AUDIT REPORT
HUD INDIAN HOUSING BLOCK GRANT PROGRAM
SICANGU WICOTI AWANYAKAPE CORPORATION
ROSEBUD, SOUTH DAKOTA
2003-DE-1001
OCTOBER 8, 2002
U.S. Department of Housing and Urban Development
Regional Inspector General for Audit
633 17TH Street 14TH Floor
Denver, Colorado 80202-3607
Issue Date
October 8, 2002
Audit Report Number
2003-DE-1001
TO: Randall R. Akers, Administrator, Northern Plains Office of Native American
Programs, 8API
FROM: Robert C. Gwin, Regional Inspector General for Audit, 8AGA
SUBJECT: HUD Indian Housing Block Grant Program
Sicangu Wicoti Awanyakape Corporation
Rosebud, South Dakota
We have completed an audit of the HUD Indian Housing Block Grant Program operations being
carried out by the Sicangu Wicoti Awanyakape Corporation, also known as the Rosebud Housing
Authority (hereinafter referred to as the Housing Authority), Rosebud, South Dakota. At the
beginning of our review, numerous tribal members, Housing Authority participants and Housing
Authority staff and officials presented to us information and concerns relating to the various
aspects of the administration and operations of the Housing Authority in connection with its
Indian Housing Block Grant Program. To address the numerous concerns, we focused our review
on the Housing Authority’s management controls over its HUD funded Block Grant Program
operations and financial systems and compliance with HUD program requirements.
Our audit resulted in six findings and concluded the Housing Authority needs to establish
necessary management controls over its operations and financial systems to ensure it functions in
accordance with HUD requirements. These six findings are discussed in this report.
Within 60 days, please give us, for each recommendation in this report, 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. Also, please furnish us copies of any correspondence or
directives issued because of the audit.
We appreciate the courtesies and assistance extended by the management and staff of the Housing
Authority and the HUD Northern Plains Office of Native American Programs.
Management Memorandum
Should you or your staff have any questions, please contact Ernest Kite, Assistant Regional
Inspector General for Audit, at (303) 672-5452.
2003-DE-1001 Page ii
Executive Summary
We have completed an audit of the HUD Indian Housing Block Grant Program operations
being carried out by the Sicangu Wicoti Awanyakape Corporation, also known as the
Rosebud Housing Authority, Rosebud, South Dakota. At the beginning of our review,
numerous tribal members, Housing Authority participants, and Housing Authority staff
and officials presented to us information and concerns related to the various aspects of the
administration and operations of the Housing Authority in connection with its Indian
Housing Block Grant Program. To address the numerous concerns, we focused our review
on the Housing Authority’s management controls over its HUD funded Indian Housing
Block Grant Program operations and financial systems and compliance with HUD
program requirements. Basically, we performed an audit of the Housing Authority’s
operations to determine whether they:
· Had adequate cash management policies to assure availability of funds to meet
expenditures, safeguarding cash and deposits, and accuracy of reporting and recording
of financial transactions;
· Followed admission and occupancy policies and procedures;
· Effectively used collection policies and procedures to maintain control over Tenant
Accounts Receivable;
· Followed procurement policies and procedures in procuring goods and services;
· Effectively administered the maintenance program;
· Maintained housing units in good repair, order and condition;
· Effectively administered the Private Homeowner Rehabilitation/Loan Program; and
· Effectively managed inventories of materials and supplies.
Generally, the audit covered the period January 1, 1998 through December 31, 2000. Our
review disclosed that management controls were not satisfactorily established to ensure
that the Housing Authority:
· Had adequate cash management policies to assure availability of funds to meet
expenditures, safeguarding cash and deposits, and accuracy of reporting and recording
of financial transactions;
· Followed occupancy policies and procedures;
· Effectively used collection policies and procedures to maintain control over tenant
accounts receivable;
· Followed procurement policies and procedures in procuring goods and services;
Page iii 2003-DE-1001
Executive Summary
· Effectively administered the maintenance program;
· Maintained housing units in good repair, order, and condition;
· Effectively administered the Indian Housing Block Grant Program; and
· Effectively managed inventories of materials and supplies.
From July 9-13, 2001, the HUD Northern Plains Office of Native American Programs
conducted an on-site performance review of HUD funded Indian Housing Block Grants
and United States Housing Act of 1937 programs being implemented by the Housing
Authority. HUD recorded 15 findings and identified 9 other concerns during the course of
their review. HUD concluded the Housing Authority lacked the administrative capacity to
properly administer affordable housing activities effectively and disallowed a number of
costs.
The Housing Authority has numerous policies that identify
Deficient controls over procedures to be followed in the collection of payment
tenant occupancy and delinquencies, eviction for non-payment of rent and drug
related activities related offenses, subleasing, and continued occupancy, etc.
These policies apply equally to all tenants and
homeowners, including Housing Authority employees who
are assigned to a housing unit under the administration and
management of the Housing Authority itself. However, the
Housing Authority either ignores their own policies in these
areas or decides to selectively enforce those requirements.
In addition, the Housing Authority has been lax in its
efforts to collect at least $1,762,594 due from its Low Rent
tenants and $381,321 from its Mutual Help homeowners.
The lack of collection of these receivables can seriously
affect the Housing Authority’s ability to operate due to the
absence of operating funds.
The Housing Authority implemented three supplemental
Inadequate administration housing programs during the audit period using Indian
of supplemental housing Housing Block Grant Program monies. The three
programs supplemental housing programs were: Used Mobile Home
Program; Pre-Manufactured Modular Units Program; and
Private Homeowner Rehabilitation/Loan Program. In
implementing these programs, the Housing Authority did
not establish adequate administrative procedures to ensure
that HUD requirements were met. More specifically, the
Housing Authority did not ensure that only low income
2003-DE-1001 Page iv
Executive Summary
recipients benefited under the programs; that units acquired
met safe and health environments; programs’ activities
were correctly reflected on the Housing Authority’s
accounting records; and recipient purchases or loans are
being properly and promptly collected by the Housing
Authority. Also, the Housing Authority did not follow it’s
own procurement and maintenance policies in
implementing the supplemental housing programs.
These deficiencies occurred primarily because the Housing
Authority lacked adequate management and accounting
controls over the implementation of the supplemental
housing programs. The programs were carried out by
single departments or individuals of the Housing Authority
without any apparent management oversight, supervision,
and/or monitoring. In some instances the Housing
Authority Board of Commissioners authorized individual
transactions or activities that were in direct conflict with
their previously established policies and procedures.
Obviously, proper management and accounting controls are
needed if these three supplemental housing programs are to
continue in the future.
The Housing Authority does not maintain a contract
Inadequate contract administration system to ensure contractors perform
administration system according to the terms of their contracts as specified in their
own Procurement Policy. We identified procurement
deficiencies in the two procurement contracts reviewed.
These two contracts were valued at $3.04 million at the
time of our review. Specifically, one contract did not
receive Indian Health Service inspection reports on sewer
and waterline construction, certificates of insurance before
commencing work, and consistent progress schedules.
There was no record of inspections having been completed
on the other contract. In addition, the Housing Authority
does not use its own Procurement Policy on
vendors/contractors for labor type only contracts and for
small dollar amount type contracts that are charged to the
Monthly Equity Payments Account. These deficiencies
occurred because there has been a significant turnover of
Executive Directors, fractionalization between supervisory
personnel of the Housing Authority, and management of
the Housing Authority not ensuring its staff performs and
complies with all applicable provisions of its own
Procurement Policy.
Page v 2003-DE-1001
Executive Summary
The Housing Authority is not maintaining adequate
Inadequate controls over perpetual inventory records in support of its construction
materials inventory and renovation projects. There are no controls in place to
ensure requisitioning activities are properly maintained and
materials and supplies are properly safeguarded. The
Housing Authority does not have effective inventory
control to account for all of its assets. Without an adequate
inventory control system for construction materials and
supplies, the Housing Authority cannot ensure it safeguards
assets purchased with Federal funds by protecting them
from theft, loss, waste, damage, and unauthorized use.
Contrary to Federal regulations, the Housing Authority has
Improper payment of used Indian Housing Block Grant Program monies to pay
penalties and fees for unallowable penalties and fees. From 1996 through
2000, the Housing Authority was assessed penalties and
interest totaling $78,110 by the Internal Revenue Service
for not making proper Federal employment tax deposits and
failure to file the Internal Revenue Service Form 941 in a
timely manner. In addition, from 1998 through March of
2000, the Housing Authority incurred bank overdraft
charges totaling $21,900 for having insufficient funds to
meet expenditures. This occurred because the Housing
Authority did not ensure the Finance Department properly
administered its funds.
Contrary to HUD requirements, the Housing Authority has
Deficient controls over not implemented sufficient management controls over its
travel and related costs travel and related expenses to ensure that its adopted Travel
Policy is followed and adhered to. More specifically, each
official trip has not always been properly authorized, travel
advances have been improperly calculated in some cases,
travel vouchers have not always been filed by the traveler
after the end of a trip, and documentation supporting travel
costs and related calculations were often missing and/or
incomplete. As a result, the Housing Authority has limited
assurances that its travelers are complying with its Travel
Policy and that the reimbursed amounts to the travelers are
authorized, accurate, and supported. This situation has
occurred primarily by the fact that no one individual or
department with the Housing Authority has the
responsibility to review and enforce compliance with the
Housing Authority’s Travel Policy.
In addition, the Housing Authority has paid Board members
$75 in per diem for attending each Housing Authority
2003-DE-1001 Page vi
Executive Summary
Board of Commissioners meeting. The per diem was
intended to reimburse the Board member for expenses
incurred in connection with the meeting. However, the
Housing Authority has also reimbursed the attending Board
members for mileage to attend the meetings and to provide
meals at each meeting. Since the Housing Authority is
actually funding the individual cost of attending the Board
meeting, the payment of the $75 per diem fee is an extra
and unnecessary expense. During our review, we
calculated that the Housing Authority had paid a total of
$44,400 in per diem payments for attending Board
members. The payment of the $75 per diem fee is also
contrary to HUD requirements because the payment is not
consistent with the Tribal Council’s policy of not paying
Tribal Council members a fee or mileage for attending
meetings on the Rosebud Indian Reservation. Therefore,
the $44,400 is considered to be an ineligible expense to the
Indian Housing Block Grant Program.
We recommend HUD require the Housing Authority
Recommendations establish the necessary management controls over its
operations and financial systems to ensure it functions in
accordance with HUD requirements and within the Housing
Authority’s adopted policies. Specific recommendations
are provided with each finding.
The findings were discussed with the Housing Authority
Auditee Comments
during the course of the audit. On July 8, 2002, the
Housing Authority received a copy of the draft audit report
for comment. We received the Housing Authority’s initial
response on July 26, 2002 and their supplemental response
on July 30, 2002.
We have included pertinent comments of the Housing
Authority’s response in the Findings section of this report.
The Housing Authority’s narrative response is provided as
Appendix B. Attachments contained in the Housing
Authority’s supplemental response were too voluminous to
include in the audit report. These attachments were
provided to the Northern Plains Office of Native American
Programs under separate cover.
Page vii 2003-DE-1001
Executive Summary
THIS PAGE LEFT BLANK INTENTIONALLY
2003-DE-1001 Page viii
Table of Contents
Management Memorandum ...........................................................................................i
Executive Summary ...................................................................................................... iii
Introduction ......................................................................................................................1
Findings
1. Deficient Controls Over Tenant Occupancy and Related Activities...............5
2. Inadequate Administration of Supplemental Housing Programs .................19
3. Inadequate Contract Administration System ....................................................35
4. Inadequate Inventory Control System ................................................................43
5. Improper Payment of Penalties and Fees ...........................................................49
6. Deficient Controls Over Travel and Related Costs ..........................................55
Management Controls ..................................................................................................65
Follow Up On Prior Audits..........................................................................................67
Appendices
A. Schedule of Ineligible Costs............................................................................69
B. Auditee Comments ...........................................................................................71
C. Distribution ........................................................................................................83
Page ix 2003-DE-1001
Table of Contents
Abbreviations:
HUD U.S. Department of Housing and Urban Development
NAHASDA Native American Housing Assistance and Self-Determination Act of 1996
SWA Sicangu Wicoti Awanyakape Corporation
Board Housing Authority Board of Commissioners
OMB Office of Management and Budget
CFR Code of Federal Regulations
2003-DE-1001 Page x
Introduction
Congress enacted the Native American Housing Assistance and Self-Determination Act of 1996
(NAHASDA) to provide Federal assistance for Indian Tribes in a manner that recognizes the
right of tribal self-governance. An objective of the NAHASDA is to develop, maintain, and
operate affordable housing in safe and healthy environments on Indian Reservations and other
Indian areas for occupancy by low-income Indian families.
The Sicangu Wicoti Awanyakape Corporation (formerly called the Rosebud Housing Authority)
was established on December 14, 1976 when the Rosebud Sioux Tribal Council adopted
Rosebud Sioux Tribal Ordinance Number 76-02. The Housing Authority is organized and
operated for the purpose of:
· Remedying unsafe and unsanitary housing conditions that are injurious to the public health,
safety, and morals;
· Alleviating the acute shortage of decent, safe, and sanitary dwellings for persons of low
income;
· To assist to the best of its abilities and as funds are available persons of all income levels to
obtain good and decent housing at fair and reasonable cost (added on April 12, 2000 though
Rosebud Sioux Tribal Resolution Number 98-276); and
· Providing employment opportunities through the construction, reconstruction, improvement,
extension, alteration or repair of low-income dwellings.
The Sicangu Wicoti Awanyakape Corporation is also known as the Rosebud Housing Authority
(hereinafter referred to as the Housing Authority). The Housing Authority is managed by a
Board of Commissioners composed of twelve members and two Rosebud Sioux Council
Representatives. The Executive Director is appointed by the Board and is responsible for the
daily operations of the Housing Authority.
The Housing Authority had the following unit mix at the time of our review:
Low-Rent 821 units
Mutual Help 345 units
Total 1,166 units
These units are located in 21 different communities on the Rosebud Indian Reservation. The
NAHASDA authorized the Indian Housing Block Grant Program that replaced Indian housing
assistance programs under the United States Housing Act of 1937. The Housing Authority
received its first Indian Housing Block Grant in 1998. For years 1998 to 2000, HUD authorized
$20,602,588 to the Housing Authority through Indian Housing Block Grants. In 1999, the
Rosebud Sioux Tribe received $800,000 in the form of a HUD Community Development Block
Grant to rehabilitate housing. The Housing Authority is also administering this program. In
addition, there are still some active Traditional Indian Housing Development Programs,
Page 1 2003-DE-1001
Introduction
Comprehensive Grant Programs, and Operating Subsidy housing programs initiated under the
United States Housing Act of 1937.
From July 9-13, 2001, the Northern Plains Office of Native American Programs conducted an
on-site performance review of the various HUD funded programs being implemented by the
Housing Authority. HUD’s report identified 15 findings and 9 other concerns. These are
presented in the Follow Up On Prior Audits Section of this report.
At the beginning of our review, numerous tribal members,
Audit Objectives Housing Authority participants and Housing Authority staff
and officials presented to us information and concerns
relating to the various aspects of the administration and
operations of the Housing Authority in connection with its
Indian Housing Block Grant Program. The information and
concerns dealt with possible lack of compliance with
Federal and Housing Authority requirements.
To address these numerous concerns, we focused our
review on the Housing Authority’s management controls
over its HUD funded Indian Housing Block Grant Program
operations and financial systems and compliance with HUD
program requirements. Therefore, we performed an audit
of the Housing Authority’s operations to determine whether
they:
· Had adequate cash management policies to assure
availability of funds to meet expenditures, safeguarding
cash and deposits, and accuracy of reporting and
recording of financial transactions;
· Followed occupancy policies and procedures;
· Effectively used collection policies and procedures to
maintain control over tenant accounts receivable;
· Followed procurement policies and procedures in
procuring goods and services;
· Effectively administered the maintenance program;
· Maintained housing units in good repair, order and
condition;
2003-DE-1001 Page 2
Introduction
· Effectively administered the Indian Housing Block
Grant Program; and
· Effectively managed inventories of materials and
supplies.
In conducting the audit, we:
· Interviewed various individuals to obtain the details of
their concerns;
· Interviewed Rosebud Sioux Tribal employees;
· Reviewed applicable Federal and Housing Authority
policies and procedures to gain an understanding of
their requirements;
· Interviewed appropriate Housing Authority personnel
and officials to obtain an understanding of their
operation and management of housing programs;
· Visited a number of homes that have been renovated
through participation in Housing Authority programs;
and
· Visited a number of used mobile homes purchased by
the Housing Authority for various homeowners.
We tested a non-representative sample of Housing
Audit Scope and Authority documents and other records to obtain an
Methodology understanding of the Housing Authority’s policies and
procedures being implemented in carryout its housing
programs. Due to a lack of adequate policies and
procedures being implemented by the Housing Authority, a
non-representative sample testing of available records
combined with Housing Authority staff interviews was
performed to identify the nature and possible extent of
management control weaknesses.
Generally, the audit covered the period January 1, 1998
through December 31, 2000. We performed fieldwork
from March through October 2001, with subsequent
information being obtained from HUD and the Housing
Authority through January 2002. Our review in several
departments of the Housing Authority was modified
because the Northern Plains Office of Native American
Page 3 2003-DE-1001
Introduction
Programs review completed in July 2001 adequately
addressed operations related to those departments. The
completion of our review was interrupted by situations that
necessitated reassignment of staff.
We conducted the audit in accordance with generally
accepted government auditing standards.
2003-DE-1001 Page 4
Finding 1
Deficient Controls Over Tenant Occupancy and
Related Activities
The Housing Authority has numerous policies that identify the requirements and
procedures to be followed in the collection of payment delinquencies, eviction for non-
payment of rent and drug related offenses, subleasing, and continued occupancy, etc.
These policies apply equally to all tenants and homeowners, including Housing Authority
employees who are assigned to a housing unit under the administration and management of
the Housing Authority itself. However, the Housing Authority has not properly
implemented various policy requirements and procedures. More specifically, the Housing
Authority has not been:
· Consistently enforcing its Drug Elimination Policy;
· Consistently enforcing its Sublease Policy;
· Implementing its Delinquency Policy; and
· Properly documenting the eligibility of its various Housing Program recipients.
The Housing Authority, in carrying out its various tenant and homeowner policies, has not
established sufficient procedures to ensure that required policies are implemented or has
decided to selectively enforce these requirements. As a result, the Housing Authority
program recipients have not received uniform and consistent benefits. In addition, the
Housing Authority has been lax in its efforts to collect at least $1,762,594 due from Low
Rent tenants and $381,321 from Mutual Help homeowners. The lack of collection of tenant
accounts receivable can seriously affect the Housing Authority’s ability to operate due to
the absence of operating funds. In addition, the Housing Authority is not properly
completing the annual re-certification process and calculating monthly payments.
Section 203 of NAHASDA requires recipients of
NAHASDA requires the NAHASDA grants to develop policies governing the
Housing Authority to management and maintenance of housing assisted with
develop policies and grant amounts provided under the Act. Section 102 of the
utilize sound management NAHASDA requires the submission of a 5-YEAR PLAN
practices and a 1-YEAR PLAN to the Secretary. The 1-YEAR Plan
requires evidence of compliance through a certification that
policies are in effect and are available for review by the
Secretary and the public governing eligibility, admission,
and occupancy of families for housing assisted with grant
amounts under this Act. The Housing Authority, in its
Page 5 2003-DE-1001
Finding 1
annual plan submission to HUD, certifies that the
eligibility, admission, and occupancy policies are in effect.
Rosebud Sioux Tribal Ordinance Number 76-02 declares
Tribal Ordinance requires the powers of the Tribal Government shall be vigorously
enforcement of eviction utilized to enforce eviction of a tenant or homeowner for
requirements for non- nonpayment or other contract violations including action
payment violations through the appropriate courts.
The Sicangu Wicoti Awanyakape Corporation Charter
Unsafe and unsanitary states one of its purposes is to remedy unsafe and
housing conditions to be unsanitary housing conditions that are injurious to public
remedied health, safety, and morals.
The Housing Authority has adopted various policies
Housing Authority relating to the occupancy of its tenants and homeowners.
Policies The Program Management and Occupancy Policy, Master
Requirements, establishes occupancy standards for housing
units owned, operated or managed by the Housing
Authority. The Drug Elimination Policy establishes
prohibitions against controlled substances and procedures
to be followed when violations occur. The Sublease Policy
indicates homes constructed under the Mutual Help
Homeownership Program can and should be subleased to
be certain of the continued occupancy of these homes. The
Delinquency Policy enables the Housing Authority to
systematically collect rent and monthly payments due.
We performed a review of the management controls over
Adopted policies are not the Housing Authority’s implementation of its tenants and
being fully implemented homeowners policies. We selected and reviewed two
tenant files on individuals who had supposedly violated the
controlled substance provisions of the Drug Elimination
Policy to determine if the Housing Authority took proper
action to terminate their tenancy. Our review showed the
Housing Authority is selectively enforcing its Drug
Elimination Policy. We reviewed the tenant file on an
individual who has continually subleased their Mutual Help
home to determine if the Housing Authority is properly
administering its Sublease Policy. Our review showed the
Housing Authority is not enforcing its Sublease Policy. We
selected and reviewed 15 tenant files to determine if the
Housing Authority is properly administering its
Delinquency Policy. Our review showed the Housing
Authority is not enforcing its Delinquency Policy. We
reviewed tenant accounts receivable to determine if there
2003-DE-1001 Page 6
Finding 1
are problems. Our review showed the Housing Authority
has a serious tenant accounts receivable problem which
effects management and its resources. These deficiencies
are discussed in the following sections.
DRUG ELIMINATION POLICY
The Housing Authority developed their Drug Elimination
The Drug Elimination Policy to establish prohibitions against controlled
Policy of the Housing substances, to include the possession, use, sale, distribution,
Authority requires or manufacture of any drug or other illegal substance on or
eviction of tenants for near any Housing Authority unit or on or near any Housing
violation of the drug Authority project by any tenant, by a member of the
prohibition provision tenant’s household, or a guest, or any other person under
the tenant’s control. Evidence of a violation of this
provision shall be grounds for immediate termination of
tenancy regardless of whether criminal charges have been
filed or a criminal conviction has been obtained.
We selected and reviewed two tenant files on individuals
The Housing Authority is who had supposedly violated the controlled substance
selectively enforcing its prohibition provision of the Drug Elimination Policy to
Drug Elimination Policy determine if the Housing Authority took proper action to
terminate their tenancy.
The first tenant file reviewed was inactive, as the former
individual occupying the Low Rent unit had been
previously evicted. This individual had plead guilty to one
count of possession of marijuana with intent to distribute
between 1996 and 1999. On June 23, 1999, this individual
was indicted for conspiracy and possession of marijuana
with intent to distribute. On August 9, 1999, the Housing
Authority evicted this individual for their possession and
distribution of a controlled substance.
The second tenant file reviewed was still active. On March
27, 2000, the individual occupying this Low Rent unit had
plead guilty to possession of marijuana with intent to
distribute. A review of this individuals tenant file indicates
that at October16, 2001, the Housing Authority had taken
no action to terminate the tenancy of this individual for
possession and distribution of a controlled substance.
Both of these individuals plead guilty to possession of a
controlled substance with intent to distribute. One was
properly evicted and the other was not. This occurred
Page 7 2003-DE-1001
Finding 1
because the Housing Authority is not consistently
implementing its Drug Elimination Policy. The result is
ineligible tenants continue to reside in Housing Authority
units.
SUBLEASE POLICY
The Housing Authority has adopted a Sublease Policy that
The Sublease Policy of requires it to:
the Housing Authority
identifies procedures to be · Only sublease a Mutual Help home when the
followed when subleasing homeowner family has to temporarily move off the
a Mutual Help home Rosebud Sioux Reservation and justified reasons
related to employment, education, military service, and
other reasons that have to be justified in writing to the
Housing Board of Commissioners;
· Ensure the sublease request from the family outlines
the maximum term the homeowner family will be off
the Rosebud Sioux Reservation;
· Allow year-to-year subleasing with a condition that
both the homeowner and sub-lessee will be evaluated at
the end of each year and approval of the Housing Board
of Commissioners must be given each year for an
extension of the sublease. The homeowner must
submit a request to continue the sublease to the
Housing Authority for each additional year the
homeowner wishes to sublease at least 45 days before
the sublease terminates;
· Ensure no sublease shall continue beyond four years
without compelling justification;
· Ensure the sublease request is in writing and state the
reason(s) why the homeowner is requesting to sublease
the home in addition to providing the name of sub
lessee;
· Ensure the homeowner provides a written statement for
the Housing Authority that he/she is current on all
accounts and payments owing to the Housing
Authority; and
· Ensure the local Housing Board had no involvement in
determining whether a homeowner may sublet their
2003-DE-1001 Page 8
Finding 1
home. This decision is to be made by the Housing
Authority’s Board of Commissioners and the Housing
Authority’s Executive Director shall carry out the
Housing Board of Commissioners decision
accordingly.
We reviewed the tenant file on an individual who has
The Housing Authority is continually subleased their Mutual Help home to determine
not enforcing its Sublease if the Housing Authority is properly administering its
Policy Sublease Policy. Our review indicates this homeowner has
continually subleased her home since December 5, 1997.
The Housing Board of Commissioners did not approve the
annual sublease agreements for 1997, 1998, and 1999.
There were two sublease agreements for 2001. The
Housing Board of Commissioners approved one of these
sublease agreements and did not approve the other. The
Housing Board of Commissioners did not evaluate the
homeowner and sub-lessee in 1998 and 1999. The
homeowner did not always provide complete information in
her request to sublease the home. In addition, this
homeowner had a tenant accounts receivable balance from
December 1, 1998 through June 1, 2001. The homeowner
did not obtain a written statement from the Housing
Authority indicating she was current on all accounts and
payments owing to the Housing Authority for each sublease
entered into since 1998. Despite all of these deviations
from the Sublease Policy, this homeowner has been
continually able to sublease her home.
The Mutual Help program is intended to provide
homeownership opportunities to Native American families
who will reside in and maintain their homes. The Housing
Authority defeats the purpose of the Mutual Help program
by approving improper subleases or allowing homeowners
to sublease their homes without the approval of the Housing
Board of Commissioners. This has occurred because there
are inadequate procedures in place to ensure Housing Board
of Commissioners policies are followed. The result is
ineligible individuals may be allowed to sublease a home.
DELINQUENCY POLICY
Page 9 2003-DE-1001
Finding 1
The Housing Authority developed their Delinquency Policy
The Delinquency Policy to enable it to systematically collect rent and monthly
sets outs procedures for payments due. This policy establishes procedures on how
tenant non-payments to handle tenants and homeowners who do not make their
monthly payments. The Collection/Eviction Department
administers the Delinquency Policy. The Housing
Authority’s Delinquency Policy requires the Housing
Authority to perform the following:
· Send a Notice of Delinquency to the participant after
the 10th of the month if the participant has not made the
monthly payment. The participant has until the 15th of
the month to make an appointment with the Housing
Authority staff for counseling and a payment plan will
be drawn up;
· Send a Final Notice of Delinquency to the participant
by the 15th of the month. If no arrangements for the
payment have been made with the Housing Authority,
the participant will still be able to enter into a payment
plan with the Housing Authority if they come in within
a 10 day period, and;
· If no action has been taken by the participant, a Notice
to Quit will be issued to the participant by the Housing
Authority giving the participant 3 days to vacate the
unit. If the participant does not vacate the unit, the
Housing Authority will sign a complaint against the
participant in Tribal Court. If the Housing Authority is
forced to take the participant to Tribal Court, the
Housing Authority shall not enter into a payment plan
but will request that the court grant automatic
EVICTION or payment in FULL, plus court costs.
As part of its Delinquency Policy, the Housing Authority
The Housing Authority has established procedures on the type of payment plan a
has a Payment Plan for tenant or homeowner must enter into when they do not
the collection of make their monthly payments. These procedures are as
delinquent monthly follows:
payments
· If a participant is delinquent up to $500, a payment plan
must be instituted between the participant and the
Housing Authority;
· If a participant is delinquent up to $1,000, a payment
plan guaranteeing up to $50 a month will be required;
2003-DE-1001 Page 10
Finding 1
· If a participant is delinquent in excess of $1,000, a
payment plan guaranteeing up to $100 a month will be
required; and
· If the above is not agreed to, immediate action will be
taken to remove the participant and the unit will be
reassigned to a new applicant.
We selected and reviewed 15 tenant files to determine if
The Housing Authority is participants were (1) delinquent on their monthly payments
not enforcing its and if so, (2) was the Housing Authority properly
Delinquency Policy administering its Delinquency Policy. This review covered
the period December 1, 1998 through August 1, 2001.
Our review showed the following:
· Nine participants had a tenant accounts receivable for
the entire period under review;
· One participant had a tenant accounts receivable in
1998;
· One participant had a tenant accounts receivable in
1998, 1999, and 2001;
· One participant had a tenant accounts receivable in 1998
and 2001;
· One participant had a tenant accounts receivable in 1999
and 2001;
· One participant had a tenant accounts receivable in
1999, 2000, and 2001; and
· One participant did not have a tenant accounts
receivable for the entire period under review.
The Housing Authority did not take the required action of
entering into a payment plan with any of these participants.
In addition, the Housing Authority did not issue a Notice of
Delinquency, issue a Final Notice of Delinquency, or issue
a Notice to Quit on the majority of these participants. This
has occurred because there are inadequate procedures in
place to ensure Housing Board of Commissioners policies
Page 11 2003-DE-1001
Finding 1
are followed. The result is tenants who should have been
evicted continue to reside in Housing Authority units.
TENANT ACCOUNTS RECEIVABLE
To determine the extent of the tenant accounts receivable
Increase in Tenant problem, we looked at the Independent Public Accountant
Accounts Receivable Audit Reports from 1998 to 1999. The Independent
Auditor had taken a finding in both years on excessive
tenant accounts receivable balances. These balances have
increased as follows:
Date Tenant Homeowner
March 31, 1998 $1,147,396 $258,286
March 31, 1999 $1,469,259 $328,665
December 31, 1999 $1,762,594 $381,321
For comparative purposes, the December 31, 1999 tenant
accounts receivable balance is based on the Draft
Independent Auditor’s Report dated October 20, 2000. The
Collection/Eviction Department has started the process of
requiring those Low Rent tenants who owe approximately
$1,000 or more to enter into a mandatory payment plan
with the Housing Authority. The Housing Authority has
not started the same process for Low Rent tenants who owe
less than $1,000 or for any Mutual Help homeowners
regardless of how much they owe.
The above chart shows the seriousness of the tenant
accounts receivable situation which effects management
and its resources. One of the purposes of a Housing
Authority is to use available funds to assist persons of all
income levels to obtain good and decent housing at a fair
and reasonable cost. The Housing Authority defeats this
purpose by not enforcing its own Delinquency Policy.
Section 1000.128 of the Final Rule for the NAHASDA
NAHASDA and Housing requires recipients of NAHASDA grants to:
Authority guidance
require adequate · Verify that the family is income eligible based on
documentation of anticipated annual income. The family is required to
eligibility provide documentation to verify this determination.
The recipient is required to maintain the documentation
on which the determination of eligibility is based.
2003-DE-1001 Page 12
Finding 1
On June 27, 2001, the Program Management and
Occupancy Policy, Master Requirements, was adopted by
the Board through Resolution Number 01-08. These
Master Requirements establish occupancy standards for
housing units managed by the Housing Authority. These
Master Requirements obligate the Housing Authority to
perform the following:
· Verify information provided to include earned income
through employers or other appropriate means at the
time of admission into a program and upon any re-
certification.
The 15 tenant files previously reviewed for correct
Delinquency Policy administration were also reviewed to
determine if the Housing Authority was verifying income
and completing the annual re-certification process.
Our review showed the following:
· It could not be determined how the monthly payments
were calculated on six participants;
· Annual re-certifications were not completed on four
participants; and
· The monthly payment was not properly calculated
during an interim re-certification on one participant.
In addition, the Occupancy Department does not always
indicate who reviewed the income verification process. As
a result, HUD has no assurances that the Housing Authority
is only allowing eligible families to continue their
occupancy.
Our office received a large number of concerns related to
the Occupancy Policy of the Housing Authority. Results of
our review support a number of those concerns. We found
that Department Managers either ignored applicable
Housing Board of Commissioners policies or decided to
selectively enforce them. This has occurred because there
are inadequate procedures in place to ensure Housing Board
of Commissioners policies are followed. The result is
tenants who should have been evicted continue to reside in
Housing Authority units. In addition, ineligible tenants
Page 13 2003-DE-1001
Finding 1
continue to reside in Housing Authority units and ineligible
individuals may be allowed to sublease a house.
Auditee Comments The Housing Authority provided the following comments for
each deficiency noted in the finding:
• The Housing Authority states they are reviewing tenants
who may have been indicted or convicted of a controlled
substance offense. Results of the review will be provided
to the Occupancy Department. The Housing Authority
states they are reviewing all mutual help subleases and
these will be provided to the Housing Board of
Commissioners for renewal or action. The Housing
Authority states they are sending letters to all tenants
reflecting balances owed and the need to enter into
Payback Agreements for all delinquent tenants regardless
of the amount owed. The Housing Authority states they
will use Chapter 8, Resident Eligibility and Service
Standards, to the NAHASDA Indian Housing Block
Grant Recipient Self-Monitoring Guidebook issued by
the Office of Native American Programs as a system of
management controls to ensure it properly calculates
monthly payments, verifies family income, and
completes the annual re-certification process. The
Housing Authority has also stated they believe their
current policies are adequate to assure compliance with
NAHASDA law and are being implemented in a
consistent and uniform manner.
• The Housing Authority has stated their internal
monitoring process will be completed by August 31,
2002. The Housing Authority will submit results of the
internal monitoring process and any corrective actions
taken to the HUD Northern Plains Office of Native
American Programs by September 15, 2002.
• The Housing Authority has indicated they are awaiting a
response to their comments provided to the HUD
Northern Plains Office of Native American Programs on
April 26, 2002 regarding a previous review completed by
that office.
2003-DE-1001 Page 14
Finding 1
OIG Evaluation of We agree with the actions taken by the Housing Authority to
Auditee Comments identify tenants indicted or convicted of a controlled
substance offense, the review of all mutual help subleases,
sending letters to all tenants reflecting balances owed and the
need to enter into Payback Agreements, and using the
NAHASDA Indian Housing Block Grant Recipient Self-
Monitoring Guidebook to ensure it properly calculates
monthly payments, verifies family income, and completes
the annual re-certification process. However, the Housing
Authority has still not indicated what procedures it will
establish and implement to ensure responsible personnel at
all levels comply with the Housing Authority’s occupancy
and related policies established by the Housing Board of
Commissioners.
We agree with submitting the results and corrective actions
taken by the Housing Authority concerning their internal
monitoring process to the HUD Northern Plains Office of
Native American Programs. However, the HUD Northern
Plains Office of Native American Programs should verify
that the internal monitoring process established by the
Housing Authority is not a one time process and established
procedures ensure responsible personnel at all levels comply
with the Housing Authority’s occupancy and related policies
established by the Housing Board of Commissioners.
We agree with actions taken by the Housing Authority to
continue their internal monitoring process to ensure policies
are being applied in a uniform and consistent manner while
they await approval by the HUD Northern Plains Office of
Native American Programs. Our review of the Housing
Authority’s April 26, 2002 response to the HUD Northern
Plains Office of Native American Programs indicates
occupancy and related policies are being reviewed and
updated. However, in most cases, there is no indication by
the Housing Authority on how they plan to ensure
responsible personnel at all levels comply with the
occupancy and related policies established by the Housing
Board of Commissioners.
Page 15 2003-DE-1001
Finding 1
Recommendations We recommend that the HUD Northern Plains Office of
Native American Programs:
1A. Require the Housing Authority to establish and
implement adequate procedures over its tenant
occupancy activities to ensure compliance with the
Housing Authority’s occupancy and related policies
which includes the Program and Management
Occupancy Policy, Master Requirements, the Drug
Elimination Policy, the Sublease Policy, and the
Delinquency Policy. Such procedures should ensure
that the Housing Authority’s policies are consistently
and uniformly applied. In addition, the procedures
would include the following items:
· Work with appropriate law enforcement agencies
to identify any tenants who have been indicted or
convicted of a controlled substance offense and
take appropriate action as specified in the Housing
Authority’s Drug Elimination Policy;
· Review all existing subleases for legitimacy and
approve or terminate as appropriate;
· Modify the process for Payback Agreements to
include all Low Rent and Mutual Help occupants
who have payment delinquencies, not just for Low
Rent tenants who owe $1,000 or more, and;
· Implement a system of management controls
including adequate supporting documentation and
management oversight, to ensure that it properly
calculates monthly payments, verifies family
income, and completes the annual re-certification
process.
1B. Require the Housing Authority to submit details of the
established procedures to HUD for their review and
concurrence.
1C. Conduct a review of the procedures, once they are
implemented by the Housing Authority, and ascertain
2003-DE-1001 Page 16
Finding 1
if such procedures are adequate to ensure that the
Housing Authority’s occupancy and related policies
are being properly implemented including being
applied in a uniform and consistent manner.
Page 17 2003-DE-1001
Finding 1
THIS PAGE LEFT BLANK INTENTIONALLY
2003-DE-1001 Page 18
Finding 2
Inadequate Administration of Supplemental
Housing Programs
The Housing Authority implemented three supplemental housing programs during the audit period
using Indian Housing Block Grant Program monies. The three supplemental housing programs were:
Used Mobile Home Program; Pre-Manufactured Modular Housing Units Program; and Private
Homeowner Rehabilitation/Loan Program. In implementing these programs, the Housing Authority
did not establish adequate administrative procedures to ensure that HUD requirements were met. More
specifically, the Housing Authority did not ensure that only low-income recipients benefited under the
programs; that units acquired met safe and health environments; its programs’ activities were correctly
reflected on the Housing Authority’s accounting records, and recipient purchases or loans are being
properly and promptly collected by the Housing Authority. Also, the Housing Authority did not follow
it’s own procurement and maintenance policy in implementing the supplemental housing programs.
These deficiencies occurred primarily because the Housing Authority lacked adequate management
and accounting controls over the implementation of the supplemental housing programs. The programs
were carried out by single departments or individuals of the Housing Authority without any apparent
management oversight, supervision, and/or monitoring. In some instances the Housing Authority
Board of Commissioner authorized individual transactions or activities that were in direct conflict with
the Board’s previously established policies and procedures. Obviously, proper management and
accounting controls are needed if these three supplemental housing programs are to continue in the
future.
At the beginning of our review, a number of concerns were expressed to us by various Tribal
members, Housing Authority residents and Housing Authority officials about various deficiencies
and inconsistencies existing in the three supplemental Housing Authority programs. The majority
of these concerns could have been prevented had the Housing Authority established and
implemented the proper management controls over its supplemental housing programs to ensure
that each of these were carried out in conformity with HUD requirements and were consistently and
uniformly applied.
Under Title II of NAHASDA, grantees in utilizing grant
Housing Authority must monies are limited to assist and promote affordable housing
meet specific Federal activities to develop, maintain, and operate affordable
requirements in carrying housing in safe and healthy environments on Indian
out its Indian Housing reservations and in other Indian areas for occupancy by
Block Grant Programs low-income Indian families. Under this same Title,
grantees are to adopt and follow written tenant and
homebuyer selection policies that govern rents and
homebuyer payments charged for dwelling units including
the methods by which such rents and homebuyer payments
are determined. Furthermore, under Title I of NAHASDA,
Page 19 2003-DE-1001
Finding 2
grantees must certify that they have adopted and are
following the required eligibility, admission, and
occupancy policies.
Part 85 to Title 24 of the Code of Federal Regulations
details further requirements for the Housing Authority in
carrying out its Indian Housing Block Grant Programs.
These requirements relate to the acquisition, procurement,
maintenance, and accounting for housing activities and
related costs being carried out by the Housing Authority
under its Indian Housing Block Grant Programs.
The Sicangu Wicoti Awanyakape Corporation Charter
states one of its purposes is to remedy unsafe and
unsanitary housing conditions that are injurious to public
health, safety, and morals.
More specifically, the Housing Authority must maintain
records that adequately identify the source and application
of funds provided for financially assisted activities. These
records must contain information pertaining to grant or sub-
grant awards and authorizations, obligations, unobligated
balances, assets, liabilities, outlays or expenditures, and
income. Furthermore, effective control and accountability
must be maintained for all grant and sub-grant cash, real
and personal property, and other assets. The Housing
Authority also must adequately safeguard all such property
and must assure that it is used solely for authorized
purposes.
The Housing Authority has established policies that govern
the various aspects of their operations. Such policies relate
to procurement, maintenance, tenant and homeowner
selection, and occupancy.
During the audit period, the Housing Authority established
Three supplemental and implemented three supplemental housing programs
housing programs funded using Indian Housing Block Grant monies. These three
with Indian Housing programs were:
Block Grant Program
monies · Used Mobile Home Program;
· Pre-Manufactured Modular Housing Units Program;
and
· Private Homeowner Rehabilitation/Loan Program.
2003-DE-1001 Page 20
Finding 2
These programs were not implemented and carried out in
accordance with established Federal and Housing Authority
regulations and policies. As a result, the Housing Authority
has almost no assurances that their supplemental housing
programs award housing units to eligible low-income
recipients, provide a safe and healthy environment,
procurements are in conformance with Federal
requirements, are correctly recorded on the Housing
Authority’s books of account, and are uniformly applied.
This situation has occurred because the Housing Authority
has no formal system of management controls over the
three supplemental housing programs to ensure compliance
with established Federal and Housing Authority regulations
and policies.
These three programs and related deficiencies are discussed
below.
USED MOBILE HOME PROGRAM
The Housing Authority established the Used Mobile Home
Housing Authority Program to help alleviate the housing shortage on the
purchased 23 used mobile Rosebud Indian Reservation. This program was designed
homes with Indian whereby Indian Housing Block Grant monies were used to
Housing Block Grant acquire used mobile homes for selected individuals who
Program monies would reimburse the Housing Authority for the Housing
Authority’s costs. Once the costs were reimbursed to the
Housing Authority, title to the used mobile home would be
transferred to the mutual help homebuyer.
During the audit period, the Housing Authority purchased
23 used mobile homes, most of which were in poor
condition. Four of the 23 used mobile homes are being used
as emergency housing. The remaining 19 used mobile
homes were assigned to various purchasers. In the
acquisition and administration of this program, the Housing
Authority has not followed its established procedures or
HUD requirements.
The following photograph shows one of the used mobile
homes purchased by the Housing Authority.
Page 21 2003-DE-1001
Finding 2
The used mobile homes were to be acquired following the
Housing Authority procedures set out in the Housing Authority’s Procurement
acquisition procurement Policy. Instead, the Housing Authority Board of
procedures not followed Commissioners instructed the Housing Authority to acquire
11 of the 19 used mobile homes directly from the seller
without following the Housing Authority’s policies and
procedures. In another case, the Rosebud Sioux Tribal
Council passed a resolution requiring the Housing
Authority to purchase one of the used mobile homes. As a
result of the Housing Authority following the directive
from the Rosebud Sioux Tribal Council, it failed to comply
with its own Procurement Policy for this acquisition.
In acquiring the 23 used mobile homes, the Housing
Authority only conducted inspections on 6 of the units
before they were purchased. As a result, the Housing
Authority acquired most of the used mobile homes sight
unseen and had no assurances that these units would meet
the provisions under Title II of NAHASDA that acquired
units met safe and healthy environments.
Under Indian Housing Block Grant Program requirements,
Acquisitions may not grant monies are to be used for affordable housing by low-
have been for required income Indian families. The Housing Authority files did
low-income families not clearly show that families who acquired the used mobile
homes are low-income. One instance was identified were a
purchasing family did not meet the low-income
requirements. Without proper documentation, the Housing
Authority is unable to clearly show that the low-income
2003-DE-1001 Page 22
Finding 2
requirements of the Indian Housing Block Grant Program
are met.
For these acquired used mobile homes, the Housing
Maintenance of used
Authority has been using its own maintenance staff to
mobile home units being
perform various maintenance activities on them.
funded by the Housing
Accounting records have not been properly established to
Authority
record reimbursement payments from tenants for the labor
and material costs associated with repairs to their used
mobile homes. Since the used mobile homes have been
acquired by the Housing Authority for individual buyers
who are to reimburse the Housing Authority for the
acquisition, the individual buyers are considered home
buyers and therefore are responsible for unit maintenance.
As such, the Housing Authority would not be responsible
for their maintenance and any maintenance costs incurred
by the Housing Authority on behalf of the homebuyer
would need to be reimbursed to the Housing Authority.
Under the Used Mobile Home Program, the Housing
Deficient recording of Authority was to fund the acquisition of the used mobile
receivables and payments homes and the purchasers would reimburse the Housing
for used mobile home Authority. However, any payments by the purchaser have
purchasers not been properly recorded on the Housing Authority’s
official accounting records. In addition, delinquencies on
required payments by purchasers of the used mobile homes
totals $17,766.
The administration of the program is not being properly
carried out. The Housing Authority did not obtain
Certificates of Title on 12 of the used mobile homes.
Without Certificates of Title, the Housing Authority will be
unable to transfer title with the used mobile homes when
the purchasers have fully reimbursed the Housing
Authority for the acquisition costs.
In a like manner, the Housing Authority has not entered
into signed sales contracts with the purchasers of 6 of the
used mobile homes. Without signed sales contracts, the
Housing Authority is unable to enforce any of the
provisions for the purchase of the used mobile homes by
the buyers.
In one situation, the buyer of a used mobile home has a
signed sales contract for a used mobile home that was
destroyed prior to occupancy. The buyer was provided a
Page 23 2003-DE-1001
Finding 2
second used mobile home to purchase, but the buyer has not
entered into a sales contract with the Housing Authority for
the second used mobile home. As a result, the buyer is
obligated to complete the purchase for the destroyed used
mobile home that is shown below and not for the one the
family is currently occupying.
During our review, one of the used mobile homes could not
Deficient administrative be located and is presumed to be off the Rosebud Indian
control over the Used Reservation. All of these deficiencies clearly show the
Mobile Home Program Housing Authority has not established proper
administrative control over its Used Mobile Home Program
and as a result, the Housing Authority has failed to carryout
this program in conformance with Federal and Housing
Authority regulations and policies. The true impact is that
no assurances exist that the used mobile homes met the
required safe and healthy environmental provisions
stipulated under Title II of NAHASDA. In addition, HUD
grant funds have been used to acquire the used mobile
homes without reasonable assurances that the acquisition
monies will be recovered from the sale of the used mobile
homes as originally intended.
PRE-MANUFACTURED MODULAR HOUSING
UNITS PROGRAM
Under the Housing Authority’s Pre-Manufactured Modular
HUD funds used to buy Housing Units Program, pre-manufactured modular homes
16 pre-manufactured were acquired for designated individuals who would
modular homes
2003-DE-1001 Page 24
Finding 2
reimburse the Housing Authority for the acquisition price and
any setup costs. Some of the modular homes were acquired
and used as emergency housing. The program was funded
using Indian Housing Block Grant Program monies. As
such, the Housing Authority would be obligated to comply
with Federal requirements as well as with the Housing
Authority’s established policies.
During the audit period, the Housing Authority purchased 16
pre-manufactured modular housing units. Four of the 16
modular housing units were designated as emergency
housing while another three were purchased for other tribal
organizations. Eight of the homes were acquired for
individuals. The disposition of the remaining modular
housing unit could not be determined.
The Pre-Manufactured Modular Housing Units Program was
Modular Housing Units not carried out by the Housing Authority in conformity with
Program did not comply HUD requirements or with the policies established by the
with HUD or Housing Housing Authority. More specifically, the Housing Authority
Authority requirements did not follow its Procurement Policy in purchasing the
modular homes, failed to support that the purchases were for
low income families, and has not established proper controls
over the collection of reimbursement payments from the
modular home buyers.
The purchases of the modular homes were made without
Required procurement following the provisions of the Housing Authority’s
procedures not followed Procurement Policy. The Housing Authority could not
provide any documentation to show that the necessary
bidding procedures were followed. In one instance, the
Housing Authority Board of Commissioners passed a
resolution approving payment for one of the 16 modular
housing units without ensuring that the established bidding
procedures were met. Accordingly, the Housing Authority is
unable to demonstrate that the purchases were at the best
available price.
The Housing Authority purchased three modular units for
various Tribal departments. While the Tribe did reimburse
the Housing Authority a total of $145,355 for the three
modular homes, the use of Indian Housing Block Grant
monies for their procurement was an improper use of HUD
program funds.
Page 25 2003-DE-1001
Finding 2
At the time of our site review, the Housing Authority, who
had purchased the 16 modular homes, had not made full
payment to the modular home supplier. The supplier was still
due $45,672 on the sales to the Housing Authority.
Lack of records relating to the Modular Housing Units
Benefits to low-income Program prevent the Housing Authority from demonstrating
families not documented that the home purchases were made and provided to low-
income families as required under the HUD provisions.
In a similar manner, the Housing Authority has not
Inadequate Modular established the proper accounting for the modular home
Housing Units Program purchases and the related payments by the individual buyers.
accounting records At the time of our review, the Housing Authority’s
accounting records did not reflect the actual cost of the
individual modular home acquisition and setup costs. From
the records that were available, very limited information
could be identified about the costs the Housing Authority
incurred in setting up the modular homes. Without proper
documentation, the Housing Authority is hampered in being
able to identify what modular home procurement costs are to
be repaid the Housing Authority by the individual
homebuyer.
In addition, the Housing Authority has not established the
accounts receivable due from the homebuyers in the Housing
Authority’s official accounting records. Instead informal
records were being maintained by the Housing Authority’s
Finance Department. With only informal records, no one
office or official has been given the responsibility of
collecting the amounts due the Housing Authority from the
homebuyers. Consequently, no collection efforts have been
undertaken.
The administration of the Pre-manufactured Modular
Management controls Housing Units Program was conducted outside of the
lacking framework of the Housing Authority. Housing Authority
personnel in positions of authority were able to, and did,
coordinate the modular home purchases and subsequent
reassignment to the homebuyer on their own individual
action without processing the program through the normal
departments of the Housing Authority. These Housing
Authority personnel were able to direct the Finance
Department to pay the invoices on the purchases despite
occasional inquiry concerns being made by the Finance
Department.
2003-DE-1001 Page 26
Finding 2
PRIVATE HOMEOWNER
REHABILITATION/LOAN PROGRAM
The Housing Authority initiated the Private Homeowner
Program designed to Rehabilitation/Loan Program in 1998. This program was
rehabilitate low-income designed to provide rehabilitation assistance to low-income
family owned properties families who own their own homes. No official procedures
or policies were developed for this program until May 2001.
Under the program, applications were received from
interested families who owned their own homes. Applicants
were to be ranked by points and those with the highest
number of points were to be placed on top of the waiting list.
Predetermined rehabilitation work was to be made for
approved homes and the cost of the rehabilitation work was
to be repaid to the Housing Authority by the low-income
homeowner.
This picture shows a private home that received renovation work
on the siding and roof.
The administration of the Private Homeowner
Administration of Rehabilitation/Loan Program was not carried out to ensure
Program did not meet that HUD requirements were met. More specifically, the
HUD requirements Housing Authority failed to ensure that only low-income
families participated in the program and that the approved
recipients were selected on a first come, first serve, basis. In
addition, the Housing Authority lacked documentation to
identify the exact nature of the rehabilitation work to be
Page 27 2003-DE-1001
Finding 2
performed and what work was actually performed. Lastly,
the Housing Authority did not execute the needed
Rehabilitation Loan Repayment Agreement nor established
the accounting records to track the monies due from the
owners of the rehabilitation properties. As such, the Housing
Authority is severely hampered in being able to collect the
monies from the homeowner for the rehabilitation work.
The Housing Authority had two waiting lists that were
Improper selection of established for this program. The first was a list of applicants
Program recipients that had been approved by the Housing Board of
Commissioners. This official list did not identify the
approved applicants in numerical order based upon their date
of application. The second was a list that was used by the
Program Supervisor. The second list was an unofficial list
that identified applicants by Reservation Community but not
in a numerical order by application date. In some cases, the
applicants listed where individuals who were purchasing
homes under the Used Mobile Home Program (discussed
above).
Of the 14 application files we examined, four applicants
were on the official Housing Board of Commissioners
waiting list, six applicants were on the unofficial waiting
list kept by the Program Supervisor, and four applicants
were not on any type of waiting list. The four applicants
that were not on any type of waiting list had their private
home renovated. The six applicants that were on the
unofficial waiting list had their private homes renovated.
Only one of the four applicants on the official waiting list
has received renovation work. This review clearly shows
that the Rehabilitation/Loan Program recipients were not
being selected as intended.
In addition, the Housing Authority lacked income verification
documentation to show that the selected program participants
met the low-income requirements. In addition, while the
application information furnished by a program recipient was
often incomplete, the Housing Authority did not have
documentation to show that the minimum required data was
received and verified before the applicant was approved for
the program. As a result, the Housing Authority is unable to
show that the program recipients were actually qualified and
eligible to participate in the program.
2003-DE-1001 Page 28
Finding 2
Inspections were not performed of the private homes prior to
Deficient rehabilitation the start of renovation work to determine what repairs, if any,
work inspections were needed. In addition, the Housing Authority did not
perform any inspections of the renovated work to determine
if the work was performed in an acceptable manner and/or
that the required renovation work was actually completed.
Without such inspections, the Housing Authority has no
assurance that renovation work was needed, properly done, or
actually completed.
At the time of our review, the Housing Authority had never
Deficient accountability established any accounts receivable records to identify,
and collection of Program receive and track loan repayments. For those homeowners
loans who had received renovation work, no collection effort had
been made by the Housing Authority to collect the loan
amounts. Any collection efforts may be further hampered
since the Housing Authority has not executed the necessary
Rehabilitation Loan Repayment Agreement with all of their
renovation recipients.
Even though the Housing Authority did establish a policy for
Program implementing the Private Homeowner Rehabilitation/Loan Program in May
procedures were not 2001, approximately two years after the Program was started,
established and followed the Housing Authority did not implement any procedures to
carryout the program and to ensure that the necessary HUD
requirements were being met. No process was implemented
to ensure that the program recipients met the low-income
requirements, only necessary renovation work was
performed, and that actual renovation work was properly and
correctly performed. Furthermore, the Housing Authority is
not pursuing the collection of the renovation loans.
As discussed above for these three supplemental housing
Management controls programs being implement by the Housing Authority, the
lacking Housing Authority has not established the management
controls that were necessary for the supplemental programs
to be carried out in conformity with HUD requirements and
in a uniform and consistent basis. Instead, the Housing
Authority has allowed the programs to be implemented in an
ineffective, inefficient, and many times unauthorized manner.
At the beginning of our review, a number of concerns were
expressed to us by various Tribal members, Housing
Authority residents and Housing Authority officials about
various deficiencies and inconsistencies existing in these
three supplemental housing programs. In our opinion, the
Page 29 2003-DE-1001
Finding 2
majority of these concerns could have been prevented had
the Housing Authority established and implemented the
proper management controls over its supplemental housing
programs to ensure that each of them were carried out in
conformity with HUD requirements and were consistently
and uniformly applied.
Auditee Comments The Housing Authority provided the following comments for
each deficiency noted in the finding:
· For the Used Mobil Home Program, the Housing
Authority has indicated they have discontinued this
program. The Housing Authority states they are in the
process of determining the condition of each used mobile
home, reconciling sales contracts, and trying to obtain
Certificates of Title on all used mobile homes The
Housing Authority has indicated they have recovered the
$95,600 used to purchased the used mobile homes from
non-NAHASDA sources and turned their management
over to Tribal officials.
· For its other supplement housing programs, the Housing
Authority indicates they will start using qualified
Inspectors to ensure future supplemental housing
programs meet the safe and healthy environmental
provisions stipulated under Title II of NAHASDA. In
addition, the Housing Authority indicates they will start
using Chapter 9, Fiscal and Financial Management and
Chapter 10, Procurement and Contract Administration to
the NAHASDA Indian Housing Block Grant Recipient
Self-Monitoring Guidebook issued by the Office of
Native American Programs as a system of management
controls to ensure it properly follows its Procurement
Policy. The Housing Authority also plans to develop a
Program Statement concerning future housing
replacement programs that addresses the purpose,
population segment to be service, and eligibility
requirements.
· The Housing Authority indicates the Private Homeowner
Rehabilitation/Loan Program is still under development.
The Housing Authority states they will use the Policy for
the Private Homeowner Rehabilitation/Loan Program
adopted by the Housing Board of Commissioners to
2003-DE-1001 Page 30
Finding 2
identify private homeowners who have received benefits,
the amounts involved, develop of a waiting list, and
establish an evaluation process for eligible private
property homeowner.
OIG Evaluation of The Housing Authority has indicated they have
Auditee Comments discontinued the Used Mobile Home Program. As such, our
recommendations in the draft report are basically not
applicable. However the Housing Authority will need to
provide evidence to HUD that the program has been
discontinued and that the entire Used Mobile Home Program
has been transferred to the Tribe. This will also include
evidence that the Tribe has fully reimbursed the Housing
Authority for the full amount the Housing Authority has
outstanding as receivables under its Used Mobil Home
Program and that the amount is properly recorded on the
Housing Authority’s books of account. Furthermore, the
Housing Authority will need to provide HUD with
information showing that the close out of the Used Mobile
Home Program has been properly recorded on the Housing
Authority’s books of account.
However, the Housing Authority still needs to secure
repayment of funds previously expended for all the repairs
completed on the used mobile homes.
For the other supplement housing programs, we agree with
the actions taken by the Housing Authority in regards to the
future use of qualified Inspectors to ensure future
supplemental housing programs meet safe and healthy
environmental provisions, the use of Program Statements that
address supplemental housing program requirements, and the
use of Chapters 9 and 10 of the NAHASDA Indian Housing
Block Grant Recipient Self-Monitoring Guidebook to ensure
it properly follows its Procurement Policy. However, the
Housing Authority has not indicated if the Pre-Manufactured
Modular Housing Units Program is to continue. If so, the
Housing Board of Commissioners needs to start applying
those actions indicated above to this program and establish a
record keeping system related to the purchases of the pre-
manufactured modular housing units that adequately
identifies the source and use of funds. In addition, the
Housing Authority needs to initiate actions to collect the
$94,928 in funds still owed by the modular homebuyers.
Page 31 2003-DE-1001
Finding 2
We agree with the actions taken by the Housing Authority to
identify property owners who have received benefits, in what
amounts, and the development of waiting lists and evaluation
selection procedures. However, the Housing Authority has
not indicated how they will collect expended funds from the
property owners, how they will account for those funds, and
what procedures it will establish and implement to ensure
responsible personnel at all levels comply with the Housing
Authority’s Private Homeowner Rehabilitation/Loan
Program Policy established by the Housing Board of
Commissioners.
The Housing Authority has not indicated if they will continue
to use the Pre-Manufactured Modular Housing Units
Program. In addition, the Housing Authority has indicated
the Private Homeowner Rehabilitation/Loan Program is still
under development. The Housing Authority needs to submit
to the HUD Northern Plains Office of Native American
Programs the procedures they have identified and any
additional procedures subsequently developed over their
supplemental housing programs so they can be reviewed to
ensure those procedures are adequate and meet HUD
requirements.
Recommendations We recommend that the HUD Northern Plains Office of
Native American Programs:
2A. Provide the necessary guidance and direction to the
Housing Authority in connection with the Used Mobile
Home Program to include the following:
· Obtain evidence that the Housing Authority has
discontinued its Used Mobile Home Program and
that all functions have been transferred to the Tribe.
· Obtain evidence that all monies expended by the
Housing Authority under its Used Mobile Home
Program have been fully funded by the Tribe from
non-Federal funds and that the amount has been
properly recorded on the Housing Authority’s
books of account.
2003-DE-1001 Page 32
Finding 2
· Require the Housing Authority to secure repayment
of funds previously expended for all the repairs
completed on the used mobile homes.
· Obtain and review for adequacy evidence from the
Housing Authority that the transfer of the Used
Mobile Home Program has been properly recorded
on the Housing Authority’s books of account.
2B. Provide the necessary guidance and direction to the
Housing Authority in connection with the Pre-
manufactured Modular Housing Units Program to:
· Decide whether the program is to continue and if
so, require the Housing Board of Commissioners to
establish the program framework and requirements
to be implement including compliance with HUD
requirements such as only benefiting low-income
recipients, following established procurement
procedures, implementing proper management and
accounting controls over property purchases, and
collection of loan payments;
· Initiate actions to collect the $94,928 in funds still
owed by the modular home buyers, and;
· Establish a record keeping system related to the
purchases of the pre-manufactured modular
housing units that adequately identified the source
and use of funds.
2C. Provide the necessary guidance and direction to the
Housing Authority in connection with the Private
Homeowner Rehabilitation/Loan Program to:
· Establish the appropriate accounting records and
entries to record the amounts due and payments
received from the various property owners who
received renovation work and related loans;
· Initiate rehabilitation loan repayment collection
efforts;
· Establish procedures to ensure Rehabilitation Loan
Repayment Agreements are executed for all current
and future rehabilitation recipients, and;
Page 33 2003-DE-1001
Finding 2
· Implement income verification procedures to
ensure that participants under the Private
Homeowner Rehabilitation/Loan Program meet the
low-income requirements.
2D. Require the Housing Authority to submit to HUD for
HUD’s review documentation showing the corrective
action for Recommendation Numbers 2B, and 2C
above. Once the Housing Authority has established
the appropriate procedures over these supplemental
housing programs as applicable, HUD should review
the revised systems to ensure that the procedures are
adequate and that HUD requirements are being met.
2003-DE-1001 Page 34
Finding 3
Inadequate Contract Administration System
The Housing Authority does not maintain a contract administration system to ensure
contractors perform according to the terms of their contracts as specified in their own
Procurement Policy. We identified procurement deficiencies in the two procurement
contracts reviewed. These two contracts were valued at $3.04 million at the time of our
review. Specifically, one contract did not receive Indian Health Service inspection reports
on sewer and waterline construction, certificates of insurance before commencing work,
and consistent progress schedules. There was no record of inspections having been
completed on the other contract. In addition, the Housing Authority does not use its own
Procurement Policy on vendors/contractors for labor type only contracts and for small
dollar amount type contracts that are charged to the Monthly Equity Payments Account.
These deficiencies occurred because there has been a significant turnover of Executive
Directors, fractionalization between supervisory personnel of the Housing Authority, and
management of the Housing Authority not ensuring its staff performs and complies with all
applicable provisions of its own Procurement Policy.
Federal procurement regulations must meet contracting
Regulations require the standards contained in 24 CFR 85.36. To aid in the
Housing Authority to procurement process, the Housing Authority adopted its
meet contracting own Procurement Policy.
standards
Federal procurement regulations require the Housing
Authority to:
· Have and use its own procurement procedures that
reflect applicable State and local laws and regulations,
provided the standards also conform to applicable
Federal laws and standards (24 CFR 85.36(b)(1));
· Have a contract administration system that ensures that
contractors perform in accordance with the terms,
conditions, and specifications of their contracts or
purchase orders (24 CFR 85.36(b)(2));
· Maintain records sufficient to detail the significant
history of procurement. These records must include the
rationale for the method of procurement, selection of
contract type, contractor selection or rejection, and the
basis for the contract price (24 CFR 85.36(b)(9));
Page 35 2003-DE-1001
Finding 3
· To use small purchase procedures for those relatively
simple and informal procurement methods for securing
services, supplies, or other property that do not cost
more than $25,000 in the aggregate. If small purchase
procedures are used, price or rate quotations shall be
obtained from an adequate number of qualified sources
(24 CFR 85.36(d)(1));
· Perform a cost or price analysis in connection with
every procurement action including contract
modifications. The method and degree of analysis is
dependent on the facts surrounding the particular
procurement situation, but as a starting point, grantees
must make independent cost estimates before receiving
bids or proposals (24 CFR 85.36(f)(1)); and
· Indian Preference shall apply to small purchase
procedures; that the Housing Authority shall require a
statement from all contractors agreeing to provide
Indian Preference in subcontracting, training, and
employment; and the Housing Authority must
document its efforts in providing Indian Preference. If
no quotations are solicited or received from Indian
owned economic enterprises, the Housing Authority
must also include as part of its documentation a
statement explaining the reasons for the lack of Indian
participation (24 CFR 905.175(b)(i)(ii)(iii)).
The Housing Authority has adopted a Procurement Policy
The Procurement Policy that requires it to:
of the Housing Authority
requires them to meet · Ensure contracts and modifications are in writing,
contracting standards clearly specifying the desired supply, services or
construction, and are supported by sufficient
documentation regarding the history of the
procurement, including as a minimum the method of
procurement chosen, the selection of the contract type,
the rationale for selecting or rejecting offers, and the
basis for the contract price (Chapter 2, Section 2-2(B));
· Perform an independent cost estimate before
solicitation and is appropriately safeguarded for each
procurement above the small purchase limitation, and a
cost or price analysis is conducted on the responses
received for all procurements (Chapter 2, Section 2-
2(E); and
2003-DE-1001 Page 36
Finding 3
· Adhere to the procurement and program requirements
of HUD Handbook 7450.1 for Indian Housing
Development projects (Chapter 2, Section 2-2(I)).
HUD Handbook 7450.01, REV-1 requires the Housing
HUD Handbook 7450.01, Authority to:
REV-1 requires the
Housing Authority to · Assure that construction progress is properly
meet contracting administered and the Housing Authority receives the
standards products for which it has contracted (Chapter 8, Section
8-1) and
· Inspections be made of the construction work at all
critical stages of construction work. Ensure that
inspections are properly conducted at these times and
construction work should be accepted before the
contractor proceeds to the next stage (Chapter 8,
Section 8-16).
The Development Department of the Housing Authority is
responsible for the procurement of construction contracts.
The Procurement Policy in effect during the time of our
review covered the purchase of materials/supplies and
professional services. The procedures identified the
requirements to be followed.
We selected a sample of two construction contracts valued
Two construction at $3.04 million at the time of our review to determine if the
contracts were reviewed Housing Authority procured and administered those
contracts according to procurement requirements. We
compared the documentation provided on each procurement
selected for review with the Procurement Policy of the
Housing Authority.
During the course of our review of the Development
Department of the Housing Authority, it was noted on
several occasions that the Executive Director did not know
the source of funds being used for a project or have any
idea what was the remaining fund balance on a particular
construction project. In addition, Development Department
personnel of the Housing Authority occasionally had
difficulty responding to questions or locating documents.
Page 37 2003-DE-1001
Finding 3
Various documentation deficiencies were noted during our
Documentation review:
deficiencies
· One contract did not receive Indian Health Service
inspection reports on sewer and waterline construction
and consistent progress schedules as required by HUD
Handbook 7450.01, REV-1. There were 13 other
subcontractors for this construction project.
Certificates of insurance could not be found on seven of
these subcontractors. These documents are necessary
to keep the Housing Authority updated on the progress
of construction, alert them to any problems, and
provide security for any potential loss that might occur;
· One contract had no record of inspections having been
completed. HUD Handbook 7450.01, REV-1 requires
the Housing Authority to ensure inspections of the
construction work are completed at all critical stages of
the construction work. In addition, the Housing
Authority utilized the Force Account Method to save
on labor costs for this construction project. However,
almost 42 percent of the costs associated with this
construction project were for labor. The end result is
the Housing Authority has spent more money to move
and setup those housing units than they are worth; and
· During an examination of various archived vendor files
in the Finance Department of the Housing Authority,
we notice one contractor had previously performed
work for the Housing Authority. This work included
snow removal, painting, installing storm doors and
windows, replacing title in bathrooms, and removing
and replacing carpeting. However, there was no
documentation on this contractor in the Development
Department of the Housing Authority to detail the
history of the procurement as required by 24 CFR
85.36(b)(9) and their own Procurement Policy. This
contractor was not an Enrolled Tribal Member nor was
his firm entitled to Indian Preference. There was no
documentation in the Development Department of the
Housing Authority to indicate the reasons for lack of
Indian participation.
2003-DE-1001 Page 38
Finding 3
According to the Development Department of the Housing
Required cost estimates Authority, they do not create procurement files on
are not performed and vendors/contractors for labor type only contracts or for
procurements without small contracts (less than $2,000) that are charged to the
evidence of competition Monthly Equity Payments Account. They also elect to
are being completed bypass the procurement process specified in their own
Procurement Policy for these types of contracts. This
means the Housing Authority does not perform the required
cost or price analysis or provide evidence of competition
for these types of contracts as required by 24 CFR
85.36(f)(1) and their own Procurement Policy. Without
records, it is not possible to determine the rationale behind
the method of procurement, ensure the contractor provides
those services contractor for, selection procedures are
properly followed, cost data is analyzed, and if Indian
Preference requirements are being met.
As a result of not having a contract administration system,
the Housing Authority cannot ensure contractors perform
according to the terms of their contracts. In addition, the
Housing Authority does not always use their Procurement
Policy when completing procurement activities. These
deficiencies could have been prevented had the Housing
Authority established a contract administration system and
implemented proper management controls over its
procurement activities to ensure they are carried out in
conformity with HUD requirements and the Housing
Authority’s Procurement Policy.
Auditee Comments The Housing Authority provided the following comments for
each deficiency noted in the finding:
· The Housing Authority believes they already have
adequate contract administration and procurement
procedures in place. However, to ensure compliance in
the areas of contract administration, procurement, and
inspection the Housing Authority has indicated they will
use seven different Chapters from the NAHASDA Indian
Housing Block Grant Recipient Self-Monitoring
Guidebook issued by the Office of Native American
Programs. These Chapters include the Organizational
Contract Environment; Fiscal and Financial
Management; Procurement and Contract Administration;
Labor Standards and Contract Administration; Tribes
Page 39 2003-DE-1001
Finding 3
Assuming Environmental Review Responsibilities;
Financial Assessment; and Physical Assessment
Checklist. The Housing Authority has indicated they will
use the Chapters bi-annually as part of their self-
monitoring process.
· The Housing Authority has stated they will maintain
documents related to the self-monitoring process over the
contract administration area and these documents will be
available to HUD for their review.
OIG Evaluation of We agree the Housing Authority has an adequate
Auditee Comments Procurement Policy. As noted in the finding, the Housing
Authority did not have an adequate contract administration
system in place to ensure its procurement activities were
carried out in conformity with HUD’s regulations and their
own Procurement Policy. In addition, the Housing Authority
has not indicated what procedures it will establish and
implement to ensure responsible personnel at all levels
comply with the self-monitoring process related to contract
administration activities.
The HUD Northern Plains Office of Native American
Programs should review the self-monitoring process related
to contract administration activities as specified by the
Housing Authority to ensure they are being performed
adequately and the Housing Authority is complying with
Federal contracting requirements.
Recommendations We recommend that the HUD Northern Plains Office of
Native American Programs:
3A. Require the Housing Authority to establish and
implement a contract administration system to ensure
its procurement activities are carried out in conformity
with HUD’s regulations and the Housing Authority’s
Procurement Policy. This system should include:
· Appropriate monitoring and inspections are
performed of contractor performance to ensure
the terms of the contract are met;
2003-DE-1001 Page 40
Finding 3
· Sufficient historical detail on each type of
procurement activity to allow for identification of
the method of procurement, selection of contract
type, contractor selection or rejection, and basis
for the contract price; and
· Steps to ensure compliance with the procurement
requirements detailed in the Housing Authority’s
Procurement Policy.
3B. Review the Housing Authority’s Contract
Administration System, when it has been implemented
under Recommendation Number 3A above, to ensure
that adequate controls are in place over the Housing
Authority’s contracting activities and the Housing
Authority is complying with Federal contracting
requirements.
Page 41 2003-DE-1001
Finding 3
THIS PAGE LEFT BLANK INTENTIONALLY
2003-DE-1001 Page 42
Finding 4
Inadequate Inventory Control System
The Housing Authority is not maintaining adequate perpetual inventory records in support
of its construction and renovation projects. There are no controls in place to ensure
requisitioning activities are properly maintained and materials and supplies are properly
safeguarded. The Housing Authority does not have effective inventory control to account
for all of its assets. Without an adequate inventory control system for construction
materials and supplies, the Housing Authority cannot ensure it safeguards assets purchased
with Federal funds by protecting them from theft, loss, waste, damage, and unauthorized
use.
HUD regulations (24 CFR 85.20(b)(3)) states that effective
Regulations and guidance control and accountability must be maintained for all grant
require the Housing and sub-grant cash, real and personal property, and other
Authority to account for assets. Grantees and sub-grantees must adequately
and safeguard assets safeguard all such property and must assure that it is used
solely for authorized purposes.
OMB Circular A-87, Section A (2)(a)(1) states
Governmental units are responsible for the efficient and
effective administration of Federal awards through the
application of sound management practices.
The Housing Authority developed their Procurement Policy
The Procurement Policy to assure that supplies, services, and construction activities
of the Housing Authority are procured efficiently, effectively, and at the most
requires them to account favorable prices available. Under the Housing Authority’s
for and safeguard assets Procurement Policy, the Executive Director or his/her
designee is to ensure that procedures for inventory control,
storage and protection of goods and supplies, and issuance
of, or other disposition of, supplies and equipment are
established in accordance with HUD Handbook 7460.1,
Chapter 5. This reference requires the Housing Authority
to adopt and comply with policies for procurement and
administration of supplies, materials, services, and
equipment in connection with the operation of Housing
Authority developments to include inventory control,
storage and protection of goods and supplies, and the
issuance and disposition of supplies and equipment.
The Housing Authority has not established and
Inventory controls are implemented an adequate inventory control system over its
lacking purchases of materials and supplies. Inventory records are
not maintained. Without inventory records, the Housing
Page 43 2003-DE-1001
Finding 4
Authority is unable to identify what goods have been
purchased, what materials are on hand and in storage, and
what inventory items have been used. Furthermore, the
Housing Authority has a large quantity of materials and
supplies on hand but these are not properly stored and
safeguarded. As a result, the Housing Authority has limited
assurances that the materials and supplies it purchases are
needed and used for official Housing Authority activities.
At the time of our review, the Housing Authority
Procurement Department was responsible for the
procurement of materials and supplies. All purchased
materials and supplies are delivered to the two Housing
Authority warehouses that are located next to each other.
These include both inside and outside storage areas.
The following photographs show inside storage.
2003-DE-1001 Page 44
Finding 4
These photographs show that materials being stored in a
haphazard arrangement. No shelves are provided to help
facilitate the storage of the materials. In addition, the
storage facilities were not locked and otherwise secured.
The following photographs show the Housing Authority’s
outside storage areas.
These photographs clearly show that materials stored
outside are exposed to the elements and some lumber
products are rotting. Vehicle entry gates are left open and a
number of personnel entry doors to the storage warehouses
are also left open.
The following photograph shows the poor condition of the
security fence. This photograph indicates the security fence
Page 45 2003-DE-1001
Finding 4
surrounding the outside storage area is not sufficient to
prevent theft of Housing Authority materials and supplies.
We reviewed the operations of the Procurement Department
of the Housing Authority. Procurement personnel were not
aware of the procedures for inventory control, storage, and
protection of goods and supplies, and the issuance of, or
other disposition of materials and supplies established in
HUD Handbook 7460.1, Chapter 5. The Housing Authority
has no written procedures on how to conduct physical
inventories. In addition, the Housing Authority has no
controls in place to ensure requisitioning activities are
properly maintained and materials and supplies are properly
safeguarded.
We reviewed the procurement of materials and supplies by
the Procurement Department of the Housing Authority.
Only three partial physical inventories in the sheet rock,
plumbing, and electrical material areas have been
completed. Since a complete physical inventory has never
been completed, the Housing Authority is not able to take
trial balances of their inventory records at regular intervals
and reconcile the results to the general ledger control
account. The Housing Authority has not even made quality
control spot counts on the three partial physical inventories
they have completed. Reorder levels have not been
established for any individual material item or individual
supply item.
2003-DE-1001 Page 46
Finding 4
As a result of its inadequate inventory control system, the
Housing Authority cannot ensure it safeguards assets
purchased with Federal funds by protecting them from
theft, loss, waste, damage, or unauthorized use. The current
system does not provide sufficient information for
management to make informed material acquisition
decisions. The Housing Authority has no way of knowing
if they are ordering materials and supplies beyond what is
actually necessary to perform their normal day to day
operations. The Housing Authority does not even know the
exact amount of materials and supplies they do have on
hand.
Auditee Comments The Housing Authority provided the following comments for
each deficiency noted in the finding:
· The Housing Authority indicates they have hired a
Warehouse Supervisor and Inventory Management
Specialist. In addition, the storage warehouses have been
mapped, materials are now stored in designated areas, a
security fence is in place, the warehouse has been
designated a secure area, and materials are now being
stored out of the weather. The Housing Authority also
indicates they will procure a computer inventory system
to perform inventory control, track disbursements, and
complete reconciliations. The Housing Authority is in
the process of completing a physical inventory of all
materials and supplies and developing written procedures
for conducting physical inventories.
· The Housing Authority has indicated they are awaiting a
response to their comments provided to the HUD
Northern Plains Office of Native American Programs on
April 26, 2002 regarding a previous review completed by
that office.
OIG Evaluation of The actions being taken and planned by the Housing
Auditee Comments Authority should help correct the deficiencies noted in the
finding.
The HUD Northern Plains Office of Native American
Programs should review the actions taken by the Housing
Page 47 2003-DE-1001
Finding 4
Authority to ensure those procedures they are now using
ensure proper controls are being exercised over their material
purchases and inventory.
Recommendations We recommend that the HUD Northern Plains Office of
Native American Programs provide the necessary guidance
and direction to the Housing Authority to:
4A. Establish and implement adequate control procedures
over its material purchases and inventory. These
procedures would include the following:
· Develop written procedures on how to conduct
physical inventories;
· Complete a physical inventory of all materials and
supplies;
· Improve security measures for the outside storage
area to include building a secure fence;
· Develop an improved materials shelving system for
the storage warehouses;
· Establish reorder levels for materials and supplies
so only those items necessary for day-to-day
operations are available; and
· Maintain adequate perpetual inventory records in
support of its materials and supplies and that these
records are reconciled to the applicable general
ledger control account.
4B. Review the procedures established and implemented
by the Housing Authority under Recommendation
Number 4A above to ensure proper controls and
procedures are being exercised over the Housing
Authority’s material purchases and inventory and are
in conformance with HUD requirements.
2003-DE-1001 Page 48
Finding 5
Improper Payment of Penalties and Fees
Contrary to Federal regulations, the Housing Authority has used Indian Housing
Block Grant monies to pay for unallowable penalties and fees. From 1996 through
2000, the Housing Authority was assessed penalties and interest totaling $78,110 by
the Internal Revenue Service for not making proper Federal employment tax
deposits and failure to file the Internal Revenue Service Form 941 in a timely
manner. In addition, from 1998 through March of 2000, the Housing Authority
incurred bank overdraft charges totaling $21,900 for having insufficient funds to
meet expenditures. This occurred because the Housing Authority did not ensure the
Finance Department properly administered its funds.
HUD regulations (24 CFR 1000.26(a) and 24 CFR
Regulations and guidance 85.22(b)) states recipients shall comply with the
establish principles for requirements and standards of OMB Circular A-87,
determining allowable “Principles for Determining Costs Applicable to
costs Grants and Contracts with State, Local and
Federally recognized Indian Tribal Governments.”
OMB Circular A-87 establishes principles for
determining allowable costs by State, Local and
Federally recognized Indian Tribal Governments.
Attachment B(20) states fines, penalties, damages,
and other settlements resulting from violations (or
alleged violations) of, or failure of the governmental
unit to comply with Federal, State, Local, or Indian
Tribal laws and regulations are unallowable except
when incurred as the result of compliance with
specific provisions of the Federal award.
Attachment B(26) states costs incurred for interest
on borrowed capital or the use of a government
unit’s own funds, however represented, are
unallowable.
Furthermore, 24 CFR 1000.26(b)(1)(ii) specifically
states that fines and penalties are unallowable costs
to the Indian Housing Block Grant program.
One of the functions of the Finance Department is
The Finance Department to ensure the Housing Authority is in compliance
is responsible for Federal with the fiscal accountability requirements of
tax requirements and Federal, State, Local, and Indian Tribal
reporting excess funds Governments. In this regard, the Payroll Manager
and shortages is responsible for Federal tax requirements and
Page 49 2003-DE-1001
Finding 5
maintaining checkbooks and balances. The Payroll
Manager is required to report any excess funds or
shortages to the Finance Officer.
FEDERAL TAX PENALTIES AND INTEREST
We reviewed documents issued to the Housing
IRS penalties and interest
Authority by the Internal Revenue Service to
of $78,110 was assessed
determine if the Housing Authority was assessed
against the Housing
penalties and interest related to its Federal tax
Authority
requirements. The period reviewed was 1996
through 2000.
Our review showed the Housing Authority was
assessed $78,110 in penalties and interest for not
making proper Federal employment tax deposits
and failing to file the Internal Revenue Service
Form 941 in a timely manner. Penalties and interest
are not allowable costs under HUD regulations and
OMB Circular A-87.
BANK OVERDRAFT CHARGES
We reviewed bank documents issued to the Housing
Bank overdraft charges of Authority to determine if the Housing Authority
$21,900 was assessed was assessed overdraft charges for having
against the Housing insufficient funds to meet expenditures. The period
Authority reviewed was 1998 through 2000.
Our review showed the Housing Authority was
assessed $21,900 in bank overdraft charges for not
having sufficient funds to meet expenditures. Bank
overdraft charges are not allowable costs under
HUD regulations and OMB Circular A-87.
Our office received concerns related to the payment
of penalties and interest to the Internal Revenue
Service and the assessment of bank overdraft
charges for having insufficient funds to meet
expenditures. Results of our review support those
concerns. The assessment of payroll penalties and
interest and bank overcharges occurred because the
Housing Authority did not ensure the Finance
Department properly administered its funds.
Procedures were not in place to pay the Internal
Revenue Service the withheld payroll tax deduction
and to file the required forms in a timely manner.
2003-DE-1001 Page 50
Finding 5
The Housing Authority encountered funding
shortfalls due primarily to the fact that Indian
Housing Block Grant Program monies were not
timely drawn down from HUD. This same situation
necessitated the Bank advancing funds to the
Housing Authority to cover the checks issued by the
Housing Authority. Better management of its
funding and HUD grant draw downs is needed by
the Housing Authority to prevent the future
assessment of penalties and interest and bank
overdraft charges that are unallowable under the
Indian Housing Block Grant Program.
Auditee Comments The Housing Authority provided the following
comments for each deficiency noted in the finding:
· The Housing Authority has stated they have hired
a Chief Financial Officer and a Payroll Manager
that are knowledgeable about Federal
employment tax requirements and are responsible
for ensuring appropriate balances are maintained
and checked daily for all checking and savings
accounts. In addition, the Housing Authority has
indicated they are developing a Corporation
Financial Management Procedures Handbook to
ensure improved financial management.
· The Housing Authority has indicated they agree
that Internal Revenue Service interest, penalties,
and bank overdraft charges are ineligible costs.
The Housing Authority has identified three
different methods to recover these funds from
non-Federal sources and has made an inquiry as
to the possibility of a repayment plan.
· The Housing Authority has stated they will
provide the HUD Northern Plains Office of
Native American Programs with verification of
repayment of the interest, penalties, and bank
overdraft charges from non-Federal sources as
they occur.
· The Housing Authority has stated they will work
with the HUD Northern Plains Office of Native
Page 51 2003-DE-1001
Finding 5
American Programs to ensure management
controls are in place and comply with HUD
guidelines.
OIG Evaluation of We agree with the actions being taken and
Auditee Comments planned by the Housing Authority to ensure Federal
tax requirements are met and appropriate balances are
maintained and checked daily for all checking and
savings accounts. However, the HUD Northern
Plains Office of Native American Programs should
review the Corporation Financial Management
Procedures Handbook being developed by the
Housing Authority to ensure procedures identified
require compliance on the part of responsible
personnel at all levels.
We are not directing the Housing Authority to select a
particular method to recover these funds from non-
Federal sources. The Housing Authority needs to
work with the HUD Northern Plains Office of Native
American Programs about the possibility of a
repayment plan.
The action planned by the Housing Authority should
correct this deficiency provided the HUD Northern
Plains Office of Native American Programs
determines that management controls specified in the
Corporation Financial Management Procedures
Handbook are adequate and in conformance with
HUD requirements.
Recommendations We recommend that the HUD Northern Plains
Office of Native American Programs provide the
necessary guidance and direction to the Housing
Authority to:
5A. Implement a system of management controls to
ensure the Finance Department makes proper
Federal employment tax deposits, files
required Federal tax documents in a timely
manner, and maintains sufficient funds to meet
expenditures.
2003-DE-1001 Page 52
Finding 5
5B. Recover from non-Federal sources the $78,110
in penalties and interest and the $21,900 in
bank overdraft charges and use the recovered
monies for eligible HUD program costs.
We also recommend that the HUD Northern Plains
Office of Native American Programs:
5C. Obtain evidence from the Housing Authority
that the $78,110 in penalties and interest and
the $21,900 in bank overdraft charges has been
recovered and used for eligible HUD program
costs.
5D. Review the system of management controls
implemented by the Housing Authority under
Recommendation Number 5A to ensure they
function properly and are in conformance with
HUD requirements.
Page 53 2003-DE-1001
Finding 5
THIS PAGE LEFT BLANK INTENTIONALLY
2003-DE-1001 Page 54
Finding 6
Deficient Controls Over Travel and Related
Costs
The Housing Authority has adopted the Rosebud Sioux Tribal Travel Policy as its Travel Policy.
However, contrary to HUD requirements, the Housing Authority has not implemented sufficient
management controls over its travel and related expenses to ensure that its adopted Travel Policy is
followed and adhered to. More specifically, each official trip has not always been properly authorized,
travel advances have been improperly calculated in some cases, travel vouchers have not always been
filed by the traveler after the end of a trip, and documentation supporting travel costs and related
calculations were often missing and/or incomplete. As a result, the Housing Authority has limited
assurance that its travelers are complying with its Travel Policy and that the reimbursed amounts to the
travelers are authorized, accurate, and supported. This situation has occurred primarily by the fact that
no one individual or department within the Housing Authority has the responsibility to enforce
compliance with the Housing Authority’s Travel Policy.
In addition, the Housing Authority has paid Board members $75 in per diem payments for
attending each Housing Authority Board of Commissioners meeting. The per diem was intended to
reimburse the Board member for expenses incurred in connection with the meeting. However, the
Housing Authority has also reimbursed the attending members for mileage to attend the meetings
and to provide meals at each meeting. Since the Housing Authority is actually funding the
individual cost of attending the Board meeting, the payment of $75 per diem is an extra and
unnecessary expense. During our review, we calculated that the Housing Authority had paid a
combined total of $44,400 in per diem payments for attending Board members. The $75 per diem
payment is also contrary to HUD requirements because the payment is not consistent with the
Tribal Council’s policy of not paying Tribal Council members a fee or mileage for attending
meetings on the Rosebud Indian Reservation. Therefore, the $44,400 is considered to be an
ineligible expense to the Indian Housing Block Grant Program.
The Housing Authority is to follow the financial
Adequate internal management standards set out in Section 85.20 of Title 24 of
controls, accounting the Code of Federal Regulations. This section provides that
records, and the Housing Authority must maintain effective control and
documentation must be accountability for all grant cash, real and personal property
established for travel and and other assets and adequately safeguard such assets and
related costs assure that they are used solely for authorized purposes.
Section 85.20 also requires the Housing Authority to
maintain accounting records that adequately identify the
source and application of funds provided. These records
must contain information pertaining to grant awards and
authorizations, obligations, unobligated balances, assets,
liabilities, outlays or expenditures and income. Furthermore,
Page 55 2003-DE-1001
Finding 6
the accounting records must be supported by such source
documentation as cancelled checks, paid bills, payrolls, time
and attendance records, contract award documents, etc. In
addition, the provisions of OMB Circular A-87 must be
followed in connection with the eligibility of costs.
On February 20, 1998, the Housing Authority adopted the
Housing Authority Travel Rosebud Sioux Tribal Travel Policy as the official Travel
Policy establishes travel Policy for the Housing Authority. This policy set out various
requirements and reimbursement rates for certain types of travel and delineated
procedures requirements for incurring official travel and being
reimbursed for official travel costs. Travelers are to be paid
for lodging and a set amount for Meals and Incidental
Expense based on a rate for each quarter of the day the
traveler is in travel status.
Our review identified that the Housing Authority has been
Travel Policy not incurring official travel and related travel costs contrary to
followed with duplicate the provisions of its official Travel Policy. These deviations
compensation for travel to have occurred in two areas: First, the Housing Authority has
Board meetings not been authorizing official travel and reimbursing its
travelers in accordance with its Travel Policy. Second, the
Housing Authority has provided duplicate compensation to
Housing Authority Board of Commissioner members for
attending Board meetings. These two areas are discussed
below:
DEFICIENT ADMINISTRATION OF TRAVEL
AUTHORIZATIONS, ADVANCES, AND COSTS
Under the Housing Authority’s Travel Policy, travelers on
Housing Authority official Housing Authority business must have advanced
processing of travel travel approval. In addition, the traveler may obtain an
authorization, advances, advance of travel funds that are based on the estimated travel
and costs costs. Once a trip is completed, the traveler is to submit a
travel voucher detailing the travel costs incurred and
refunding any excess advance received or obtaining funding
of any unpaid travel costs.
We identified and tested the internal controls the Housing
Required Travel Policy Authority has implemented over its travel and related costs.
provisions not being met Our review showed that the Housing Authority has failed to
and/or documented established adequate controls. As a result, the Housing
Authority has very limited assurance that its travelers are
incurring travel costs in conformity the adopted official
Travel Policy.
2003-DE-1001 Page 56
Finding 6
Travel documentation for three Housing Authority
employees on official Authority travel were reviewed and
the following deficiencies were noted:
· Housing Authority employees are traveling without an
approved travel authorization;
· Travel vouchers are not always submitted upon
completion of the travel;
· Housing Authority employees do not always submit
receipts to support costs claimed on the travel voucher;
· Insufficient information was provided on the travel
advance form and/or the actual travel voucher form to
support and properly calculate the Meals & Incidental
Expense amount paid; and
· Insufficient documentation was maintained to show
that any excess travel advances were properly and
promptly paid to the Housing Authority.
These deficiencies occurred primarily from the fact that the
Deficient procedures to Housing Authority does not have adequate management
control and monitor travel controls in place to ensure that official Housing Authority
and related costs travel is properly authorized, travel advances are properly
and accurately calculated, and the traveler submits the
required travel voucher after the completion of the travel.
No one individual or department had the responsibility to
ensure that travel policies and procedures were being
followed. Without adequate management controls, the
Housing Authority has very limited assurance that travel
was actually performed, or that the traveler was properly
funded for their individual trips.
The method by which travel advances and subsequent
Deficient accounting for travel vouchers are recorded makes it difficult to identify
travel advances and when travel is planned, what travel has been performed,
vouchers and the final accounting status of travel that has been
completed. This is due to the fact that travel advances are
recorded as an expense. In addition, any additional
amounts paid to the traveler after a completed trip, is also
charged as an expense. Under this process, the Housing
Authority can only identify what travel advances have
been paid and any subsequent travel voucher costs have
Page 57 2003-DE-1001
Finding 6
been paid to an individual traveler is by performing a
detailed review of the various expense records. Any errors
or omissions are not readily identifiable.
Controls could be improved if the Housing Authority were
to record all travel advances as a receivable from the
traveler. When a designated trip is completed and the final
travel voucher for the trip is submitted, the accounts
receivable for the traveler could be properly reduced. Any
amounts shown in the travel accounts receivable accounts
would be those advances that have been made by which
travel vouchers have not been submitted by the travelers.
This process would allow Housing Authority management
to quickly identify those travelers who have outstanding
advances that need to be liquidated.
DUPLICATE COMPENSATION FOR ATTENDING
BOARD MEETINGS
The Housing Authority Board of Commissioners passed
Board members receive a Resolution 98-17 on August 20, 1998 that indicated Board
$75 per diem payment for members would receive a per diem payment of $75 to attend
expenses while attending each Board meeting. The $75 payment was to be
Board meetings compensation for expenses, including travel, incurred in the
discharge of their duties.
Since the adoption of this resolution, the Housing Authority
has been paying Board members who attend Board meetings
the $75 per diem payment. However, the Housing Authority
has been reimbursing each attending Board member mileage
for attending the meetings. Also, the Housing Authority has
funded the meals that have been provided at the Board
meetings. Since the Housing Authority has paid Board
members for the actual cost of attending meetings that
include mileage and meals, the payment of the $75 per diem
that was designated for reimbursement for expenses, results
in a duplicate compensation for meeting expenses.
For the period from August 20, 1998 through August 13,
Duplicate compensation 2001, the Housing Authority Board held a total of 102
totaling $44,400 paid for meetings. For these meetings, the number of Board
Board members expenses members present totaled 592. These Board members
while attending Board received the $75 per diem for each of the meetings for a
meetings combined total expense of $44,400. Since the Housing
Authority paid these Board members mileage as well as
provided meals for the meetings, the attending Board
2003-DE-1001 Page 58
Finding 6
members did not have any additional meeting expenses to
pay. As a result, the $75 per diem payment was a duplicate
and unnecessary payment for meeting expenses since the
attending Board members were already being compensated
for mileage and meals. Therefore, the $44,400 is considered
to be an ineligible Indian Housing Block Grant Program
cost.
The Housing Authority has had up to two Board members
Tribal Council members who are Tribal Council members and are representatives of
on Housing Authority the Tribal Council to the Housing Authority Board. These
Board not paid for Tribal Council members did not receive the $75 per diem
meeting expenses payment for each Board meeting they attended nor did these
Tribal Council members receive reimbursement for their
mileage while attending the Board meetings.
This practice of non-compensation for meeting related costs
for Tribal Council members on the Housing Board is in
harmony with Tribal policy and directives. On June 23,
2000, the Rosebud Sioux Tribe issued a Tribal Council
Directive that states Tribal employees are not to be paid
meeting stipends or mileage for participating in Tribal
Council appointed committees and commissions. Similarly,
Tribal Council members do not receive mileage, meals, or a
stipend for attending meetings on the Rosebud Indian
Reservation.
The $75 per diem payment to Board members for attending
The $75 per diem Board meetings when actual expenses are funded separately
payment is not consistent by the Housing Authority could be considered a $75 stipend
with HUD and local or fee being paid to the Board members. The payment of
government requirements such a stipend is contrary to HUD regulations and guidance
and not consistent with Tribal government policy and
practice.
HUD requirements under NAHASDA Guidance 98-13
reinforced the provisions in OMB Circular A-87 and stated
that stipends for Board members to attend monthly meetings
is considered an allowable cost but it:
· Must be a necessary and reasonable for the proper and
efficient performance and administration of a Federal
award;
· Must be authorized or not prohibited under Tribal law;
and
Page 59 2003-DE-1001
Finding 6
· Must be consistent with policies, regulations, and
procedures that apply uniformly to both Federal awards
and other activities of the governmental units.
The Housing Authority Board payment of the $75 per diem
as a stipend or fee is not authorized under Tribal policy and
practice and is not consistent with the policies and
procedures being followed by the Tribal government.
Accordingly the payment of the $75 to Board members is an
unallowable cost to the Indian Housing Block Grant
Program. Accordingly, the total $44,400 paid during our
review period for per diem to Housing Board members
attending Board meetings needs to be repaid to the Indian
Housing Block Grant Program from non-Federal sources.
These deficiencies as discussed in the previous two
Management controls and
sections are a result of the Housing Authority not
procedures lacking
establishing adequate management controls and procedures
to implement their adopted Travel Policy and to ensure that
such travel and related costs are incurred in compliance
with HUD and Housing Authority requirements. As a
result, the Housing Authority is incurring travel costs and
payments that are unauthorized, ineligible, and/or
improperly documented.
Auditee Comments The Housing Authority provided the following comments for
each deficiency noted in the finding:
· The Housing Authority believes they already have
adequate management controls over its travel and related
costs and an adequate Travel Policy is maintained. The
Housing Authority states their Travel Policy required all
travel to have proper written authorization, travel reports
are required and reconciled in a timely manner, and
travel is treated as an advance and maintained as a
receivable until reconciled.
· The Housing Authority is awaiting a determination by
the HUD Northern Plains Office of Native American
Programs regarding the practice of providing Board
members a $75 per diem payment for each meeting they
attend. The Housing Authority believes the per diem
cost is justified because it a common practice of other
2003-DE-1001 Page 60
Finding 6
Tribal Designated Housing Entities. The Housing
Authority has stated they have reduced the per diem
payment to $70 and are no longer paying mileage costs.
· The Housing Authority state they will discuss the
$44,400 as an ineligible cost and provide official
notification as to the results of their discussions to the
HUD Northern Plains Office of Native American
Programs.
· The Housing Authority has indicated they are awaiting a
response to their comments provided to the HUD
Northern Plains Office of Native American Programs on
April 26, 2002 regarding a previous review completed by
that office. The Housing Authority also indicates they
are open to any technical assistance HUD can provide in
establishing other appropriate controls to ensure
compliance with their Travel Policy.
OIG Evaluation of We agree the Housing Authority has an adequate Travel
Auditee Comments Policy. However, the Housing Authority has not
implemented any process to be performed by Housing
Authority officials and/or staff to ensure that the Authority’s
adopted Travel Policy is being followed. No one has the
assigned responsibility that travel advances are properly
authorized, documented and conform with the Travel Policy
provisions before a travel advance is made; that travel
vouchers are prepared and submitted by each traveler at the
completion of each trip; and that the travel costs actually
paid is properly documented, supported and complies with
the Travel Policy. This indicates a lack of adequate
management controls over its travel and related costs to
ensure compliance with HUD requirements and with the
Housing Authority’s adopted Travel Policy
We have reviewed the Housing Authority’s response on this
subject submitted to the HUD Northern Plains Office of
Native American Programs. However, the payment of the
$75 per diem, or a reduced amount of $70, as a stipend or fee
is not authorized under Tribal policy and the practice is not
consistent with the policies and procedures being followed
by the Tribal government. Therefore, it does not meet the
allowable cost provisions of OMB Circular A-87 or
Page 61 2003-DE-1001
Finding 6
NAHASDA Guidance 98-13 and is considered an ineligible
cost.
The Housing Authority has not indicated how they will
reimburse the Indian Housing Block Grant Program from
non-Federal sources for the duplicate compensation paid to
Board members for attending Board meetings. The Housing
Authority’s official notification to HUD about their
discussions on the subject needs to indicate how it will
accomplish this reimbursement.
The HUD Northern Plains Office of Native American
Programs should assist the Housing Authority in establishing
and implementing appropriate controls over their travel and
related costs to ensure they are adequate and that HUD
requirements and the Housing Authority’s Travel Policy are
being met.
Recommendations We recommend that the HUD Northern Plains Office of
Native American Programs:
6A. Require the Housing Authority to establish and
implement adequate management controls over its
travel and related costs to ensure compliance with
HUD requirements and with the Housing Authority’s
adopted Travel Policy. Such controls would:
· Enforce the requirement that all travel have
properly written prior authorization;
· Ensure travel vouchers are promptly submitted
after each trip and are properly supported and
calculated in accordance with the Housing
Authority’s Travel Policy, and;
· Record travel advances as a receivable on the
Housing Authority’s books of account;
6B. Have the Housing Authority stop the practice of
providing Board members a $75, or a reduced amount
of $70, per diem payment for each meeting they attend.
6C. Require the Housing Authority to reimburse the
Indian Housing Block Grant Program from non-
2003-DE-1001 Page 62
Finding 6
Federal sources the duplicate compensation of
$44,400 paid to the Board members for attending
Board meetings.
6D. Once the Housing Authority has established and
implemented the appropriate controls and procedures
set out in Recommendation Number 6A above, HUD
should review the implemented system to ensure that
the controls and procedures are adequate and that
HUD requirements and the Housing Authority’s
Travel Policy are being met.
Page 63 2003-DE-1001
Finding 6
THIS PAGE LEFT BLANK INTENTIONALLY
2003-DE-1001 Page 64
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 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 controls were relevant to
Relevant Management our objectives and each was assessed during our review:
Controls
· Accounting system;
· Procurement system;
· Inventory system;
· Maintenance system;
· Occupancy system; and
· The Housing Authority’s supplemental housing
programs.
The following procedures were used to evaluate
management controls:
· Interviews with Housing Authority officials and
employees;
· Interviews with Rosebud Sioux Tribal employees;
· Interviews with Housing Authority residents;
· Tours of the Housing Authority’s supplemental housing
programs; and
· Review of Housing Authority management systems and
related records.
Page 65 2003-DE-1001
Management Controls
Our review indicates the Housing Authority lacks the
Significant Weaknesses management controls necessary to ensure that the Housing
Authority:
· Complied with policies related to drug elimination,
subleasing, delinquency, and eligibility (Finding 1);
· Complied with policies related to procurement,
maintenance, and administration of its supplemental
housing programs (Finding 2);
· Maintained proper administration over its procurement
and contracting of goods and services (Finding 3);
· Maintained adequate administration and safeguards
over its materials and supplies inventory (Finding 4);
· Prevented the assessment of penalties, interest, and
bank overdraft charges (Finding 5); and
· Complied with established Travel Policy requirements
ensuring that Housing Authority travel is authorized,
accurate, supported, and eligible (Finding 6).
2003-DE-1001 Page 66
Follow Up On Prior Audits
The Office of Inspector General has not completed any type of audit work related to the Housing
Authority since at least 1990. However, the HUD Northern Plains Office of Native American
Programs has conducted a monitoring review of the Housing Authority. During the week of July
9, 2001, HUD conducted an on site performance review of HUD funded Indian Housing Block
Grant and United States Housing Act of 1937 programs being implemented by the Housing
Authority. HUD’s Final Monitoring Report was issued on April 26, 2002 and contained 11
findings with related recommended corrective action and target dates. These 11 findings are:
1. Tribal Council failed to monitor, perform oversight and accountability of the Sicangu Wicoti
Awanyakape (SWA) Corporation Housing Board in violation of 24 CFR 1000.502;
2. Required operating policies not in place as required by Section 203 of NAHASDA;
3. SWA is not conducting re-certifications as required by 24 CFR 1000.128 and NAHASDA
102(c)(5);
4. SWA is not complying with tenant and homebuyer selection policies in accordance with
Section 207 of NAHASDA;
5. Non-low income family received same benefits as low-income families which was not in
accordance with 24 CFR 1000.110(e);
6. 1937 Housing Act housing stock is not being maintained as required by Section 203(a)(2)(b)
of NAHASDA;
7. SWA has failed to adequately safeguard, maintain records for and dispose of equipment
purchased with HUD funds as evidenced by poor or non-existent property records, incomplete
physical inventory records, and possible loss or theft, in violation of 24 CFR 85.20 and 24
CFR 85.32;
8. SWA is in non-compliance with Section 105 of NAHASDA and 24 CFR Part 58 by
obligating/expending funds in connection with the rehabilitation of non-1937 Act units and
with the new construction of 4 units of modular housing prior to performing an environment
review;
9. SWA failed to follow the procurement requirements of 24 CFR 85.36 and its own
Procurement Policy for contracts and purchases;
10. SWA Board held excessive Board meetings, in violation of By-Laws of Rosebud Housing
Authority, Article III;
Page 67 2003-DE-1001
Follow Up On Prior Audits
11. SWA is not in compliance with the Single Audit Act required by 24 CFR 1000.544 and
NAHASDA.
2003-DE-1001 Page 68
Appendix A
Schedule of Ineligible Costs
Recommendation Description Ineligible Costs 1/
5B Penalties and Interest $78,110.80
5B Bank Overdraft Charges $21,900.00
6C Duplicate Per Diem Payments $44,400.00
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.
Page 69 2003-DE-1001
Appendix A
THIS PAGE LEFT BLANK INTENTIONALLY
2003-DE-1001 Page 70
Appendix B
Auditee Comments
Page 71 2003-DE-1001
Appendix B
2003-DE-1001 Page 72
Appendix B
Page 73 2003-DE-1001
Appendix B
2003-DE-1001 Page 74
Appendix B
Page 75 2003-DE-1001
Appendix B
2003-DE-1001 Page 76
Appendix B
Page 77 2003-DE-1001
Appendix B
2003-DE-1001 Page 78
Appendix B
Page 79 2003-DE-1001
Appendix B
SUPPLEMENTAL AUDITEE COMMENTS
(The Supplemental Auditee Comments contained numerous attachments that were too
voluminous to include in the audit report. These attachments were provided to the
Northern Plains Office of Native American Programs under separate cover.)
2003-DE-1001 Page 80
Appendix B
Page 81 2003-DE-1001
Appendix B
THIS PAGE LEFT BLANK INTENTIONALLY
2003-DE-1001 Page 82
Appendix C
Distribution Outside of HUD
Sharon Pinkerton, Senior Advisor, Subcommittee on Criminal Justice, Drug Policy &
Human Resources, B373 Rayburn House Office Bldg., Washington, DC 20515
Stanley Czerwinski, Director, Housing and Telecommunications Issues, U.S. General
Accounting Office, 441 G Street, NW, Room 2T23, Washington, DC 20548
Steve Redburn, Chief Housing Branch, Office of Management and Budget, 725 17th
Street, NW, Room 9226, New Executive Office Bldg., Washington, DC 20503
Linda Halliday (52P), Department of Veterans Affairs, Office of Inspector General, 810
Vermont Ave., NW, Washington, DC 20420
William Withrow (52KC), Department of Veterans Affairs, OIG Audit Operations
Division, 1100 Main, Rm 1330, Kansas City, Missouri 64105-2112
The Honorable Joseph Lieberman, Chairman, Committee on Government Affairs, 706
Hart Senate Office Bldg., United States Senate, Washington, DC 20510
The Honorable Fred Thompson, Ranking Member, Committee on Governmental Affairs,
340 Dirksen Senate Office Bldg., United States Senate, Washington, DC 20510
The Honorable Dan Burton, Chairman, Committee on Government Reform, 2185
Rayburn Bldg., House of Representatives, Washington, DC 20515
The Honorable Henry A. Waxman, Ranking Member, Committee on Government
Reform, 2204 Rayburn Bldg., House of Representatives, Washington, DC 20515
Andy Cochran, House Committee on Financial Services, 2129 Rayburn H.O.B.,
Washington, DC 20515
Clinton C. Jones, Senior Counsel, Committee on Financial Services, U.S. House of
Representatives, B303 Rayburn H.O.B., Washington, DC 20515
Page 83 2003-DE-1001
Appendix C
THIS PAGE LEFT BLANK INTENTIONALLY
2003-DE-1001 Page 84
HUD Indian Housing Block Grant Program, Sicangu Wicoti Awanyakape Corporation, Rosebud, South Dakota
Published by the Department of Housing and Urban Development, Office of Inspector General on 2002-10-08.
Below is a raw (and likely hideous) rendition of the original report. (PDF)