oversight

Capacity Reviews of the Warm Springs Housing Authority, Warm Springs, Oregon

Published by the Department of Housing and Urban Development, Office of Inspector General on 2009-09-21.

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

                                                  U.S. Department of Housing and Urban Development
                                                                    Office of Inspector General
                                                                                              Region X
                                                                                Federal Office Building
                                                                            909 First Avenue, Suite 126
                                                                      Seattle, Washington 98104-1000
                                                                                  Voice (206) 220-5360
                                                                                   Fax (206) 220-5162

                                                                   Issue Date

                                                                         September 21, 2009
                                                                   Audit Memorandum Number

                                                                            2009-SE-1803



MEMORANDUM FOR: Ken Bowring, Administrator, Northwest Office of Native American
                Programs, 0API



FROM:                      Joan S. Hobbs, Regional Inspector General for Audit, 0AGA

SUBJECT:                   Capacity Review of the Warm Springs Housing Authority, Warm
                           Springs, Oregon


                                        INTRODUCTION

In accordance with our goal to review funds provided under the American Recovery and
Reinvestment Act of 2009 (Recovery Act), we conducted a capacity review of Warm Springs
Housing Authority’s (Authority) operations. We selected the Authority for this review based
upon the results of our audit of the Authority in 2007. Our objective was to determine whether
there was evidence indicating that the Authority lacked the capacity to adequately administer
Recovery Act funding.

For each recommendation without a management decision, please respond and provide status
reports in accordance with U.S. Department of Housing and Urban Development (HUD)
Handbook 2000.06, REV-3. Please furnish us copies of any correspondence or directives issued
because of this review.

                                METHODOLOGY AND SCOPE

Our review of the Authority was limited to gaining an understanding of internal controls over the
administration of Recovery Act funds. To meet our objective, we reviewed Recovery Act
documentation and the Authority’s proposed Recovery Act project. We interviewed Authority
management and staff and briefly reviewed Authority policies and procedures, organizational
charts, and financial and accounting documents and records.
Our review of this documentation was limited to our stated objective and should not be considered a
detailed analysis of the Authority’s internal controls or operations. Since this was a limited scope
review, it was not performed in accordance with generally accepted government auditing standards.


                                         BACKGROUND

The Warm Springs Tribal Council designated the Authority to act on its behalf for Native
American Housing Assistance and Self-Determination Act of 1996 grants. The Authority
provides housing services for low-income families on the Warm Springs reservation, located in
central Oregon, and is responsible for the management of housing programs funded by both the
tribe and HUD.

Under the Recovery Act, HUD allocated more than $626,000 to the Authority, with which it
proposes to build five new homeownership units. Consequently, our review consisted of the
Authority’s internal controls related to procuring the goods and services needed to build the houses,
accounting for the costs and materials associated with the project, and ensuring quality construction.


                                     RESULTS OF REVIEW

We did not find evidence indicating that the Authority lacked the capacity to adequately administer
its Recovery Act funding. Our limited review found that the Authority’s procurement process and
accounting system generally met HUD requirements. The Authority’s development plan for the
five new units and recently implemented changes to its inventory system should safeguard
purchased materials. If the Authority follows its internal controls and its development plan, it
should properly use its Recovery Act funding.

While the Authority had developed the areas of capacity necessary to administer its Recovery Act-
funded project of building five new homeowner units, we have a significant concern regarding the
management of the Authority’s operations. The concern is that accomplishments will not be
sustained without a commitment to future management and to continued improvement of the
internal control environment.

Previously, the tribal government placed the Authority’s board of commissioners in abeyance due to
abuses, but the board was later reinstated. During the course of this review, two members of the
board were removed because they were ineligible to be covered under the tribe’s liability insurance
due to prior offences that could have been disclosed by performing a background check. In
addition, a third member’s term has expired and another resigned, and they were not reinstated or
replaced.

As a result, the Authority’s board has only three members of the seven mandated by Warm Springs’
tribal code and lacks the quorum required by the code to conduct business. Also, the executive
director came out of retirement to help transition the Authority into new management, but a new
executive director has not yet been hired, and the Authority faces uncertainty about its future
leadership. Although the board does not have the required quorum, the executive director has the
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authority to enter into the contracts necessary to complete the development of the units funded by
the Recovery Act.

A qualified executive director and functional board of commissioners are necessary to establish the
organization’s internal control environment; integrity and ethical values; commitment to
competence; and framework for planning, directing, and controlling operations to achieve Authority
objectives. New leaders need to be selected that are qualified, experienced, and dedicated to the
mission of the Authority.


                                    RECOMMENDATIONS

We recommend the Administrator, Northwest Office of Native American Programs,

  1A. Provide technical assistance using Northwest Office of Native American Programs staff, as
      needed, in the Authority’s efforts to complete open grants, acquire new leadership, improve
      its control environment, and implement its inventory system.

  1B. Monitor the Authority’s progress in completing the activities noted in recommendation 1A.

  1C. Request the Tribal Council of the Confederated Tribes of Warm Springs to appoint qualified
      and insurable members to the Authority’s board of commissioners in accordance with the
      Warm Springs tribal code and follow up on the status of the search for board members.

  1D. Request the Tribal Council of the Confederated Tribes of Warm Springs to endorse and
      expedite the search for a qualified and insurable executive director for the Authority in
      accordance with the Warm Springs tribal code and follow up on the status of the search for
      an executive director.

                                    AUDITEE’S RESPONSE

We provided a discussion draft memorandum report to the auditee on September 3, 2009, and
held an exit conference on September 9, 2009. The Warm Springs Housing Authority provided
written comments which are attached as Appendix A. The authority agreed with our findings
and recommendations and proposed a course of corrective actions.




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Appendix A

                        AUDITEE COMMENTS




Joan S. Hobbs                                September 9, 2009
Regional Inspector General for Audit
U.S. Department of Housing and Urban Development
Office of Inspector General
Region X
Federal Office Building
909 First Avenue, Suite 126
Seattle, Washington 98104-1000

Joan

Re: Capacity Review of the Warm Springs Housing Authority


In response to your memorandum addressed to Mr. Ken Bowring, Northwest
Office of Native American Programs (NwONAP) that I received via FedEx on
Friday September 4, 2009.

And, our subsequent exit phone conference call on Wednesday, September
9, 2009 for my comments and response to the site review. Let me first of all
comment on the staff site visit for their review of our programs and services.
It met the highest standards that are demanded of the Office of Inspector
General. We appreciated the professionalism, integrity, and work ethics of all
staff in their site visit.

                        RECOMMENDATEDATIONS

We recommend the Administrator, Northwest Office of Native American
Programs,




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1A   Provide technical assistance using northwest Office of
     Native American Programs Staff, as needed, in the
     Authority’s efforts to complete open grants, acquire new
     leadership, improve its control environment, and
     implement its inventory system.

Thru the efforts of Mr. Ken Bowering Administrator, Northwest Office of
Native American Programs and staff, we have been in contact with staff on
question for resolution of our open grants and help in bring about closure to
this matter.

Thru the efforts of Mr. Ken Bowring and his programs, services, and
communications with Mr. Charles R. Calica, Secretary Treasurer/CEO for the
Warm Springs Confederated Tribes. Collectively we are addressing the
leadership question for both the LHA Board of Commissioners and the
selection of a new Executive Director for the Warm Springs Housing
Authority.

Improvements to our control environment and implementation of our
inventory system are a works in progress. We are engaging Mr. Kermit
Mankiller, consultant with the National American Indian Housing Council to
review and make improvements to our current procurement and contracting
process and procedures, along with policy language improvements. While
our current practices meet HUD requirement we are looking for
improvements to our current practices and procedures.

1B   Monitor the Authority’s progress in completing the activities
     noted in recommendation 1A.

We will keep Mr. Ken Bowering posted on our activities and make periodic
reports to his office of current activities and changes to our processes and
procedures.

1C   Request the Tribal Council of the Confederated Tribes of Warm
     Springs to appoint qualified and insurable members to the
     Authorities’ board of commissioners in accordance with the
     Warm springs tribal code and follow up on the status of the
     search for board members.

I am currently scheduled to meet with Tribal Council on Thursday September
10, 2009 at 1:30 PM for my Housing Report. My first order of business is to
request Tribal Council action on the filling the four (4) LHA Board of
Commissioners vacant positions. And the need to expedite the process and
procedures outlined by Tribal Council. I will further request that Mr. Charles


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R. Calica, Secretary Treasurer/CEO for the Warm Springs Confederated
Tribes to keep Mr. Ken Bowering informed of the Tribal Council process and
procedures.

I will keep Mr. Bowering posted on the out come of my request and the
actions of Tribal Council on resolution to this matter.

1D    Request the Tribal Council of the Confederated Tribes of Warm
      Springs to endorse and expedite the search for a qualified and
      insurable Executive Director for the Authority in accordance
      with the Warm Springs Tribal Code and follow up on the status
      of the search for an Executive Director.

I have signed a service contract with Mr. Greg Lambert, President of the Mid
Oregon Personnel Greg@MidOregonPersonnel.com phone Madras,
Oregon 541-475-7640, on Wednesday September 8, 2009 to conduct a
regional and national search for an Executive Director for the Warm Springs
Housing Authority.

From the finalist the remaining three (3) LHA Board of Commissioners and
two (2) senior managers from Tribal government will conduct an interview
and selection for the new Executive Director for the Warm Springs Housing
Authority.

I will keep Mr. Ken Bowering posted on all of the above recommendations
from the Office of Inspector General, Region X Office. With email copies to
jhobbs@hudoig.gov on our progress for resolution to the identified I.G. site
Report for Warm Springs.


Respectfully,

Signed
___________________________
Jeffery Sanders Sr.
Executive Director
Warm Springs Housing Department
Email: jsanders@wstribes.org
Office Phone 541-553-3250
Cell Phone 541-460-0377


CC:   Mr. Ken Bowering, Administrator Northwest Office of Native American Programs
      Mr. Charles R. Calica, Secretary Treasurer/CEO Warm Springs Confederated Tribes



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