oversight

Dallas Housing Authority, Dallas, Texas, Demonstrated Capacity to Administer Its Recovery Act Capital Fund Formula Grant

Published by the Department of Housing and Urban Development, Office of Inspector General on 2009-12-18.

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

                                                                 Issue Date
                                                                          December 18, 2009
                                                                 Audit Report Number
                                                                          2010-FW-1001




TO:         Justin Ormsby, Director, Office of Public Housing, 6APH

            //signed//
FROM:       Gerald R. Kirkland
            Regional Inspector General for Audit, Fort Worth Region, 6AGA

SUBJECT: Dallas Housing Authority, Dallas, Texas, Demonstrated Capacity to Administer
         Its Recovery Act Capital Fund Formula Grant


                                   HIGHLIGHTS

 What We Audited and Why

             As part of the Office of the Inspector General’s (OIG) directive to determine
             whether safeguards exist to ensure that American Recovery and Reinvestment Act
             of 2009 (Recovery Act) funds are used for their intended purposes, we audited the
             Dallas Housing Authority’s (Authority) Recovery Act Public Housing Capital
             Fund formula grant (grant). We selected the Authority based upon a risk
             assessment of regional housing authorities that were allocated capital funds under
             the Recovery Act. Our objective was to evaluate the Authority’s capacity in the
             areas of internal controls, eligibility, financial controls, procurement, and
             output/outcomes in administering its grant.


 What We Found

             Overall, the Authority demonstrated capacity to administer its grant in accordance
             with requirements. It had sufficient controls in place to ensure activities were
             properly procured, funds were obligated and expended within the time allotted,
             and payments were properly authorized. The Authority’s Recovery Act initiatives
             were well underway and appeared to include eligible activities consistent with its
             grant agreement. However, the Authority should address the issues identified in
           this report to help ensure it fully expends its grant funds on eligible activities
           within Recovery Act deadlines.

What We Recommend


           We recommend that the Director, U. S. Department of Housing and Urban
           Development (HUD), Office of Public and Indian Housing, Fort Worth, Texas,
           work with the Authority to resolve documentation requirements for administration
           and management improvements expense categories. We also recommend that
           HUD require the Authority to revise its budget and reallocate $280,000 in
           budgeted funds to other eligible activities. Further, HUD should require the
           Authority to properly reclassify $27,425 in costs associated with bid advertising
           and duplicating bid specifications, require a contractor to correct improperly
           installed garage doors, and enforce lease provisions that hold tenants accountable
           for damages.

           We agree with HUD’s management decisions for all of the recommendations.
           Further, we agree that final action is complete for recommendations 1A, 1B, and
           1C. We will make the appropriate entries in the departmental audit resolution
           tracking system upon issuance of the report.

           For each recommendation without a completed final action, 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.

Auditee’s Response


           We provided our draft report to the Authority on December 2, 2009, and
           discussed it with Authority officials at the exit conference on December 7, 2009.
           The Authority provided its written comments to our draft report on December 14,
           2009. The Authority agreed with the finding and recommendations and provided
           information about how it implemented or will implement the recommendations.
           The complete text of the auditee’s response, along with our evaluation of that
           response, can be found in appendix B of this report.




                                              2
                            TABLE OF CONTENTS

Background and Objective                                                        4

Results of Audit
      Finding: The Authority Demonstrated Capacity to Administer the Grant in   5
      Accordance with Requirements

Scope and Methodology                                                           10

Internal Controls                                                               12

Appendixes
   A. Schedule of Questioned Costs and Funds To Be Put to Better Use            13
   B. Auditee Comments and OIG’s Evaluation                                     14




                                            3
                          BACKGROUND AND OBJECTIVE

In 1938, the Dallas City Council established the Dallas Housing Authority (Authority). A
five-member board of commissioners1 governs the Authority. The board appoints a president and
chief executive officer to administer the operations of the Authority. The Authority’s main office is
located at 3939 North Hampton Road, Dallas, Texas.

The Authority receives capital funds annually via a formula grant from the U. S. Department of
Housing and Urban Development (HUD). The Authority may use its capital funds for
development, financing, modernization, and management improvements. It received $6.9 and
$6.4 million in capital fund grants in 2008 and 2009, respectively.

On February 17, 2009, the President signed the American Recovery and Reinvestment Act of
2009 (Recovery Act). Title XII of the Recovery Act appropriated $4 billion to carry out capital
and management activities for public housing agencies.2 By formula, HUD allocated $8.8
million to the Authority for its capital and management activities and executed a Recovery Act
Public Housing Capital Fund formula grant (grant) agreement, effective March 18, 2009.

Transparency and accountability were critical priorities in the funding and implementation of the
Recovery Act. The Recovery Act imposed additional reporting requirements beyond the
standard reporting requirements for the Authority’s capital fund grants. In addition, the
Authority must obligate 100 percent of its Recovery Act grant by March 17, 2010. At that date,
any unobligated funds must be recaptured by HUD.

Our objective was to evaluate the Authority’s capacity in the areas of internal controls,
eligibility, financial controls, procurement, and output/outcomes in administering its grant.




1
    The mayor of Dallas appoints board members.
2
    As authorized under Section 9 of the United States Housing Act of 1937.


                                                       4
                                     RESULTS OF AUDIT

Finding: The Authority Demonstrated Capacity to Administer the Grant
         in Accordance with Requirements
The Authority had sufficient controls in place to ensure activities were properly procured, funds
were obligated and expended within the time allotted, and payments were properly authorized.
However, the Authority needs to revise its grant budget to reallocate costs for activities it no
longer plans to charge to the grant. In addition, it incorrectly classified certain expenses and did
not ensure that a contractor properly installed deliverables. By addressing the issues identified in
this report, the Authority could strengthen its capacity and achieve additional program goals.


The Authority Had Sufficient
Controls
               The Authority’s development department was responsible for ensuring the Authority
               obligated and expended grant funds within the established time limits. The director
               of development tracked Recovery Act grant obligations, expenditures, and contracts
               using Excel spreadsheets and met periodically with finance staff to compare them to
               information in the Authority’s financial system. While not a flawless method, it
               appeared to meet the Authority’s needs.

               The Authority’s finance department continued to experience challenges; however, it
               appeared to be constructively addressing them. Despite its challenges, the finance
               department had sufficient controls in place to properly record obligations and
               expenditures in its accounting system and report the information to HUD.

               HUD's financial system (electronic Line of Credit Control System (eLOCCS)) and
               the Authority’s internal records showed the following for the Authority’s $8.8
               million grant:

                                             Total       Percentage         Total         Percentage
                                           obligated      obligated       expended         expended
                  eLOCCS report
                      as of               $3,271,841          37.12        $819,822           9.30
                September 30, 2009
                 Authority records
                      as of               $6,256,530          70.97       $1,046,894          11.88
                September 28, 2009
               Table 1: It appeared the Authority’s development department updated its records after its September 28,
               2009, board meeting, but its finance department had not yet obligated the funds in eLOCCS (the Authority
               could not obligate grant funds in eLOCCS until the contracts were executed).




                                                          5
                  While the Authority had made progress in obligating and expending its grant
                  funds, it had not drawn down any of the $880,000 budgeted for administration.3
                  The Authority had not drawn down administrative funds because it did not have
                  documentation of specific administrative expenses associated with the grant, as
                  required by HUD. Specifically, HUD required the Authority to provide
                  supporting documentation for drawdown requests for administration and
                  management improvements for its Recovery Act grant in anticipation of guidance
                  from the Office of Management and Budget regarding transparency reporting
                  requirements. Although the Authority had incurred administrative costs
                  associated with the grant, it did not allocate them to the grant in its records.
                  Under the standard capital fund program, it was not required to do so;4 therefore,
                  it did not have detailed information available to support drawdowns for
                  administration. If the Authority is unable to adequately support its administrative
                  expenses in a timely manner, the budgeted $880,000 would be subject to
                  recapture. Following issuance of the draft audit report, HUD worked with the
                  Authority to resolve documentation requirements for these expense categories.

                  Authority management was responsive to issues raised during the review and took
                  appropriate action when warranted. The Authority should continue to strive for
                  good coordination between the development and finance departments to ensure its
                  records reconcile. The Recovery Act requirement to expedite obligation and
                  expenditure of grant funds makes this need more urgent than normal.

    The Authority Should Revise Its
    Grant Budget


                  Because of the shorter timeframes for obligating and expending Recovery Act
                  funds, the Authority must make timely revisions to its budgets and activities to
                  ensure it continues to maximize its use of these funds. For example, the
                  Authority’s Recovery Act procurements recognized aggressive bidding, and the
                  Authority planned to reallocate the resultant cost savings to additional activities.
                  As a result of the audit, the Authority revised its grant budget to reflect the
                  additional activities it planned to undertake with its cost savings and addressed the
                  issues identified below.

                  The Authority allocated $180,000 in its grant budget for a physical needs
                  assessment required by its grant agreement with HUD. However, as of September
                  30, 2009, HUD had not provided guidance on performing the assessment.
                  Instead, HUD advised5 public housing agencies not to budget any Recovery Act
                  funds for physical needs assessments. To avoid recapture, the Authority


3
     As of September 30, 2009.
4
     Under asset management, fees that the central office cost center earned were “de-federalized,” thus the
     Authority did not and was not required to allocate central office expenditures to specific grants.
5
     July 24, 2009, Frequently Asked Questions on HUD’s Office of Capital Improvements Web site.


                                                          6
                  implemented the recommendation to reallocate this $180,000 to other eligible
                  activities before the March 17, 2010, obligation deadline.

                  In another instance, the Authority allocated $100,000 to remodel space in its
                  community and support services department. It expended $43,792 on the project
                  before deciding not to charge the cost to the grant. The Authority revised its
                  budget to reallocate the $100,000 for this project to other eligible activities and
                  obligate the funds accordingly.

                  The Authority misclassified $15,757 in bid advertising expenses and $11,668 in
                  costs for reproducing bid specification documents. This error occurred because
                  the Authority incorrectly budgeted $30,000 in bid advertising costs to
                  management improvements rather than administration. In addition, HUD
                  required costs for reproducing bid specification documents to be charged to
                  planning, not management improvements.6 The Authority revised its budget to
                  reclassify bid advertising expenses as administration7 and add a line item for
                  planning to include the costs of reproducing bid specifications. The Authority
                  should also reclassify the costs in its financial records and eLOCCS.

    The Authority Should Hold the
    Contractor Responsible and
    Enforce Lease Provisions


                  The Authority executed a $27,000 contract to replace 50 garage doors for single-
                  family homes in its Lakewest Village scattered site. After only 8 years,8 all
                  garage doors at the site were replaced. Work under the contract included
                  furnishing and installing all materials, supplies, equipment, and labor to complete
                  the garage door replacements. However, some of the doors appeared to have been
                  improperly installed, and the contractor failed to replace some of the rotted wood
                  surrounding the doors as required by the contract. The contract required the
                  contractor to guarantee materials and workmanship for 1 year. The Authority
                  agreed to implement the recommendation to require the contractor to adjust doors
                  that did not appear to have been properly installed and replace rotted trim as
                  required in the scope of work.




6
      HUD’s Low-Rent Accounting Technical Guide prescribes the uniform chart of accounts that the Authority must
      use. This requirement allowed HUD to review and evaluate budget proposals for compliance with regulatory
      requirements and to monitor actual expenditures against approved budget estimates.
7
      In doing this, the Authority should be cognizant of the 10 percent limitation on administration.
8
      Lakewest Village was built in 2001.


                                                        7
             Figure 1: The garage door had a gap between the door and the right side trim. Minor damage was noted on
             the top right side of the bottom panel. The trim on the left side appears to be rotted.

             In addition, within 4 months of replacement, several garage doors showed visible
             damage. The Authority should enforce provisions of its lease that hold tenants
             accountable for damages to the doors. Authority management agreed to require
             tenants to pay actual costs for repairing the damages. Had management enforced
             the lease provisions, it may not have needed to replace all 50 garage doors after
             only 8 years in service. Managing the properties in accordance with the lease
             should mitigate future costs and prolong the useful life of the garage doors.




             Figure 2: These garage doors appear to have been properly installed; however, they have been damaged.


Conclusion

             Despite ongoing challenges in its finance department, the Authority demonstrated
             the capacity to administer the grant in accordance with requirements. It had
             sufficient controls in place to ensure activities were properly procured, funds were
             obligated and expended within the time allotted, and payments were properly
             authorized. The Authority addressed the budgetary issues identified in this report
             to help ensure it fully expends its grant funds on eligible activities within the


                                                       8
          Recovery Act deadlines. It should take expedient action to address the remaining
          concerns related to the correct classification of costs in its financial records and
          eLOCCS as well as enforcing contract and lease provisions associated with the
          garage doors at Lakewest Village.

Recommendations

          We recommend the Director, Office of Public and Indian Housing, Fort Worth,
          Texas, require the Authority to

          1A. Work with HUD to resolve documentation requirements for administration
              and management improvements expense categories in its budget, including the
              $880,000 the Authority budgeted for administration, or reprogram the funds to
              other eligible activities.

          1B. Revise its budget to reallocate $180,000 budgeted for a physical needs
              assessment to other eligible activities.

          1C. Revise its budget to reallocate $100,000 budgeted for remodeling the
              community and support services space to other eligible activities.

          1D. Revise its budget to properly reclassify $30,000 in bid advertising costs as
              administration and properly reclassify $15,757 expended for bid advertising in
              its financial records and eLOCCS.

          1E. Revise its budget to include a line item in planning for the cost of duplicating
              bid specifications, including at least the $11,668 already expended, and to
              reclassify the expenses in its financial records and eLOCCS.

          1F. Require the contractor to correct improperly installed garage doors at
              Lakewest Village.

          1G. Enforce lease provisions at Lakewest Village that hold tenants accountable
              for damages.




                                            9
                         SCOPE AND METHODOLOGY

We performed the audit at Authority's main offices at 3939 North Hampton Road, Dallas, Texas,
and at our offices in Fort Worth, Texas, from August 6 through September 30, 2009. The scope
of the audit was February through August 2009. We expanded the scope to include funding
obligations and expenditures reported to HUD as of September 30, 2009. We initially planned to
assess the Authority’s capacity to administer the grant by reviewing its performance for activities
that were similar to those it planned to undertake with its Recovery Act grant. However, the
review expanded beyond assessing the Authority’s capacity because the Authority had made
substantial progress in obligating Recovery Act funds. This allowed us to perform testing of
actual Recovery Act procurements and outputs/outcomes of in-progress and completed Recovery
Act projects.

To achieve our audit objectives, we

       Obtained and reviewed relevant laws, regulations, program guidance, and grant
       agreements.
       Interviewed HUD and Authority staff.
       Obtained, analyzed, and reviewed electronic financial records.
       Reviewed supporting documentation for disbursements.
       Reconciled recorded transactions with grant drawdown requests.
       Reviewed procurement activities.
       Inspected deliverables.

We performed a data reliability assessment of the Authority’s detailed general ledger trial
balance as of August 31, 2009. We used financial data from the Authority’s accounting system
to identify a universe of transactions from which to select sample items for testing. We based
audit conclusions on the results of tests performed on the selected sample, not on the financial
data. We tested the data by tracing it to source documentation while performing sample testing.
We did not identify any discrepancies between the data and the sample items. We also
performed limited analytical testing of general ledger entries and compared the expenses
recorded in the general ledger with the records maintained by the Authority’s development
department. Based on the planned use of the data, the minimal risk associated with using the
data, and the review of corroborating evidence, the data were complete and sufficiently reliable
to meet the stated audit objective.

We used ACL software to identify a sampling universe and select a random sample of
transactions in the general ledger trial balance as of August 31, 2009. After excluding certain
administrative expenditures that were subject to HUD mandatory review, we summarized the
transactions to identify a sampling universe of 52 journal entries. Further review and
classification of the data showed one payee accounted for 33 journal entries (63percent) but only
$11,668 of the $464,803 expended (2.5 percent). To prevent skewing the sampling results, we
selected one sample journal entry from that payee and five from the remaining payees, resulting
in a sample of more than 10 percent of the journal entries. Because we selected the journal
entries randomly, we expect the sample to be representative of the Authority's performance for


                                                10
nonadministrative expenditures under the grant. We did not project the sampling results to the
audit universe. The questioned costs reported are for specific sample items only.

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
objective. We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objective.




                                               11
                              INTERNAL CONTROLS

Internal control is an integral component of an organization’s management that provides
reasonable assurance that the following controls are achieved:

       Program operations,
       Relevance and reliability of information,
       Compliance with applicable laws and regulations, and
       Safeguarding of assets and resources.

Internal controls relate to management’s plans, methods, and procedures used to meet its
mission, goals, and objectives. They 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
              objective:

                  Program operations – Policies and procedures that management implemented
                  to reasonably ensure that its program met its objectives.

                  Validity and reliability of data – Policies and procedures that management
                  implemented to reasonably ensure that valid and reliable data were obtained,
                  maintained, and fairly disclosed in reports.

                  Compliance with laws and regulations – Policies and procedures that
                  management implemented to reasonably ensure that its resource use was
                  consistent with laws and regulations.

                  Safeguarding resources – Policies and procedures that management
                  implemented to reasonably ensure that its resources were safeguarded against
                  waste, loss, and misuse.

              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 did not identify any significant weaknesses.


                                               12
                                               APPENDIXES

Appendix A

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

                    Recommendation                Unsupported 1/             Funds to be put to
                           number                                                 better use 2/
                             1A                                                         $880,000
                             1B                                                          180,000
                             1C                                                          100,000
                             1D9                           $15,757                        14,243
                             1E                             11,668
                          Totals                           $27,425                    $1,174,243




1/   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 the 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.

2/   Recommendations that funds 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. These amounts include reductions in
     outlays, deobligation of funds, withdrawal of interest, costs not incurred by implementing recommended
     improvements, avoidance of unnecessary expenditures noted in preaward reviews, and any other savings that
     are specifically identified. In this case, it represents funds that can be properly classified, obligated, and
     expended within the time required that would otherwise be at risk of recapture.




9
     The Authority should revise its budget to properly reclassify $30,000 in bid advertising costs as administration
     costs. To avoid double counting, we split the amount between unsupported and funds to be put to better use
     ($15,757 + $14,243 = $30,000).


                                                          13
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation                               Auditee Comments

             Dallas Housing Authority


             December 14, 2009

             Mr. Gerald R. Kirkland, Regional Inspector General for Audit
             Office of Inspector General
             U.S. Department of Housing & Urban Development
             819 Taylor Street, Room 13A09
             Fritz Lanham Federal Building
             Fort Worth, Texas 76102

             Subject:             Dallas Housing Authority, Dallas, Texas Demonstrated Capacity to Administer
                                  Recovery Act Capital Funds Formula Grant

             Dear Mr. Kirkland:

             In March 2009, the Dallas Housing Authority (DHA) received $8.8 million dollars pursuant to Title XII
             of the American Recovery and Reinvestment Act of 2009 (Recovery Act) for capital and management
             activities and executed a Recovery Act Public Housing Capital Fund formula grant (grant) agreement.
             From August 6, 2009 to September 30, 2009, the U.S. Department of Housing and Urban Development
             (HUD), Office of Inspector General (OIG) conducted an audit of the capacity of DHA to administer the
Comment 1    grant. Due to the substantial progress made by DHA in obligating the funds, the OIG elected to expand
             the scope of the audit to include complete testing of actual Recovery Act procurements and
             outputs/outcomes in-progress and completed Recovery Act projects.

             DHA is pleased to receive the OIG’s finding that DHA demonstrated the capacity to administer the grant
             in accordance with the grant requirements. DHA greatly appreciates the opportunity to meet with you,
             the auditors, and Carrie E. Dobbins, Director, Technical Division, at the exit conference on the finding
             and on the recommendations made. We take this opportunity to comment on the recommendations and to
             apprise you of the resulting corrective actions taken.

             The recommendations included (1) working with HUD to resolve documentation requirements for
             administration and management improvement expense categories in the DHA budget, including the
             amount of $880,000 budgeted for administration, or reprogram the funds to other eligible activities; (2)
             revising the DHA budget to reallocate, reclassify, or reprogram expenses associated with a physical
             needs assessment, remodeling the community and supportive services space, and bid advertising costs,
             and to include a line item in planning for the cost of bid specifications; (3) contractor responsibility
             relating to deficiencies in installation of garage doors at the Lakewest Village scattered site property;
             and (4) lease enforcement at the Lakewest Village scattered site property for damages to garage doors.




                                                       14
            On November 30, 2009, a team of HUD personnel from the Fort Worth Field Office, led by
            David Storms, Facilities Management Specialist, conducted an on-site review of DHA’s
            ARRA activities to date. The review covered DHA's Procurement activities and Environment
            Review documentation relating to the grant. DHA's Development and Finance Departments
Comment 2   will work with this team to provide documentation to support the portion of $880,000 in
Comment 3   administrative expenditures previously requested by DHA, as HUD’s guidance has changed.
            As recognized by your team, DHA was unaccustomed to providing documentation for
            administrative expenditures under current HUD requirements for asset-based management, as
            fees earned by the Central Office Cost Center were declared by HUD to be “de-federalized.”
            DHA is pleased to report that it has met the documentation requirements prescribed. For
Comment 2   future expenses, DHA intends to adopt the procedural recommendations made by HUD of
            applying a 10% administrative BLI draw request of every ARRA fund expended and drawn
            down from eLOCCS.

            Initially, public housing authorities (PHAs) receiving the ARRA funds were required to
Comment 4   allocate funds in their Recovery Act budgets a certain sum for a physical needs assessment.
            DHA allocated $180,000 for this purpose. Later, HUD advised the recipient PHAs not to
            budget any funds for such assessment. DHA has revised its budget to reflect reallocation of
Comment 5   expenses associated with the assessment. The revised budget also reflects the reallocation of
            costs associated with the bid advertising and bid specifications activities referenced in #2
            above. Enclosed please find a copy of the revised budget, made only to reclassify or
            reprogram funds to other eligible activities.

            In 2009, DHA made an administrative decision to replace the garage doors for the 50 single-
            family homes in its Lakewest Village scattered site property, which was constructed in 2001.
            The purpose was both a preventive-maintenance and a cost-savings strategy. By replacing all
            the doors under one contract, the warranty of parts and materials run concurrent.
            Additionally, DHA realized a cost savings by replacing all of the doors at one time, instead
            of a piece-meal approach. While the garage doors functioned properly, there were some
            deficiencies in the installation by the qualified contractor of the new doors. The Development
Comment 6   Department has contacted the responsible contractor under the warranty to correct the
            deficiencies, primarily through the adjustment of spring settings as well as caulking and
            replacement of some wood fittings. Many of these deficiencies require only minor
            adjustments. All deficiencies/adjustments have been completed. See photographs enclosed.

            For damages to the newly-installed garage doors caused by residents, DHA intends to seek
Comment 7   full repayment as provided in the lease agreements. Once the adjustments have been
            completed, DHA will invoice the residents accordingly.




                                                 15
At the time of the audit, DHA records show that DHA had obligated 70.97% of the grant, while HUD’s
financial system, eLOCCS, shows only 37.12%. DHA's Development Department, as the department
responsible for ensuring that DHA obligated and expended the grant funds within the established time
limits, is working with its Finance Department to update eLOCCS to reflect the percentage (70.97%)
actually obligated.

As acknowledged, DHA has made substantial progress in obligating the grant funds, and DHA is
confident that it will be able to obligate 100% of funds within the one-year time limit, to expend 60% of
the funds within the two-year time limit, and to expend 100% of the funds within three-year time limit.

We appreciate the cooperative and forthcoming approach of everyone involved and, as always, thank you
for the assistance and guidance provided by you and your staff.


Sincerely,


MaryAnn Russ,
President & CEO,
Dallas Housing Authority



Enclosures




                                          16
                                 OIG Evaluation of Auditee Comments

Comment 1        OIG did not test all of the Authority's Recovery Act activities. As explained in
                 the scope and methodology section, we tested a sample of six transactions and the
                 related procurement activities. The conclusions in the report are based in part on
                 the sample.

Comment 2        We appreciate the efforts made by HUD and the Authority to implement the
                 recommendation.

Comment 3        The report noted that HUD's documentation requirements for the Recovery Act
                 grant differed from the standard Capital Fund program because of the associated
                 accountability and transparency requirements. HUD did not change its guidance
                 for the standard Capital Fund program.

Comment 4        HUD did not require public housing agencies to allocate Recovery Act funds for
                 physical needs assessments. PHAs were allowed to use regular Capital Funds for
                 this purpose.10

Comment 5        We commend the Authority for revising its budget to help ensure it obligates the
                 entire grant by the deadline. We encourage it to make the appropriate corrections
                 in its financial records and eLOCCS.

Comment 6        We appreciate Authority's action to ensure the contractor corrects the deficiencies.

Comment 7        We acknowledge the Authority's efforts to implement the recommendation and
                 encourage it to seek repayment from tenants.




10
     Annual contributions contract amendment, section 7(k), and PIH notice 2009-12.


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