oversight

The Jefferson Parish, LA Department of Community Development Did Not Always Support Expenditures, Comply With Procurement Requirements, or Provide Adequate Oversight of Subrecipients

Published by the Department of Housing and Urban Development, Office of Inspector General on 2014-09-30.

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

OFFICE OF AUDIT
REGION 6
FORT WORTH, TEXAS




         Jefferson Parish Community Development
                       Jefferson, LA

     Community Development Block Grant Program




2014-FW-1007                             September 30, 2014
                                                        Issue Date: September 30, 2014

                                                        Audit Report Number: 2014-FW-1007




TO:            Cheryl S. Breaux,
               Director, Office of Community Planning and Development, 6HD

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


SUBJECT:       The Jefferson Parish, LA Department of Community Development Did Not
               Always Support Expenditures, Comply With Procurement Requirements, or
               Provide Adequate Oversight of Subrecipients


    Attached is the U.S. Department of Housing and Urban Development (HUD), Office of
Inspector General’s (OIG) final results of our review of Jefferson Parish’s Community
Development Block Grant (CDBG) program.

    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 8M, 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
817-978-9309.
                                           September 30, 2014
                                           The Jefferson Parish, LA Department of Community
                                           Development Did Not Always Support Expenditures,
                                           Comply With Procurement Requirements, or Provide
                                           Adequate Oversight of Subrecipients


Highlights
Audit Report 2014-FW-1007


 What We Audited and Why                    What We Found

We audited Jefferson Parish’s         The Parish did not always (1) have documentation to
Community Development Block Grant     support program expenditures, (2) comply with
(CDBG) program as part of the Office  procurement requirements when procuring contractors
                                      for housing rehabilitation, and (3) provide adequate
of Inspector General’s annual audit plan
to review Community Development       oversight for its subrecipients. These conditions
funds. The audit objective was to     occurred because the Parish (1) did not have updated
determine whether the Parish          written departmental procedures for its staff, adequate
adequately supported and expended its staffing levels, an efficient records management
program funds in accordance with      system, or complete written departmental procurement
Federal requirements.                 procedures; (2) relied on its subrecipient to maintain
                                      documentation to support its project without verifying
  What We Recommend                   the adequacy of the documentation; (3) did not ensure
                                      that staff was aware of the departmental monitoring
                                      policy; and (4) disregarded monitoring and agreement
We recommend that the Director of     requirements. As a result, the Parish could not support
HUD’s New Orleans Office of           that more than $1.4 million of program costs were
Community Planning and Development eligible, reasonable, or met a national objective. In
require the Parish to (1) support or  addition, it increased the risk of fraud, waste, and
repay its CDBG program $1.4 million   abuse.
from non-Federal funds, (2) implement
written departmental expenditure,
procurement, and monitoring
procedures, (3) implement a
departmental records management
system for expenditures and national
objective compliance, and (4)
implement a departmental process to
maintain and update the Parish’s pre-
qualified bidder’s list.
                            TABLE OF CONTENTS


Background and Objective                                                        3

Results of Audit
      Finding 1: The Parish Did Not Always Have Documentation To Support
      Expenditures                                                              4
      Finding 2: The Parish Did Not Always Comply with Procurement
      Requirements                                                              7
      Finding 3: The Parish Did Not Always Provide Adequate Oversight for its
      Subrecipients                                                             10

Scope and Methodology                                                           13

Internal Controls                                                               15

Appendixes
A.    Schedule of Questioned Costs                                              17
B.    Auditee Comments and OIG’s Evaluation                                     18
C.    Questioned Housing Rehabilitation Contracts                               27




                                            2
                       BACKGROUND AND OBJECTIVE
The Community Development Block Grant (CDBG) program was established by Title I of the
Housing and Community Development Act of 1974, Public Law 93-383 as amended, 42 United
States Code 5301. Under the CDBG program, the U. S. Department of Housing and Urban
Development (HUD) provides grants to State and local governments to aid in the development of
viable urban communities. Recipients are required to use grant funds to provide decent housing
and suitable living environments and to expand economic opportunities, principally for persons
of low and moderate income. In addition, each CDBG funded activity must meet one of three
national objectives listed below:

   •   Benefit low- and moderate-income persons,
   •   Aid in preventing or eliminating slums or blight, or
   •   Address a need with a particular urgency because existing conditions pose a serious and
       immediate threat to the health or welfare of the community.

The Jefferson Parish Community Development Department administers its program using
entitlement grants received from HUD to support the development of viable urban communities
through decent housing, and expanding the economic opportunities of persons of low-moderate
income. The Parish is the third largest CDBG grant fund recipient in the state of Louisiana.
Between October 2011 and September 2013, the Parish received more than $5 million in CDBG
funds from HUD. According to the Parish, 100 percent of its funded activities met the low and
moderate income national objective.

Activities implemented by the Parish included housing rehabilitation, public service, and public
facilities and improvements or capital projects. Regarding its housing rehabilitation activities,
the Parish conducted procurements for housing rehabilitation and lead abatement contractor
services to rehabilitate properties for low-income households. For its public service activities, it
used six subrecipients to implement various projects. For public facilities and improvements
activities, it used contractors procured by the Parish’s Purchasing Department.

Our objective was to determine whether the Parish adequately supported and expended its
CDBG funds in accordance with federal requirements.




                                                 3
                                     RESULTS OF AUDIT


Finding 1: The Parish Did Not Always Have Documentation to Support
Expenditures

The Parish did not always have documentation to support program expenditures. Specifically,
for five payment voucher expenditure files reviewed, the Parish did not always document
invoices, time and attendance records, supporting journal entries, or proof that resulting
payments were made to its contractors. This occurred because the Parish did not have (1)
updated written departmental procedures for its staff, (2) adequate departmental staffing levels
and (3) an efficient departmental records management system. As a result, the Parish could not
support the use of more than $1 million in CDBG funds.


    The Parish Could Not Support
    More Than $1 Million in
    Expenditures

                 A review of documentation in five payment voucher files, with payments totaling
                 $3,496,145, determined that the Parish did not always maintain support for its
                 payments. Federal regulations required the Parish to adequately document costs
                 and support its accounting records with source documentation. 1 In addition, the
                 Parish’s departmental expenditure policy2 included pay request procedures which
                 required it to (1) support non-payroll expenses with paid invoice or periodic bills
                 for service; and if unavailable, a copy of the canceled check with a written
                 description, and (2) support claims for salaries and wages with copies of
                 attendance, gross pay, pay rate time hours worked, and payroll tax records.
                 However, for the five files reviewed, the Parish did not have complete
                 documentation to support $1,039,105 in payments. See Table 1.

                 Table 1: Unsupported voucher payments
                    Payment voucher            Amount paid                  Unsupported costs
                             1                   $732,200                       $268,380
                             2                    469,461                         21,227
                             3                    896,671                        276,045
                             4                    757,532                        242,426
                             5                    640,281                        231,027
                           Total               $3,496,145                     $1,039,105


1
     2 CFR 225 - Appendix A- C (1) (j) and 24 CFR 85.20 (b)(6)
2
     The Community Development Department policies.


                                                       4
                 For these payments, the Parish did not have invoices, time and attendance records,
                 supporting journal entries, or documentation showing that payments were made to
                 recipients. In addition, the Parish withdrew funds for retainage from HUD’s
                 Integrated Disbursement and Information System (IDIS) 3 and withheld the
                 retainage from its rehabilitation contractors’ payments. Federal and State
                 regulations required the Parish to remit retainage to contractors after the
                 completion of work. 4 However, as of February 2014, it had been 5 to 23 months
                 since its rehabilitation contractors completed work, but the Parish could not
                 provide evidence that it remitted the retainage. When asked about one of the
                 contractors, the Parish stated that it forgot to pay the contractor.

    Inadequate Expenditure Policy
    and Staff, and Inefficient
    Records Management System

                 The Parish did not have adequate departmental expenditure policies or staff to
                 perform the accounting function, and did not have an efficient departmental
                 records management system. Specifically, the Parish’s departmental expenditure
                 policy did not match its current staffing positions. These policies included
                 descriptions of the staff positions and procedures for processing expenditures but
                 were 15 years 5 old and listed staff positions that no longer existed. For example,
                 the policy included an internal auditor position and indicated that financial
                 management was primarily the responsibility of the internal auditor, accountant
                 supervisor, and the accountant. However, the internal auditor position was not
                 listed on the Parish’s departmental organizational chart, dated February 2014.

                 In addition, the Parish did not have adequate departmental staff to process its
                 accounting transactions. Specifically, from 2005 through 2013, the Parish only
                 had one departmental employee, an accounting supervisor, to process its
                 accounting transactions. According to Parish departmental staff, since 2008,
                 staffing levels have been reduced. Further, past positions no longer existed.
                 Without adequate departmental staff, the Parish could not ensure that its
                 expenditures were adequately reviewed and documented and that payments were
                 processed in compliance with requirements. For example, during our review, the
                 Parish was under a workout plan and was at risk of losing CDBG funding because
                 it was not expending its funding in a timely manner and was not meeting HUD’s
                 required 1.5 percent expenditure timeliness test for the past two grant years. 6



3
     IDIS is the draw down and reporting system for the CDBG formula grant program. It allows grantees to request
     their grant funding from HUD and report on what is accomplished with these funds.
4
     HUD’s “Basically CDBG for Entitlements” course training manual, Chapter 16, section 16.1.3
     Progress Payments and Louisiana Revised Statute 38:2248.
5
     The Community Development Department policies were effective in 1999.
6
     24 CFR 570.902


                                                        5
                  Lastly, because the Parish had an inefficient departmental records management
                  system, its payment voucher files were not readily accessible for audit review, as
                  required. 7 Specifically, because the Parish’s departmental accounting supervisor
                  did not maintain auditable documentation, the accounting supervisor had to obtain
                  the documentation from other sources, including the program managers and the
                  Parish’s general Accounting Department. 8 We made several requests to the
                  Parish’s departmental staff for supporting documentation, which took 3 weeks for
                  it to provide. Further, the documentation provided was incomplete.

    Conclusion

                  Because the Parish did not have updated written departmental expenditure
                  policies for its current staff positions, adequate departmental staff levels, or an
                  efficient departmental records management system, it spent more than $1 million
                  in program funds that it could not support.

    Recommendations

                  We recommend that the Director of HUD’s New Orleans Office of Community
                  Planning and Development require the Parish to

                  1A.     Support or repay its CDBG program $1,039,105 from non-Federal funds
                          for costs that lacked adequate supporting documentation.

                  1B.     Implement updated written departmental procedures to ensure that it has
                          adequate coverage for the processing of its expenditures.

                  1C.     Implement a records management system for expenditures to ensure
                          supporting documentation is maintained and readily accessible for audit.




7
     24 CFR 85.42 (e)(1) and 24 CFR 85.42 (b)(1).
8
     The Parish has an Accounting Department which processes all payments for the Parish after the Parish reviews
     the supporting documentation.


                                                        6
Finding 2: The Parish Did Not Always Comply with Procurement
Requirements

The Parish did not always comply with procurement requirements when procuring contractors
for housing rehabilitation services. Specifically, a review of six housing rehabilitation contractor
procurement files determined that for two, the Parish did not always maintain departmental
supporting documentation showing that it (1) conducted a cost or price analysis, (2) performed
an independent cost estimate, or (3) ensured full and open competition or justification otherwise.
In addition, the Parish did not always maintain (1) departmental records sufficient to detail the
significant history of procurement, such as contractor selection or rejection, and the basis for the
contract price, and (2) a current departmental pre-qualified bidders list. These conditions
occurred because the Parish lacked complete written departmental procurement procedures. As a
result, the Parish could not support that $267,497 spent on 16 procured contracts for two
contractors were cost reasonable.


     The Parish Could Not Support
     $267,497 in Contract
     Expenditures

                  A review of six housing rehabilitation contractor procurement files, with 43
                  associated contracts and payments totaling $784,205, determined that the Parish
                  did not always comply with procurement requirements. To support the cost
                  reasonableness of contract payments, Federal regulations required the Parish to
                  maintain documentation showing that it performed independent cost estimates and
                  costs analyses, 9 and ensured full and open competition, or provide justification for
                  not doing so. 10 However, for two contractors, with 16 associated contracts and
                  payments totaling $267,497 (See Appendix B), the Parish did not have
                  departmental independent cost estimates, cost analyses, or justification for the
                  lack of full and open competition. See Table 2.

                    Table 2: Procurement deficiencies
                                                                   Number of              Total
                      Contractor Name                            contracts/type         payments
                      Louisiana Services and Contracting   14 (lead abatement)          $199,840
                      Company (LASCO)
                      LASCO                                1 (housing rehabilitation)      53,950
                      Prestige Facility Maintenance        1 (housing rehabilitation)      13,707
                                      Total                            16               $267,497




9
      24 CFR 85.36(f) 1.
10
      24 CFR 85.36(c) 1.


                                                     7
                  According to the Parish, it did not perform a departmental cost estimate for any of
                  the 14 LASCO lead abatement contracts because neither the staff nor its
                  contracted inspector had experience in the lead abatement area and relied on the
                  bid responses that came in for the procurements to establish a basis for contract
                  price. However, of the 14 procured contracts, LASCO was the only contractor to
                  bid on 12, showing no cost reasonableness review had been performed.

                  As related to full and open competition, the Parish’s departmental lead abatement
                  pre-qualified bidders list only included two contractors. When asked, the Parish
                  indicated that LASCO was the only contractor willing to perform lead abatement
                  and the replacement of exterior items, which was often needed for the CDBG
                  housing rehabilitation activities. However, the Parish did not have departmental
                  documentation to justify why it did not ensure full and open competition or seek
                  other contractors in the event that only one bid had been received. 11

                  In addition to the departmental files lacking adequate documentation to support
                  cost reasonableness, the files also lacked award letters showing contractor
                  selection or rejection, and review that the contractors were not debarred, as
                  required. 12 According to the Parish, it did not conduct departmental debarment
                  reviews. The Parish stated that it maintained a departmental pre-qualified
                  bidder’s list. However, as of March 2014, the Parish had not advertised for
                  prospective housing rehabilitation contractors for its departmental bidders list
                  since December 2010 and could not recall when it last advertised for lead
                  abatement contractors. Therefore, the listing was not current, as required. 13

     Incomplete Procurement
     Procedures

                  The Parish lacked complete written departmental procurement procedures to
                  ensure that it conducted all required steps when procuring its housing
                  rehabilitation contracts. The Parish provided departmental bid letting and
                  opening procedures for the sealed bid procurement method. However, the
                  policies did not have procedures for other procurement methods, requirements for
                  updating its pre-qualified bidder’s listing, procedures for debarment review,
                  maintaining procurement records, or conducting cost or price analyses and
                  independent cost estimates.

     Conclusion



11
          24 CFR 85.36(c)1
12
          24 CFR 85.36(b) 9.
13
          24 CFR 85.36(c) 4.


                                                   8
          Because the Parish did not have adequate departmental procurement procedures,
          it could not support that $267,497 spent on 16 procured contracts for two
          contractors was cost reasonable.

Recommendations



          We recommend that the Director of HUD’s New Orleans Office of Community
          Planning and Development require the Parish to

          2A.     Support the cost reasonableness of the 16 contracts or repay $267,497 to
                  its CDBG program with non-Federal funds.

          2B.     Implement written departmental procedures that include all procurement
                  requirements.

          2C.     Implement written departmental procedures to maintain and update its pre-
                  qualified bidder’s list.




                                           9
Finding 3: The Parish Did Not Always Provide Adequate Oversight for
its Subrecipients
The Parish did not always provide adequate oversight for its subrecipients. Specifically, the
Parish did not always (1) have support showing that it met its national objective for projects
carried out by its subrecipients, (2) monitor its subrecipients on a consistent basis, and (3)
include all required elements in its subrecipient agreements. This occurred because the Parish
(1) relied on its subrecipient to maintain documentation to support its projects without verifying
the adequacy of the documentation, (2) did not ensure that departmental staff was aware of the
departmental monitoring policy, and (3) disregarded departmental monitoring and agreement
requirements. As a result, the Parish could not support that $93,975 in CDBG funds expended
on three projects met an eligible national objective and put CDBG funding at an increased risk
for fraud, waste, and abuse.


     The Parish Did Not Always
     Provide Adequate Oversight


                   The Parish did not always provide adequate oversight for its subrecipients.
                   Federal regulations required the Parish to maintain evidence that each of its
                   activities met one of three national objectives. 14 However, the Parish could not
                   always provide support that departmental activities carried out by its subrecipients
                   met a national objective. Specifically, for three of the four activities reviewed, the
                   subrecipients did not have adequate support that $93,975 was spent to assist low
                   and moderate income participants. As shown in Table 3, the documentation did
                   not support the participants’ income or the number of participants reported to
                   HUD in the Parish’s 2011 and 2012 Comprehensive Annual Performance and
                   Evaluation Report (CAPER) 15. See Table 3.

Table 3: Assisted persons reported in CAPER versus documentation
                                                    Participants        Participants             Files with
                                        Total       according to        according to        participants income
           Activity                    funding        CAPERs         subrecipients’ files     documentation
 New Hope Adopt a School               $24,975           43                  24                       0
 Responsibility House Supportive         30,000           17                  15                     10
 Housing
 Healing Hearts Family                   39,000           45                  12                      9
 Counseling
 Total                                 $93,975          105                   51                     19


14
      CFR 570.200(a) (2).
15
      CAPER is a report in which the Parish reports the accomplishments and progress made toward their
      consolidated plan goals for the prior year. The consolidated plan, which may have a duration of between 3 and
      5 years, describes the jurisdiction’s community development priorities and multiyear goals.


                                                         10
                  For example, regarding the Adopt a School activity, the subrecipient could only
                  provide a list of names showing that it assisted 24 of the 43 participants and could
                  not locate any supporting income documentation showing that the participants
                  were low and moderate income.

     The Parish Did Not
     Consistently Monitor
     Subrecipients and its
     Agreements Lacked Required
     Elements

                  Although required to monitor and assure compliance with Federal requirements, 16
                  a review of the Parish’s departmental monitoring activities for 12 subrecipients
                  between October 2011 and September 2013, determined that it had not monitored
                  5. In addition, the subrecipient agreements for six did not include all required
                  elements, 17 such as a schedule for completing the work, provisions related to all
                  Federal laws and regulations, how program income would be used, and reversion
                  of assets requirements. Parish departmental staff agreed that, although required, it
                  had not monitored some subrecipients consistently. However, although they had
                  no formal monitoring report documented, it had indirectly monitored the
                  subrecipients by reviewing expenditures or performing rehabilitation site visits.

     The Parish Had Procedural and
     Internal Control Weaknesses



                  The Parish had departmental procedural and internal control weaknesses.
                  Specifically, Parish departmental staff stated that it relied on its subrecipients to
                  maintain documentation to support that a national objective was met. However,
                  Table 3 above shows that the subrecipient had not maintained sufficient
                  documentation. In addition, although the Parish provided a written departmental
                  monitoring policy, departmental staff was not aware of the policy. Regarding the
                  elements required in the subrecipient agreement, the Parish’s departmental
                  monitoring policy required it to review record-keeping, reporting and financial
                  management, labor standards, fair housing and equal opportunity, acquisition and
                  procurement requirements, and all other contractual requirements, during contract
                  negotiations, to ensure that the subrecipient is informed of its duties and
                  responsibilities under the terms of the agreement. After an agreement is signed,
                  the policy required an annual monitoring review of these requirements. However,
                  the policy did not require these elements be included in the written agreement,
                  which is required by Federal regulations.

16
          24 CFR 85.40 (a).
17
          24 CFR 570.503(b).


                                                   11
             Providing adequate oversight to subrecipients and ensuring that subrecipient
             agreements include all required elements would ensure that subrecipients
             maintain appropriate documentation, meet one of the national objectives, and
             follow all requirements. In addition, since the Parish used subrecipients to carry
             out some of its activities, the Parish should ensure that its staff is aware of its
             departmental monitoring policies and ensure that it adequately monitors
             subrecipients.

Conclusion

             As a result of its departmental procedural and control weaknesses, the Parish
             could not support that $93,975 of CDBG funds spent on three projects met an
             eligible national objective, and put its CDBG funding at an increased risk for
             fraud, waste, and abuse.

Recommendations

             We recommend that the Director of HUD’s New Orleans Office of Community
             Development require the Parish to

             3A.    Support the data reported in the CAPER regarding the three projects or
                    repay to its CDBG program $93,975 from non-Federal funds.

             3B.    Implement departmental procedures that ensure that adequate
                    documentation is maintained to support that funds are used to meet a
                    national objective.

             3C.    Implement written departmental monitoring procedures and controls to
                    ensure that staff periodically monitors subrecipients, to include ensuring
                    that subrecipients maintain adequate records.

             3D.    Implement written departmental procedures to ensure all required
                    elements are included in subrecipient agreements.




                                              12
                              SCOPE AND METHODOLOGY

We conducted our audit at the Parish’s office in Jefferson, LA, and the HUD Office of Inspector
General’s (OIG) office in New Orleans, LA, between February and August 2014. Our audit
scope covered the Parish’s CDBG program for the period October 1, 2011, through September
30, 2013. We expanded the scope as necessary to accomplish our audit objective.

To accomplish our objective, we

     •   Reviewed relevant laws, regulations, and program guidance.
     •   Reviewed the Parish’s organizational structure and written policies for the program.
     •   Reviewed the Parish’s audit reports, HUD monitoring reports, grant agreements, and
         action plans.
     •   Interviewed Parish staff.
     •   Reviewed the Parish’s national objectives, financial management system, administrative
         expenditures, and program income.
     •   Reviewed the Parish’s subrecipient agreements, monitoring documentation, procurement
         files, and program expenditures.

Using a universe of 11 IDIS drawdowns, totaling $5,956,817 as of September 30, 2013, we
selected a non-statistical sample of five vouchers with the highest dollar value, totaling
$3,496,145, to review at least 50 percent of the funding within the audit scope. We performed a
complete expenditure file review for the sampled drawdowns to determine whether the Parish
adequately supported and expended its program funds. Through the file reviews, we assessed the
reliability of the computer-processed data and determined that the data were generally reliable.

Using a universe of 14 housing rehabilitation contractors, with a total of 52 contracts 18 and
expenditures totaling $1,004,134 as of September 30, 2013, we selected a non-statistical random
sample of 6 contractors with 43 contracts to determine whether the Parish adequately procured
its contracts and ensured that its expenditures to those contractors were reasonable and
necessary. These contracts were procured directly by the Parish’s Community Development
Department. We did not assess any computer-processed data regarding the procurement review
because we did not rely heavily on computer data to conduct this review.

Using a universe of 13 projects from the 2011 CAPER and 8 projects from the 2012 CAPER, we
selected a sample of two projects from each CAPER. We reviewed the support for the data
reported in the CAPER for the projects to determine whether the Parish ensured compliance with
its national objectives. We did not assess any computer-processed data regarding the national
objective compliance review because we did not rely heavily on computer data to conduct this
review.



18
     Some entities had multiple contracts during the audit period.


                                                         13
We reviewed the Parish’s monitoring files and associated agreements for its 12 subrecipients that
administered 15 activities to determine whether the Parish monitored them and included all
required elements in the associated subrecipient agreements. We did not assess any computer-
processed data regarding the monitoring and agreement reviews because we did not rely on it.

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.




                                               14
                              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:

               •   Effectiveness and efficiency of operations: Policies and procedures in place
                   to reasonably ensure that program activities were conducted in accordance
                   with applicable laws and regulations. Specifically, policies and procedures
                   intended to ensure that the Parish complied with Federal regulations in
                   administering its CDBG program.

               •   Relevance and reliability of information: Policies and procedures in place to
                   reasonably ensure that expenditure and procurement errors were reduced, and
                   that subrecipient oversight was provided.

               •   Compliance with applicable laws, regulations: Policies and procedures in
                   place to reasonably ensure that appropriate expenditure documentation was
                   obtained and maintained, it conducted all required steps when procuring
                   contracts, and it provided adequate oversight to its subrecipients.

               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.

                                                 15
Significant Deficiencies

             Based on our review, we believe that the following items are significant deficiencies:

             •   The Parish did not have adequate written departmental accounting procedures
                 and file management systems in place to ensure that the appropriate
                 documentation was obtained and maintained. (Finding 1)
             •   The Parish did not have adequate departmental staffing levels to ensure that
                 the expenditures were adequately reviewed and filed. (Finding 1)
             •   The Parish did not have adequate written departmental procurement
                 procedures to ensure that it conducted all required steps when procuring
                 contracts. (Finding 2)
             •   The Parish did not provide adequate departmental oversight to its
                 subrecipients to ensure that they (1) were monitored consistently, (2) included
                 all required elements in the subrecipient agreements, and maintained
                 documentation to support their projects. (Finding 3)




                                              16
                                   APPENDIXES

Appendix A

                 SCHEDULE OF QUESTIONED COSTS

                          Recommendation
                                                  Unsupported 1/
                              number
                                1A                     $1,039,105
                                2A                        267,497
                                3A                         93,975
                               Total                   $1,400,577


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.




                                             17
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Ref to OIG Evaluation   Auditee Comments




                         18
Comment 1




Comment 1


Comment 1




Comment 2




            19
Comment 3


Comment 4




Comment 5


Comment 4




Comment 4




            20
Comment 4




Comment 6




Comment 6




Comment 6


Comment 3



Comment 6




            21
Comment 6


Comment 3

Comment 6



Comment 3




Comment 7




Comment 7



Comment 7




Comment 7
Comment 3




            22
Comment 7




            23
                         OIG Evaluation of Auditee Comments

Comment 1   The Parish asserted that it (1) did not have departmental staff available to
            manually search for the documentation, (2) had several other audits during the
            same timeframe where departmental staff were required to supply documents, (3)
            cannot independently establish new departmental procedures, but acknowledged
            that its accounting system may need improvements for the retrieval of documents,
            and (4) is not an entity of itself and does not duplicate Parish procedures.

            According to its CDBG grant agreement with HUD, the Parish was required to
            comply with all applicable laws and regulations in distributing funds provided
            under the agreement. This included having documentation pertinent to the grant
            available for audit review. Having a lack of departmental staff and several
            ongoing audits simultaneously did not relieve the Parish of this responsibility. In
            addition, as discussed in finding one, during our audit, the Parish provided
            departmental policies and procedures, which included staff roles and
            responsibilities and expenditure procedures. Therefore, to assert that the Parish
            cannot independently establish departmental procedures and that it is not an entity
            of itself is contradictory to the departmental policy provided during the audit and
            its statements in the response related to departmental processes it is implementing.
            Therefore, we stand by our original conclusions and recommendations.

Comment 2   The Parish stated that it had been audited at least annually for “regular”
            accounting purposes, and for more special programs, with the result that there
            were not any findings regarding its failure to adhere to the requirements of A-133.
            We audited the Parish’s departmental controls and processes over the CDBG
            program rather than regular accounting purposes. In addition, OIG conducts
            independent audits and the conclusions reached by other audit entities may differ
            due to various factors, including potential differences in the scope of the review.
            As such, we stand by our original conclusions.

Comment 3   With its written response, the Parish provided additional documentation in an
            effort to support questioned costs related to the (1) five voucher files reviewed,
            (2) cost reasonableness for two of its contractors as well as bid advertisements
            and debarment reviews conducted outside of our audit period, and (3) projects
            administered by its subrecipients required to meet the low-to moderate income
            national objective. We initially requested documentation in March 2014, and then
            notified the Parish on multiple occasions thereafter that the documentation had
            not been provided. Additionally, the documentation is voluminous. Thus, we did
            not assess its validity or adequacy. The Parish will need to provide the
            documentation to HUD for its review during the audit resolution process. We did
            not include the documents in this report, but they are available for review upon
            request. We did not make any revisions to the report based on the
            documentation.




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Comment 4   The Parish concurred that it did not have adequate departmental staffing levels
            and indicated that it hired additional staff. It stated that it has instituted a
            departmental policy, whereby all supporting documentation is scanned and filed
            electronically in an effort to ease the retrieval of expenditure support documents.
            The Parish also stated that it has instituted a process where its departmental staff
            will make drawdown requests to assure consistency with HUD requirements for
            drawdowns within 120 days, maintain documentation, and considered other
            processes and procedures to improve its drawdown process. We acknowledge the
            Parish’s efforts towards resolving these weaknesses.

Comment 5   The Parish disagreed that no accounting procedures were in place and stated that
            it provided its current procedures with the response. Our report did not conclude
            that there were no accounting procedures in place, but that the Parish did not have
            an adequate departmental expenditure policy. In addition, the additional support
            documentation provided with the response did not include the current procedures.
            Therefore, we stand by our original conclusion.

Comment 6   Regarding its procurement processes, the Parish asserted that the departmental
            procurement procedures used by its staff was mandated by HUD and received
            concurrence from the Parish’s Legal and Purchasing Departments. It also stated
            that it had recently been working to update its in-house process for procurement
            of the pre-bidder’s list and planned to develop new procedures as well as seek
            best practices to increase participation from the private market. Based upon these
            efforts the Parish asserted that it did more than due diligence to increase
            competition and provide reasonable costs for the services The Parish further
            explained that the Parish relied on price analyses performed by a certified lead
            inspector but these inspectors or risk assessors have retired or did not return after
            the storm. Thus, the staff member presently in charge of housing rehabilitation is
            anticipated to obtain a lead inspector certification in October of this year. Based
            upon these comments, the Parish requested that finding 2 be cleared.

            While we acknowledge the Parish’s efforts, the Parish has not yet (1) revised its
            departmental procurement policies to ensure all procurement requirements
            outlined in 24 CFR 85.36 are met, (2) updated its departmental pre-bidder’s list,
            and (3) obtained specialized departmental staff to conduct cost reasonableness
            analyses for lead inspections. Therefore, we did not clear the finding and stand by
            our original conclusions and recommendations.

Comment 7   The Parish stated that the Adopt a School program was located in a severely low
            income neighborhood and was geared toward troubled and at risk youth who were
            economically, academically, socially, and psychologically disadvantaged. It
            asserted that it could have met the low-mod criteria by documenting the nature
            and location of the program as opposed to income verification and the program
            would have met the requirements. However, based upon (1) conversations with
            the departmental staff, (2) its 2011 CAPER, and (3) the subrecipient agreement(s)
            requirements, income verification was the means of determining the low to

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moderate income status for this program and not its nature and location. Thus,
supporting income verification documentation should have been obtained and
maintained.

In addition, the Parish asserted that it did not disregard departmental monitoring
and agreement requirements and that all subrecipients are monitored continuously
throughout the year with one onsite visit. It attached copies of the process,
monitoring letters and other support documentation with its response. However,
this documentation was the same documentation provided during the audit, which
was deemed insufficient. In addition, some monitoring letters were outside the
scope of the audit. The Parish did not provide any documentation supporting that
it did not disregard the subrecipient agreement requirements. Based upon the
previously supplied documentation for the other subrecipients, the Parish asserted
that it had proven that it had met all of the requirements and requested that finding
3 be cleared.

Due to the deficiencies that remain, as explained in the previous paragraphs, we
did not clear the finding and stand by our original conclusions and
recommendations.




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     Appendix C

        QUESTIONED HOUSING REHABILITATION CONTRACTS

                                          Contract          Contract     Amount       Amount
              Contractor
                                          start date        end date     awarded     questioned
                                            6/27/2013         9/1/2013    $ 37,985      $37,985
                                            3/22/2012        4/21/2012       1,795        1,795
                                            3/22/2012        4/21/2012       7,070        7,070
                                            5/13/2013         7/1/2013      22,270       22,270
                                            4/23/2012        6/26/2012       1,140        1,140
                                            5/13/2013        6/13/2013        975          975
                                            9/24/2012       10/24/2012      34,282       34,282
LASCO (lead abatement contracts)
                                            3/26/2012        4/25/2012      23,178       23,178
                                            9/24/2012       11/23/2012      32,606       32,606
                                             3/1/2013        4/30/2013       1,390        1,390
                                            8/22/2013       10/27/2013       2,195        2,195
                                            4/18/2012        5/24/2012       3,285        2,956
                                           10/11/2013       11/16/2013       2,095        2,095
                                            9/24/2012       10/24/2012      29,903       29,903
LASCO (housing rehabilitation contract)     5/18/2011       11/19/2011      53,950       53,950
Prestige Facility Maintenance Service
                                             2/6/2012       12/22/2012      13,707       13,707
(housing rehabilitation contract)
                   Total                                                  $267,826     $267,497




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