AUDIT REPORT
The Housing Authority of the City of Newark
Controls Over Bond Financing Activities, Obtaining Supporting
Documentation, and Legal Settlements Require Improvement
Newark, New Jersey
2006-NY-1003
February 14, 2006
OFFICE OF AUDIT
New York/New Jersey Region
Issue Date
February 14, 2006
Audit Report Number
2006-NY-1003
TO: Edward T. De Paula, Director, Office of Public Housing, 2FPH
FROM: Edgar Moore, Regional Inspector General for Audit, 2AGA
SUBJECT: The Housing Authority of the City of Newark, Newark, New Jersey, Controls
Over Bond Financing Activities, Obtaining Supporting Documentation, and
Legal Settlements Require Improvement
HIGHLIGHTS
What We Audited and Why
Pursuant to a request from the former U.S. Department of Housing and Urban
Development (HUD) New York/New Jersey regional director, we performed a
second audit of the Housing Authority of the City of Newark (Authority) to cover
areas of concern, identified in our first audit as being high risk. The objectives of
this audit were to determine whether the Authority’s (1) Housing Finance
Corporation conducted its operations in accordance with HUD regulations, (2)
payments made to the City of Newark in addition to the payments in lieu of taxes
for municipal services were allowable, (3) costs for legal settlements were
properly authorized, and (4) self-insurance program is cost effective.
What We Found
In our opinion, the Authority did not conduct its bond financing activities in
accordance with HUD requirements. It did not ensure that its Housing Finance
Corporation (1) placed all excess funds for specific projects into the debt service
reserves, (2) remitted amounts to HUD when required, (3) properly certified and
reported its McKinney Act activities to HUD, and (4) disbursed all McKinney Act
funds in a timely manner and/or made disbursements only for eligible items. As a
result, more than $1.8 million was either not placed into project’s(s’) debt service
reserves or remitted to HUD as required. In addition, more than $1.9 million in
McKinney Act funds were not spent in a timely manner for proper purposes.
Contrary to the requirements of its annual contribution contract, cooperation
agreement, and federal regulations, the Authority did not maintain adequate
documentation to support various payments made to the City of Newark. It could
not substantiate that the services the Authority paid for were in addition to those
services that the City was obligated to provide under the cooperation agreements
the Authority has with the City, or that the payments made were reasonable. As a
result, Authority officials cannot substantiate that the $6.9 million paid to the City
of Newark was necessary.
Contrary to HUD requirements, the Authority settled general liability claims
without obtaining prior written HUD approval. As a result, HUD could not be
assured that more than $1.2 million in legal settlements paid under the self-
insurance program were processed in a cost-effective manner.
What We Recommend
We recommend that HUD obtain a legal opinion as to whether the citations of 24
CFR [Code of Federal Regulations] 811.105 and 811.108 are applicable to the
projects in question and as to the disposition of $3.7 million in funds being
retained by the Authority and its Housing Finance Corporation. If it is determined
that the cited regulations are applicable then the Authority should deposit $1.5
million into the debt service reserves of the applicable projects and HUD should
determine whether $320,859 should be recaptured and the proper disposition of
the $1.9 million in McKinney Act savings/funds being held by the Authority and
its Housing Finance Corporation. The Authority should establish controls to
ensure that McKinney Act Savings/funds are disbursed and reported in
accordance with applicable requirements, and the Authority should also provide
documentation or reimbursement for the $67,524 in questioned disbursements
made by the Housing Finance Corporation. We further recommend that HUD
review the documentation provided to determine if the evidence supports that city
services were provided that exceeded the services that were to be provided in
accordance with the cooperation agreement and seek reimbursement for any
amounts not supported. In addition, we recommend that procedures be
established to ensure that a) service agreements with the city are properly
executed and monitored, services are provided, and costs are reasonable, b) prior
HUD approval is obtained for general liability settlements, and c) contract
services are provided as required.
For each recommendation without a management decision, please respond and
provide status reports in accordance with HUD Handbook 2000.06, REV-3.
Please furnish us copies of any correspondence or directives issued because of the
audit.
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Auditee’s Response
Officials of the Authority generally disagreed with our findings. They stated that
the regulations cited (24 CFR [Code of Federal Regulations] 811.105 and
811.108) are not applicable to the projects in question and that there is no
provision in the old regulations that require unspent McKinney Act savings/funds
to be returned to HUD. As a result, we added a recommendation for HUD to
obtain a legal determination to identify the regulations that are applicable, and to
determine the proper disposition of the funds being retained by the Housing
Finance Corporation. Authority officials believe that they provided enough
evidence to substantiate the issues in finding two, and they agreed with finding
three and have begun making corrective actions by developing procedures to
request HUD approval before settling general liability claims.
We discussed the results of our review with Authority officials during the audit
and at an audit exit conference held on January 5, 2006. Authority officials
provided their written comments on January 10, 2006. The complete text of the
Authority’s response, along with our evaluation of that response, can be found in
appendix B of this report. The Authority’s response included a number of
exhibits and documents that were too voluminous to be included in our final
report, but were provided to your office.
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TABLE OF CONTENTS
Background and Objectives 5
Results of Audit
Finding 1: In Our Opinion, the Authority Did Not Conduct Its Bond Financing 6
Activities in Accordance with HUD Regulations and Requirements
Finding 2: The Authority Did Not Maintain Adequate Documentation to Support 12
Payments to the City of Newark
Finding 3: The Authority Settled General Liability Claims without Obtaining 16
HUD’s Written Approval
Scope and Methodology 19
Internal Controls 20
Followup on Prior Audits 22
Appendixes
A. Schedule of Questioned Costs and Funds to Be Put to Better Use 23
B. Auditee Comments and OIG’s Evaluation 24
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BACKGROUND AND OBJECTIVES
The Housing Authority of the City of Newark (Authority) was established in 1938 after the
passage of the Federal Housing Act of 1937 to build and manage public housing developments
for residents of the City of Newark, New Jersey. The Authority owns approximately 7,800 low-
income housing units, assists an additional 6,383 families through the Section 8 program, and
operates various urban renewal programs. In addition, the Authority’s board of commissioners
established the Housing Finance Corporation to sponsor the issuance of tax-exempt bonds to
finance the construction of Section 8 housing. The Authority reported total operating revenue of
more than $150 million for the period ending March 31, 2005.
The Authority’s board of commissioners is comprised of seven members, who serve five-year
terms; one member is appointed by the mayor, five members are appointed by the mayor with
city council approval, and one member is appointed by the New Jersey Department of
Community Affairs as delegated by the governor. The executive director of the Authority is Mr.
Harold Lucas.
The former U.S. Department of Housing and Urban Development (HUD) regional director had
requested a full operational audit of the Authority as a result of media allegations of questionable
business practices. We performed an audit and issued an audit report on May 26, 2005. This is
our second audit of the Authority, which is being performed to address the issues that were
identified in the initial audit as high risk but not reported on. Our objectives for this audit were
to determine whether the Authority’s (1) Housing Finance Corporation conducted its operations
in accordance with HUD regulations, (2) payments made to the City of Newark in addition to the
payments in lieu of taxes for municipal services were allowable, (3) costs for legal settlements
were properly authorized, and (4) self-insurance program is cost effective.
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RESULTS OF AUDIT
Finding 1: In Our Opinion, the Authority Did Not Conduct Its Bond
Financing Activities in Accordance with HUD Regulations
and Requirements
The Authority did not ensure that its Housing Finance Corporation (1) placed all excess funds for
specific projects into the debt service reserves, (2) remitted amounts to HUD when required, (3)
properly certified and reported its McKinney Act activities to HUD, and (4) disbursed all
McKinney Act funds in a timely manner and/or made disbursements only for eligible items. As
a result, more than $1.8 million was either not placed into the project’s (s’) debt service reserves
or remitted to HUD as required. In addition, more than $1.9 million in McKinney Act funds
were not spent in a timely manner or properly used to provide decent, safe, and sanitary housing
to very low-income persons. These problems occurred because the Authority did not have
controls in place to ensure that all bond-financing activities were conducted in accordance with
applicable regulations. Further, Authority officials believe that the regulations were not
applicable to the projects in question since the effective date of the regulations was after the bond
issue dates, and that the regulations allowed them ten years to disburse McKinney Act Savings.
Consequently, to ensure that the Authority complies with the regulations, we recommend that
HUD obtain a legal determination as to the proper disposition of funds being retained by the
Housing Finance Corporation.
Criteria
Federal regulations at 24 CFR [Code of Federal Regulations] 811.105(a)(2)(iii)(b)
provides that the applicant shall receive no compensation in connection with the
financing of a project except for its expenses. Should the applicant receive any
compensation in excess of such expenses, the excess is to be placed in the debt
service reserve. In addition, 24 CFR [Code of Federal Regulations] 811.108, which
relates to debt service reserves, provides that the debt service reserve and its
investment income shall be available only for the purpose of paying principal or
interest on the obligations. Upon full payment of the principal and interest on the
obligations (including that portion of the obligations attributable to the funding of the
debt service reserve), any funds remaining in the debt service reserve shall be
remitted to HUD.
Funds Were Not Placed into the
Debt Service Reserve
During the period April 1, 1978, to March 31, 2005, the Authority’s Housing Finance
Corporation earned management service and interest income from various activities.
The source of most of the management service income was not identified. The
Authority’s staff believed that the income was the result of financing services the
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Housing Finance Corporation provided to Section 8 projects. They stated that the
financing services may have included bond floating, short-term financing, or conduit
bond financing. The Housing Finance Corporation generated interest income by
investing the management service income in various short-term financing
instruments; nevertheless, net income from management services plus applicable
interest income amounted to $1,865,103 as of March 31, 2005. Although the Code of
Federal Regulations provides that the Housing Finance Corporation may not receive
any compensation in connection with the financing of a project except for its
expenses and that the excess compensation should have been placed in the debt
service reserves of the individual projects, these funds were not placed into specific
projects’ debt service reserves. As a result, debt service reserves for specific projects
were under funded, and these projects were deprived of the use of funds that could
have been used for the payment of principal and interest on the projects’ obligations.
Funds Were Not Remitted to
HUD as Required
Part of the above management service income and interest, which was not placed into
debt service reserves, is applicable to financing activities for four of the Authority’s
projects that had their 1980 bonds redeemed in 2002. One of the projects whose
bonds were redeemed, Livingston Homes, has $59,450 of the $1,865,103. If these
funds had been properly deposited in the debt service reserve for Livingston Homes,
they would have been remitted to HUD as required by federal regulations when the
bond issue that financed the project was redeemed or paid off in 2002; consequently,
HUD was deprived of the use of $59,450.
In addition, $261,409 of the $1,865,103 pertains to three projects (Fairview, Saint
Mary’s Villa, and Broadway Manor) that had their bond issues refinanced under the
McKinney Act. After the refinancing, HUD generated refunding agreements for
these projects, which may be inaccurate since the $261,409 was not available or
deposited into the individual projects’ debt service reserves. Therefore, HUD may
have inaccurately determined the amount needed to pay off the outstanding bonds and
fund the debt service reserves before approving the refunding agreements.
Accordingly, HUD needs to review the debt service reserves and refunding
agreements for these three projects and determine whether any funds should be
recaptured.
To properly account for the above management service interest and income, HUD
needs to review and make a determination on how to handle the $261,409, while the
Authority needs to remit the $59, 450 to HUD and ensure that the remaining
$1,544,244 is deposited into the project’s (s’) debt service reserve, which would
represent funds being put to better use .
7
McKinney Activities Were Not
Certified in a Timely Manner
and Reported to HUD
The Stewart B. McKinney Act was designed to provide funding for housing related to
the homeless and very low-income persons. McKinney Act savings are defined as
savings resulting from the reduction in Section 8 contract rents related to project
bonds that have been refinanced. Regarding the Authority and its Housing Finance
Corporation, HUD approved refinancing of four bond issues under the provisions of
the McKinney Act between 1993 and 1995. HUD determined the amount of savings
on the Section 8 contract rents that resulted from the refinancing and approved
refunding agreements, which provided for semiannual payments to the Housing
Finance Corporation for 50 percent of the Section 8 savings resulting from the
refinancing.
The refunding agreements provide that the Housing Finance Corporation must submit
a written requisition to the trustee and HUD stating that the refunding payments
(together with any interest earned) have been expended or are expected to be
expended within the next six months. Further, the Housing Finance Corporation must
provide annual certifications to HUD that the refunding payments are being used in
accordance with their approved housing plan, together with a report setting forth the
uses of the refunding payments and the nature of the assistance provided, within 90
days of the end of its fiscal year.
From April 1, 1994, to March 31, 2005, the Housing Finance Corporation received
financial adjustment factor refunding payments (also known as McKinney Act
savings) of $2,289,284 and earned interest income of $469,444 by investing the
funds. Thus, the total amount of the refunding payments and applicable interest was
$2,758,728 through March 31, 2005. Yet despite having received this funding since
1994, the Authority did not submit its initial report to HUD until May 31, 2005. This
report provided that the McKinney Act savings/fund balance was $2,950,991 as of
March 31, 2005. However, this balance was overstated and was later corrected by the
Authority during our review on October 12, 2005. The Authority did not certify that
the funds had been used in accordance with the refunding agreements and inform
HUD on what these funds would be used for (in this case the funds were supposed to
be used for security costs) until May 2005. Thus, the Authority did not report or
certify to HUD in a timely manner.
McKinney Act Funds Were Not
Disbursed in a Timely Manner
By not providing the above reports in a timely manner, HUD was not made aware
that the Housing Finance Corporation was not disbursing these funds in a timely
manner. Further, from the $2,758,728 balance of McKinney Act savings/funds or
refunding payments received, the Housing Finance Corporation had disbursed a total
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of $802,299 through March 31, 2005, leaving $1,956,429 of McKinney Act
savings/funds that had not been disbursed as of March 31, 2005. Since the Housing
Finance Corporation did not expend these funds for eligible purposes within six
months of receiving them as required, it was not in compliance with the requirements
of the refunding agreements. Consequently, HUD needs to determine the proper
disposition of the remaining McKinney Act funds.
Questionable Disbursements
The Authority’s Housing Finance Corporation inappropriately disbursed $67,524 on
costs not related to the corporation’s mission and not in accordance with federal
regulations. These funds were used to reimburse the Authority’s operating account for
legal costs stemming from litigation and for consulting services in connection with real
estate acquisitions. Contrary to the requirements, these costs were not related to
financing or refinancing the debt obligations of Section 8 projects or to providing
housing for low-income families.
The refunding agreement provides that McKinney Act funds should only be used in
the city of Newark, New Jersey, to provide decent, safe, and sanitary housing
affordable to very low-income families or persons. Such funds may be applied (i)
directly to assist very low-income families or persons or (ii) to pay the development
costs of dwelling units to be occupied by persons and families of very low income but
only to the extent that these costs would be chargeable to the project’s capital account
for income tax purposes. The refunding agreements also state that McKinney Act
funds shall not be used to pay administrative costs of the corporation.
Further, 24 CFR [Code of Federal Regulations] 811.108 provides that non-
McKinney-Act funds (which were received before April 1, 1993) should all have
been deposited in debt service reserves and only used for the payment of principal or
interest on the obligations. Costs that are not related to the financing of the bond
issues would not be eligible costs .
The $67,524 in questioned disbursements is considered unsupported as follows:
Date of
Legal fees disbursement Amount
Lawsuit Authority vs. Mar. 27, 1992 $13,312.78 1/
City Construction
“ Aug. 27, 1992 $12,722.59 1/
Consultant fees
Feasibility study Section Nov. 14, 2000 $9,786.75 1/
8 project acquisition
“ Aug. 13, 2000 $20,833.33 1/
“ Feb. 21, 2003 $10,868.45 1/
Total $67,523.90
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1/ These items are considered unsupported because there was insufficient
documentation to determine whether the costs were eligible and reasonable or
could be considered allowable development costs that would be charged to the
project’s capital account for income tax purposes.
Conclusion
Authority officials submitted comments (see Appendix B) that state that the
criteria cited in this finding is not applicable to the projects in question because
the bonds for these projects were issued before the effective date of the
regulations, and therefore, the Housing Finance Corporation was entitled to the
payments per the indenture of trust. In a prior OIG audit (92-NY-204-1009),
HUD’s legal counsel ruled that the cited regulations are applicable and the
Authority and its Housing Finance Corporation agreed to abide by all regulations;
however, to date the legal opinion could not be located. As a result, to clarify this
issue HUD needs to obtain a new legal opinion on whether the regulations are
applicable and to determine the proper disposition of these funds.
Nevertheless, based on the above deficiencies, and the prior legal opinion, it is
clear that the Authority needs to strengthen its controls over bond financing
activities to ensure that its Housing Finance Corporation is following all
applicable regulations. As such, not until all bond-financing funds are placed into
the debt service reserves in a timely manner as required, disbursed for eligible
items in accordance with the housing plan, and certified and reported to HUD in a
timely manner will the Authority’s bond program be efficiently managed.
Recommendations
We recommend that the director of HUD’s Office of Public Housing
1A. Obtain a legal opinion to determine whether the citations of 24 CFR [Code
of Federal Regulations] 811.105 and 811.108 are applicable to the projects
in question and to determine the proper disposition of the funds being
retained by the Housing Finance Corporation.
If it is determined that the cited regulations are applicable, we recommend that the
director of HUD’s Office of Public Housing instruct the Authority to
1B. Deposit $1,544,244 into the debt service reserves of the individual projects
from where the funds originated .
1C. Remit $59,450 to HUD for the funds that were applicable to the bond
issue for Livingston Homes, which was redeemed in 2002.
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1D. Submit information to HUD regarding the underfunding of debt service
reserves for the three projects (Fairview, Saint Mary’s Villa, and
Broadway Manor) amounting to $261,409 so that HUD can determine
whether these funds should be recaptured and the refunding agreements
should be adjusted for these three projects.
1E. Provide direction to its Housing Finance Corporation (based on the legal
determiniation) as to the proper disposition of the $1,956,429 in
McKinney Act savings/funds that was not disbursed in a timely manner,
per the refunding agreements.
We also recommend that the director of HUD’s Office of Public Housing require
the Newark Housing Authority to:
1F. Establish controls to ensure that McKinney Act savings/funds are
disbursed and reported in accordance with the applicable requirements.
1G. Provide documentation to the Office of Public Housing regarding the
questioned disbursements amounting to $67,524 so that an eligibility
determination can be made. The cost of all ineligible disbursement should
then be repaid to the applicable project’s(s’) debt service reserve .
1H. Establish procedures to ensure that its Housing Finance Corporation
conducts it operations in accordance with all federal regulations .
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Finding 2: The Authority Did Not Maintain Adequate Documentation to
Support Payments to the City Of Newark
Contrary to the requirements of its annual contribution contract, cooperation agreement, and
federal regulations, the Authority did not maintain adequate documentation to support various
payments made to the City of Newark. It could not substantiate that the services the Authority
paid for were in addition to those services that the city was obligated to provide under the
cooperation agreements the Authority has with the city, or that the payments made were
reasonable. This occurred because the Authority did not have a signed agreement in place that
set forth, in sufficient detail, the quantity and cost of the additional services to be performed, nor
did it have controls in place to ensure that proper supporting documentation was obtained before
making the payments. As a result, Authority officials cannot substantiate that $6.9 million paid
to the City of Newark was necessary.
Criteria
The annual contribution contract requires the Authority to operate in an
economical and efficient manner. It requires the Authority to perform and
comply with all the applicable provisions of the cooperation agreement including
the making of payments in lieu of taxes and to at all times enforce its rights under
the cooperation agreement and not terminate or amend the agreement without the
prior written approval of HUD. The annual contributions contract also requires
the Authority to maintain records in a manner that permits HUD to determine
whether all funds have been expended in accordance with each specific program
regulation and requirement.
The cooperation agreement between the Authority and the City of Newark states
that the Authority will pay 10 percent of the annual shelter rent to the city as a
payment in lieu of taxes and that the city will provide, without additional charge
to the Authority and its tenants, public services and facilities as furnished from
time to time without charge to other dwellings and inhabitants in the municipality.
Payments Made in Addition to
Payment in Lieu of Taxes
The Authority said they entered into two memorandums of understanding with the
City of Newark whereby the city agreed to provide special services to the
Authority and its residents. These memorandums of understanding, which were
not signed, provided that the City would provide special services to the Authority
in excess of the City’s responsibility under various cooperation agreements. Such
services were to include:
• Services and facilities related to supervision of special police officers
employed by the Authority.
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• Services for manning two stabilization vans owned by the Authority and
used to provide around the clock patrolling at the housing sites of the
Authority.
• Special police services during the implosion/demolition of major housing
complexes owned by the Authority.
• Additional police services at various low rise and high rise developments
and buildings.
• Additional police services at large common areas of the Authority etc.
The agreements did not specify the quantity and cost of the additional services to
be provided at each project nor what constituted normal services. We requested
additional information and supporting documents to determine the eligibility and
reasonableness of the costs. Although the Authority officials provided additional
information, we could not determine from the documents that the services
provided were in addition to the level of services the the City was already
obligated to provide under the cooperation agreements. Moreover, since the
Authority was unable to provide signed copies of the agreements, HUD lacks
assurance that formal agreements were made.
The Authority said they entered into these memorandums of understanding
because Authority and city officials believed that a combination of high density
and poverty in the Authority’s developments exerted greater than normal demands
on city departments, especially for the police and the health and human services
departments. This was intended to be in addition to what services are normally
required by other apartment dwellings and residents throughout the city. The
agreements called for the Authority to make a one-time “up front” payment to the
city, reflecting the expected reasonable cost of said services. The agreements
further provided that the Authority could conduct an audit of the costs of the
services and facilities provided by the city within six months of the
commencement of the agreement. If the services were determined to not benefit
the Authority and its residences, the city was to return a prorated amount to the
Authority.
On August 14, 2001, the Authority paid the City of Newark $1.4 million for
additional services. Further, without conducting an audit to determine if the
initial payment was reasonable, on April 9, 2002 the Authority made another
payment of $5.5 million to the City, bringing the total of the payments to $6.9
million. These payments were in addition to the $884,074 payments in lieu of
taxes that the Authority paid the City between April 2001 and March 2004 for
baseline services. Moreover, Authority officials paid the $6.9 million without
documentation to substantiate that the costs were for services specified in the
memorandums of understanding.
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Health and Human and
Emergency Service Costs.
Authority officials provided documents indicating that the city incurred $778,508
in costs by the Department of Heath and Human Services and Emergency Medical
Services for health care services; meals provided seniors and children, and
ambulance services. A supporting schedule reflected that these costs were derived
by taking the percentage of Authority residents in relation to the percentage of the
total population of the city of Newark and applying it to the city’s total cost for
health and human services and emergency medical services for the year.
However, without providing statistics on the number of Authority residents who
received these services, the appropriateness of this amount cannot be determined,
especially since under the cooperation agreement, the city, in exchange for
payments in lieu of taxes, was required to provide the Authority and its residents
at no additional charge the same services and facilities that it provided to other
dwellings and inhabitants.
Police Services
The Authority also provided documents reflecting $6,393,346 in costs for
additional police services purportedly provided to the Authority. This included a
schedule showing summary salary and benefit costs for 85 police officers who
purportedly provided police coverage at four low-income housing projects from
September 1, 1998, through September 1, 1999. However, another schedule from
the city provided as support for the total payments indicated that the services were
for the years 2000 and 2001. Moreover, the term of the unsigned memorandum of
understanding agreements provided to us was from April 1, 2001 to March 31,
2003. After we requested explanations for the above discrepancies, on July 18,
2005 the Authority’s board of commissioners approved amended resolutions that
after the fact asserted that the services were provided from 1998 to 2003.
Monitoring and Audits
Although the memorandums of understanding allowed the Authority to audit and
monitor charges for services provided, monitoring reports provided by the
Authority did not indicate that additional services were provided. Further, there
was no indication that a cost benefit analysis was performed six months after
commencement of the service agreements, as set forth in the memorandums of
understanding and the Authority’s resolution No. 01-08-22. Authority officials
stated that the benefits received from such services are intangible, and, therefore,
they did not have any physical records of the benefits received. We disagree that
the Authority does not have or could not obtain physical records to show the
benefits of the services. Arrest records, complaint logs, service calls, etc could all
be used to evaluate the need for and frequency of the special services.
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Conclusion
The former executive director and the board of commissioners did not provide
proper oversight over initiation and implementation of service agreements with
the City of Newark. Because the Authority failed to maintain adequate
supporting documentation, monitor the services provided, or audit the support
when received, HUD can not be assured the $6.9 million paid to the City of
Newark was for special services provided in addition to what should have been
provided under the cooperation agreements or whether the payments were
reasonable.
Recommendations
We recommend that the director of the HUD Office of Public Housing
2A. Review the documentation provided by the Authority, determine if the
evidence supports that services were provided that exceeded the services
that were to be provided in accordance with the cooperation agreements and
seek reimbursement of any amounts that are not supported.
We recommend that the director of the HUD Office of Public Housing require the
Authority to:
2B. Establish procedures that will ensure that service agreements with the City
of Newark are properly executed and monitored to ensure that services have
been provided, and that costs charged to the Authority are reasonable,
necessary, and properly documented.
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Finding 3: The Authority Settled General Liability Claims without
Obtaining HUD’s Written Approval
Contrary to HUD requirements, the Authority settled general liability claims without first
obtaining written approval from HUD as required. This occurred because Authority officials
believed that HUD approval had already been obtained since insurance settlements are a line
item in the Authority’s budget, which HUD approved. As a result, HUD could not be assured
that legal settlements amounting to more than $1.2 million were processed in the most cost-
effective manner. Further, the Authority contracted with a firm to review the settlements and
provide an assessment of settlement levels and litigation management but only received the
services for the first year of a three-year contract.
No HUD Approval for Legal
Settlements
The Authority has a self-insurance program through which it pays up to the first
$200,000 of general liability and workman’s compensation claims, with an
insurance company paying the claim amounts in excess of $200,000. We
examined Authority claims paid in excess of $10,000 and found that from April 1,
2001, through March 31, 2005, the Authority paid $1,233,735 to settle 17 general
liability claims. However, the Authority entered into settlement agreements for
these claims without obtaining the prior written approval of the HUD regional
counsel .
HUD Litigation Handbook 1530.01, REV-5, paragraph 5-3(c), states that a public
housing authority shall accept no settlement arising out of litigation without the
prior written concurrence of HUD. The terms of any such offer shall be
communicated in writing to the regional counsel together with the
recommendations of the public housing authority for disposition and the
arguments in support of those recommendations.
Paragraph 5-3(c) further states that if the opportunity for a settlement arises in the
course of a trial, counsel for the public housing authority shall inform the court of
these requirements and, in an appropriate case, shall respectfully move for a
continuance to allow for an opportunity to obtain HUD concurrence in the terms
of the proposed settlement .
Authority officials stated that local HUD field office approval is not required or
sought during the process of settling claims since the costs for insurance
settlements are included in the Authority’s HUD-approved annual budget.
However, local HUD officials informed us that although the Authority’s overall
expenditures or funding level is approved for performance funding, HUD does not
review the general line items in the budget; therefore, approval was not obtained.
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The HUD regional counsel indicated that the requirements for prior written
approval by HUD for general liability claims are applicable. The consolidated
annual contributions contract, part A, section 5, requires the Authority to comply
with all applicable statutes, executive orders, and regulations issued by HUD.
Since advance written approval from the HUD regional counsel was not sought or
obtained, HUD was not able to provide guidance on how to defend or settle
various law suits, and could not be assured that these cases were resolved in the
most economical or efficient manner.
Contracted Reviews Were Not
Performed
On January 31, 2002, the Authority entered into a two-year contract with a
consulting firm to provide broker consulting services for the purpose of enhancing
the Authority’s loss control services under its property and casualty insurance
program at a total cost of $151,450. The contract was later renewed for a third
year for $78,200, and the consultant was paid $229,650. The contract required
the consultant to perform an annual claims audit of the self-insured workers’
compensation and general liability claims operations. However, the claims audit
was only performed for the first year. The audit’s scope should have included
assessments of litigation management and settlement levels and identification of
opportunities for improvement. The audits were not provided for the second and
third years of the contract although the full amount of the contract was paid. This
occurred because the Authority lacked controls to ensure that contractor complied
with all requirements of the contract before being paid. However, Authority
officials state (see comments in Appendix B), that although the audits were not
conducted other services were provided that can substitute for the audits; further,
since the audits were only valued at $7,000 per year only $14,000 should be at
issue. Nevertheless, not only did HUD not review the claim settlements made,
but the Authority’s hired consultant also did not review the claim settlements;
therefore, HUD could not be assured that settlements were reasonable.
Conclusion
Due to the lack of controls, HUD could not be assured that the Authority’s self-
insurance program was cost effective as prior approval from HUD was not
obtained and risk management audits were not conducted. Therefore, procedures
should be established to ensure that contracted services for risk management are
provided, and the Authority should either seek the contracted risk management
audits from the consultant, submit evidence to HUD so that HUD could determine
whether the additional services provided were adequate in lieu of the claims
audits, or obtain a price adjustment/refund for this contract. In addition, HUD
needs to review the support for the 17 claims paid to ensure that the settlements
were proper.
17
Recommendations
We recommend that the director of HUD’s Office of Public Housing instruct the
Authority to
3A. Establish procedure to ensure that HUD approval is obtained before settling
general liability claims.
3B. Submit support for the 17 general liability claims amounting to $1,235,735
to the HUD regional counsel for review and approval. If any of the claims
are determined to be unallowable, the amount of that claim should be repaid
from nonfederal funds.
3C. Establish procedures that will ensure the contracted services for loss control
are provided in accordance with terms of the broker/consultant contract.
3D. Either seek performance of the loss control audits that are required to be
performed by the loss management-consulting contractor, submit evidence
to HUD so that HUD could determine whether the additional services
provided by the contractor were enough to forgo the two claims audits that
were not performed, or obtain a refund for the services not performed in
accordance with the contract.
18
SCOPE AND METHODOLOGY
Our review was conducted at the the Housing Authority of the City of Newark
located at 500 Broad Street, Newark, New Jersey. To accomplish our objectives,
we interviewed HUD officials and officials of the Authority and its Housing
Finance Corporation. In addition, we reviewed the following :
• Applicable laws, regulations, and other HUD program requirements;
• The Authority’s annual contribution contracts, trust indentures, and
cooperation agreements; and
• HUD’s and the Authority’s program files for the low-rent housing and Section
8 programs.
We reviewed various documents including financial statements, ledgers, bank
statements, invoices, purchase orders, contracts, check vouchers, and prior Office
of Inspector General (OIG) and HUD reports on the Authority. We reviewed
documentation regarding service agreements with the City of Newark, including
activity reports and other supporting documents furnished by the Authority and
the city. We also reviewed the Authority’s financial and administative records
related to its Housing Finance Corporation, including bond trust indentures and
refunding agreements, cooperation agreements and the memorandums of
understanding with the City of Newark, and documentation related to liability
claims that were paid by the Authority.
We performed the audit from May through October 2005. The audit covered the
period from April 1, 2001, through March 31, 2005, but was extended as
necessary to periods before and after these dates.
We performed our review in accordance with generally accepted government
auditing standards.
19
INTERNAL CONTROLS
Internal controls are an integral component of an organization’s management that provides
reasonable assurance that the following objectives are being achieved:
• Effectiveness and efficiency of operations,
• Reliability of financial reporting, and
• Compliance with applicable laws and regulations.
Internal controls relate to management’s plans, methods, and procedures used to meet its
mission, goals, and objectives. Internal controls include the processes and procedures for
planning, organizing, directing, and controlling program operations. They include the systems
for measuring, reporting, and monitoring program performance.
Relevant Internal Controls
We determined the following internal controls were relevant to our audit objectives:
• Program operations - Policies and procedures that management has
implemented to reasonably ensure that a program meets its objectives.
• Compliance with laws and regulations - Policies and procedures that
management has implemented to reasonably ensure that resource use is
consistent with laws and regulations.
• Safeguarding resources - Policies and procedures that management has
implemented to reasonably ensure that resources are safeguarded against
waste, loss, and misuse.
• Validity and reliability of data - Policies and procedures that management
has implemented to reasonably ensure that valid and reliable data are
obtained, maintained, and fairly disclosed in reports.
We assessed the relevant controls identified above.
A significant weakness exists if management controls do not provide reasonable
assurance that the process for planning, organizing, directing, and controlling
program operations will meet the organization’s objectives
Significant Weaknesses
Based on our review, we believe the following items are significant weaknesses:
20
• The Authority did not have an adequate system to ensure compliance with
laws and regulations related to the disposition of the proceeds of bond
financing activities, obtaining support for payments made to the City of
Newark, complying with cooperation agreements, and obtaining HUD
approval for legal settlements (see findings 1, 2, and 3).
• The Authority did not have an adequate system to ensure that resources were
properly safeguarded when its Housing Finance Corporation made
questionable payments of $67,524, it paid $6.9 million to the City of Newark
for services provided under the cooperation agreements, it did not obtain
HUD approval for legal settlements, and it did not ensure that risk
management services were provided (see findings 1, 2, and 3).
21
FOLLOWUP ON PRIOR AUDITS
Report No. 2005-NY-1005
Dated: May 26, 2005
We issued the above audit report entitled “The Housing Authority of the City of
Newark Bond Financing Activities and Section 8 Housing Choice Voucher
Administrative Fee Reserves.” The report contained two audit findings with
recommendations for corrective action. The finding involved the Authority’s
retaining of funds remaining after a bond issue had been redeemed and the use of
housing choice voucher administrative fee reserves for ineligible purposes. The
Authority has reimbursed the housing choice voucher administrative fee reserve
account for the $3,991,350 expended for the acquisition of properties; however, the
recommendations are still open. The Authority is appealing the recommendation
that HUD be paid the $2,533,536 in funds that remained after the Authority’s 1980
mortgage revenue bonds were redeemed. The Office of Public Housing has
established December 31, 2006, as the target date for the Auditee to complete its
corrective actions and for HUD to verify the corrective actions taken.
22
APPENDIXES
Appendix A
SCHEDULE OF QUESTIONED COSTS
AND FUNDS TO BE PUT TO BETTER USE
Recommendation Funds to be put
number Ineligible 1/ Unsupported 2/ to better use 3/
1B $1,544,244
1C $59,450
1D $261,409
1E $1,956,429
1G $67,524
2A $6,900,000
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
polices or regulations.
2/ Unsupported costs are those costs charged to a HUD-financed or HUD-insured program
or activity when we cannot determine eligibility at the time of audit. Unsupported costs
require a 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.
3/ “Funds to be put to better use” are quantifiable savings that are anticipated to occur if an
OIG recommendation is implemented, resulting in reduced expenditures at a later time
for the activities in question. This includes costs not incurred, deobligation of funds,
withdrawal of interest, reductions in outlays, avoidance of unnecessary expenditures,
loans and guarantees not made, and other savings.
23
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
Comment 1
Comment 2
24
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
Comment 3
Comment 4
Comment 5
Comment 6
25
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
Comment 6
Comment 7
Comment 8
26
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
Comment 8
Comment 9
Comment 10
27
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
Comment 11
Comment 12
28
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
Comment 12
29
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
Comment 12
30
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
Comment 12
Comment 13
Comment 14
Comment 13
Comment 15
Comment 16
31
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
Comment 16
Comment 17
32
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
33
OIG Evaluation of Auditee Comments
The report scope has been corrected to reflect that our audit covered the
Comment 1 period April 1, 2001 through March 31, 2005, and was extended to cover
periods before and after these dates as necessary. Therefore, although our
testing has led us to earlier years, the Authority’s current management is still
responsible for the issues disclosed in this report.
Comment 2 Although a prior OIG finding was resolved in an earlier year, it does not
follow that the conditions that caused the finding do not exist today. Various
issues described in this report do exist today, resulting in the current audit
findings. In finding 1 funds still have not been deposited in debt service
reserves and McKinney Act savings were still not being reported or
expended in accordance with the requirements of the refunding agreements.
In finding 2 the Authority has still not been able to obtain adequate
supporting documentation for payments to the City of Newark for services
that may have been provided as recently as 2003. In finding 3 HUD approval
was not sought or obtained for general liability claims that occurred from
2003 through 2005.
It is understood that the former executive director and board members may
Comment 3 have initiated policy that led to some of the control weaknesses cited in this
report; however, when the current executive director and board members
assumed responsibility over the Authority it became their job to correct the
control weaknesses. Nevertheless, we revised our finding to reflect that the
former executive director was involved in the deficiencies noted.
Finding 1
Debt Service Reserves
In 1992 OIG chose to audit the flow of funds related to certain bonds issued
Comment 4 by the City of Newark’s Housing Finance Corporation (Report No. 92-NY-
204-1009), and as a result, the Authority agreed to reimburse its Housing
Finance Corporation the ineligible cost it received and to follow federal
regulations pertaining to the receipt and use of excess compensation.
However, as in 1992, the Authority did not fund the debt service reserves of
the individual projects for which it had received excess compensation for,
therefore, we are readdressing this issue. Further, the report requested that
$1.5 million in excess management service income be placed into the
individual projects’ debt service reserves. We requested that $320,959
($59,450 and $261,409) be either returned to HUD or for HUD to determine
whether it should be returned.
34
The Authority indicated that the citations of 24 CFR [Code of Federal
Comment 5
Regulation] 811.105 and 811.108 were not applicable to bond issues under
the old regulations. The old regulations did not require that surplus funds
in the debt service reserve be remitted to HUD. The Authority also
indicated that 44 Federal Register 12360, (March 6, 1979) stated the new
regulations are only effective for those projects for which the Section 8
notification of selection of the preliminary proposal was issued on or after
April 5, 1979, the effective date of the new regulations. The Authority
stated that it had not been able to locate any notifications of selection and
wanted to know our basis for applying the new regulations. The citations
in 24 CFR [Code of Federal Regulations] Part 811 apply because all of the
bonds other than Aspen Temple were issued after the effective date of the
new regulations.
Further, during our prior audit (92-NY-204-1009), HUD’s counsel
verbally opined that the regulations were applicable. However, since we
could not locate a formal opinion addressing this issue, we have added a
recommendation for HUD to obtain a formal legal opinion regarding the
applicability of the cited regulations and advise the Authority on the
proper disposition of the funds in excess of expenses related to Aspen
Temple and the other projects.
Comment 6 The Authority indicated that the citations of 24 CFR [Code of Federal
Regulations] 811.105(a) (2) (iii) (b) and 811.108 were not applicable for the
bond issue for Aspen Temple which closed on November 21, 1978 before
the April 5, 1979 effective date of the new regulations. However, the
indenture of trust for Aspen Temple, section 103 provides that it is agreed
among the Housing Finance Corporation, the trustee, and the Authority that
all terms and provisions of the regulations, Federal Housing Administration
regulations, and the National Housing Act are hereby incorporated by
reference in the indenture and that they shall be controlling to the extent that
they are in conflict with or in addition to the terms and provisions of the
indenture and in the event of any inconsistency with the provisions of the
indenture. Thus, it appears that the new regulations are applicable.
The Housing Finance Corporation is entitled to reimbursement for its
expenses including costs related to the bond issuance. Therefore, our review
is only requesting that the total compensation that is in excess of the Housing
Finance Corporation’s allowable costs be deposited in the debt service
reserves of the individual projects. For Aspen Temple, the excess
management service income was earned between June 30, 1980, and
February 9, 1993 (after the effective date of the new regulations). Further,
section 706 of the indenture of trust provides that the Aspen Temple
Apartments Company may pay each of its fiduciaries reasonable
compensation for services rendered under the indenture including
reimbursement for all reasonable expenses incurred in the performance of
35
duties under the indenture. The Housing Finance Corporation recorded
$491,369 in management services income applicable to Aspen Temple from
June 30, 1980, through February 9, 1993. However, because no expenses
were noted after June 30, 1980, on the Housing Finance Corporation’s
records for management services provided to this project, this compensation
does not appear to be reasonable according to the terms of the indenture of
trust. Accordingly, we requested a legal determination regarding the
disposition of these funds.
The Housing Finance Corporation’s financial records (cash receipts
Comment 7 journals) showed that the $50,778 was recorded as management services
income pertaining to Fairview Homes not to the development Norfolk
Square. Further, OIG’s prior audit report (Audit Report 92-NY-204-1009)
questioned the fact that the Housing Finance Corporation did not place the
excess funds into the project’s debt service reserves. Instead, funds
($125,800) were placed into the Authority’s general revolving fund. Upon
our audit, the Authority returned these funds to the Housing Finance
Corporation, although, a review of the records showed that the Housing
Finance Corporation did not place these funds into the debt service
reserves as required. However, based on the Authority’s claim that the
regulations are not applicable, we revised our finding to include a
recommendation for HUD to obtain a legal determination as to the proper
disposition of the funds being retained by the Housing Finance
Corporation. Thus, recommendation 1A, 1B, and 1C of the draft report
are still applicable and are now 1B, 1C, and 1D.
McKinney Act Savings
Comment 8 The Housing Finance Corporation was required to report semiannually
that it had expended the McKinney Act funds/savings within six months.
Since it did not report on the use of these funds as required for a 10-year
period, HUD was not aware that the funds were not being expended in a
timely manner. Therefore, HUD was unable to apply a remedy to the
Housing Finance Corporation’s default of possibly suspending the
payment of future McKinney Act savings/payments until the default was
resolved. Consequently, all of the McKinney Act savings/funds
installments had been paid to the Housing Finance Corporation before
HUD became aware of the default. Thus OIG recommended that the
remaining McKinney Act savings that had not been spent be repaid to
HUD due to the default on the requirements for reporting and spending the
McKinney Act savings/funds. Further, the requirements do not state that
the Authority has 10 years to expend the funds; however, they do state that
the savings/funds are subject to specific use requirements for 10 years.
The funds must be expended within six months of receiving each
installment payment according to the refunding agreement.
36
In addition, the Authority’s September 3, 2004, submission of its proposal
on how the McKinney Act funds would be expended did not resolve the
default of not reporting. In HUD’s September 27, 2004, response, HUD
stated that the Authority’s letter satisfied the 90 day deadline for an initial
progress report and that HUD looked forward to receiving timely reports
in the future to the extent the Authority continued to receive McKinney
Act savings installments. This letter did not state that HUD had approved
the proposed use of funds. Nevertheless, since Authority officials state
that repayment or recapture is not an option for not expending the funds in
a timely manner in accordance with the regulations and the refunding
agreement, we have revised our recommendation to require the Office of
Public Housing to obtain a legal determination as to the proper disposition
of the unspent McKinney Act savings/funds being retained by the Housing
Finance Corporation. We further recommend that in the event the
Housing Finance Corporation is allowed to retain the McKinney Act
savings, controls should be established to ensure compliance with the
spending and reporting requirements of the refunding agreements and
regulations. We also removed the statement that the Authority did not
respond until OIG began its inquiry during the audit. Further,
recommendation 1D of the draft report is now 1E, and it now reflects that
the funds in question should be disposed in accordance with the legal
determiniation.
Questionable Disbursements
Comment 9 In this section the costs that are being questioned represent items paid with
non-McKinney Act funds, which should only be used for the payment of
principal and interest on the obligation or for expenses related to the
financing of the project. Since some of the funds used for these expenses
may have been from McKinney Act savings, the draft report states that
these funds could also be used for providing housing for low-income
families. However, the $26,035 paid for the lawsuit was paid with non-
McKinney Act funds, and since these costs were not directly related to
financing activities, they appear to be ineligible costs. However, based on
the documents submitted at the exit conference, we classify these costs as
unsupported pending an eligibility determination by HUD.
Comment 10 We have accepted the $80,000 in costs paid to the borrower as being an
allowable financing-related cost based on the Authority’s explanation and
review of the supporting documents. These questioned costs have been
eliminated from the finding.
Regarding the $41,489 for consulting services, we could not determine
Comment 11 whether it was paid with McKinney Act or Non-McKinney Act funds.
These costs would not be allowable if paid with non-McKinney funds
since the costs were not directly related to financing activities. Further, if
37
the funds were classified as McKinney Act disbursements, a determination
would have to be made by HUD that they are allowable development
costs. Therefore, we classify these costs as unsupported pending an
eligibility determination by HUD. Regarding the recommendations, they
are valid because the Housing Finance Corporation has not conducted its
operations in accordance with the applicable regulations. However, we
have revised our recommendations; recommendation 1E is now 1G, which
reflects that the amount of questioned costs is now $67,524.
Finding 2
The Authority’s comments allude that OIG looked at the additional
Comment 12 payments to the City of Newark because the initial resolution authorizing
the services contained discrepancies in the time of performance of these
services, which was addressed, after the fact, by a board resolution made
during the audit (July 2005); however, this was not the only reason we
examined these costs. Authority officials provided three boxes of
documents related to the police services; however, as mentioned in the
audit finding, the information did not provide the basis for determining the
costs, nor did the Authority substantiate that the services provided were in
addition to the normal services required of the city under the cooperation
agreementThe supporting documents provided did not contain payroll-
related information about salary or wages, time distribution records signed
and approved by a responsible official. Moreover, there were no periodic
certifications signed or certified by employees or supervisors having first
hand knowledge of the work performed. More importantly, the
documentation provided by the City indicated that the costs charges were
based on a rate of $50 per hour, yet the actual salary costs for the periods
in question were never provided.
The Authority also asserts that additional police services were needed as
evidenced by HUD providing them with a Drug Elimination Grant during
the period. However, Drug Elimination Grants are not necessarily for
additional police services. In this case, the Drug Elimination Grants were
provided from 1998 to 2001 for the employment of security and
investigators, voluntary tenant patrols, physical improvements, drug
prevention, special initiatives, gun buyback programs, and other program
costs. The Drug Elimination Grants did not mention additional police
services.
Further the report does not state that police services were not provided or
that the Authority should monitor the activities of the police. The report
indicates that the services may have been routine, and that the cost of these
services is not documented. Although the Authority as stated in their
reponse provided three boxes of documents and two binders at the exit
38
conference, stating that the city incurred over $12 million in costs, there
was insufficient evidence to substantiate the cost of these services, that the
services were in addition to what was required under the cooperation
agreement, and that the services were worth more than the $800,000
already provided to the city in payments in lieu of taxes. As such, the
auditors asked for cost data, such as payroll records etc., that could be
used to justify the additional payments made to the city. As mentioned in
the finding, the schedules provided documented routine items such as
traffic stops, auto accidents, domenstic disputes and reported roberies, etc.,
however, the documentation was inadequate to make a determination that
the costs were reasonable. Therefore, contrary to the requirement of its
annual contribution contract, cooperation agreement, and federal
regulations, the Authority did not maintain adequate documentation to
support the additional payments made to the City of Newark.
Comment 13 After consultation with the Newark HUD Office of Public Housing, draft
recommendation 2B that required the Authority to obtain HUD approval
before entering into any agreements with the City of Newark has been
deleted. In addition, we have deleted draft recommendation 2D that
required sanctions against the board and the executive director. Further,
OIG never stated that the Authority should oversee law enforcement
activities; however, the Authority should ensure that documents submitted
to request reimbursement for services are adequately reviewed before
payment.
The Authority did not have procedures in place to ensure that service
Comment 14 agreements were properly monitored; that the services were provided and
that the costs were reasonable, necessary and properly documented. Note
that recommendation 2C in the draft report is still applicable and is now
2B.
Finding 3
Comment 15 The Authority’s actions are responsive to the audit finding.
The Authority’s comments admit that the claims audits were not performed
Comment 16
for two of the years. However, Authority officials state that in lieu of these
audits the contractor performed other services related to asbestos problems at
the Authority’s headquarters office and at one project. Authority officials
further stated that since the audits only cost $7,000 per year only $14,000
should be at issue. However, although we accept most of the Authority’s
comments that other services may have been provided; the additional
39
documentation provided indicated that the claims audits that were not
performed might be valued at $21,300 ($10,380 and $10,920). Nevertheless,
to clarify this issue HUD needs to make a determination on whether the
equivalent services provided were adequate in lieu of the audits that were not
performed, and on whether any funds should be repaid.
Comment 17 The significant weaknesses identified in the Internal Control section of the
report, which relate to the Authority not having adequate systems to
ensure compliance with laws and regulations and to ensure resources are
properly safeguarded are valid conclusions that still exist today based on
the results of the audit (see examples in the evaluation of comment 2).
Further, we have evaluated the Authority's comments and supporting
documentation and made appropriate revisions to the findings and
recommendations.
40
The Housing Authority of the City of Newark Controls Over Bond Financing Activities, Obtaining Supporting Documentation, and Legal Settlements Require Improvement
Published by the Department of Housing and Urban Development, Office of Inspector General on 2006-02-14.
Below is a raw (and likely hideous) rendition of the original report. (PDF)