oversight

The Mississippi Regional Housing Authority VIII, Gulfport, MS, Generally Followed Requirements When Obligating and Expending Its Recovery Act Capital Funds but Did Not Accurately Report Recovery Act Grant Information

Published by the Department of Housing and Urban Development, Office of Inspector General on 2011-08-16.

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

                                                                 Issue Date
                                                                          August 16, 2011
                                                                  
                                                                 Audit Report Number
                                                                              2011-AO-1006




TO:        Holly Bellino-Knight, Director, Office of Public Housing, 4GPH

           //signed//
FROM:      Nikita N. Irons, Regional Inspector General for Audit, Gulf Coast Region,
               11AGA

SUBJECT: The Mississippi Regional Housing Authority VIII, Gulfport, MS, Generally
           Followed Requirements When Obligating and Expending Its Recovery Act
           Capital Funds but Did Not Accurately Report Recovery Act Grant
           Information


                                   HIGHLIGHTS

 What We Audited and Why

             We initiated an audit of the Mississippi Regional Housing Authority VIII’s Public
             Housing Capital Fund formula grant program as part of our annual audit plan to
             review American Recovery and Reinvestment Act of 2009 funds. Our objective
             was to determine whether the Authority properly obligated and expended its
             Recovery Act capital funds in accordance with requirements, followed Recovery
             Act requirements when procuring contracts for goods or services, and accurately
             reported its Recovery Act activities.

 What We Found

             The Authority generally followed Recovery Act requirements in the obligation
             and expenditure of its Recovery Act capital funds. Additionally, it ensured that
             procurements were made in accordance with Federal and Recovery Act
           requirements. However, the Authority did not accurately report required -
           Recovery Act Capital Fund grant information in federalreporting.gov.

           For the seven quarterly reports reviewed during our audit period, the Authority
           overreported the amount of funds received in five quarters and underreported in
           one quarter. It also underreported the amount of funds expended in four quarters
           and overreported in one quarter. In addition, it failed to provide a list of projects
           and activities funded by name and incorrectly reported the primary place of
           performance in all seven quarters. 


What We Recommend


           We recommend that the Jackson Office of Public Housing ensure that the
           Authority complies with HUD guidance and ensures the assignment of a staff
           person responsible for becoming familiar with the guidance on the Web site and
           reporting as required. We also recommend that the Jackson Office of Public
           Housing review the next quarterly report submitted to ensure that it is accurate
           due to the Authority’s history of inaccurate reporting.

           For each recommendation without a management decision, please respond and
           provide status reports in accordance with HUD Handbook 2000.06, REV-3.
           Please furnish us copies of any correspondence or directives issued because of the
           audit.


Auditee’s Response


           We provided the discussion draft of the audit report to the Authority on July 19,
           2011, and requested its comments by July 26, 2011. The Authority provided its
           written response on July 28, 2011, and agreed with the finding. The complete text
           of the auditee’s response, along with our evaluation of that response, can be found
           in the appendix of this report.




                                             2
                           TABLE OF CONTENTS

Background and Objective                                                     4

Results of Audit
      Finding : The Authority Did Not Accurately Report Recovery Act Grant   5
                 Information in Federalreporting.gov

Scope and Methodology                                                        8

Internal Controls                                                            9

Appendix
    A.     Auditee Comments and OIG’s Evaluation                             11




                                           3
                      BACKGROUND AND OBJECTIVE

The Mississippi Regional Housing Authority VIII was created for the purpose of providing
decent, safe, and sanitary public and assisted housing for low-income families. The Authority
receives subsidy assistance from the U.S. Department of Housing and Urban Development
(HUD) to provide housing to eligible low-income households. It is responsible for other rental
assistance programs including Section 8, conventional housing, and low-income housing tax
credit developments. The Authority manages 5,730 housing choice vouchers and 797 units of
conventional public low-income housing in 14 southern counties of Mississippi.

The mission of the Authority is to promote adequate and affordable housing, economic
opportunities, and suitable living environments free from discrimination. The Authority’s
central office is located at 10430 Three Rivers Road, Gulfport, MS.

On February 17, 2009, President Obama signed into law the American Recovery and
Reinvestment Act of 2009, which included $13.6 billion for projects and programs administered
by HUD. Of the $13.6 billion, $4 billion was allocated in public housing capital funds. Of the
$4 billion, the Recovery Act required that $3 billion be distributed as Public Housing Capital
Fund formula grants and $1 billion be distributed through a competitive grant process.

On March 18, 2009, the Authority received more than $3.7 million in Public Housing Recovery
Act formula grant funds to carry out capital and management activities. The Recovery Act
required the Authority to obligate 100 percent of the funds within 1 year of the date on which
funds became available and expend 60 percent within 2 years and 100 percent within 3 years of
such date. The Recovery Act also required the Authority to comply with the procurement
requirements of 24 CFR (Code of Federal Regulations) Part 85. The Authority obligated the
funds within the required timeframe, and the related procurements were made in accordance with
24 CFR Part 85 and Recovery Act requirements. As of April 30, 2011, the Authority had
expended more than $3.3 million (88 percent) of the funds.

Further, the Recovery Act required the Authority to report on the use of Recovery Act funding
within 10 days after the end of each calendar quarter. Aimed at providing accountability and
transparency, the Recovery Act required the Authority to enter the total amount of funds
received and spent and a list of projects and activities funded by name, completion status,
estimates of jobs created or retained, subaward information, and other payments in
federalreporting.gov, which is the central nationwide data collection system for Federal agencies
and recipients to use in reporting on their use of Recovery Act funding. Once data have been
submitted to federalreporting.gov and reviewed by the funding or awarding agency, the reports
are made available to the public via recovery.gov.

Our objective was to determine whether the Authority properly obligated and expended its
Recovery Act capital funds in accordance with requirements, followed Recovery Act
requirements when procuring contracts for goods or services, and accurately reported its
Recovery Act activities.




                                                4
                                RESULTS OF AUDIT

Finding: The Authority Did Not Accurately Report Recovery Act
         Grant Information in Federalreporting.gov
The Authority did not accurately report required Recovery Act Capital Fund grant information in
federalreporting.gov. It did not understand how to accurately report the grant information. As a
result, the public did not have access to accurate information related to the Authority’s use of
Recovery Act capital funds.



The Authority Did Not
Accurately Report the Amount
of Funds Expended

              The Authority generally obligated and expended Recovery Act grant funds in
              accordance with Recovery Act requirements, but it did not accurately report
              required Recovery Act grant information in federalreporting.gov. According to
              the Recovery Act reporting requirements (2 CFR (Code of Federal Regulations)
              Part 176), Recovery Act grant recipients are required to report the following
              information in federalreporting.gov:

                     Amount of the Recovery Act grant award;
                     List of projects and activities funded by name to include description,
                      completion status, and number of jobs created or retained using Recovery
                      Act grant funds;
                     Grant funds received and invoiced;
                     Expenditure amounts;
                     Listing of vendors receiving Recovery Act grant funds;
                     Vendor transactions and payments; and
                     Primary place of performance

              For the seven quarterly reports reviewed during our audit period, the Authority
              overreported the amount of funds received in five quarters and underreported in
              one quarter. In addition, it underreported the amount of funds expended in four
              quarters and overreported in one quarter. The following tables list what was
              reported in federalreporting.gov, what the actual amounts were, and the difference
              between the two numbers.




                                               5
                         Recovery Act capital funds received and invoiced
            Ending date      Funds received
           for reporting reported in federal-       Actual funds          Reporting
              period          reporting.gov           received           differences
                9/30/2009        $3,783,351.00                 $0.00     $3,783,351.00
              12/31/2009           $127,472.80           $214,104.40       ($86,631.60)
                3/31/2010          $700,566.67           $440,272.45        $260,294.22
                6/30/2010        $1,168,989.00         $1,168,969.06             $19.94
                9/30/2010        $3,783,351.00         $1,168,969.06     $2,614,381.94
              12/31/2010         $3,783,351.00         $2,598,010.30     $1,185,340.70
                3/31/2011        $3,310,425.31         $3,310,425.31              $0.00


                                Recovery Act capital funds expenditures
            Ending date          Expenditures
           for reporting      reported in federal-        Actual                  Reporting
              period             reporting.gov         expenditures               differences
                9/30/2009              $35,965.10                 $0.00              $35,965.10
              12/31/2009              $127,472.80           $214,104.40            ($86,631.60)
                3/31/2010             $127,472.80           $440,272.45           ($312,799.65)
                6/30/2010           $1,163,492.53         $1,168,969.06              ($5,476.53)
                9/30/2010           $1,721,959.00         $1,721,959.00                    $0.00
              12/31/2010            $2,225,002.93         $2,598,010.30           ($373,007.37)
                3/31/2011           $3,310,425.31         $3,310,425.31                    $0.00

           In addition, the Authority failed to provide a list of projects and activities funded
           by name and incorrectly reported the primary place of performance in all seven
           quarters. 

The Authority Did Not
Understand the Reporting
Requirements

           The Authority did not understand how to accurately report the grant information.
           Although the Office of Public and Indian Housing provided Recovery Act
           reporting guidance and an example of a completed Federal reporting template for
           formula grants on its Web site, the Authority did not ensure that the Capital Fund
           program director reviewed the online training materials and obtained an
           understanding of the reporting requirements before entering grant information
           into federalreporting.gov.




                                             6
The Public Did Not Have
Access to Accurate Grant
Information

             The public did not have access to accurate grant information related to the
             Authority’s expenditures of Recovery Act capital funds. In addition, the public
             did not have information pertaining to the projects and activities funded with
             Recovery Act grant funds. As a result, the Authority’s use of Recovery Act
             capital funds was not transparent.


Conclusion


             The Authority generally followed the Recovery Act requirements in the obligation
             and expenditure of its Recovery Act capital funds. Additionally, it ensured that
             procurements were made in accordance with Federal and Recovery Act
             requirements. However, it did not accurately report required Recovery Act
             Capital Fund grant information in federalreporting.gov. As a result, the public did
             not have access to accurate information related to the Authority’s use of Recovery
             Act capital funds.


Recommendation


             We recommend that the Director of the Jackson Office of Public Housing

             1A. Ensure that the Authority complies with HUD guidance and ensures the
                 assignment of a staff person responsible for becoming familiar with the
                 guidance on the Web site and reporting as required.

             1B. Review the next quarterly report submitted to ensure that it is accurate due
                 to the Authority’s history of inaccurate reporting.




                                              7
                    SCOPE AND METHODOLOGY

Our review period covered March 18, 2009, through April 30, 2011. We performed the work at
the Authority’s central office in Gulfport, MS, and our office in Jackson, MS, from February 23
through June 9, 2011.

To accomplish our objective, we performed the following steps as they related to the Authority’s
Recovery Act Public Housing Capital Fund formula grant:

      Reviewed relevant laws, regulations, and HUD guidance.
      Reviewed meeting minutes of the Authority’s board of commissioners.
      Reviewed the Authority’s procurement policies and procedures.
      Reviewed and analyzed the Authority’s audited financial statements for fiscal year 2009.
      Reviewed and analyzed the Authority’s 5-year and annual plans for fiscal years 2009 and
       2010.
      Reviewed HUD’s monitoring reports and the Authority’s 2009 procurement
       accountability assessment report.
      Interviewed pertinent HUD staff and the Authority’s staff.
      Reviewed and analyzed the Authority’s Recovery Act Public Housing Capital Fund
       formula grant obligations, expenditures, procurements, and quarterly reports.
      Conducted site visits to the Authority’s Dan Stepney Homes and Pecan Circle Homes
       housing developments.

To determine whether the Authority properly obligated and expended its Recovery Act capital
funds in accordance with Recovery Act rules and regulations, we examined procurement records
for all 10 contracts, totaling more than $3.6 million, to ensure that the Authority properly
obligated 100 percent of the funds within 1 year of the date on which funds became available and
procured goods and services in accordance with 24 CFR Part 85. We also examined
documentation for all nine vouchers, totaling more than $3.3 million, to ensure that the Authority
properly expended its capital funds in accordance with Recovery Act rules and regulations.

To determine whether the Authority properly entered Recovery Act information into
federalreporting.gov, we examined all expenditures during our audit period. We then compared
that information to that reported in federalreporting.gov.

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 finding
and conclusion based on our audit objective.




                                                8
                              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:

                     Control over the obligation and expenditure of Recovery Act capital funds.
                     Control over properly entering Recovery Act information into
                      federalreporting.gov.

               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 believe that the following item is a significant deficiency:

                  The Authority did not ensure that staff responsible for entering data into
                   federalreporting.gov understood how to accurately report the Recovery Act
                   Capital Fund information.




                                                 9
Separate Communication of
Minor Deficiencies

           Minor internal control and compliance issues were reported to the auditee in a
           separate memorandum, dated August 15, 2011.




                                            10
Appendix A
        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation                                 Auditee Comments




                                          Assisting Families and Changing Lives
                  P.O. Box 2347, Gulfport, Mississippi 39505‐2347      10430 Three Rivers Road, Gulfport, Mississippi 39503 
                Office: (228) 831‐2992      Fax: (228) 831‐5575      Hearing Impaired—Statewide Relay Service: (800) 582‐2233 
                                                                           


                July 28, 2011

                Kimberly Sandifer
                Assistant Regional Inspector General for Audit
                HUD Office of Inspector General
                Gulf Coast Region, Office of Audit
                Jackson, MS

                Re: MRHA VIII Response to Audit Draft Report


                Dear Ms. Sandifer:

                We have reviewed the draft report of your recently completed audit
                of the Mississippi Regional Housing Authority VIII’s American
                Recovery and Reinvestment Act of 2009 Public Housing Capital
                Funds.

                The conditions found as identified in the draft repot have been
Comment 1       explained to the housing authority staff persons responsible for
                monitoring the American Recovery and Reinvestment Act of 2009
                Public Housing Capital Funds and corrective action will be taken to
                ensure we are following all recommendations and are in compliance
                with all federal regulations and guidelines.




                                                         11
Ref to OIG Evaluation                      Auditee Comments




               Should you have any questions regarding the above response, please
               call me at (228) 831-2992 ext. 1017.


               Sincerely,

               //signed//
               J.P. Lawrence
               Executive Director




                          Serving Covington, Forrest, George, Greene, Hancock, Harrison,
                 Jackson, Jones, Lamar, Marion, Pearl River, Perry, Stone, and Wayne Counties




                                             12
                        OIG Evaluation of Auditee Comments

Comment 1   We acknowledge the Authority’s willingness to take corrective actions.




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