oversight

Volunteers of America's Whispering Pines Senior Village, Estacada, OR- HUD and Recovery Act Rules and Regulations

Published by the Department of Housing and Urban Development, Office of Inspector General on 2013-04-25.

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

OFFICE OF AUDIT
REGION 10
SEATTLE, WA




      Whispering Pines Senior Village, Estacada, OR

          Green Retrofit Program Funded by the
         American Recovery and Reinvestment Act




2013-SE-1002                                  April 25, 2013
                                                                    Issue Date: April 25, 2013

                                                                    Audit Report Number: 2013-SE-1002




TO:            Margaret S. Salazar, Associate Deputy Assistant Secretary for Affordable
               Housing Preservation, HTA

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

SUBJECT:       Volunteers of America’s Whispering Pines Senior Village, Estacada, OR,
               Generally Used and Reported Its Green Retrofit Recovery Act Funds in
               Accordance With HUD and Recovery Act Rules and Regulations


    Attached is the U.S. Department of Housing and Urban Development (HUD), Office of
Inspector General’s (OIG) final results of our review of Whispering Pines Senior Village’s
Green Retrofit program funded by the American Recovery and Reinvestment Act.

    HUD Handbook 2000.06, REV-4, sets specific timeframes for management decisions on
recommended corrective actions. For each recommendation without a management decision,
please respond and provide status reports in accordance with the HUD Handbook. Please furnish
us copies of any correspondence or directives issued because of the audit.

    The Inspector General Act, Title 5 United States Code, section 8L, requires that OIG post its
publicly available reports on the OIG Web site. Accordingly, this report will be posted at
http://www.hudoig.gov.

   If you have any questions or comments about this report, please do not hesitate to call me at
913-551-5870.




                                                Office of Audit Region 10
                                    909 First Avenue, Suite 126, Seattle, WA 98104
                                      Phone (206) 220-5360, Fax (206) 220-5162
                           Visit the Office of Inspector General Website at www.hudoig.gov

                                                           
                                                           
                                            April 25, 2013

                                            Volunteers of America’s Whispering Pines Senior
                                            Village, Estacada, OR, Generally Used and Reported Its
                                            Green Retrofit Recovery Act Funds in Accordance With
                                            HUD and Recovery Act Rules and Regulations

Highlights
Audit Report 2013-SE-1002



 What We Audited and Why                     What We Found

We performed an audit of Volunteers         VOA’s Whispering Pines Senior Village, Estacada,
of America’s (VOA) Whispering Pines         OR, generally used and reported its Green Retrofit
Senior Village’s Green Retrofit             Recovery Act funds in accordance with HUD and
program funded by the American              Recovery Act rules and regulations. It did not always
Recovery and Reinvestment Act. Our          accurately report Recovery Act cost and jobs
objective was to determine whether          information. However, those inaccuracies did not
VOA used its Whispering Pines Green         cause a material error in reporting.
Retrofit Recovery Act funds in
accordance with U.S. Department of
Housing and Urban Development
(HUD) and Recovery Act rules and
regulations and accurately reported
Recovery Act cost and jobs
information. We selected the project,
located in Estacada, OR, because it was
the largest Green Retrofit project in our
region, based on the amount awarded of
$1.023 million, and because we had not
previously audited this program.

 What We Recommend

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

Background and Objective                                                   3

Results of Audit                                                           4
      Volunteers of America Generally Complied With HUD and Recovery Act
      Rules and Regulations

Scope and Methodology                                                      6

Internal Controls                                                          7

Appendixes
      A.     Auditee Comments                                              8




                                          2
                      BACKGROUND AND OBJECTIVE

The American Recovery and Reinvestment Act of 2009 became Public Law 111-5 on February
17, 2009. It provided for the creation and preservation of jobs, infrastructure investment, energy
efficiency and science, assistance to the unemployed, State and local fiscal stabilization for the
fiscal year ending September 30, 2009, and other purposes.

The U.S. Department of Housing and Urban Development (HUD) issued Housing Notice H-09-
02, published May 13, 2009, to implement $250 million in Recovery Act loans and grants for
energy and green retrofit improvements in its multifamily-assisted housing stock. Those funds
were to provide up to $15,000 per residential unit to reduce energy costs and water use and
provide other environmental benefits in exchange for a 15-year extension of the property’s use
agreement. HUD implemented the Green Retrofit program through the Office of Affordable
Housing Preservation, using, where appropriate, policy and program approaches developed for
its Mark-to-Market Green Initiative.

Whispering Pines Senior Village is a 62-unit senior housing complex built in 2003. It receives a
significant portion of its rental income from HUD, which regulates rental charges and operating
methods. The project is operated under Section 202 of the National Housing Act and is also
subject to project rental assistance contracts with HUD. Its owner, Volunteers of America
(VOA), is a national charity serving America’s most vulnerable groups since 1896. It has nearly
16,000 paid, professional employees and hundreds of human service programs, including
housing and healthcare. VOA helps more than 2.5 million people in more than 400 communities
in 46 States as well as the District of Columbia and Puerto Rico.

ONTRA, Inc., HUD’s retrofit administrator, has analyzed, managed, restructured, and liquidated
more than $15 billion in distressed loan and real estate assets throughout its 24-year tenure as a
loan and real estate special servicer. In 1999, ONTRA received a contract from HUD to
implement the Section 8 Mark-to-Market program established by the Multifamily Assisted
Housing Reform and Affordability Act of 1997.

On August 6, 2010, VOA, ONTRA, and HUD entered into a retrofit funding agreement for more
than $1.023 million in Green Retrofit funds under the Recovery Act. VOA used the funds to
perform a green retrofit of 62 units and common areas in its Whispering Pines property,
including solar electric and hot water equipment, new roofing, upgrades from electric baseboard
heat to heat pumps, and other green improvements.

Our objective was to determine whether VOA used its Whispering Pines Green Retrofit
Recovery Act funds in accordance with HUD and Recovery Act rules and regulations and
accurately reported Recovery Act cost and jobs information.




                                                3
                               RESULTS OF AUDIT


Volunteers of America Generally Complied With HUD and Recovery
Act Rules and Regulations
VOA generally used its Whispering Pines Senior Village Green Retrofit Recovery Act funds in
accordance with HUD and Recovery Act rules and regulations. It did not always accurately
report Recovery Act cost and jobs information. However, those inaccuracies did not cause a
material error in reporting.


 VOA Generally Complied With
 Requirements

              Expenditures were eligible and adequately supported.

                    Invoices paid to subgrantees for retrofit activities, payments for grantee
                     and administrator fees, and payments by the administrator for independent
                     inspections and analysis were appropriate.
                    VOA’s grant application, procurement practices, and monitoring complied
                     with Housing Notice H-09-02.
                    Payroll complied with Davis-Bacon Act wage requirements.


 Minor Deficiencies Were Noted

              Although some minor delays existed in Recovery Act reporting, we successfully
              reconciled expenditures to preaward estimates, contracts, and HUD’s Line of
              Credit Control System drawdowns. Some of the vendors involved with this
              project contracted directly with HUD’s retrofit administrator, ONTRA. ONTRA
              made payments directly to these vendors, so VOA was not aware of them until
              final reporting. VOA corrected the resulting timing difference on its final
              Recovery Act report. Consequently, these Recovery Act reporting differences
              were immaterial, given the small error amount of $18,650, or 1.8 percent of the
              grant, and that correction had already taken place.

              We were unable to reconcile jobs, as reported in Recovery.gov, with the
              supporting documents that were provided. One subgrantee confirmed that 120
              hours were accidently counted twice through a clerical error, resulting in a job
              reporting error of 0.23 jobs. This reporting difference was immaterial, given the
              small error amount and that the number of jobs reported could not be corrected.




                                               4
Recommendations

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




                                          5
                        SCOPE AND METHODOLOGY

We performed our audit from October 25, 2012, through January 22, 2013, by correspondence
with VOA in Alexandria, VA, and HUD’s retrofit administrator, ONTRA, in Austin, TX. We
performed our onsite audit work at the Whispering Pines Senior Village in Estacada, OR. Our
review covered the period June 22, 2009, through March 21, 2012.

To accomplish our audit objective, we

      Reviewed applicable Recovery Act and HUD requirements;
      Interviewed HUD, ONTRA, and VOA staff;
      Reviewed agreements, applications, and supporting documents;
      Read VOA’s single audit reports;
      Reviewed VOA’s applicable policies and procedures;
      Reviewed VOA’s files for procurement, monitoring, and contractor payrolls;
      Analyzed VOA’s support for disbursements;
      Reviewed eligibility of planned activities;
      Reviewed the project’s Recovery Act reports; and
      Observed the completed project.

We reconciled 100 percent of expenditures to information in HUD’s Line of Credit Control
System and Recovery Act reporting. We reviewed detailed support for 14 of the 28 invoices
paid in 6 grant draws, representing 81.6 percent of the $943,227 in grant expenditures. The 14
invoices selected for review consisted of the highest dollar invoice from each of the 5 largest
subgrantees, all 3 payments for grantee and administrator fees, and all 6 payments by the
administrator for independent inspections and analysis. We also reviewed all bids received and
awarded. The review was designed to determine whether the expenditures were eligible and
adequately supported.

We used the source documentation maintained by ONTRA and VOA to compare to information
in HUD’s Line of Credit Control System. We did not rely on automated data to support our
audit conclusions. All conclusions were based on source documentation reviewed during the
audit and observations during our site visit to the property.

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 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:

                  Controls over the use of Green Retrofit funds in compliance with laws and
                   regulations.
                  Controls over the accuracy of the reports found in Recovery.gov.
                  Monitoring of the Green Retrofit Program by the owner.

               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.

               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 VOA’s internal control.




                                                 7
Appendix A

                           AUDITEE COMMENTS


Auditee Comments

     The auditee concurred and elected not to provide written comments.




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