tenants, lenders, and others with a stake in the
future of affordable housing.

HUD issued Notices of Funding Availability in Fiscal Years 1998 and 2000 to provide
opportunities for nonprofit organizations to participate in the Section 514 Grants program.
HUD awarded two types of Grants—the Intermediary Technical Assistance Grant and the
Outreach and Training Assistance Grant. The Notices of Funding Availability for the
Intermediary Technical Assistance Grant program states that the program provides funds
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 eligible projects throughout its jurisdiction. The Notices of
Funding Availability for the Outreach and Training Assistance Grant program states that the
program is to provide technical assistance to tenants of eligible Mark-to-Market properties so
that tenants can: (1) participate meaningfully in the Mark-to-Market Program; and (2) affect
decisions about the future of their housing.

Indiana Coalition on Housing and Homeless Issues organized in 1989 as a nonprofit tenant
advocacy organization. The Coalition is a statewide association dedicated to the right of all
citizens of the State of Indiana to safe, decent, and affordable housing and necessary
supportive services. The Coalition is a member of, and affiliated with, the National Low
Income Housing Coalition, National Coalition for the Homeless, National Association of
HUD Tenants, and the National Alliance to End Homelessness. The Executive Director of
the Coalition is James Cundiff. The Coalition’s offices are located at 324 West Morris, Suite
202, Indianapolis, Indiana.

There are over 500 properties with over 44,000 units providing affordable housing for some
of the State of Indiana’s lowest income households. The 20-year Section 8 Program
contracts on these properties began to expire, or will expire, over the next few years. Most of
these properties are owned by for-profit businesses and have few incentives to renew their
Section 8 contracts. These owners may opt-out of the Section 8 Program and rent their units
at market rates or choose to sell the properties. The Outreach and Training Assistance Grant
program provides for outreach and training in the area of those properties with expiring
Section 8 Program contracts in which rents are above the fair market rent and eligible for the
Mark-to-Market Program.

The Outreach and Training Assistance Grant Agreement for Fiscal Year 1998, between
Indiana Coalition on Housing and Homeless Issues and HUD, for $350,000 was signed on
October 8, 1998. On January 11, 2001, the Outreach and Training Assistance Grant



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Agreement for Fiscal Year 2000 in the amount of $350,000 was signed. HUD’s Office of
Multifamily Housing Assistance Restructuring notified the Coalition after January 2001 that
the authorized amount for the Fiscal Year 2000 Grant was reduced from $350,000 to
$183,333. As of June 30, 2002, the Coalition expended $350,000 and $181,341 of the Fiscal
Years 1998 and 2000 Grants, respectively.

The Outreach and Training Assistance Grants represented 27 percent of the total funding
awarded to Indiana Coalition on Housing and Homeless Issues. In addition to the funds from
the Outreach and Training Assistance Grants, the Coalition was awarded $1,401,462 from 26
non-Federal sources as of June 30, 2002. As required by Office of Management and Budget
Circular A-133, Audits of States, Local Governments, and Nonprofit Organizations, the
Coalition received an annual financial audit of its activities for the two-year period ending
December 31, 2001. The audit report contained an unqualified opinion. The report did not
identify that the Coalition: failed to maintain supporting documentation of all Grant
disbursements; improperly used Grant funds for duplicative expenses or costs not related to
the Grants; and did not maintain complete and accurate books and records for the Grants.

                                       FINDING
                       Controls Over The Grants Need Improvement

Indiana Coalition on Housing and Homeless Issues submitted voucher claims for its Outreach
and Training Assistance Grants that contained duplicative costs, costs not related to the
Grants, ineligible administrative costs, and unsupported salaries and general operating costs.
The unsupported salaries and general operating costs included travel expenses, consultant
fees, telephone charges, membership dues, and conference and administrative costs. The
unsupported and ineligible voucher claims were due to the Coalition’s: (1) inadequate billing
process prone to errors since it was not based on supported hourly rates or its general ledger;
(2) lack of reviews of claims submitted for reimbursement; and (3) insufficient support for
amounts claimed. As a result, we questioned $35,783 of claims made by the Coalition that
represented either unsupported or ineligible costs to the Grants.

                                   Federal Requirements

24 CFR Part 84.27 states for each kind of recipient, there is a set of Federal principles for
determining allowable costs. Allowability of costs will be determined in accordance with the
cost principles applicable to the entity incurring the costs. The allowability of costs incurred
by nonprofit organizations is determined in accordance with Office of Management and
Budget Circular A-122, Cost Principles for Nonprofit Organizations.

Attachment A of Office of Management and Budget Circular A-122 requires that all
allowable direct and indirect costs be adequately documented. Attachment B, paragraph
7(m), on compensation of personnel costs requires that salaries and wages—whether treated
as direct or indirect costs—will be based on documented payrolls and supported by personnel
activity reports, such as time sheets. The activity reports (e.g., time sheets) must be
maintained for all staff members whose compensation is charged, in whole or in part, to




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Federal grant awards. These reports must reflect an after-the-fact determination of actual
activity of each employee. Budget estimates do not qualify as support.

24 CFR Part 84.21(b) and Circular A-110, Uniform Administrative Requirements for Grants
and Agreements With Institutions of Higher Education, Hospitals, and Other Nonprofit
Organizations, require that a grantee’s financial management system provide accurate,
current, and complete disclosure of the financial results of each Federally assisted program
and records that identify the source and application of funds.

                      Payroll Costs Were Not Adequately Supported

Indiana Coalition on Housing and Homeless Issues failed to ensure that employee payroll
costs charged to its Outreach and Training Assistance Grants were adequately supported and
accurate. Not all of the Coalition’s employees regularly submitted time sheets in support of
what they worked on for each period, and errors were made for the number of hours claimed
on some vouchers. In addition, the Coalition lacked support for the hourly pay rates it used
to charge the Grants. As a result, we questioned $11,156 in payroll costs charged to the
Grants.

The Coalition did not adjust its salary expense accounts in its general ledger to reflect actual
hours worked on each program or activity area as reported on employees’ time sheets. The
Coalition posted actual hours worked into a job ledger only. This enabled the Coalition to
have a control in place in its job ledger for determining when time sheets were missing.
However, several time sheets were missing that indicated the Coalition did not use the ledger
for this purpose.

                       General Ledger Did Not Reflect Actual Costs

The Coalition’s general ledger salary expense accounts were divided into four activity areas.
Salary costs were charged to these activities based on budget estimates established at the
beginning of each year. A “Tenants Organizing Project Activity” account was used to charge
the Outreach and Training Assistance Grants. However, adjusting journal entries to reflect
actual hours worked in the Coalition’s job ledger were not posted to its general ledger. By
not adjusting the general ledger salary expense accounts to reflect actual hours worked on
each activity, the accuracy of the annual financial statements was impacted for each activity
area.

We calculated pay rates and compared them to the hourly pay rates claimed by the Coalition
using the payment voucher requests. Our analysis disclosed that the Coalition overcharged
for some employees and undercharged for others. Our analysis was based on time sheets in
support of the hours claimed. When time sheets were missing, we questioned the entire cost.
Otherwise, we only questioned the difference between the hours that were supported and the
amounts claimed by the Coalition. The following table on page 6 shows the Coalition’s
unsupported salaries by employee and Grant.




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                           Unsupported Salaries Paid From Grants
                                                    Grant #             Unsupported
                      Employee         FFOT980008IN FFOT00014IN           Salaries

                    Grant Program
                      Supervisor          $2,200              $4,851      $7,051
                   Program Assistant       1,114              (1,026)         88
                   Program Assistant       3,995                   0       3,995
                  Executive Director      (3,610)              (467)      (4,077)
                   Program Manager           (9)                  4           (5)
                    Office Manager        (1,039)              1,186        147
                    Former Director         3,774                  0       3,774
                   Program Assistant         100                  83        183
                        Totals            $6,525              $4,631    $11,156


The Coalition’s Office Manager who maintains the accounting records said he was not aware
of the need to adjust the salary expense accounts. In order to make these types of
adjustments, the Coalition would need to summarize the hours worked from the time sheets,
compare the results to the budget estimates, and adjust the salary expense accounts to reflect
actual hours worked. As previously stated, this would serve to enhance the accuracy of the
Coalition’s financial statements.

                        Unsupported and Ineligible Disbursements

The Coalition lacked invoices to support amounts paid from its Outreach and Training
Assistance Grants for travel, consultant services, telephone charges, membership dues,
conference and general operating costs. The Coalition also submitted claims for activities
unrelated to the Grants program. We reviewed 1,381 of the Coalition’s Grant transactions of
which 67 transactions were either not supported with an invoice or were ineligible. As a
result, the Coalition paid $9,013 in unsupported transactions and $1,505 in ineligible
transactions from the Grants. According to the Executive Director, the Coalition lacked
procedures for submitting and documenting payment voucher claims. The Director for the
Coalition also said its accounting system was not designed for billing HUD for Grant
expenditures. The Coalition’s Office Manager said payment voucher claims were manually
prepared and prone to human error, and a third party review was not considered. This
resulted in unsupported and ineligible costs to the Grant program of $10,518. The following
table on page 7 shows disbursement amounts that were ineligible or not supported.




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                         Unsupported And Ineligible Transactions
      Transaction Transactions Unsupported             Amount          Ineligible
      Description Reviewed        Transactions Unsupported Ineligible Transactions
      Conference           23           1          $ 129       $360         3
      Membership           15           2             400         0         0
      Telephone           323          13           3,224       213         7
      Travel            1020           18           5,260       932        23
            Totals:    1381            34          $9,013    $1,505        33
                    Total Unsupported/Ineligible       $10,518

                              Unsupported Voucher Claims

Administrative costs charged to the Coalition’s Outreach and Training Assistance Grants
were unsupported or ineligible. We identified unsupported and ineligible administrative
costs due to: charging penalty costs; calculating errors--including balances from prior
periods; and claiming back pay twice for four employees. The Office Manager said the
Coalition’s accounting software lacked the ability to separate out personnel costs from its
accounting records for billing the Grants. The Manager also said the Coalition’s accounting
software for the Grants program only allowed the Coalition to print out current period
transactions from the listing of administrative charges in its job ledger, thus increasing the
risk of claiming transactions already paid from a prior period. We found three instances of
this occurring. Preparing the Coalition’s payment voucher was a labor-intensive clerical task
prone to errors. Errors primarily occurred because the Coalition lacked a procedure for
reviewing claims prior to submitting them to HUD for payment. The following table on page
8 summarizes the Coalition’s unsupported and ineligible administrative costs of $12,119 paid
from the Grants.




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                     Administrative Unsupported or Ineligible Costs
                        Administrative costs
    Payment                                   Under/(Over)
    Voucher #        Claimed        Supported   Support Ineligible    Description
     84000016          $3,042         $2,938     $ 0       $ 104 IRS penalty
     84000123           3,690          4,023     (333)           0 Calculating errors
     84000292          15,630          6,215          0      9,415 Duplicate payment
     84000330           2,798          5,125    (2,327)          0 Calculating errors
     84000427           7,142          7,815      (673)          0 Calculating errors
     84000455           2,225          2,251       (26)          0 Calculating errors
     84000474           1,920          2,104      (184)          0 Calculating errors
     84000487          10,000          3,838          0      6,162 Duplicate payment
     84000535          23,229         20,735          0      2,494 Duplicate payment
     84000611          19,656         20,358      (702)          0 Calculating errors
     84000643          11,953         13,089    (1,136)          0 Calculating errors
     84000693           2,041          2,734      (693)          0 Calculating errors
     84000824         19,673         19,655          18          0 Calculating errors
      Totals        $122,999      $110,880     ($6,056) $18,175
 Unsupported and Ineligible Costs To Grants              $12,119

                               Erroneous Billing Procedures

Indiana Coalition on Housing and Homeless Issues was overpaid for life and health insurance
claims due to the Coalition using erroneous billing procedures. Since February 2001, the
Coalition submitted claims for life and health insurance based on its cost allocation plan and
also included these costs in the hourly pay rates of three employees working on the Grants
program. This was not apparent to the Coalition because it lacked supporting documentation
showing how it computed the hourly pay rates. As a result, the Coalition received $1,990
more in Grant funds than they were entitled to.

Prior to February 2001, the Coalition’s hourly pay rates for its employees working full-time
on the Outreach and Training Assistance Grants did not include fringe benefits. Instead, the
associated fringe benefits were charged separately to the Grants. The exception was with the
hourly pay rates for the Coalition’s employees working on multiple activities. Their fringe
benefits were included in their hourly pay rates only.

At the request of HUD’s Office of Multifamily Housing and Assistance Restructuring in
February 2001, the Coalition established an hourly pay rate to include fringe benefits for all
of its employees. The Coalition then billed the Outreach and Training Assistance Grants for
personnel costs based on the number of hours spent on the Grants. However, the Coalition
continued to bill the Grants directly for employee health and life insurance costs after
establishing hourly pay rates that included these costs. This was not evident to the Coalition
because it failed to document what costs were included in its calculation of the hourly pay


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rates. We were able to determine that the hourly rates included these costs for three
employees by:

   ·   Recalculating the hourly rates using direct hours for each employee as stated in the
       Coalition’s cost allocation plan;
   ·   Including the health and life insurance costs; and
   ·   Comparing the results to the rates charged by the Coalition to the Grants.

                 Health And Life Insurance Costs Were Claimed Twice

The Coalition claimed health and life insurance costs twice for three employees paid from the
Outreach and Training Assistance Grants program since February 2001—once as part of the
employee’s hourly pay rate, and secondly—as a direct charge to the program for employee
health and life insurance costs.

The Executive Director said he agreed that the Coalition neglected to remove direct charges
for health and life insurance costs when it changed its billing method for personnel costs to a
hourly pay rate. The following table shows the health and life insurance costs totaling
$1,990 that were claimed both in the direct charges to the program, as well as being included
in the hourly pay rates of these employees.

                       Duplicate Health And Life Insurance Costs
                  Voucher    Time       Health      Life    Duplicate
                   Claim # Period        Costs      Costs    Claim
                  84000611 2/01-3/01     $394        $ 0      $ 394
                  84000624    4/01           0        19         19
                  84000643    5/02         491         7        498
                  84000824 7/01-9/01       508         4        512
                  84000914 10/01-1/02      440         9        449
                  84001025 2/02-3/02        57         2         59
                  84001092 4/02-5/02        57         2         59
                   Totals               $1,947       $43     $1,990

As a result, the Coalition was unable to support charges to the Outreach and Training
Assistance Grants totaling $35,783. The $35,783 consisted of $11,156 in questioned payroll
charges due to missing time sheets and billing errors; $21,670 in ineligible administrative
costs due to duplicate payments, penalty fees, calculation errors, duplicate health and life
insurance costs, and claims for activities not related to the Grants; and $2,957 in unsupported
general operating expenses for travel, telephone charges, membership dues, and conferences.

                                 AUDITEE COMMENTS

We provided our draft audit memorandum report to Indiana Coalition on Housing and
Homeless Issues’ Executive Director and HUD’s staff during the audit. The Coalition’s
Executive Director provided his comments on the draft report on October 18, 2002. The


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Director’s comments included 52 attachments (time sheets and activity reports) that were not
necessary for understanding his comments.

We held an exit conference with Indiana Coalition on Housing and Homeless Issues’ Executive
Director on October 24, 2002. We included the Executive Director’s comments in Appendix B
of this report with the exception of 52 attachments. HUD’s Director of Multifamily Housing
Assistance Restructuring received a complete copy of the Coalition’s comments with the 52
attachments. The Coalition’s Executive Director was provided with copies of the audit
memorandum report.

[Excerpts paraphrased from the comments provided by Indiana Coalition on Housing and
Homeless Issues’ Executive Director on our draft audit memorandum report follow.
Appendix B, pages 16 and 17, contains the complete text of the comments for the draft
report.]

Indiana Coalition on Housing and Homeless Issues supplied all available documentation for the
unsupported Outreach and Training Assistance Grant expenditures. The Coalition believes the
Grants should be reimbursed $38,586 for the following costs: $10,518 for unsupported and/or
ineligible disbursements; $12,119 for unsupported and/or ineligible administrative items; $1,990
for excessive health and life insurance; and $13,959 for unsupported salaries.

The Coalition provided documentation to support the time after January 8, 2000 for its Grant
Program Supervisor and Program Assistant that were charged to the Outreach and Training
Assistance Grants.

The Coalition is tracking the use of funds for all grants and restricted contributions, and its
general ledger supports the use of the funds. This is to ensure the proper accounting of all
funds so grantors can see the funds are used for their intended purpose. The Coalition has
adequate billing procedures in place for all payment requests that are supported by hourly
rates and its general ledger.

Indiana Coalition on Housing and Homeless Issues is posting a $38,586 adjustment to its
general ledger so the Coalition’s Board of Directors will have an accurate financial
statement. The Coalition understands that additional adjustments may be needed to reflect
the actual final costs.

The Coalition established written procedures to ensure complete and accurate claims are
supported. Expenses are being recorded by the Coalition on spreadsheets along with
supporting documentation for every cost claimed. The Coalition’s Program Supervisor,
Office Administrator, and the Executive Director will conduct an audit on each claim before
submission for payment. Additionally, the Treasurer for the Coalition’s Board and its
accountant will conduct a random review of the claims.

The Coalition has written management controls in place to ensure that only eligible activities
receive funding and documentation for expenditures meet Office of Management and Budget
Circular A-122. Since the controls are in place and the Coalition will ensure that current and



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future claims will be made for only eligible activities, Indiana Coalition on Housing and
Homeless Issues sees no need to consider suspending the Outreach and Training Assistance
Grants funding.

                   OIG EVALUATION OF AUDITEE COMMENTS

Indiana Coalition on Housing and Homeless Issues provided supporting documentation;
therefore, we adjusted our finding accordingly. The actions taken by the Coalition, if fully
implemented, should improve its administration of the Outreach and Training Assistance
Grants. We did not remove our recommendation that HUD consider suspending the
Coalition’s funding until evidence is provided to demonstrate it implemented sufficient
management controls to ensure that only eligible costs receive funding and the documentation
for each expenditure complies with Office of Management and Budget Circular A-122.

                                RECOMMENDATIONS

We recommend that HUD’s Director of Multifamily Housing Assistance Restructuring
require Indiana Coalition on Housing and Homeless Issues to:

1A.    Provide documentation to support the $14,113 ($11,156 plus $9,013 less $6,056) of
       unsupported payments cited in this finding. If documentation cannot be provided, then
       the Coalition should reimburse its Outreach and Training Assistance Grants for the
       amount that cannot be supported from non-Federal funds.

1B.    Reimburse its Outreach and Training Assistance Grants $21,670 ($1,505 plus
       $18,175 plus $1,990) from non-Federal funds for the improper payment of duplicative
       expenses and costs not related to the Grants.

1C.    Implement procedures and controls to follow HUD’s regulation and/or Office of
       Management and Budget Circular A-122 regarding the accurate recording and proper
       use of the Outreach and Training Assistance Grant funds.

1D.    Post actual expenses to its general ledger for the Outreach and Training Assistance
       Grants to assure the Coalition has accurate books and records for the Grants.

We also recommend that HUD’s Director of Multifamily Housing Assistance Restructuring:

1E.    Consider suspending funding until Indiana Coalition on Housing and Homeless Issues
       implements sufficient management controls to ensure that only eligible costs receive
       funding and the documentation for expenditures complies with Office of Management
       and Budget Circular A-122.




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                               MANAGEMENT CONTROLS

In planning and performing our audit, we considered the management controls of Indiana
Coalition on Housing and Homeless Issues to determine our auditing 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 the following management controls were relevant to our audit objectives:


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


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


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


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

We assessed all of the relevant controls identified above.

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

Based upon our review, we believe the following items are significant weaknesses:

·   Program Operations

Indiana Coalition on Housing and Homeless Issues did not manage its Outreach and Training
Assistance Grants according to program requirements. Specifically, the Coalition: (1) lacked
documentation to support $14,113 in Grant funds disbursed; (2) improperly used $21,670 of
Outreach Grant funds to pay duplicative expenses and costs not related to the Grants; and (3) did
not maintain accurate books and records for the Grants (see Finding).




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·   Validity and Reliability of Data

Indiana Coalition on Housing and Homeless Issues failed to maintain accurate books and
records for its Outreach and Training Assistance Grants since adjusting journal entries were
not posted to the Coalition’s general ledger (See Finding).

·   Compliance with Laws and Regulations

Indiana Coalition on Housing and Homeless Issues did not follow HUD’s regulation and/or
Office of Management and Budget Circular A-122 regarding the accurate recording and proper
use of the Outreach and Training Assistance Grant funds (see Finding).

·   Safeguarding Resources

Indiana Coalition on Housing and Homeless Issues failed to maintain documentation to
support $14,113 in Outreach and Training Assistance Grant funds disbursed, and
inappropriately used $21,670 of Outreach Grant funds to pay duplicative expenses and costs
not related to the Grants (see Finding).




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                          FOLLOW-UP ON PRIOR AUDITS

This is the first audit of Indiana Coalition on Housing and Homeless Issues by HUD’s Office
of Inspector General. The latest Independent Auditor’s Report for the Coalition covered the
two-year period ending December 31, 2001. The Report contained no findings.




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                                                                                  Appendix A

                          SCHEDULE OF QUESTIONED COSTS


Recommendation                       Type of Questioned Cost
   Number                     Ineligible 1/         Unsupported 2/

        1A                                              $14,113
        1B                     $21,670
                               $21,670                  $14,113


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.




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                                      Appendix B

       AUDITEE COMMENTS




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                                                                             Appendix C

                         DISTRIBUTION OUTSIDE OF HUD

The Honorable Barbara A. Mikulski, Chairperson, Subcommittee on Veterans Affairs,
       HUD, and Independent Agencies, 709 Hart Senate Office Building, United States
       Senate, Washington, DC 20510
The Honorable Christopher S. Bond, Ranking Member, Subcommittee on Veterans
       Affairs, HUD, and Independent Agencies, 274 Russell Senate Office Building, United
       States Senate, Washington, DC 20510
The Honorable Joseph Lieberman, Chairman, Committee on Government Affairs, 706
       Hart Senate Office Building, United States Senate, Washington, DC 20510
The Honorable Fred Thompson, Ranking Member, Committee on Governmental Affairs,
       340 Dirksen Senate Office Building, United States Senate, Washington, DC 20510
The Honorable Dan Burton, Chairman, Committee on Government Reform, 2185
       Rayburn Building, House of Representatives, Washington, DC 20515
The Honorable Henry A. Waxman, Ranking Member, Committee on Government
       Reform, 2204 Rayburn Building, House of Representatives, Washington, DC 20515
Andy Cochran, Committee on Financial Services, 2129 Rayburn House Office Building,
       United States House of Representatives, Washington DC 20515
Clinton C. Jones, Senior Counsel, Committee on Financial Services, B303 Rayburn Building,
       United States House of Representatives, Washington DC 20515
Sharon Pinkerton, Senior Advisor, Subcommittee on Criminal Justice, Drug Policy &
       Human Resources, B373 Rayburn House Office Building, United States Housing of
       Representatives, Washington, DC 20515
Stanley Czerwinski, Director, Housing and Telecommunications Issues, United States
       General Accounting Office, 441 G Street, NW, Room 2T23, Washington, DC 20548
Steve Redburn, Chief of Housing Branch, Office of Management and Budget, 725 17th
       Street, NW, Room 9226, New Executive Office Building, Washington, DC 20503
Linda Halliday (52P), Department of Veterans Affairs, Office of Inspector General, 810
       Vermont Avenue, NW, Washington, DC 20420
William Withrow (52KC), Department of Veterans Affairs, Office of Inspector General
       Audit Operations Division, 1100 Main, Room 1330, Kansas City, Missouri 64105-
       2112
Kay Gibbs, Committee on Financial Services, 2129 Rayburn House Office Building,
       United States House of Representatives, Washington DC 20515
George Reeb, Assistant Inspector General for Health Care Financing Audits
Jennifer Miller, Professional Staff, House Committee on Appropriations
James Cundiff, Executive Director of Indiana Coalition on Housing and Homeless Issues




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