oversight

Financial Management of HUD Programs, Housing Authority of the City of Corpus Christi, Corpus Christi, Texas

Published by the Department of Housing and Urban Development, Office of Inspector General on 2004-03-26.

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

         AUDIT REPORT




FINANCIAL MANAGEMENT OF HUD PROGRAMS

      HOUSING AUTHORITY OF THE
        CITY OF CORPUS CHRISTI

        CORPUS CHRISTI, TEXAS

              2004-FW-1004

             March 26, 2004

         OFFICE OF AUDIT, REGION 6
            FORT WORTH, TEXAS
                                                                  Issue Date
                                                                          March 26, 2004
                                                                  Audit Case Number
                                                                          2004-FW-1004




TO:          Diana Armstrong
             Director, Office of Public Housing, 6JPH



FROM:        D. Michael Beard
             Regional Inspector General for Audit, 6AGA

SUBJECT: Financial Management of HUD Programs
         Housing Authority of the City of Corpus Christi
         Corpus Christi, Texas


As requested by your office, we conducted an audit of the Housing Authority of Corpus Christi,
Texas (the Authority). The audit generally covered the Authority's financial transactions for the
period October 1, 2001, through April 30, 2003. The objectives of the audit were to determine
whether the Authority used funds in accordance with HUD requirements under the Low Rent,
Section 8, Drug Elimination, and Resident Opportunity and Self Sufficiency (ROSS) Programs.
In addition, our objectives were to determine if the Authority allocated common costs equitably
among its federal and non-federal programs and if the Authority complied with its new
procurement policy adopted in February 2003. This audit contains one finding.

In accordance with HUD Handbook 2000.06 REV-3, within 60 days please provide us, for each
recommendation without management decisions, a status report on: (1) the corrective action taken;
(2) the proposed corrective action and the date to be completed; or (3) why action is considered
unnecessary. Additional status reports are required at 90 days and 120 days after report issuance for
any recommendation without a management decision. Also, please furnish us copies of any
correspondence or directives issued because of the audit.

Should you or your staff have any questions, please contact Jerry Thompson, Assistant Regional
Inspector General for Audit, at (817) 978-9309.
Management Memorandum




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2004-FW-1004              Page ii
Executive Summary
At the request of the Director of Public Housing, we conducted an audit of the Housing
Authority of Corpus Christi, Texas (the Authority). The objectives of the audit were to
determine whether the Authority used funds in accordance with HUD requirements under the
Low Rent, Section 8, Drug Elimination, and Resident Opportunity and Self Sufficiency (ROSS)
Programs. In addition, our objectives were to determine if the Authority allocated common costs
equitably among its federal and non-federal programs and if they complied with its new
procurement policy adopted in February 2003.



                                    The Authority had implemented and complied with its new
 The Authority violated             procurement policy and HUD procurement requirements.
 HUD program                        However, the Authority violated HUD program
 requirements.                      requirements by spending $4,052,302 in HUD funds for
                                    ineligible and questionable purposes. The Authority
                                    management used $1,031,872 in HUD program funds for
                                    unauthorized purposes and cannot support $3,020,430 in
                                    arbitrary payroll allocations and other program costs.

                                    The Authority used $2,932,086 in Low Rent funds to pay:
                                    (1) development and salary costs of an affiliated nonprofit's
                                    housing project; (2) Section 8 Program salary and benefit
                                    costs; (3) common administrative costs for Section 8
                                    Programs and for the nonprofits; and (4) arbitrary salary
                                    and benefits cost allocations.

                                    The Authority used $533,694 in Section 8 Voucher
                                    Program funds to pay the development and salary costs of
                                    an affiliated nonprofit's housing project and arbitrary salary
                                    and benefits cost allocations.

                                    The Authority used $228,470 in Drug Elimination Grant
                                    funds to pay: (1) the development and salary costs of an
                                    affiliated nonprofit's housing project; (2) questionable
                                    program costs; and (3) arbitrary salary and benefits cost
                                    allocations.

                                    The Authority used $194,292 in Capital Funds to pay
                                    arbitrary salary and benefits cost allocations.

                                    The Authority used $160,358 Hampton Port Section 8
                                    funds to pay: (1) development and salary costs of an
                                    affiliated nonprofit's housing project; (2) non-project salary
                                    and benefit costs; and (3) other arbitrary salary and benefits
                                    cost allocations.

                                        Page iii                                    2004-FW-1004
Executive Summary



                    The Authority used $3,402 in ROSS funds to pay arbitrary
                    salary and benefits cost allocations.

                    Authority managers told us they were not familiar with the
                    provisions of the Low Rent and Section 8 contracts, federal
                    cost principles, and other HUD program requirements for
                    cost eligibility. Authority managers also told us they
                    thought that all HUD program funds could be used for the
                    purpose of providing any affordable housing for people
                    throughout the city. Therefore, they did not implement
                    procedures to ensure they charged only eligible costs to
                    HUD programs or develop adequate cost allocation plans.
                    As a result, the Authority diverted funds from programs for
                    which HUD intended the funds to be used and violated
                    HUD annual contribution contracts, grant agreements, and
                    other requirements.

                    During the audit, the Authority officials indicated they took
                    action to address our concerns by implementing cost
                    allocation plans and timekeeping procedures to properly
                    allocate salaries and benefits. In addition, the Authority
                    paid back to HUD programs or recorded interfund payables
                    for $488,810 of the unallowable costs we identified for
                    nonprofit activities and common cost allocations. The
                    Authority still needs to provide satisfactory support to
                    HUD for the questioned costs.

                    We are recommending HUD require the Authority to
 Recommendations    implement effective procedures to ensure costs are eligible
                    and adequately documented. Also, the Authority needs to
                    repay all ineligible costs incurred during and subsequent to
                    the audit period ending May 31, 2003, to the appropriate
                    HUD programs. Also, we are recommending HUD obtain
                    sufficient support for the arbitrary salary and benefit
                    allocations, common cost allocations, other questionable
                    costs, and recover any remaining unsupported costs.

                    We provided a draft report to officials of the Corpus Christi
 Auditee Comments   Housing Authority on January 12, 2004, and held an exit
                    conference on February 3, 2004. The Authority said they
                    had already taken steps to resolve all of the
                    recommendations. The Authority provided a formal
                    written response dated March 2, 2004, which is attached as
                    Appendix B.


2004-FW-1004            Page iv
Table of Contents
Management Memorandum                                                       i



Executive Summary                                                         iii



Introduction                                                               1



Finding
1. $4.1 Million Used for Questionable and Ineligible Purposes              7




Management Controls                                                      23



Issues Needing Further Consideration                                     25



Appendices
   A. Schedule of Questioned Costs                                       27

   B. Auditee Comments                                                   29




                              Page v                            2004-FW-1004
Table of Contents



Abbreviations

ACC            Annual Contribution Contract
CFR            Code of Federal Regulations
HUD            U.S. Department of Housing and Urban Development
OIG            Office of Inspector General
OMB            Office of Management and Budget
ROSS           Resident Opportunity and Self Sufficiency




2004-FW-1004                            Page vi
Introduction
                                  The City of Corpus Christi established the Housing
                                  Authority of Corpus Christi (Authority), Texas, in 1938.
                                  The Mayor appoints a five-member Board of
                                  Commissioners to govern the Authority. The Board hires
                                  an executive director to manage the Authority's day-to-day
                                  operations. The Authority has 1,836 Low Rent and 949
                                  Section 8 units (839 Section 8 Voucher and 110 Project
                                  Based Section 8 units at the Hampton Port Project). As of
                                  April 17, 2003, the Authority had $21,833,844 in program
                                  funds available from HUD's Line of Credit Control System,
                                  as shown in the table below. The Authority keeps its
                                  records at its central office at, 3701 Ayers, Corpus Christi,
                                  Texas.


                             Program                  Authorized Disbursed Available Balance
          Capital Fund Program                        $10,618,855 $ 5,631,084      $ 4,987,771
          Drug Elimination Program                        917,788     755,832          161,956
          Section 23 Lease                                463,559           0          463,559
          Operating Fund                                3,765,889   1,970,329        1,795,560
          Public Housing Development Grants             1,268,750   1,230,687           38,063
          Resident Opportunities & Self Sufficiency        30,000         221           29,779
          Section 8 Housing (from HUD Multifamily)      5,310,411   1,400,607        3,909,804
          Section 8 Certificates                       12,805,262   9,123,517        3,681,745
          Section 8 Contract Administrators             7,875,000   2,492,751        5,382,249
          Section 8 Vouchers                            1,982,044     598,686        1,383,358
          Totals                                      $45,037,558 $23,203,714           $21,833,844

                                  HUD considered the Authority troubled from 1999 through
                                  April 2001. During this period, the Authority was under
The Authority’s troubled
                                  the control of the Memphis Troubled Agency Recovery
past.
                                  Center to help improve its performance. HUD reassigned
                                  control and monitoring functions to the San Antonio Office
                                  of Public Housing in April 2001, when the Authority
                                  reached the "standard performer" status. The current
                                  Executive Director, Richard Franco, told us the Board of
                                  Commissioners hired him in December 2001 to help
                                  improve the administration of the programs. Over 10 years
                                  ago, HUD employed him as an Area Manager of a HUD
                                  field office. The San Antonio Office of Public Housing
                                  requested we conduct an audit due to indications of
                                  possible continued problems.

                                  The Authority currently has two active nonprofit
Active nonprofits.                corporations: the Corpus Christi Finance Corporation and
                                       Page 1                                    2004-FW-1004
Introduction


                     the Thanksgiving Homes Corporation. The purpose of the
                     nonprofits is to assist the Authority in meeting its goals of
                     providing affordable housing to low and moderate-income
                     citizens and residents throughout the community and
                     surrounding areas. The Authority Commissioners serve as
                     the Directors on both Boards of the active nonprofits.

                     In July 1996, the Corpus Christi Finance Corporation was
                     formed and funded with $926,000 by the Corpus Christi
                     Housing Opportunities Corporation. The Corpus Christi
                     Housing Opportunities Corporation is a dormant nonprofit
                     the Authority formed in April 1994 when it transferred
                     $1,046,498 in profits from the purchase and sale of a
                     Resolution Trust Corporation property.

                     In December 2002, the Authority Commissioners passed a
                     resolution that authorized and approved the creation of the
                     Thanksgiving Homes Corporation. The Thanksgiving
                     Homes Corporation plans to construct 30 homes and
                     related infrastructure, which it plans to sell to qualified
                     low-income families. The Thanksgiving Homes
                     Development Team consists solely of Authority staff.
                     Sixteen people from the Authority worked on the
                     development of the Thanksgiving Homes Project. The
                     Authority’s Executive Director is the Chief Executive
                     Officer and Developer of the Thanksgiving Homes Project.
                     In May 2003, the Corpus Christi Finance Corporation
                     Board of Directors conveyed property and guaranteed the
                     construction loan for the Thanksgiving Homes Project.



                     The objectives of the audit were to determine whether the
 Audit Objectives.   Authority used funds in accordance with HUD
                     requirements under the Low Rent, Section 8, Drug
                     Elimination, and Resident Opportunity and Self Sufficiency
                     (ROSS) Programs. In addition, our objectives were to
                     determine whether the Authority allocated common costs
                     equitably among its federal and non-federal programs and
                     to determine whether the Authority complied with its new
                     procurement policy adopted in February 2003.



                     To achieve the objectives, we:
 Audit Scope and
 Methodology
2004-FW-1004              Page 2
                                                                              Introduction


                               •     Reviewed the files of the HUD Office of Public
                                     Housing;
                               •     Reviewed HUD Handbooks, Annual Contribution
                                     Contracts, Grant Agreements, Code of Federal
                                     Regulations, and OMB Circulars that apply to the
                                     Public Housing Grants and Programs to identify the
                                     requirements for: (1) financial management, (2)
                                     uses of program funds, and (3) cost eligibility;
                               •     Reviewed the Authority’s organizational charts,
                                     personnel and procurement policies, PHA Plan,
                                     contract registers, nonprofit corporation files and
                                     bank statements, grant files, and the accounting
                                     system data;
                               •     Reviewed the Authority's audited financial
                                     statements for fiscal years 1999, 2000, 2001, and
                                     2002;
                               •     Reviewed the Authority's board minutes, bank
                                     statements, check vouchers, invoices, contracts,
                                     receipts, cancelled checks, general ledgers,
                                     accounts payable ledgers, payroll reports,
                                     computerized accounting records, HUD Line of
                                     Credit Control System drawdown requests, and
                                     other supporting financial statements and
                                     documents for transactions between October 1,
                                     2001, and July 31, 2003.
                               •     Interviewed HUD and Authority Staff as necessary.
                               •     With regard to the Authority’s computerized
                                     accounting records, we reviewed documentation
                                     supporting the transactions therein recorded and did
                                     not rely on the computerized accounting records to
                                     make the conclusions in our report.

                            We reviewed over $14 million in transactions in the
Transactions and programs   following areas and grants in the table below:
audited.
                               Transaction Type                  Reviewed
                               Payroll                                $ 6,141,259
                               Capital Fund Draw Downs                  5,980,609
                               Procurement                                929,098
                               Drug Elimination Grants                    833,148
                               Interfund Payables                         618,937
                               Common Cost Allocations                    110,920
                               ROSS Grants                                 48,595
                               Total                                 $14,662,566




                                   Page 3                                    2004-FW-1004
Introduction


               Where we did not review all transactions in certain expense
               categories as indicated below, the results of the review
               apply only to the items selected and cannot be projected to
               the universe or total population.

               We reviewed all the Authority's payroll expenses, totaling
               $6,141,259 for about 200 employees, from October 1,
               2001, through April 30, 2003.

               We reviewed all the 2000, 2001, and 2002 Capital Fund
               drawdowns, totaling $5,980,609 that occurred from July
               15, 2001, through April 26, 2003.

               We reviewed all procurement claims over $10,000, from all
               funds and programs, paid from May 1, 2003, through
               June 24, 2003. The Authority did not award any contracts
               over $25,000 since the inception of its new procurement
               policy on February 1, 2003. In the Accounts Payable
               Report there were 28 claims, totaling $929,098. We
               selected three claims, totaling $47,478, to test for
               compliance with the procurement policy. The other claims
               were not selected because the payments related to Pre-
               February 2003 contracts, utility payments, payroll and
               benefit payments, or were for police services.

               We reviewed all the 2000 and 2001 Drug Elimination
               Grant drawdowns, totaling $833,148 from August 2001
               through June 2003.

               We reviewed all the Interfund transfers totaling $618,937
               from the Low Rent Program to the Section 8 Voucher
               Program, the Corpus Christi Finance Corporation, the
               Thanksgiving Homes Corporation, and the Hampton Port
               Section 8 Project.

               We reviewed the Authority's Cost Allocation Plans for the
               Section 8 Voucher Program, the Corpus Christi Finance
               Corporation, and the Thanksgiving Homes Corporation that
               were implemented in May 2003 and July 2003. We also
               identified the common costs allocations for the Authority's
               Hampton Port Section 8 Project. We scheduled $110,920
               in common costs allocations for these programs and
               entities, from October 2001 through May 2003.

               We reviewed all the Resident Opportunities and Self
               Sufficiency (ROSS) Grant drawdowns totaling $48,595 for

2004-FW-1004        Page 4
                                                  Introduction


the fiscal year 2001, 2002, 2003 grants, drawn down during
October 2001 through July 2003.

We conducted the audit from April 2003 through October
2003 in accordance with Generally Accepted Government
Auditing Standards. The audit generally covered the
Authority's operations from October 1, 2001, through
April 30, 2003. We limited our scope to begin with the
Authority's first full fiscal year since their transition from
the Memphis Troubled Agency Recovery Center to the
Office of Public Housing in April 2001




     Page 5                                       2004-FW-1004
Introduction




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2004-FW-1004     Page 6
                                                                                            Finding


         $4.1 Million Used for Questionable and
                   Ineligible Purposes
The Authority violated HUD program requirements by spending $4,052,302 in HUD funds for
ineligible and questionable purposes. The Authority management used $1,031,872 in HUD program
funds for unauthorized purposes and cannot support $3,020,430 in arbitrary payroll allocations and
other program costs. Specifically, the Authority: (1) used $267,814 in HUD funds for a nonprofit’s
housing project; (2) used $476,088 in Low Rent funds to pay ineligible salaries and benefits for the
Section 8 Programs; (3) used $110,920 in Low Rent funds to pay the common administrative costs
for the nonprofits and other HUD programs; (4) used $32,381 in Drug Elimination Grant funds for
questionable purposes; and (5) paid unauthorized or questionable salaries and benefits of $177,050
from the Drug Elimination Grant Program and cannot support the propriety of $2,988,049 in
arbitrary payroll allocations to all of the HUD programs. Authority managers told us they were not
familiar with the provisions of the Low Rent and Section 8 contracts, federal cost principles, and
other HUD program requirements for cost eligibility. Authority managers also told us they believed
all HUD program funds could be used for the purpose of providing any affordable housing for
people throughout the City. Therefore, they did not implement procedures to ensure that only
eligible costs were charged or allocated to HUD programs. As a result, the Authority diverted funds
from HUD programs and violated HUD Annual Contribution Contracts (ACC), grant agreements,
and other requirements.



                                      The Low Rent ACC between HUD and the Authority
 HUD requirements.                    incorporates by reference the regulations for Public and
                                      Indian Housing Authorities contained in Title 24 of the
                                      Code of Federal Regulations (CFR). Title 24, CFR, part
                                      85, establishes the uniform administrative rules for Federal
                                      Grants and cooperative agreements and sub-awards to
                                      State, local and Indian tribal governments. This part also
                                      establishes OMB Circular A-87 Cost Principles for State
                                      and Local Governments as the cost principles for housing
                                      authorities to follow when determining allowable costs to
                                      federal programs.

                                      Section 2 of the Low Rent Program ACC states that
                                      operating expenditures shall mean all costs incurred by the
                                      Authority for administration, maintenance, and other costs
                                      and charges that are necessary for the operation of the
                                      public housing projects other than Section 8.

                                      Section 9 (C) of the Low Rent Program ACC, regarding the
                                      General Fund states, Program funds are not fungible;
                                      withdrawals shall not be made for a specific program in

                                            Page 7                                    2004-FW-1004
Finding


               excess of funds available for that program. Section 10 (C),
               regarding pooling of funds states, “the Housing Authority
               shall not withdraw from any of the funds or accounts
               authorized under this section amounts for the projects
               under ACC, or for the other projects or enterprises, in
               excess of the amount then on deposit in respect thereto.”

               Sections 11 and 12 of the Section 8 Voucher ACC states
               that the Authority must use program receipts only to pay
               program expenditures in accordance with the HUD
               approved budget estimate and supporting data for the
               program. The Authority must also maintain an
               administrative fee reserve account and credit the account
               by the amount by which program administrative fees paid
               by HUD for a fiscal year exceed administrative expenses.
               Funds in the administrative fee reserve account can be used
               to pay administrative expenses in excess of program
               receipts or for other housing purposes.

               Part 2, Section 2.6 (b) of the Section 8 Housing Assistance
               Payment Program Contract for Hampton Port states that
               project funds must be used for the benefit of the project, to
               make mortgage payments, to pay operating expenses, and
               to make the required deposits to the replacement reserve
               account. Any surplus project funds that are withdrawn
               must have HUD approval and be only for project purposes.

               Article II (1 and 14) of the Public Housing Drug
               Elimination Grant Agreement, states that Grantees must
               follow applicable OMB Cost Principles, agency program
               regulations, and the terms of the grant agreements in
               determining cost reasonableness, eligibility, or proper cost
               allocations.

               Title 24, CFR 85.20 (b)(2, 3, 5) requires Grantee’s
               Financial Management Systems to include fiscal and
               accounting controls that permit the tracing of funds to
               adequately identify the source and application of the funds.
               Grantees must maintain effective control and accountability
               to adequately safeguard cash, real, and personal property to
               assure that assets are used solely for authorized purposes.
               Grantees must follow applicable OMB cost principles,
               agency program regulations, and the terms of grant
               agreements in determining the cost reasonableness, cost
               eligibility, and if necessary the proper cost allocation. In
               addition, accounting records must be supported with source

2004-FW-1004        Page 8
                                                       Finding


documentation, such as cancelled checks, paid bills,
payrolls, time and attendance records, contract award
documents, etc.

OMB Circular A-87, Attachment A, Part C, Basic
Guidelines, requires costs to be necessary, reasonable, and
adequately documented for proper and efficient
performance and administration of federal awards. Costs
must conform to any limitations or exclusions set forth in
these principles, federal laws, terms and conditions of the
federal award, or other governing regulations as to types or
amounts of cost items. The Circular also provides that
costs should be allocated or charged to a particular cost
objective or program according to the relative benefits
received. In addition, any cost identified or allocated to a
particular program may not be charged to other federal
programs: to overcome funding shortfalls; to avoid
restrictions imposed by law or terms of the federal awards;
or for other reasons.

OMB Circular A-87, Attachment A, Part E and F, define
direct costs and indirect costs. Direct costs are identified
with a particular final cost objective. Compensation for
employees is for the time devoted and specifically
identified with the performance of the award or federal
program. Indirect costs are costs incurred for common or
joint purposes that benefit more than one program and are
not readily assignable to a particular cost objective or
award. Indirect costs apply to costs incurred by grantee
departments supplying goods, services, and facilities to the
other departments. It may be necessary for an agency to
establish indirect cost pools or cost allocation plans to
facilitate equitable distribution of indirect costs to the cost
objectives and programs that benefit from common
administrative costs or services.

OMB Circular A-87, Attachment B, Section 11 (h),
Support of salaries and wages, sets the standards for payroll
documentation regarding time distribution. Specifically:

    •    Charges for salaries and wages of employees who
         work solely on a single federal award or cost
         objective must be supported, at least semi-annually,
         by signed periodic certifications.



        Page 9                                    2004-FW-1004
Finding


                   •     Salary and wage distribution for employees who
                         work on multiple activities, federal or non-federal
                         awards, direct or indirect cost activities or other
                         cost objectives, must be supported by personnel
                         activity reports or equivalent documentation as
                         approved by the cognizant federal agency.
                         Personnel activity reports must be signed, prepared
                         at least monthly, coincide with one or more pay
                         periods, and reflect an after-the-fact distribution of
                         the actual total activity for which the employee is
                         compensated; Budget estimates or other distribution
                         percentages determined before the services are
                         performed do not qualify as support for charges to
                         federal awards. The awarding federal agency must
                         approve any other substitute system for estimates or
                         percentages. In all cases, the government entity
                         must use monthly activity reports and perform
                         quarterly comparisons of actual costs to budgeted
                         distributions. Adjustments to the estimates must be
                         made if the difference is more than 10 percent. If
                         the difference is less than 10 percent the
                         adjustments can be recorded annually.

               OMB Circular A-87, Attachment B, Section 11 (d), Fringe
               benefits, states that the cost of fringe benefits in the form of
               employer contributions or expenses for social security;
               employee life, health, unemployment, and worker's
               compensation insurance, pension plan costs, and other similar
               benefits shall be allocated to federal awards in the same
               manner as employees’ salaries and wages.

               OMB Circular A-87, Attachment B, Section 18,
               entertainment, states that costs of entertainment, including
               amusement, diversion, and social activities and any costs
               directly associated with such costs (such as tickets to shows
               or sports events, meals, lodging, rentals, transportation, and
               gratuities) are unallowable.

               Section (IV)(E)(10) of the 1999 Drug Elimination Program
               Notice of Funding Availability in the Federal Register,
               dated May 12, 1999, lists indirect costs as ineligible
               program charges. Further, the “Public Housing Drug
               Elimination Program Monitoring and Reporting Guide for
               Field Office Staff and Grantees” provides rules and
               instructions for monitoring and administration of the Drug
               Elimination Grant Program. In part three of the guide,

2004-FW-1004           Page 10
                                                                                    Finding


                               HUD specifically states, that indirect costs cannot be
                               charged to the Drug Elimination Grant Program.

The Authority diverted         The Authority Management violated HUD contract
$267,814 in HUD funds to       requirements by diverting $267,814 in Public Housing and
develop a nonprofit’s          Section 8 Program funds to other purposes instead of
project.                       program operations. The Authority management used Low
                               Rent and Section 8 Program funds, intended for the
                               operation of the projects, to develop and build 30 homes for
                               the Thanksgiving Homes Project. The Thanksgiving
                               Homes Project is owned by the Thanksgiving Homes
                               Corporation which is an affiliated nonprofit of the
                               Authority.

                               In June 2002, the Authority advanced $25,000, from the
                               Section 8 Voucher Program, to the Corpus Christi Finance
                               Corporation, another affiliated nonprofit that is financing
                               the project, to purchase the land. The Section 8 Voucher
                               Program had no reserves at the time, or at any time since
                               September 30, 2000, so the funds actually came from
                               advances HUD made to the Authority for the Section 8
                               Voucher Program.

                               In April 2003, the Authority advanced an additional
                               $100,000 in Hampton Port Section 8 funds, to the Corpus
                               Christi Finance Corporation, to pay the architectural
                               services for the project. During that same month, the
                               Authority used $142,814 of Low Rent funds to purchase
                               building materials to build the houses.

                               In May 2003, the Corpus Christi Finance Corporation
                               deeded the land to the Thanksgiving Homes Corporation
                               for the Thanksgiving Homes Project. We noted the
                               Authority did not have to finance the Thanksgiving Homes
                               Project with Low Rent or Section 8 funds, because the
                               Corpus Christi Finance Corporation had over $1,000,000 in
                               cash and investments it could have used for the
                               Thanksgiving Homes Project.




                               As of April 30, 2003, the Authority’s Section 8 Programs
   The Authority used Low      owed its Low Rent Program $476,088. The Authority used
   Rent funds to pay Section   Low Rent funds to pay for Section 8 Program salaries and
   8 Program costs.            benefits for staff that work on the Section 8 Voucher

                                    Page 11                                   2004-FW-1004
Finding


                          Program and the Hampton Port Section 8 Project. The
                          Authority officials told us they use the Low Rent General
                          Fund to pay payroll costs for all the programs. At a later
                          date, when money is available, the programs reimburse the
                          Low Rent General Fund for past payroll costs incurred.

                          On April 30, 2003, the Authority’s Section 8 Voucher
                          Program owed $309,699 to the Low Rent Program for
                          funds used to pay the salaries and benefits of the Section 8
                          Voucher Program. The Hampton Port Section 8 Project
                          owed $166,389 to the Low Rent Program for funds used to
                          pay the salaries and benefits for employees that work on
                          the Hampton Port Section 8 Project.

                          The Section 8 Voucher Program, on September 30, 2002,
                          owed the Low Rent Program $977,752. During the next 3
                          months, the Section 8 Program was only able to reimburse
                          $990,000 to the Low Rent Program for part of the payroll
                          costs that had accumulated through December 2002.
                          However, the Low Rent General Fund has continued to pay
                          monthly Section 8 Voucher Program payroll costs ranging
                          form $37,345 to $65,495.

                          Until July 2003, the Authority charged all common
 The Authority used Low   administrative costs to the Low Rent Program. Authority
 Rent funds to pay        officials did not properly allocate common administrative
 common costs for the     costs because they had not developed an acceptable cost
 Section 8 Programs and   allocation. The Independent Public Auditors have had
 the nonprofits.          repeat findings on the Authority’s allocation of costs from
                          fiscal year 1999 through 2002. The auditors either could
                          not test the rationale of the cost allocation schedules or
                          reported that costs were not being allocated to the
                          nonprofits or the Section 8 Programs.

                          In May and July 2003, the Finance Director prepared cost
                          allocation plans for the Section 8 Voucher Program and for
                          the nonprofits. The costs allocation plans, for monthly
                          expenses, are generally based on estimates and include
                          estimates for common administrative costs such as postage,
                          communications, computer, copier, printing, utilities, pest
                          control, protective services, janitorial services, and general
                          liability and auto insurance. A cost allocation plan for the
                          Hampton Port Section 8 Project was not prepared. The
                          Finance Director stated that the administrative management
                          fee the Authority receives covers all common costs
                          incurred for any supervisory or administrative salaries, and

2004-FW-1004                   Page 12
                                                    Finding


other costs. HUD approved the fee when approving the
management certification on August 16, 2002. She also
stated that the monthly management fee is a good estimate
of common administrative costs incurred for the operation
of the Hampton Port Section 8 Project, such as those
allocated to the Section 8 Voucher Program. However,
HUD will need to review and approve the rationale behind
the allocation plans.

Although the Authority based the allocation on estimates, it
has reimbursed the Low Rent Program for some of the
costs. The Authority allocated 8 months of common costs
to the Corpus Christi Finance Corporation because it was
not very active until October 2002. They allocated 6
months of common costs to the Thanksgiving Homes
Corporation because it was not created until December
2002. After we brought the issue to the Authority’s
attention, the Corpus Christi Finance Corporation
reimbursed the Low Rent Program for common costs from
October 2002 through July 2003. However, the
Thanksgiving Homes Corporation has not reimbursed the
Low Rent Program for any common costs allocated or
recorded from December 2002 through July 2003.
According to the Finance Director, the Thanksgiving
Homes Corporation will reimburse the Low Rent Program
after all the homes are built and sold and the construction
loan is paid back. She said the Low Rent Program would
continue to incur the common costs associated with the
Thanksgiving Homes Project until the last house has been
sold. We do not believe the Low Rent Program should be
used to finance the nonprofits.

The Low Rent Program has been paying the monthly
common costs for the Hampton Port Section 8 Project
without getting reimbursed since 1991. For the 11 years
between August 1991 and July 2002, the Authority did not
collect a management fee from the Hampton Port Section 8
Project to cover any administrative costs associated with
the management of the project.

Based on the Authority’s estimates, during the 20 months
between October 2001 and May 2003, the Low Rent
Program has incurred $110,920 in common costs for the
administration of the Section 8 Programs and for nonprofit
projects. The table below shows the Authority’s estimated
common monthly cost allocation, the amount that should be

     Page 13                                   2004-FW-1004
Finding


                                      collected for the audit period if HUD accepts the method of
                                      allocation, the amount that has been reimbursed or
                                      recorded, and the remaining allocations due as of April 30,
                                      2003.

                                          Monthly         Months Allocations              Reimbursed Remaining
                                          Common          In Audit In Audit               Or         Allocations
                 Programs                 Costs           Period        Period            Recorded       For Period
     Section 8 Voucher                        $2,100               20        $ 42,000          $16,920       $25,080
     Hampton Port Section 8                       2,970            20            59,400         28,167        31,233
     Corpus Christi Finance Corporation            680             8              5,440          5,440                0
     Thanksgiving Homes Corporation                680             6              4,080          4,080                0
     Total Common Costs                                                     $110,920           $54,607       $56,313


                                      HUD will need to review the cost allocation plans to decide
                                      whether they provide an acceptable basis for charging
                                      common costs to the various HUD programs, and ensure
                                      the Low Rent Program is credited and repaid for the costs
                                      paid from Low Rent.

                                      The Authority management cannot support the propriety of
 The Authority cannot                 $32,381 it charged to the Drug Elimination Grants. The
 support $32,381 it                   Authority's Drug Elimination Grant Program files were
 charged to the Drug                  missing accounting records to support the charges, missing
 Elimination Grants.                  documents to show that the costs were for eligible
                                      activities, or missing both accounting and eligibility
                                      documentation. For example, the Authority had
                                      expenditures for holiday activities for Easter,
                                      Thanksgiving, Christmas, Halloween, Valentine’s Day, and
                                      St. Patrick’s Day. The Authority also gave funds directly
                                      to the Resident Associations for the Thanksgiving and
                                      Christmas activities. We asked the Authority to provide
                                      justification for the unsupported costs; however, the
                                      Authority did not provide adequate support for the
                                      eligibility of these costs. For many of the charges,
                                      including the Christmas and Thanksgiving activities, the
                                      justification given by the Authority was that the activity
                                      was included in the HUD approved Drug Elimination Grant
                                      Budget and Plan. However, although HUD approves
                                      budgets, the grant agreement still requires the Authority to
                                      abide by all applicable laws and OMB Circulars. The
                                      Authority could not show how holiday activities met the
                                      eligibility requirements and did not provide any invoices,

2004-FW-1004                                 Page 14
                                                                              Finding


                           receipts, or other documentation to show how the Resident
                           Association used the money. Without any supporting
                           documentation, these charges appear to be for
                           entertainment costs related to holiday celebrations. These
                           costs will remain unsupported until the Authority can
                           provide documentation that shows:

                              1. What eligible activity was undertaken, i.e., youth
                                 sports, drug or crime prevention activities, etc.
                              2. When the activity was undertaken.
                              3. Where the activity was undertaken.
                              4. Who attended, who was assisted, or who benefited
                                 from the activity.

                           Without the proper documentation, the Authority can
                           provide no assurance these funds were used for their
                           intended purposes. The table below shows a summary of
                           expenditures missing invoices, expenditures missing
                           documentation to show how the expenditure should be
                           considered necessary and reasonable for program
                           accomplishment, and expenditures that were missing both
                           invoices and proper documentation. We have provided
                           HUD and the Authority the detailed listing of the
                           unsupported expenditures.


                                 DEP   Missing    Missing Missing
                                Grant Invoices & Eligibility Both
                                 Year Receipts Documents            Totals
                                  2000     $1,756    $11,005 $5,530 $18,291
                                  2001      7,563      4,269  2,258 14,090
                                Totals     $9,319    $15,274 $7,788 $32,381




                           The Authority cannot support the eligibility of $2,988,049
The Authority cannot       of salaries and benefits costs it charged to HUD programs.
support $2.9 million in    In addition, the Authority paid an estimated $177,050 for
salary and benefit costs   indirect salaries and benefits charged to the Drug
for the period.            Elimination Program for salaries of non-project employees
                           and unallocated salaries associated with nonprofit
                                Page 15                                  2004-FW-1004
Finding


               activities. The Authority used arbitrary allocation
               percentages to allocate the salaries and benefits for 45
               employees who worked on multiple programs instead of
               keeping detailed time activity reports that show the actual
               time spent on each program.

               The Authority used a computerized system to record and
               allocate salary and benefit expenses of about $6,141,259
               for 202 employees during the review period from October
               1, 2001, through April 30, 2003. We used computerized
               payroll records to compare the gross wages paid by
               employee assignments, job descriptions, and assigned
               activities. We also conducted interviews with employees to
               evaluate and determine if the salaries were supported.

               The Finance Director and staff described the Authority's
               computerized payroll system and provided electronic
               payroll data. The payroll system generates employee
               paychecks drawing funds from a Low Rent clearing
               account. The system keeps track of how much each
               program owes the Low Rent account and Finance
               personnel periodically reimburse the Low Rent account as
               Program funds become available. The system allocates
               individual payroll costs to Program accounts using an
               allocation code. The Executive Director and Finance
               Director, using their “best estimate” of time spent on
               programs by employees, assigned the allocation codes and
               percentages for each position or employee. Adjustments to
               the allocation percentages and codes are made when there
               are changes in staff or employee responsibilities. The
               Authority did not provide supporting data to support their
               estimates for the allocation codes. The following table
               shows the unsupported payroll and ineligible payroll costs
               paid by programs during the review period.




2004-FW-1004        Page 16
                                                                                        Finding

                                                                 Thanks Giving
                                                                    Homes
                            Unsupported Indirect Non-Project Development Ineligible
    Program/Activity          Payroll    Salary Costs Employees     Team         Payroll
                                A             B          C            D         B, C, &D
Low Rent                      $2,190,306                                $11,958    $11,958
Section 8 Voucher Program        501,375                                  7,319      7,319
Hampton Port                      55,019                  $5,088            251      5,339
Capital Fund 1999-2001           186,278                                  8,014      8,014
ROSS 2002-2003                     3,402
DEP 1999-2001                     51,669     $141,703                     2,717    144,420
Totals                        $2,988,049     $141,703         $5,088         $30,259    $177,050


                                  The Authority’s payroll and accounting records were
                                  incomplete. The records show how the Authority allocated
                                  gross wages by employee and program; however, they did
                                  not provide this level of detail for all the employer-paid
                                  benefits and taxes by employee. The Authority was only
                                  able to provide, by employee, the allocation for employer-
                                  paid premiums for the Humana Health and Life Insurance
                                  for the period from October 1, 2001, through April 30,
                                  2003. The employer-paid benefits and taxes included:
                                  FICA, Short-Term Disability Insurance, Retirement
                                  Benefits, Health and Dental Insurance, Life Insurance,
                                  Worker’s Compensation Insurance, and State
                                  Unemployment Insurance.

                                  The Authority arbitrarily allocated $2,988,049 in salaries
                                  and employer-paid benefits and taxes. We identified
                                  $1,667,917 in unsupported salaries for 45 employees who
                                  worked on multiple programs. In addition, $1,320,132 in
                                  employer-paid benefits and taxes, including Humana
                                  Health benefits, is unsupported because they could only be
                                  identified by program.

                                  The $177,050 in ineligible salaries and benefits charged to
                                  the programs was specifically used for the following
                                  ineligible activities: (a) $141,703 ineligible indirect salary
                                  costs was charged to the Drug Elimination Programs; (b)
                                  $5,088 in salaries were charged to the Hampton Port
                                  Section 8 Project for non-project employees; and (c)
                                  $30,259 in salaries for authority staff that worked on a
                                  nonprofit’s housing project.


                                       Page 17                                     2004-FW-1004
Finding



                             The Authority allocated $141,703 in salaries and benefits
 The Authority charged the   for 25 employees from the executive, finance, purchasing,
 Drug Elimination            warehouse, personnel, information technology, and other
 Programs $141,703 for       support departments to the Drug Elimination Program
 unallowable indirect        using arbitrary or predetermined payroll allocations. The
 salary costs.               Authority cannot show the costs related to authorized direct
                             time spent on the program. Therefore the $141,703 is
                             unallowable because the Drug Elimination Grant does not
                             allow indirect costs to be charged to the program.

                             The Authority also allocated $5,088 salaries and benefits to
 The Authority charged
                             the Hampton Port Section 8 Project for eight employees
 $5,088 in salaries to the
                             that were not assigned to the project. The employees are
 Hampton Port Project for
                             from various departments and are not involved in the day-
 employees not assigned to
                             to-day operations of the project. Thus, the Authority
 the project.
                             cannot show that the payroll allocations to the Hampton
                             Port Section 8 Project were for project expenses. In
                             addition, the Hampton Port Section 8 Project already pays
                             the Authority a monthly administrative fee to cover the
                             salaries and benefits of department staff and other
                             administrative costs needed to administer their program.
                             The salary and benefit allocations of $5,088 are not project
                             costs and should not have been charged to the project.

 The Authority did not       The Authority did not allocate an estimated $30,259 in
 allocate development        salaries, for 16 employees, from various departments that
 team salaries to the        worked on the Thanksgiving Homes Project. These
 Thanksgiving Homes          employees are development team members of the
 Project.                    Authority's affiliated nonprofit, The Thanksgiving Homes
                             Corporation. The team members did not keep detailed time
                             records showing how much time they spent on the
                             nonprofit’s project. We requested each team member to
                             provide their “best estimate” of time spent doing
                             development activities for the nonprofit. We then
                             estimated salary expenses by multiplying each team
                             member's estimate of time spent on development activities
                             by their salary rate. Then we allocated estimated salary
                             costs among program accounts using the Authority's
                             payroll allocation ratios. Based on this estimate, we
                             calculated the Authority used HUD program funds of about
                             $30,259 to pay salary expenses for individuals working on
                             Thanksgiving Homes’ development activities. Because of
                             incomplete payroll records, we were not able to estimate
                             the benefits and taxes that should have been allocated for
                             the 16 employees.

2004-FW-1004                      Page 18
                                                                                             Finding



                                     Authority management stated they were not familiar with
Authority managers are               the HUD requirements and cost principles that restrict the
not familiar with HUD                use of funds in the Low Rent, Section 8, and Drug
requirements.                        Elimination Programs; and require that salaries, benefits
                                     and common costs be properly allocated and supported.
                                     Authority managers told us they believed all HUD program
                                     funds could be used for the purpose of providing any
                                     affordable housing for people throughout the city. They
                                     also did not see a problem with using HUD funds for
                                     nonprofit development activities.

                                     During the audit, Authority managers generally agreed with
                                     our findings and conclusions. The Authority officials
                                     indicated they reimbursed $488,810 to the HUD programs or
                                     recorded liabilities for unauthorized costs identified during
                                     the audit. See Table below.

                                                          Totals       Reimbursed      Remaining
                     Finding - Condition                Questioned         or          Questioned
                                                           Costs        Recorded         Costs
        Thanksgiving Homes Project Cash Outlays            $ 267,814       $267,814      $          0
        Section 8 Program Salaries and Benefits              476,088        166,389          309,699
        Common Administrative Costs                          110,920         54,607           56,313
        Unsupported Drug Elimination Costs                    32,381               0          32,381
        Ineligible Salaries and Benefits                     177,050               0         177,050
        Unsupported Salaries and Benefits                  2,988,049               0      2,988,049
        Total Questioned Costs                            $4,052,302       $488,810      $3,563,492

                                     The Authority indicated they specifically:
                                        1. Reimbursed the HUD programs for $267,814 for the
                                           ineligible costs used to develop the Thanksgiving
                                           Homes Project;
                                        2. Reimbursed the Low Rent Program $166,389 for
                                           the salaries and benefits paid on behalf of the
                                           Hampton Port Section 8 Project;
                                        3. Developed and implemented common cost
                                           allocation plans for the Section 8 Voucher Program
                                           and the nonprofits;
                                        4. Reimbursed, or recorded an Interfund Payable, for
                                           at least $54,607 to the Low Rent Program for
                                           common cost paid on behalf of the Section 8
                                           Programs and the nonprofit corporations;


                                           Page 19                                     2004-FW-1004
Finding


                          5. Began to implement new payroll procedures to
                             support future payroll allocations for employees
                             that work on multiple programs; and
                          6. Required Thanksgiving Homes Development Team
                             members maintain detailed time sheets and record
                             the amount of time spent on each program activity,
                             including any nonprofit activities.



                    Authority officials indicated they are committed to
Auditee Comments    partnering with HUD and specifically stated: "In the spirit
                    of cooperation and compliance the CCHA has already
                    taken steps to resolve all audit recommendations, as is
                    detailed in the attached Response to Audit
                    Recommendations." They said a common cost allocation
                    policy has been developed and approved by the Executive
                    Director. The Authority has paid back some money
                    identified by the finding and has initiated payback plans for
                    some other money to be repaid. They also said they are in
                    the process of reviewing certain expenditures in an effort to
                    provide adequate support to HUD. Regarding the amounts
                    Thanksgiving Homes owes to HUD programs, the
                    Authority officials said they would repay the HUD
                    programs with a bank loan.



OIG Evaluation of   The Corpus Christi Housing Authority appears to be
Auditee Comments    responsive to our report and recommendations.




Recommendations     We recommend HUD:

                    1A.      Require the Authority to implement procedures,
                             including acceptable cost allocation plans, to ensure
                             they only charge eligible and supported costs to the
                             HUD programs.

                    1B.      Ensure the Authority properly pays back the HUD
                             programs from nonfederal funds the $267,814 for
                             cash outlays associated with the nonprofit’s
                             Thanksgiving Homes Project.


2004-FW-1004               Page 20
                                                       Finding


1C.     Ensure the Authority pays back the Low Rent
        Program $476,088 ($166,389 from Hampton Port
        and $309,699 from the Section 8 Voucher Program)
        for salaries and other costs paid for the Section 8
        Programs.

1D.     Require the Authority to repay the Low Rent
        Program for any additional costs that have
        accumulated in all the Section 8 and nonprofit
        Interfund Payable accounts subsequent to May 31,
        2003.

1E.     Require the Authority to cease using the Low Rent
        program to cover the salaries, benefits, common
        costs, and other costs for other programs.

1F.     Ensure the Authority’s Cost Allocation Plans for the
        Section 8 Voucher Program and the nonprofits are
        acceptable and if appropriate require the Authority to
        pay back the $110,920 to the Low Rent Program for
        common costs paid for the Section 8 Programs and
        the nonprofits and any additional common cost
        allocations subsequent to May 2003.

1G.     Require the Authority to adequately support or
        reimburse the Drug Elimination Programs any of the
        $32,381in program costs they cannot support.

1H.     Ensure the Authority develops and implements a
        formal timekeeping policy that complies with HUD
        regulations and cost principles to support employee
        salaries and benefits costs allocated to the
        programs.

1I.     Ensure the Authority pays back the HUD programs,
        $177,050 paid for ineligible salary costs and any other
        undetermined benefits and taxes paid by HUD
        programs.

1J.     Require the Authority to provide support for the
        $2,988,049 in unsupported salaries and employer-
        paid benefits and taxes or repay any amounts that
        remain unsupported.

1K.     If the Authority refuses to take adequate corrective
        action, consider taking action to declare a

      Page 21                                    2004-FW-1004
Finding


                 substantial breach or default of the Annual
                 Contribution Contracts.




2004-FW-1004   Page 22
Management Controls
Management controls include the plan of organization, methods and procedures adopted by
management to ensure that its goals are met. Management controls include the processes for
planning, organizing, directing, and controlling program operations. They include the systems for
measuring, reporting, and monitoring program performance.



                                      We determined the following management controls were
 Relevant Management
                                      relevant to our audit objectives:
 Controls
                                          •   Management's adherence to federal contract
                                              provisions and regulations;
                                          •   Management's assurance that expenditures are
                                              eligible;
                                          •   Management's assurance that expenditures are
                                              adequately supported and properly recorded; and
                                          •   Management's adherence to procurement policies
                                              and procedures.

                                      We assessed the relevant controls identified above.

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

                                      Based on our review, we believe the Authority lacks
 Significant Weaknesses               controls to ensure:

                                          •   Adherence to federal contract provisions and
                                              regulations;
                                          •   Expenditures are eligible; and
                                          •   Expenditures are adequately supported and properly
                                              recorded.

                                      These weaknesses are more fully described in the finding
                                      section of this report.




                                          Page 23                                     2004-FW-1004
Management Controls




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2004-FW-1004           Page 24
Issues Needing Further Consideration
The Authority may not be properly accounting for program assets or equitably allocating related
employee health, life, and dental benefits costs to the programs. It appears, the Authority is not
keeping track of contributions and program balances in its self-funded health benefits plan.
Federal cost principles require that costs be allocated to the extent of benefits received and not
be charged to other programs to overcome fund deficiencies. In addition, employee benefit costs
must be allocated in a manner consistent with employee wage allocations and based on
documented payroll records. The detail must be adequate to support allocations for employees
working on more than one federal award.

The Authority began a self-funded insurance program on July 1, 2002, called the Employee
Benefit Plan Trust. This insurance program provides health benefits for Authority employees.
The Authority is the Plan Administrator and has control of the Trust Account. The Authority has
an administrative services agreement contract with Entrust, Inc., for a fee. The program
generally works like this:

     1. The Authority uses program funds to pay the employer's portion of the health and
        dental premiums and its share of the fees. The employees’ premiums also include their
        share of Entrust Inc. fees.
     2. The Authority deposits the employer and employee premium contributions into the
        Low Rent General Fund;
     3. Authority managers write a Low Rent check to transfer employer and employee
        contributions to the Employee Benefit Plan Trust; and
     4. Entrust Inc. processes and pays health and dental claims using the trust funds; and
        provides monthly reports detailing plan activity and recommended plan funding.

The Authority's current system for employee health and dental benefits does not appear to meet
federal cost principles. The Authority does not track contribution balances in the Employee
Benefit Plan Trust account by program or match claim payments with program contributions.
For example if an employee from the Drug Elimination Program has a claim, the Authority
would not be able to show that only Drug Elimination Fund contributions would be used from
the trust to pay the claim. The Authority could not track employee claims from the Section 8
Voucher Program that were in excess of that program’s contributions in the trust. In the latter
example, other program funds would be used to overcome the fund deficiency. Authority
managers said the trust balance was about $148,884 as of September 30, 2003. They do not
know what programs contributed, or make up this balance because they are not maintaining
records to support their allocation of employer benefits and payroll costs (see Finding on
unsupported payroll costs).




                                          Page 25                                    2004-FW-1004
Issues Needing Further Consideration




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2004-FW-1004                            Page 26
                                                                                                        Appendix A

Schedule of Questioned Costs
Recommendation                                     Type of Questioned Cost
   Number                                     Ineligible 1         Unsupported 2


         1B                                   $ 267,814
         1C                                     476,088
         1F                                     110,920
         1G                                                               $ 32,381
         1I                                      177,050
         1J                                                                2,988,049

         TOTALS                               $1,031,872                  $3,020,430




1
    Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity that the auditor
    believes are not allowable by law contract or Federal, State or local policies or regulations.
2
    Unsupported costs are costs charged to a HUD-financed or HUD-insured program or activity and eligibility
    cannot be determined at the time of audit. The costs are not supported by adequate documentation or there is a
    need for a legal or administrative determination on the eligibility of the costs. Unsupported costs require a future
    decision by HUD program officials. This decision, in addition to obtaining supporting documentation, might
    involve a legal interpretation or clarification of Departmental policies and procedures.




                                                   Page 27                                              2004-FW-1004
Appendix A




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2004-FW-1004    Page 28
                             Appendix B

Auditee Comments




                   Page 29   2004-FW-1004
Appendix B




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          Appendix B




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Appendix B




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          Appendix B




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Appendix B




2004-FW-1004   Page 34
          Appendix B




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Appendix B




2004-FW-1004   Page 36
          Appendix B




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Appendix B




2004-FW-1004   Page 38