oversight

The Hampton Redevelopment and Housing Authority, Hampton, Virginia, Did Not Always Follow HUD Requirements

Published by the Department of Housing and Urban Development, Office of Inspector General on 2006-07-12.

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

                                                                 Issue Date
                                                                      July 12, 2006
                                                                 Audit Report Number
                                                                       2006-PH-1011




TO:         William D. Tamburrino, Director, Baltimore Public Housing Program Hub,
             3BPH
            Robert Jennings, Director, Richmond Office of Public Housing, 3FPH



FROM:



SUBJECT: The Hampton Redevelopment and Housing Authority, Hampton, Virginia, Did Not
          Always Follow HUD Requirements



                                   HIGHLIGHTS

 What We Audited and Why

             We audited the Hampton Redevelopment and Housing Authority (Authority) as
             part of our fiscal year 2005 annual audit plan. Our objective was to determine
             whether the Authority carried out its operations in accordance with applicable
             U.S. Department of Housing and Urban Development (HUD) requirements.

 What We Found

             The Authority carried out much of its operations in accordance with applicable
             HUD requirements. It generally provided reasonable housing assistance
             payments to eligible recipients, inspected its Section 8 units annually, and
             properly supported its drawdown of HUD funds. However, contrary to its annual
             contributions contract, the Authority did not properly allocate $59,816 in salary
             and benefit costs to its nonfederal housing developments. It also did not always
           follow federal procurement requirements when awarding contracts. In addition, it
           made some incorrect housing assistance payments and did not settle $61,867 in
           interfund balances due its low-rent public housing fund from other HUD
           programs in a timely manner. These problems generally occurred because the
           Authority did not have adequate internal controls in place to ensure that it fully
           complied with HUD and other federal requirements.

What We Recommend

           We recommend that the director of the Baltimore Public Housing Program Hub
           require the Authority to provide adequate documentation to support $59,816 in
           questioned salary and benefit costs or reimburse its public housing program from
           nonfederal sources. We also recommend that the Authority provide adequate
           documentation to justify its awarding of four contracts or repay the program
           $84,891 or the amount currently expended under the contracts from nonfederal
           funds. Additionally, we recommend that HUD reduce the amount of housing
           assistance payments by the $5,090 overpayment on the Authority’s next Section 8
           year-end settlement statement and require the Authority to reimburse applicable
           tenants $773 for housing assistance underpayments, thereby putting these funds to
           better use. We further recommend that HUD direct the Authority to repay its
           low-rent public housing fund $61,867 from its other HUD programs. Lastly, we
           made several recommendations for the Authority to create and implement
           adequate internal controls to ensure that it fully complies with HUD and other
           federal requirements.

Auditee’s Response


           We discussed the report with the Authority during the audit and at an exit
           conference on June 27, 2006. The Authority provided written comments to our
           draft report on July 5, 2006. The Authority concurred with our findings and
           included with its response documentation showing corrective action it was taking
           to address the audit recommendations. We commend the Authority for taking
           immediate action to address our recommendations. The complete text of the
           Authority’s response, along with our evaluation of the documentation the
           Authority provided with its response, can be found in appendix B of this report.




                                            2
                            TABLE OF CONTENTS

Background and Objectives                                                            4

Results of Audit
      Finding 1: The Authority Did Not Properly Allocate Costs of $59,816 to Its     5
      Nonfederal Housing Developments
      Finding 2: The Authority Did Not Always Follow Federal Procurement             8
      Requirements When Awarding Contracts
      Finding 3: The Authority Did Not Always Make Correct Housing Assistance        12
      Payments
      Finding 4: The Authority Did Not Settle $61,867 in Interfund Balances Due to   14
      Its Low-Rent Public Housing Fund in a Timely Manner

Scope and Methodology                                                                16

Internal Controls                                                                    17

Appendixes
   A. Schedule of Questioned Costs and Funds to Be Put to Better Use                 19
   B. Auditee Comments and OIG’s Evaluation                                          20




                                             3
                      BACKGROUND AND OBJECTIVES


The Hampton Redevelopment and Housing Authority (Authority) was established in 1958 to
promote adequate and affordable housing, economic opportunity, and a suitable living environment
free from discrimination. The Authority’s primary mission is to promote opportunities that
revitalize communities, enhance the quality of life, and provide a link to housing and self-
sufficiency for the citizens of Hampton, Virginia. A seven-member board of commissioners
governs the Authority. The Authority is located at 22 Lincoln Street in Hampton, Virginia.

The Authority owns and manages 542 public housing units and has 2,403 Section 8 units under its
consolidated annual contributions contract with the U.S. Department of Housing and Urban
Development (HUD). The consolidated annual contributions contract defines the terms and
conditions under which the Authority agrees to develop and operate all projects under the
agreement. HUD authorized the Authority the following financial assistance from fiscal years
2003 to 2005:

   •   $4.2 million in operating subsidies to operate and maintain its housing developments,
   •   $2.4 million in Public Housing Capital Fund program funding to modernize public
       housing units, and
   •   $45.1 million to provide housing assistance through tenant-based Section 8 vouchers.

Our audit objective was to determine whether the Authority carried out its operations in accordance
with applicable HUD criteria.




                                                4
                                      RESULTS OF AUDIT


Finding 1: The Authority Did Not Properly Allocate Costs of $59,816 to
Its Nonfederal Housing Developments
The Authority improperly used federal funds to support its nonfederal housing developments. It
did not ensure that salary and benefit costs were properly allocated to its nonfederal
developments for services provided by its employees contrary to its consolidated annual
contributions contract 1 and Office of Management and Budget Circular A-87. 2 This occurred
because the Authority did not have adequate internal controls in place to ensure that it properly
identified the source and allocation of its funds. As a result, it improperly paid $59,816 from
federal funds from January 2003 through August 2005 for salary and benefits of Authority
employees who worked to support its nonfederal housing developments.



    The Authority Improperly Used
    $59,816 in Federal Funds


                 The Authority improperly paid $59,816 from federal funds from January 2003
                 through August 2005 for salary and benefits of 10 Authority positions. Authority
                 employees in the positions worked to support its five nonfederal housing
                 developments. The employees provided a variety of services such as
                 management, finance, information systems, and human resources functions. The
                 improper payments occurred because the Authority’s internal controls did not
                 ensure that it properly allocated salary and benefit costs that reflected all services
                 performed to support its nonfederal developments. In addition, it did not properly
                 prepare personnel activity reports or equivalent documentation to support all
                 services performed by its employees. As a result, $59,816 in salary and benefit
                 costs was not allocated to the nonfederal developments for services performed by
                 Authority employees and was improperly paid from federal funds. This practice
                 was contrary to the Authority’s consolidated annual contributions contract and
                 Office of Management and Budget Circular A-87.

                 The Authority’s annual contributions contract with HUD requires it to maintain
                 records that identify the source and allocation of its funds. This key management
                 control is critical to ensuring that the Authority spends federal funds, provided

1
  Annual contributions contract, part A, section 9, “General Fund” – The Authority may withdraw funds from the
general fund only for projects covered under the annual contributions contract.
2
  Office of Management and Budget Circular A-87, revised May 4, 1995, as further amended, August 29, 1997,
attachment B, paragraph 11(h)(5), “Personnel Activity Reports.”



                                                        5
 through its annual contributions contract, only in accordance with the regulatory
 requirements of each specific federal program. Further, the contract specifies that
 the Authority can only withdraw federal funds for the payment of costs associated
 with the development and operation of projects under its annual contributions
 contract or other projects specifically approved by HUD. Thus, when employees
 work on multiple programs, a distribution of salaries should be supported by
 personnel reports or equivalent documents. The Authority’s procedures were also
 not in accordance with Office of Management and Budget Circular A-87, which
 requires a distribution of salaries or wages to be supported by personnel activity
 reports or equivalent documentation.

 Since the Authority could not provide documentation to support services provided
 by its staff members working on both federal and nonfederal projects, we
 estimated the total salary and fringe benefits that the low-income housing fund
 paid to support the nonfederal entities. Our estimate was calculated by
 multiplying the total salary and benefits costs paid to the applicable staff members
 we identified as having worked on both the federal and the nonfederal programs
 by the percentage the nonfederal units comprised of the total units under the
 Authority’s management. The Authority has 542 public housing units and 2,403
 Section 8 units under lease. It also has 115 nonfederal units for a total of 3,060.
 We divided 115 by 3,060 to arrive at an allocation percentage of 3.8 percent.


                                Nonfederal
                                  units
                                   4%




                                             Federal
                                              units
                                              96%




The Authority’s accounting records showed that total salaries and benefits paid to
the applicable staff members from January 2003 through August 2005 totaled
$1,574,111. We calculated the unsupported payments to be $59,816 because the
nonfederal units under management accounted for 3.8 percent of the Authority’s
total units. The Authority was proactive during the audit and provided
documentation showing it would reasonably allocate its future expenses to its
nonfederal housing developments. We therefore consider recommendation 1B
closed.




                                   6
    Recommendations


                   We recommend that the director of the Baltimore Public Housing Program Hub
                   require the Authority to

                   1A.     Provide adequate documentation to support the allocation of $59,816
                           identified in the report or reimburse its public housing program from
                           nonfederal sources.

                   1B. *   Develop a reasonable method for allocating future salaries and expenses
                           to its nonfederal affiliated entities and ensure that these expenses are
                           allocated on a monthly basis, thereby putting $22,431 3 to better use
                           annually.




*
    This recommendation is closed.
3
    $59,816/32 months reviewed x 12 months = $22,431.


                                                        7
Finding 2: The Authority Did Not Always Follow Federal Procurement
Requirements When Awarding Contracts
The Authority’s process for awarding contracts did not always comply with federal regulations or
its own procurement policy. The Authority did not always adequately justify its award of contracts,
nor did it always maintain sufficient records to fully document its procurement process. This
occurred because responsible Authority officials lacked training related to procurement. As a result,
the Authority improperly awarded a total of $84,891 to four vendors without complying with its
own procurement policy or federal regulations. For these contracts, the Authority had inadequate
assurance that it paid reasonable prices or received the best value for the services it purchased.



 The Authority Did Not Always
 Fully Document Its Contract
 Award Process


               The Authority did not always maintain proper evidence to show that the
               appropriate measures were taken to ensure compliance with federal regulations
               when awarding contracts. Regulations at 24 CFR [Code of Federal Regulations]
               85.36(b)(9) state that grantees and subgrantees will maintain records that are
               sufficient to document significant procurement history. Also, section 14 of the
               Authority’s own procurement policy states that a full and complete record shall be
               made part of the purchasing record, stating what actions were taken and why.

               We selected 10 of the Authority’s 44 current contracts for our review and found
               deficiencies pertaining to four of the contracts. The Authority was not able to
               provide adequate procurement records to demonstrate that the four contracts were
               awarded within the guidelines set forth in the Authority’s own procurement
               policies and federal guidelines. Each of the four contracts is discussed below.


 The Authority Did Not Properly
 Justify a Contract It Awarded to
 a Sole Bidder for Legal Services


               The Authority awarded an $11,000 contract to a law firm that was a single bidder
               in August 2004 without performing the required cost analysis to justify the
               selection. Regulations at 24 CFR [Code of Federal Regulations] 85.36(d)(4)(ii)
               state that a cost analysis verifying the proposed cost data, the projection of the
               data, and the evaluation of the specific elements of costs and profits is required
               when only one bid is received for a contract. HUD Handbook 7460.8, section 4-
               33, further states that for a sealed bid that only receives one bid, a cost analysis is



                                                  8
                  required. The Authority did not have documentation to show that it performed a
                  cost analysis or any elements of a cost analysis before awarding this contract.


    The Authority Did Not
    Document Its Award of a Pest
    Control Contract


                  The Authority awarded a contract valued at $25,875 to a vendor for pest control
                  services but had no documentation showing the procurement process it used to
                  select the vendor. Without the required documentation, we were unable to
                  determine whether the contract was awarded properly. In particular, the
                  Authority could not show that it conducted this procurement transaction in a
                  manner providing for full and open competition. HUD’s Procurement Handbook 4
                  requires the Authority to follow its written procurement policy. The Authority’s
                  procurement policy reinforced federal requirements by requiring the Authority to
                  competitively award contracts expected to exceed $10,000. Since the Authority
                  did not follow federal or its own procurement policy, it did not ensure that it
                  efficiently used HUD funds.

    The Authority Improperly
    Awarded a Sole Source
    Architect and Engineering
    Contract

                  The Authority also awarded a sole source contract valued at $27,900 to an
                  architect and engineering firm in September 2005 without advertising it as
                  required. A memorandum in the file indicated that the selection was based upon
                  prior work completed, but there was no documentation in the file to support the
                  information in the memorandum. As stated above, the Authority’s procurement
                  policy required the Authority to competitively award contracts expected to exceed
                  $10,000. For professional engineering services, the Authority’s procurement
                  policy allowed it to select a vendor based on favorable past experience with the
                  vendor, provided this was justified in writing. However, in this instance, the
                  Authority did not solicit or evaluate bids as required and did not justify in writing
                  why it selected the vendor. Therefore, it did not ensure that HUD funds were
                  efficiently used.




4
    HUD Handbook 7460.8, REV-1, paragraph 3-4 B.


                                                    9
The Authority Awarded a
Consulting and Engineering
Contract without Adequate
Justification


            The Authority also awarded a $20,116 contract in July 2005 to a company to
            perform consulting and engineering services without adequately identifying why
            the contractor was chosen. Regulations at 24 CFR [Code of Federal Regulations]
            85.36(d)(3)(v) state that when using competitive proposal procedures, the services
            and qualifications of competitors are to be evaluated and the most qualified
            competitor will be selected. The file on this contract contained information
            regarding rating criteria for the contract. The winning bid received a perfect score
            in each category. However, required documentation was not available explaining
            why the contractor received a perfect score. The Authority stated that it
            interviewed two of four contractors, including the contractor selected. However,
            there was no written documentation of the interviews in the file.

Authority Officials Lacked
Procurement Training


            Each department manager at the Authority was responsible for procuring
            contracts for his or her respective department. However, some of the department
            managers who awarded the contracts reviewed did not always have an adequate
            knowledge of federal or the Authority’s procurement requirements. Additionally,
            Authority officials were unable to provide sufficient documentation to show that
            the responsible personnel had received sufficient training in procurement. The
            Authority can alleviate these problems by emphasizing the importance of properly
            following federal procurement regulations and its own procurement policy to
            responsible personnel and providing them needed training in this regard.

Recommendations


            We recommend that the director of the Baltimore Public Housing Program Hub
            require the Authority to

            2A.    Provide adequate documentation to justify its awarding of the four
                   contracts discussed in this finding as required by federal procurement
                   regulations. If the Authority is unable to provide adequate supporting
                   documentation, it should repay the program $84,891 or the amount
                   currently expended under the contract from nonfederal funds and cease
                   paying the remaining amount from federal funds.


                                             10
2B.   Emphasize to responsible personnel the need to properly follow federal
      procurement regulations and its own procurement policy and provide them
      needed training in this regard, thereby putting future funds of $84,891 to
      better use.




                              11
Finding 3: The Authority Did Not Always Make Correct Housing
Assistance Payments
The Authority incorrectly calculated income when computing the rent and subsidies for some of
the recipients of its Section 8 Housing Choice Voucher program. This occurred because the
Authority did not have sufficient quality control procedures in place to ensure that administrative
errors made by the Authority’s staff would be detected. As a result of the errors, the Authority
made housing assistance overpayments totaling $5,090 and housing assistance underpayments
totaling $773.



 The Authority Made Housing
 Assistance Overpayments of
 $5,090 and Housing Assistance
 Underpayments of $773


               We reviewed 63 randomly selected Section 8 files, and in 18 files (29 percent), the
               Authority did not correctly calculate housing assistance payments, resulting in
               overpayments of $5,090 and underpayments of $773.

               Our review of the Authority’s calculations and documentation contained in the
               tenant files (for example, paycheck stubs and employment verification forms)
               showed the Authority’s procedures were not always effective in ensuring that rent
               and subsidies were calculated correctly. For example, the following simple
               mathematical errors were missed: the overestimation of child care deductions and
               the use of net income instead of gross income to estimate annual income. In
               addition, there were instances in which child care verification documents did not list
               the correct recipient name and child name. The errors were missed because the
               Authority did not have quality control procedures in place to ensure that the
               inaccuracies would be detected.

               HUD Handbook 7420.10g, chapter 6, describes the guidelines for calculating the
               rent and subsidies. Chapter 22 of the handbook describes the quality control
               procedures necessary for ensuring the calculations are correct. Specifically,
               chapter 22 requires housing authorities to establish quality control procedures to
               ensure that staff’s daily decision making on tenant eligibility and tenant rent
               complies with program regulations and is based on accurate information.
               Additionally, the procedures should include adequate training of staff and
               monitoring of their performance.

               The Authority can reduce the risk of error associated with calculations of rent and
               subsidies by implementing quality control procedures as required by HUD
               Handbook 7420.10g, chapter 6. The quality control procedures should include



                                                 12
          training and periodic reviews of the work done by Section 8 occupancy
          technicians to ensure that income, rent and subsidies are properly calculated.

          Despite the deficiencies noted in our audit, all of the Section 8 files reviewed
          showed that the recipients met income eligibility requirements. In addition, HUD
          recently rated the Authority as a standard performer under its Section 8
          Management Assessment program.

Recommendations

          We recommend that the director of the Baltimore Public Housing Program Hub

          3A.     Reduce the amount of housing assistance payments by $5,090 on the
                  Authority’s next Section 8 year-end settlement statements to account for
                  the overpayments.

          3B.     Reimburse applicable tenants $773 for the housing assistance
                  underpayments, thereby putting these funds to better use.

          3C.     Require the Authority to implement written internal control procedures to
                  help prevent future mistakes, including training and periodic reviews of
                  work done by Section 8 occupancy technicians to ensure that annual
                  income, rent, and subsidy amounts are properly calculated.




                                           13
Finding 4: The Authority Did Not Settle $61,867 in Interfund Balances
Due to Its Low-Rent Public Housing Fund in a Timely Manner
Contrary to its annual contributions contract, the Authority used low-rent public housing funds to
pay expenses of other HUD programs and did not settle the balance due to the low-rent public
housing fund in a timely manner. This occurred because the Authority did not have adequate
internal controls requiring it to reconcile and settle its accounts monthly. As a result, $61,867 in
low-rent public housing funds was used to pay expenses of other HUD programs and was not
reimbursed to the public housing fund for over 30 days.



 Interfund Balances Due to the
 Low-Rent Public Housing Fund
 Were Not Settled Monthly


               The Authority used a due-to/due-from accounting system to account for
               transactions directly between other funds and/or other entities included within its
               general ledger but did not have adequate internal controls requiring it to reconcile
               and settle its accounts monthly. A program’s or entity’s due-to balance represents
               amounts it owes (payable) another fund or entity for disbursements and/or
               advances made on its behalf. A due-from balance (receivable) represents an
               amount owed the program or entity.

               According to the fiscal year 2004 independent audit of the Authority’s financial
               statements, $350,470 was owed to the low-rent public housing fund from other
               HUD programs including the Public Housing Capital Fund, Community
               Development Block Grant, and HOME Investment Partnerships, as well as two
               tax credit properties developed outside of HUD and not part of the annual
               contributions contract. At the end of fiscal year 2005, $61,867 was owed to the
               low-rent public housing fund from the Community Development Block Grant
               ($4,509) and the HOME Investment Partnerships ($57,358) programs.

               The Authority’s use of low-rent public housing funds to support other HUD
               programs is a violation of its annual contributions contract. Section 9(C) under
               part A of the contract states that the Authority may withdraw funds from the
               general fund only for the payment of the costs of development and operation of
               the projects under the annual contributions contract with HUD, the purchase of
               investment securities as approved by HUD, and such purposes as may be
               specifically approved by HUD. It further states that program funds are not
               fungible and that withdrawals shall not be made for a specific program in excess
               of the funds available for the program.

               The violation of the annual contributions contract occurred because the Authority
               did not have adequate internal controls to ensure that it reimbursed its low-rent


                                                14
          public housing program in a timely manner. Therefore, the Authority should take
          action to reimburse the low-rent public housing fund $61,867 from its Community
          Development Block Grant and HOME Investment Partnerships programs and
          create and implement policies and procedures to reconcile and settle its accounts
          monthly.

Recommendations


          We recommend that the director of the Baltimore Public Housing Program Hub
          require the Authority to

          4A.     Repay its low-rent public housing fund $61,867 owed by the Community
                  Development Block Grant and HOME Investment Partnerships programs.

          4B.     Create and implement policies and procedures to ensure the due-to/due-
                  from account is reconciled and settled monthly, thereby putting $61,867 in
                  public housing funds to better use over a one-year period.




                                          15
                         SCOPE AND METHODOLOGY


We performed the audit from September 2005 through March 2006 at the Authority located in
Hampton, Virginia. The audit was performed in accordance with generally accepted government
auditing standards.

The audit covered transactions representative of operations current at the time of the audit and
included the period January 2003 through August 2005. We expanded the scope of the audit as
necessary. We reviewed applicable regulations and guidance and discussed operations with
management and staff personnel at the Authority.

To determine whether the Authority carried out its operations in accordance with applicable
HUD requirements, we

   •   Reviewed the Authority’s internal control structure,

   •   Reviewed 10 of 44 active contracts with an estimated dollar value of more than $2
       million,

   •   Used audit software to randomly select and review 63 Section 8 tenant files and 10 public
       housing tenant files,

   •   Reviewed 10 of 124 drawdowns from the Line of Credit Control System totaling
       approximately $2.2 million, and

   •   Reviewed the Authority’s interfund balances.




                                               16
                             INTERNAL CONTROLS


Internal control is 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:

                  •   Properly allocating applicable costs to the Authority’s affiliated nonfederal
                      entities,

                  •   Conducting all procurement transactions in accordance with federal
                      procurement regulations,

                  •   Accurately calculating rent and subsidies of families in the Authority’s
                      Section 8 program, and

                  •   Settling interfund balances on a monthly basis.

              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.
              The Authority did not



                                               17
•   Have a plan for properly allocating applicable costs to the Authority’s
    affiliated nonfederal housing developments.

•   Ensure that procurement transactions were conducted in accordance with
    federal procurement regulations.

•   Have an adequate quality control program to ensure that rent and subsidies
    were accurately calculated.

•   Implement procedures to ensure that interfund balances were settled on a
    monthly basis.




                              18
                                   APPENDIXES

Appendix A

              SCHEDULE OF QUESTIONED COSTS
             AND FUNDS TO BE PUT TO BETTER USE

        Recommendation             Ineligible 1/    Unsupported      Funds to be put
        number                                               2/       to better use 3/
                         1A                              $59,816
                         1B                                                  $22,431
                         2A                              $84,891
                         2B                                                  $84,891
                         3A             $5,090
                         3B                                                     $773
                         4A            $61,867
                         4B                                                 $61,867
                       Total           $66,957         $144,707            $169,962


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 estimates of amounts that could be used more
     efficiently if an Office of Inspector General (OIG) recommendation is implemented.
     This includes reductions in outlays, deobligation of funds, withdrawal of interest subsidy
     costs not incurred by implementing recommended improvements, avoidance of
     unnecessary expenditures noted in pre-award reviews, and any other savings which are
     specifically identified. In these instances, if the Authority implements our
     recommendations, it will 1) cease improperly using low-rent public housing funds
     annually to support its nonfederal entities; 2) prudently use federal funds to obtain the
     best possible value for services; 3) use $773 in Section 8 funds to serve its purpose of
     assisting eligible families; and 4) cease using low-rent public housing funds to support
     other programs.




                                             19
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation   Auditee Comments




Comment 1



Comment 2




Comment 3



Comment 4




                         20
                         OIG Evaluation of Auditee Comments


Comment 1   The Authority provided a copy of a $59,816 check it issued to reimburse the low-
            rent public housing program for not properly allocating costs to its nonfederal
            housing developments. Once we receive evidence showing the check has cleared,
            we will consider recommendation 1A closed.

Comment 2   We evaluated documentation the Authority provided to justify the four contracts it
            awarded, and concluded that it had not yet provided sufficient documentation to
            close recommendation 2A. The Authority stated training will be provided to
            ensure federal procurement regulations and its own procurement policies are
            properly followed. A description of the training and documentation for employee
            attendance will be required to close recommendation 2B.

Comment 3   The Authority provided copies of checks reimbursing tenants for the $773 in
            housing assistance underpayments. We therefore consider recommendation 3B
            closed. The Authority also provided documents identifying a written internal
            control procedure that will be added to their Administrative Plan, which
            adequately addresses recommendation 3C.

Comment 4   The Authority provided copies of checks reimbursing the low-rent public housing
            fund from the Community Development Block Grant and HOME Investment
            Partnerships programs. Once we receive evidence showing the checks have
            cleared, we will consider recommendation 4A closed. The Authority also
            provided a written internal control procedure that will be included in its
            Administrative Policies and Procedures Manual, which is sufficient to close
            recommendation 4B.




                                            21