oversight

King County Housing Authority, Tukwila, WA, Generally Complied With Recovery Act Capital Fund Competition Grant Requirements

Published by the Department of Housing and Urban Development, Office of Inspector General on 2011-07-20.

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

                                                                Issue Date
                                                                         July 20, 2011
                                                                 
                                                                Audit Report Number
                                                                         2011-SE-1007




TO:        Harlan Stewart, Director, Office of Public Housing, 0APH

           //signed//
FROM:      Ronald J. Hosking, Regional Inspector General for Audit, 0AGA

SUBJECT: King County Housing Authority, Tukwila, WA, Generally Complied With
           Recovery Act Capital Fund Competition Grant Requirements


                                   HIGHLIGHTS

 What We Audited and Why

            We audited King County Housing Authority to determine whether its
            expenditures for three Recovery Act Capital Fund Competition Grants were
            appropriate, eligible, and adequately supported and whether related procurements
            were made in accordance with 24 CFR (Code of Federal Regulations) Part 85 and
            Recovery Act requirements. We selected the Authority because it received more
            than $16 million in Recovery Act Capital Fund Competition Grant funds.


 What We Found


            The Authority generally ensured that its Recovery Act Capital Fund Competition
            Grant expenditures for the three grants were appropriate, eligible, and adequately
            supported and that materials and services were properly procured.
What We Recommend


           This report contains no recommendations, and no further action is necessary with
           respect to this report.


Auditee’s Response


           We provided a draft report to the Authority’s officials on June 21, 2011. They
           chose not to have an exit conference or provide a written response.




                                           2
                           TABLE OF CONTENTS

Background and Objective                                                4

Results of Audit
      The Authority Generally Complied With Recovery Act Capital Fund   5
            Competition Grant Requirements

Scope and Methodology                                                   6

Internal Controls                                                       7




                                           3
                       BACKGROUND AND OBJECTIVE

King County Housing Authority
The King County Housing Authority is a municipal corporation established in 1939 by the State
of Washington to provide affordable housing and related services. The Authority is governed by
a five-member board of commissioners appointed for 5-year terms by the King County
executive. Its primary area of operation is King County, except for the cities of Seattle and
Renton, and it owns or controls 115 residential complexes with 8,468 units through U.S.
Department of Housing and Urban Development (HUD)-subsidized and local programs. The
Authority schedules approximately $14 million in capital improvements each year.
Recovery Act Capital Fund Competition Grants
The Recovery and Reinvestment Act of 2009 included a $4 billion appropriation for the Public
Housing Capital Fund program, which provides funds annually to public housing agencies for
the development, financing, and modernization of public housing developments and for
management improvements. The Recovery Act required $3 billion to be distributed as formula
grant funds, with the remaining $1 billion to be distributed through a competitive process.
Competitive grants were issued in the following categories:
   1.   Improvements addressing the needs of the elderly and/or persons with disabilities;
   2.   Public housing transformation;
   3.   Gap financing for projects that are stalled due to financing issues; and
   4.   Creation of energy-efficient, green communities.
HUD awarded the Authority 17 Recovery Act Capital Fund Competition Grants totaling more
than $16 million. Thirteen of these grants involve improvements addressing the needs of the
elderly and/or persons with disabilities, three involve the creation of energy efficient, green
communities, and one involves gap financing for a project that was stalled due to financing
issues.
Our objective was to determine whether its expenditures for three Recovery Act Capital Fund
Competition Grants were appropriate, eligible, and adequately supported and whether related
procurements were made in accordance with 24 CFR (Code of Federal Regulations) Part 85 and
Recovery Act requirements.




                                                4
                                RESULTS OF AUDIT

The Authority Generally Complied With Recovery Act Capital Fund
Competition Grant Requirements
We reviewed the project files for the three Recovery Act Capital Fund Competition Grants in the
table below to determine whether the Authority’s expenditures were appropriate, eligible, and
adequately supported and whether related procurements were made in accordance with 24 CFR
Part 85 and Recovery Act requirements.


 Grant number   Project name           Purpose                                      Amount
 WA00200020709E Wells Wood/            Improve accessibility for the elderly        $ 82,610
                Juanita Trace          and/or disabled persons
 WA00200015209R Briarwood              Improve energy efficiency                    $1,706,245
 WA00200034109F Greenbridge V          Build 24 units at a project stalled due to   $6,679,129
                                       financing issues

Our review determined that the Authority adequately documented that these expenditures were
appropriate, eligible, and supported and that materials and services were properly procured.

In addition, we inspected the 24 newly constructed units at Greenbridge V and determined that
the cost was reasonable and the workmanship was of good quality.




 Recommendations



              This report contains no recommendations, and no further action is necessary with
              respect to this report.




                                               5
                         SCOPE AND METHODOLOGY

Our audit period covered March 2009 through February 2011. We reviewed 3 of the 17 grants
the Authority received in the Recovery Act Capital Fund Competition Grant process,
encompassing almost $8.5 million of the $16 million total. We performed our fieldwork
between March and May 2011 at the Authority’s main office at 600 Andover Park West,
Tukwila, WA, its Capital Construction Department at 625 Andover Park West, Tukwila, WA,
and its Greenbridge development in the unincorporated area of White Center, WA.
To accomplish our objective, we interviewed Authority staff and reviewed the Authority’s
financial records and project files. We also reviewed the construction plans for and inspected all
of the 24 units at the Greenbridge V development.
Sample Selection
Of the 17 competitive grants, we selected 1 from each of the 3 categories of Recovery Act
Capital Fund Competition Grants (see Background and Objectives) the Authority received. We
chose Wells Wood/Juanita Trace, the most complete of the 13 grants for improving accessibility
for disabled persons at the time of our review; Briarwood, the largest of 3 grants for improving
energy efficiency; and Greenbridge V, the only gap financing grant. We inspected all 24 units at
Greenbridge V to determine whether the construction cost was reasonable. We used HUD’s
Line of Credit Control System for background information only and did not base any conclusions
on these data.
We relied on computer-processed data maintained by the Authority for tracking Capital Fund
activities. Based on our assessment and testing of these data, we concluded that the data were
sufficiently reliable for our objective.
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.




                                                6
                              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
               objective:

                     Policies implemented to reasonably ensure that Recovery Act Capital
                      Fund Competition Grant projects are managed efficiently and effectively.
                     Policies implemented to reasonably ensure that the Recovery Act Capital
                      Fund Competition Grant program is managed consistently with Recovery
                      Act and HUD requirements.
               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 Deficiencies

               We evaluated internal controls related to the audit objective in accordance with
               generally accepted government auditing standards. Our evaluation of internal
               controls was not designed to provide assurance regarding the effectiveness of the
               internal control structure as a whole. Accordingly, we do not express an opinion on
               the effectiveness of the Authority’s internal control.



                                                 7