oversight

The Boston, MA, Housing Authority Generally Administered Its Capital Fund Recovery Grant as Required

Published by the Department of Housing and Urban Development, Office of Inspector General on 2010-09-27.

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

                                                                 Issue Date
                                                                        September 27, 2010
                                                                  
                                                                 Audit Report Number
                                                                        2010 BO 1010




TO:         Donna Ayala, Director, Office of Public Housing, Boston Hub, 1APH


FROM:       John A. Dvorak, Regional Inspector General for Audit, Region 1, 1AGA


SUBJECT: The Boston, MA, Housing Authority Generally Administered Its Capital Fund
           Recovery Grant as Required


                                   HIGHLIGHTS

 What We Audited and Why

             We audited the Boston, MA, Housing Authority (Authority) because it was
             awarded more than $33 million in Capital Fund Recovery Grant funds under the
             American Recovery and Reinvestment Act of 2009 (Recovery Act) and obligated
             the majority of the grant shortly before the required obligation deadline. Our
             objectives were to determine whether the Authority (1) obligated the capital fund
             grant funds it received under the Recovery Act for eligible projects, (2) properly
             supported obligations, and (3) had adequate management controls governing its
             obligation process.


 What We Found


             Overall, the Authority generally obligated capital funds for eligible projects,
             maintained proper support for the obligations related to the Capital Fund
             Recovery Grant, and had adequate management controls governing its obligation
             process.
              The Authority also administered its grant in accordance with requirements, and its
              accounting department maintained proper support and tracking of obligations for
              more than $33 million in Recovery Act capital funds. The Authority’s Recovery
              Act initiatives were well underway, and it appeared to be able to expend funding
              within the timeframe requirements of the Recovery Act.

              This report contains no recommendations, and no further action is necessary.


Auditee’s Response

              We provided Authority officials with a draft audit report on September 23, 2010,
              and requested a response by September 28, 2010. We contacted the Authority
              officials for an exit conference on September 24, 2010, to discuss the draft report.
              The Authority decided forego meeting with us since the report contained no
              adverse findings.




                                                2
                           TABLE OF CONTENTS



Background and Objectives                                                      4

Results of Audit
      The Authority Generally Obligated Capital Funds in Accordance With the   5
      Recovery Act and HUD Rules and Regulations

Scope and Methodology                                                          7

Internal Controls                                                              8




                                            3
                      BACKGROUND AND OBJECTIVES


The Boston Housing Authority (Authority) has 64 developments, a few of which have both
Federal and State components. Of the 64 developments, 37 are designated as elderly/disabled
developments, and 27 are designated as family developments. The Authority owns and manages
some scattered-site properties throughout the city of Boston as well. In total, the Authority
manages more than 10,000 units of Federal public housing. The Authority is lead by an
administrator who is responsible for the day-to-day operations of the Authority, including the
planning, administration, and coordination of all the Authority’s programs of housing for low-
income families, its business affairs, and its other activities.

On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act
of 2009 (Recovery Act). The legislation provided $4 billion in appropriations for the capital
fund to carry out capital and management activities for public housing agencies, as authorized
under Section 9 of the United States Housing Act of 1937. The Recovery Act required that $3
billion of the public housing capital funds be distributed as formula funds and the remaining $1
billion be distributed through a competitive process.

The Authority obligated more than $33 million in Recovery Act capital funds for the
redevelopment of the Washington Street housing site; an energy performance contract for
lighting, heating, and water systems; the upgrade and modernization of bathrooms; boiler
replacement and upgrades; preparation for the installation of security cameras; roof replacement;
securing the building envelope at a housing site; and elevator modernization.

Our audit objective was to determine whether the Authority (1) obligated the capital fund grant
funds it received under the Recovery Act for eligible projects, (2) properly supported obligations,
and (3) had adequate management controls governing its obligation process.




                                                4
                                 RESULTS OF AUDIT

The Authority Generally Obligated Capital Funds in Accordance With
the Recovery Act and HUD Rules and Regulations
The Authority generally obligated capital funds in accordance with the Recovery Act and U.S.
Department of Housing and Urban Development (HUD) rules and regulations. Specifically, the
Authority obligated capital funds for eligible projects, obligations were properly supported, and
the obligation process had proper management controls.


 The Authority Obligated
 Capital Funds for Eligible
 Projects


               On March 18, 2009, the HUD Office of Public and Indian Housing (PIH) issued
               Notice PIH 2009-12 (HA), which provided information and procedures for
               processing Recovery Act capital fund formula grants. On March 18, 2009, HUD
               awarded the Authority more than $33 million in Capital Fund Recovery Grant
               funds. The Authority had until March 17, 2010, to obligate 100 percent of the
               Capital Fund Recovery Grant, and the Authority met the deadline. The Authority
               obligated capital funds for (1) redevelopment of the Washington Street housing
               site; (2) an energy performance contract for lighting, heating, and water systems
               at 12 public housing sites; (3) the upgrade and modernization of more than 600
               bathrooms at three of the Authority’s oldest family housing sites—Charlestown,
               Mary Ellen McCormack, and Old Colony; (4) boiler replacement and upgrades at
               six public housing sites; (5) preparation for the installation of security cameras in
               elevators at five family developments and in elevators and lobbies at 24 elderly
               developments; (6) roof replacement at 10 buildings at Lenox Street and seven
               buildings at Charlestown housing sites; (7) securing the building envelope at the
               Walnut Park housing site; and (8) elevator modernization at one family site and
               six elderly housing sites.



  Obligations Were Properly
  Supported

               The Authority maintained proper support for the obligations related to the Capital
               Fund Recovery Grant. The accounting department maintained proper support and
               adequately tracked the obligation of more than $33 million in Recovery Act
               capital funds it received.


                                                 5
  The Obligation Process Had
  Proper Management Controls

               The Authority had a procurement policy, and it was amended in May 2009 to
               incorporate the necessary updates to bring the Authority into compliance with the
               Recovery Act and HUD guidance. The Authority generally followed its
               procurement policy, and contracts were generally properly awarded. We sampled
               and reviewed four contracts to determine whether the Authority obligated funds in
               a timely manner. In addition, we reviewed the four contracts to determine
               whether the projects were eligible to be funded by the Capital Fund Recovery
               Grant funds. These four projects represented nearly $15 million of more than $33
               million (45 percent) of the total obligations for the Capital Fund Recovery Grant.
               The chief procurement officer adequately maintained contract files, which
               properly documented the contract process.


Expenditures Were Properly
Supported


               The Authority’s accounting department maintained proper support for the
               expenditures reviewed totaling $10 million. It also adequately tracked and
               reported the expenditures of Recovery Act capital funds it had obligated.



  Conclusion


               Based on our audit, the Authority obligated capital funds for eligible projects,
               obligations were properly supported, and the obligation process had proper
               management controls for the more than $33 million in Recovery Act capital
               funds. Also, it generally administered its grant in accordance with requirements.
               The Authority’s Recovery Act initiatives were well underway, and it appeared to
               be able to expend funding within the timeframes of the Recovery Act.

               Based on the results of the audit, this report contains no recommendations.




                                                6
                        SCOPE AND METHODOLOGY

We conducted the audit in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objectives.

We conducted our audit between March and August 2010. We completed our fieldwork at the
Authority’s office located at 52 Chauncy Street, Boston, MA, and 125 Amory Street, Roxbury,
MA. In addition, we visited the City of Boston, Boston City Hall, One City Hall Plaza, Boston,
MA, and the Boston Redevelopment Authority, One City Hall Square, Boston, MA. Our audit
covered the period March 18, 2009, through March 17, 2010, and was extended as necessary to
meet our audit objectives.

To accomplish our objectives, we did the following:

              Reviewed applicable laws, regulations, and other HUD program requirements.

              Analyzed the Authority’s obligations and disbursements related to the Capital
               Fund Recovery Grant.

              Interviewed the Authority’s staff to learn how Recovery Act funds were
               obligated.

              Selected a sample of four contracts and reviewed the contracts to determine
               whether the Authority obligated funds in a timely manner. In addition, we
               reviewed the four contracts to determine whether the projects were eligible to be
               funded by the Capital Fund Recovery Grant funds. These four projects
               represented nearly $15 million of more than $33 million (45 percent) of the total
               obligations for the Capital Fund Recovery Grant.




                                                7
                              INTERNAL CONTROLS

Internal control is a process adopted by those charged with governance and management,
designed to provide reasonable assurance about the achievement of the organization’s mission,
goals, and objectives with regard to

      Effectiveness and efficiency of operations,
      Reliability of financial reporting, and
      Compliance with applicable laws and regulations.

Internal controls comprise the plans, policies, methods, and procedures used to meet the
organization’s mission, goals, and objectives. Internal controls include the processes and
procedures for planning, organizing, directing, and controlling program operations as well as the
systems for measuring, reporting, and monitoring program performance.


 Relevant Internal Controls
               We determined that the following internal controls were relevant to our audit
               objectives:

                     Policies and procedures to reasonably ensure that grant funds are obligated
                      for eligible projects,
                     Policies and procedures to reasonably ensure that obligations are properly
                      supported, and
                     Policies and procedures to reasonably ensure that obligations are reported
                      accurately and in a timely manner and Recovery Act capital funds are
                      adequately monitored.

               We assessed the relevant controls identified above.

               A deficiency in internal control exists when the design or operation of a control does
               not allow management or employees, in the normal course of performing their
               assigned functions, the reasonable opportunity to prevent, detect, or correct (1)
               impairments to effectiveness or efficiency of operations, (2) misstatements in
               financial or performance information, or (3) violations of laws and regulations on a
               timely basis.

 Significant Deficiency


               Based on our review, we found no significant deficiencies in the Authority’s
               internal controls that would affect its ability to manage and administer Recovery
               Act-funded projects.



                                                 8