oversight

The Colfax Housing Authority, Colfax, LA, Did Not Properly Administer Its Programs, Including Its 2009 American Recovery and Reinvestment Act Grant

Published by the Department of Housing and Urban Development, Office of Inspector General on 2013-11-08.

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

                                               U.S. DEPARTMENT OF
                               HOUSING AND URBAN DEVELOPMENT
                                        OFFICE OF INSPECTOR GENERAL




                                                    November 8, 2013
                                                                                              MEMORANDUM NO:
                                                                                                   2014-FW-1801


Memorandum
TO:           Cheryl Williams
              Director, Public and Indian Housing, 6APH

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

SUBJECT:      The Colfax Housing Authority, Colfax, LA, Did Not Properly Administer Its
              Programs, Including Its 2009 American Recovery and Reinvestment Act Grant


                                                 INTRODUCTION

In accordance with our regional plan to review public housing programs and because of
weaknesses identified by the U.S. Department of Housing and Urban Development (HUD), we
reviewed the public housing programs of the Colfax Housing Authority, Colfax, LA. Our
objective was to determine whether the Authority administered its HUD public housing
programs in accordance with regulations and guidance.

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.

                                METHODOLOGY AND SCOPE

The scope of the review generally covered the Authority’s financial transactions, expenditures,
procurements, American Recovery and Reinvestment Act of 2009 grant, and Housing Choice
Voucher and low-rent programs’ waiting lists for the period January 1, 2007, through December
31, 2012. We expanded the scope as necessary to meet the audit objective. We conducted the
review at the Authority’s administrative office in Colfax, LA, the HUD field office and our
offices in Baton Rouge, LA, and our office in Houston, TX, from March through July 2013.




                                               Office of Audit (Region 6)
                                819 Taylor Street, Suite 13A09, Fort Worth, TX 76102
                                      Phone (817) 978-9309, Fax (817) 978-9316
                          Visit the Office of Inspector General Web site at www.hudoig.gov.
To accomplish our objective, we performed the following:

       •       Reviewed relevant laws, regulations, and other HUD requirements;
       •       Reviewed the Authority’s procurement policy and accounts payable procedures;
       •       Reviewed the Authority’s board meeting minutes and board resolutions;
       •       Reviewed the Authority’s financial statements and reports, bank statements,
               invoices, and other supporting documentation;
       •       Reviewed the Authority’s procurement and expenditure files;
       •       Reviewed HUD’s monitoring reports;
       •       Reviewed and analyzed data representing disbursements from the Authority’s
               general fund account;
       •       Interviewed HUD staff;
       •       Interviewed former and current Authority staff and board members; and
       •       Conducted onsite visits to 22 of the Authority’s low-rent units.

Because we knew enough about the population to focus on certain items in the population that
were potentially problematic, we used the nonstatistical sampling method to select 36 payees
with disbursements totaling $516,231 of the 6,387 transactions totaling more than $4 million
reflected in the Authority’s bank statements for the period January 2007 through December
2012. Specifically, for the 36 payees, we identified non-Housing Choice Voucher program
disbursements of $1,000 or more, accumulated disbursements of $5,000 or more for a single
payee, and payees with potential conflicts. In addition, for 14 of the 36 payees, we reviewed the
associated procurement files to determine support for costs and compliance with HUD’s and
other procurement requirements. Additional disbursements associated with these 14 payees
totaled $370,845. Further, the Authority purchased a total of 89 appliances with Recovery Act
funds. To verify the existence of these appliances, we used the inventory listing and invoice
receipts to randomly select 43 of these appliances, located in 22 of the Authority’s low-rent
units, for onsite visits.

                                       BACKGROUND
The Authority is a related organization of the Town of Colfax, established to provide safe,
decent, and sanitary housing for very low-income families and individuals. It is located at 300
Park Lane, Colfax, LA, and manages 90 low-rent units and 50 housing choice vouchers. The
Authority is governed by a five-member board of commissioners, appointed by the mayor of
Colfax, who serve staggered multiyear terms. The board hires the executive director, who serves
as the board secretary and is responsible for the daily operations of the Authority. The
Authority’s previous executive director retired in February 2012, and the Authority hired a new
executive director in July 2012.




                                                2
In addition to rental income the Authority received from its low-rent units, HUD provided funds
to the Authority as shown in table 1.

         Table 1
              Fiscal year 1       Capital Fund       Operating subsidy     Recovery Act
                  2007                 $134,120               $ 203,644
                  2008                  132,649                 227,797
                  2009                  132,270                 256,629          $167,907
                  2010                  131,196                 227,089
                  2011                  111,373                 253,837
                  2012                   99,495                 250,739
                 Totals                $741,103              $1,419,735          $167,907

                                        RESULTS OF REVIEW

The Authority did not properly oversee its public housing programs. Specifically, it

    •   Made disbursements that lacked adequate supporting documentation;
    •   Made unsubstantiated payments to its employees;
    •   Issued payroll checks to the previous executive director’s wife, a nonemployee;
    •   Cashed certificates of deposit without sufficient explanations;
    •   Misused cash received from salvaged equipment;
    •   Did not follow HUD’s and its own procurement requirements;
    •   Could not account for 22 of 89 appliances purchased with Recovery Act funds;
    •   Did not maintain true and accurate records of its board meetings and resolutions; and
    •   Did not properly maintain adequate documentation for its housing programs’ waiting
        lists.

This condition occurred because the Authority lacked proper oversight and adequate internal
controls. As a result, it (1) incurred questioned costs totaling more than one million dollars, (2)
did not properly award contracts, and (3) lacked integrity in its daily operations.

The Authority Made Questionable Disbursements

Federal regulations 2 required the Authority to maintain adequate supporting documentation for
its expenditures. However, it (1) made disbursements for unsupported expenditures; (2) made
unsubstantiated payments to its employees; (3) issued payroll checks to the previous executive
director’s wife, a nonemployee; (4) cashed certificates of deposit without sufficient explanations;
and (5) misused cash received from salvaged equipment.




1
    The Authority’s fiscal year period is from April 1 through March 31.
2
    Appendix A of 2 CFR (Code of Federal Regulations) Part 225(c)(1)(j)




                                                       3
Unsupported Expenditures
While the Authority had a disbursements policy, it did not establish a level of review or approval
before paying vendors and contractors. Instead of following the disbursements policy, Authority
staff performed the processes based upon a general knowledge of office procedures. As a result,
for 12 of 36 payees reviewed, the Authority incurred more than $129,000 in questioned costs.
Specifically, the Authority could not provide receipts, invoices, or other documentation to
support $129,840 3 for 12 disbursements. In one instance, the Authority included only a copy of
its balance sheet showing an accrued liability instead of an invoice. In another instance, the
Authority incurred an expense for employee related benefits and did not maintain any file
support documentation. See Appendix C for details on the expenditure review results.

Payments to Employees Unsubstantiated
The Authority issued checks, outside of its normal payroll process, to employees for
unsubstantiated purposes. Specifically, between January 2007 and December 2012, the
Authority issued at least 59 checks from its operating funds totaling $33,081 to its employees, in
addition to the employee’s regular pay, without adequate supporting documentation. The
Authority could not explain all of the employee disbursements but stated that it issued bonuses to
employees.

To provide bonuses to employees, HUD required the Authority to obtain advance approval from
the board and the Louisiana State Civil Service 4 office and have independent verification and
documentation of the performance measures. HUD also required the Authority to include the
bonus amounts in its HUD-approved annual budget. According to the Authority, Louisiana State
Civil Service rule 6.16.1, board approval, and its HUD-ranked performance as a standard or
higher performer allowed it to pay bonuses to employees. The Authority obtained board
approval for the bonuses. However, the Authority neither had State approval for any year nor
included the bonuses in any of its HUD-approved budgets; thus, we questioned all of the
$33,081.

Payroll Checks Issued to the Previous Executive Director’s Wife
The previous executive director’s wife received payroll checks totaling $2,733 from the
Authority between April and July 2012, although she was not an Authority employee, making
these payments ineligible. Specifically, in April 2012, 2 months after the previous executive
director retired, the Authority rehired him to perform maintenance at the Authority’s properties.
According to the Authority, it issued checks for this work in his wife’s name since he was
receiving Social Security disability payments during this period. While the Authority reported
the incident to the Colfax police department and its attorney issued three letters demanding
repayment, it had not received repayment of these funds.


3
    This includes $15,156 paid from the operating fund, $2,237 paid from Recovery Act funds, and $112,447 paid
    from the Capital Fund program.
4
    The Louisiana State Civil Service approval was applicable only to employees in classified positions. Only
    board approval was needed for nonclassified employees. Of the Authority’s employees, two were in
    nonclassified positions, which were temporary in nature as their hiring or firing was at the will of the agency.




                                                          4
Withdrawals From Certificates of Deposit
The Authority made four withdrawals from three certificates of deposit totaling $182,005
between July 2008 and September 2012 as shown in table 2.

            Table 2
                Certificate of        Withdrawal             Withdrawal               Current
                  deposit 5            amount                    date                  status
                      1                   $ 10,040            7/18/2008                Closed
                      2                     50,000            4/11/2011                Closed
                      2                     61,965            4/02/2012                Closed
                      3                     60,000            9/28/2012                Open
                   Total                  $182,005

According to the Authority’s board resolutions, it made the withdrawals to have more funds to
pay Authority expenditures. A review of the bank records showed that the bank transferred the
funds from the certificates into the Authority’s general fund checking account. However, the
Authority could not explain the specific uses of these funds.

Misused Cash Received From Salvaged Equipment
Between January 2010 and August 2012, the Authority’s former executive director and two
maintenance employees received $8,688 in cash from salvaging Authority appliances and
equipment at a local salvage yard. Upon receipt, the former administrative assistant kept 6 and
monitored the cash and documented its uses with receipts or handwritten notes. Regulations 7
required the Authority to maintain effective control and accountability of all cash, real and
personal property, and other assets and ensure that it adequately safeguarded all property and
used it solely for authorized purposes. However, the Authority used the cash for personal loans
to two employees and barbeques for its staff, vendors, and residents. Of the $8,688, the
Authority did not have any documentation showing that $7,796 was deposited into its bank
account or other use of the funds as shown in table 3.

    Table 3
          Employee personal loans                       Barbeques
    Employee     Loan       Repayment               Vendor        Amount               Salvage funds
        1           $450          $400         Wal-Mart             $ 69        Cash (salvage)         $8,688
        1             70             0         Wal-Mart              117        Employee loans          (833)
        1             20             0         Dollar General         11        Loans repaid              560
        1             60             0         Lowe’s                152        Barbeques               (419)
        1            163           160         Dollar Tree             9        Cash Remaining          (200)
        1             50             0         Ford Food Center       61        Total                  $7,796
        2             20             0               Total          $419
    Total           $833          $560




5
    The second certificate had two separate cash withdrawals in the amounts listed.
6
    The cash was placed into a plastic bag, referred to as the “kitty.”
7
    24 CFR 85.20(b)(3)




                                                         5
The Authority Did Not Comply With Federal Procurement Requirements

A review of 14 procurement files showed that the Authority did not have documentation, such as
contracts, procurement file documentation, cost analyses and independent cost estimates, to
support disbursements to 13 contractors. For the disbursement to these 13 contractors, the
Authority did not maintain documentation in its procurement files to support $671,211 8 in
disbursements as shown in table 4. For example, the Authority paid one contractor for
foundation repair work at several of its low-rent housing units without a contract and had only a
written proposal of the work specifications and estimates. In another example, the Authority
paid a contractor to provide services related to heating, ventilation, and air conditioning
improvements, but in procuring these services, it did not perform a cost or price analysis to
support that the amounts paid for the goods and services were justified. See Appendix D for
details on the procurement review results.

     Table 4
                                                                 Number of files
                           Deficiency                            with deficiencies          Total cost
     No contract                                                        2                      $ 77,955
     No contract or procurement file or documentation                   4                          208,202
     No procurement file or documentation                               1                           59,300
     No contract, cost or price analysis, or independent
     cost estimate 9                                                      1                         75,833
     No cost or price analysis or independent cost
     estimate                                                             5                       249,921
     Total                                                               13                     $671,211 10

In addition, the Authority did not ensure that its contracts were necessary and reasonable, or
maintain a contract log or contract administration system. Federal procurement regulations 11
required the Authority to comply with Federal cost principles, 12 which state that a cost must be
necessary and reasonable for the proper and efficient performance and administration of Federal
awards. The Authority’s procurement policy stated that it would comply with Federal
procurement requirements, 13 including those that must be met to support cost reasonableness.
However, the Authority did not ensure that it (1) had records detailing the history of its
procurements, including its rationale for the procurement method, selection of contract type,
contractor selection or rejection, and basis for contract price; (2) obtained performance and
payment bonds; (3) negotiated profit as a separate element of price; (4) included required
contract provisions; and (5) selected the proper procurement methods.

8
     The sources of funding consisted of the Capital Fund Program, Recovery Act, and the Authority’s operating
     funds. Total amount excludes $74,922 of costs questioned under the expenditure review.
9
     24 CFR 85.36(f) – This part required the Authority to make independent estimates before receiving bids or
     proposals.
10
     This amount includes $437,710 paid from capital funds, $124,009 paid from operating funds, and $109,492 paid
     from Recovery Act funds.
11
     24 CFR 85.36(f)(3)
12
     2 CFR Part 225
13
     24 CFR 85.36




                                                        6
As an example of the Authority’s failure to ensure that costs were necessary and reasonable, it
used the same architectural and engineering contractor for 11 of 12 different projects during a
9-year period without documenting the selection methodology. 14 In another example, the
Authority paid a $200 monthly retainer fee totaling $13,452 15 from January 2007 through August
2012 to an attorney without knowing what services the attorney provided or whether the cost was
necessary or reasonable.

Further demonstrating the Authority’s failure to follow procurement requirements, rather than
maintaining a contract log or contract administration system as required to ensure that its
contractors performed in accordance with the terms, conditions, and specifications of their
contracts, 16 the Authority only kept folders that included documentation related to the work
performed or completed by the contractor and other procurement related documentation.

Appliances Were Missing From the Authority’s Inventory

Between August 23, 2010, and April 25, 2011, the Authority purchased 89 appliances, including
49 refrigerators, 35 gas stoves, and 5 electric stoves, using $35,315 in Recovery Act funds. Site
visits determined that nine appliances were missing. In addition, a comparison of the Authority’s
inventory records to the invoice purchase receipts determined that an additional five appliances
were missing. Further, the Authority’s current executive director provided documentation
showing that another 8 appliances were missing for a total of 22 missing appliances, consisting
of 9 refrigerators, 10 gas stoves, and 3 electric stoves that cost a total of $8,028. The Authority’s
inventory policy required it to ensure that the inventoried items were maintained and properly
counted to reduce shrinkage and the risk of fraud.

The Authority Had Inaccurate and Misrepresented Board Minutes and Resolutions

Under the former executive director, the Authority did not maintain true and accurate records of
its board proceedings and board resolutions. Louisiana State regulations require all public bodies
to keep written minutes of all open meetings as public records. 17 However, a review of the board
minutes and board resolutions revealed many inaccuracies and misrepresentations. Specifically,
the Authority documented records for meetings that did not occur and decisions that board
members did not vote on. Without accurate board minutes, the Authority could not ensure that
its actions had proper board approval or that the board provided adequate oversight.

The Authority Did Not Properly Maintain Its Section 8 and Public Housing Waiting Lists

The Authority did not maintain adequate documentation to support its Housing Choice Voucher
program and public housing waiting lists. At least 12 relatives or associates of the former
executive director and former board chairman occupied the Authority’s low-rent housing units,

14
     As required by 24 CFR 85.36(b)9
15
     This total consisted of 65 payments of $200, one payment of $400 covering 2 months, and a final payment of
     $52.
16
     24 CFR 85.36(b)(2)
17
     Louisiana Revised Statue 42:20




                                                        7
and 4 received housing choice vouchers. According to the current executive director and a board
member, the Authority’s previous management placed some of the relatives into units ahead of
others on the waiting list. For example, according to the current executive director, in May 2011,
a homeless, terminally ill veteran applied and was approved for a public housing unit. However,
the Authority placed the former board chairman’s daughter, who was not on the waiting list,
before the veteran. We could not validate this or other improprieties since the Authority did not
maintain a public housing waiting list and the Housing Choice Voucher waiting list had
incomplete documents, missing pages, overlapping time periods, and duplicate information.

The Authority Lacked Proper Oversight and Adequate Internal Controls

The Authority did not have proper oversight and adequate internal controls. Specifically, it did
not instruct its board members regarding their roles and responsibilities. In addition, while the
Authority had a disbursements policy, the policy did not establish a level of review or approval
before disbursements were made to vendors and contractors, and instead of following the
disbursements policy, Authority staff performed the processes based upon a general knowledge
of office procedures. Further, the Authority did not properly maintain its written policies and
procedures as it could not locate its February 2005 to June 2013 admissions and occupancy
policy, which governs its low-rent program.

                                   RECOMMENDATIONS
We recommend that the Director, Office of Public Housing, New Orleans, LA, require the
Authority to

1A.    Support or repay $129,840, which includes $15,156 to its operating fund, $2,237 to HUD
       for its transmission to the U.S. Treasury, and $112,447 to its Capital Fund program, in
       unsupported disbursements. Repayment must be from non-Federal funds.

1B.    Support or repay to its operating fund $33,081 in disbursements to employees for bonuses
       that were improperly awarded, duplicated pay periods, and unidentified purposes under
       the applicable years. Repayment must be from non-Federal funds.

1C.    Repay its operating fund $2,733 for funds paid to the previous executive director’s wife
       when she was not an employee. Repayment must be from non-Federal funds.

1D.    Perform a reconciliation of its bank and expenditure transactions to determine the specific
       uses of the $182,005 in operating funds withdrawn from the three certificates of deposit
       and identify any missing funds. If the Authority cannot support the use of funds, it
       should repay its operating fund from non-Federal funds.

1E.    Support that it properly used $7,796 in cash from salvaged appliances and equipment or
       repay the money from non-Federal sources to its low-rent program.

1F.    Support or repay to HUD $437,710 in capital funds spent for any amounts that it cannot
       support for contracts that did not have procurement records, contracts, cost or price
       analyses, or independent cost estimates. Should the Authority provide sufficient



                                                8
      procurement documentation, require the Authority to provide invoice documentation to
      support $21,686 paid to James Decker Builders, $1,049 paid to Pan American Engineers,
      and $49,695 paid to KDC Construction Company, or repay HUD any amounts that it
      cannot support, as questioned under recommendation 1A. Any repayments must be from
      non-Federal funds.

1G.   Support or repay $124,009 to its operating funds any amounts that it cannot support for
      contracts that did not have procurement records, contracts, cost or price analyses, or
      independent cost estimates. Should the Authority provide sufficient procurement
      documentation, require the Authority to provide invoice documentation to support $225
      paid to Van’s Plumbing Repairs & Construction and $30 paid to Mike Estes, PC, or repay
      to its operating fund any amount it cannot support, as questioned under recommendation
      1A. Any repayments must be from non-Federal funds.

1H.   Support or repay $109,492 paid from its Recovery Act funds to HUD for its transmission
      to the U.S. Treasury any amounts that it cannot support for contracts that did not have
      procurement records, contracts, cost or price analysis, or independent cost estimate.
      Should the Authority provide sufficient procurement documentation, require the
      Authority to provide invoice documentation to support $2,237 paid to Pan American
      Engineers, or repay to HUD for its transmission to the U.S. Treasury any amounts that it
      cannot support, as questioned under recommendation 1A. Any repayment must be from
      non-Federal funds.

1I.   Provide complete, accurate inventory records to identify the appliances purchased with
      Recovery Act funds and the number missing. The Authority should support or repay
      $8,028 to HUD for its transmission to the U.S. Treasury the cost of any appliance that it
      cannot account for. Any repayment must be from non-Federal funds.

1J.   Develop adequate written accounting and disbursement policies and procedures.
1K.   Maintain a contract administration system, which ensures that (1) procurement
      requirements are followed consistently; (2) a contract log needed to review its record of
      procurement actions and contractors is maintained; and (3) contractors perform in
      accordance with the terms, conditions, and specifications of their contracts as required by
      24 CFR 85.36(b)(2).

1L.   Provide HUD-approved training to its Board to ensure the commissioners receive written
      instructions on their roles and responsibilities.




                                               9
APPENDIX A

                 SCHEDULE OF QUESTIONED COSTS
                  Recommendation           Ineligible       Unsupported
                      number                   1/               2/
                         1A                                   $ 129,840
                         1B                                      33,081
                         1C                    $2,733
                         1D                                       182,005
                         1E                                         7,796
                         1F                                       437,710
                         1G                                       124,009
                         1H                                       109,492
                         1I                                         8,028

                          Totals               $2,733          $1,031,961



1/   Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity
     that the auditor believes are not allowable by law; contract; or Federal, State, or local
     policies or regulations.

2/   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.




                                             10
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Ref to OIG Evaluation                                 Auditee Comments



                                                               COLFAX HOUSING AUTHORITY
                                                               P.O. BOX 179    300 Park Lane
                                                                     COLFAX, LA 71417

             Board Members:
             Eugene Couvillion, Chairman;
             Clara Crayton, Kimberline Williams, Gwendolyn Allen
             Consondra Davis., Executive Director,

                                                                    September 16, 2013

             TO: U.S. Department Of
                 Housing and Urban Development
                 Office of Inspection General

             From: Consondra Dorsey-Davis
                   Executive Director

             Re: Colfax Housing Authority, LA122, Plan of Action
                 In response To the Findings of the Audit Report of
                 HUD’s Office of Inspector General

             This reported finding covers the Authority’s financial transactions, procurements,
             ARRA 2009 grant, and the programs, Low-Rent and Voucher Choice, administered
             by the Colfax Housing Authority for the period covering January 01, 2007 through
             December 31, 2012.

Comment 1    1A: Supporting documentations were found for the funds totaling $134,703, in
             unsupported disbursement.

Comment 2    1B: The Authority shall review the amount totaling $33,081, in disbursements to
             employees and provide supporting documentations or repay to its operating fund account.

             1C: No supporting documentation for this disbursement. Letters of Demand has been sent
Comment 2
             in pursue of recouping the amount owed to the operating fund account.

             1D: The Authority has begun a reconciliation of its expenditure to account for the use of
Comment 2    $182,005.00 received from the three certificates of deposits.




                                                                    11
Ref to OIG Evaluation                        Auditee Comments (continued)



Comment 2   1E: Of the $8,688 cash received for salvage sales, only $297.17 was deposited into the
            operating funds account. The remaining balance of $7,796, no supporting documentation
            for this disbursement show proper usage. The Authority will pursue recouping the
            amount owed to the operating fund account

            1F: The 2009 vehicle in the amount $16, 305, was purchased from Futurell Chevrolet, a
Comment 3
            vendor with the OSP. The Authority procurement policy revised and approved on
            02/17/2005, states that the purchase of a vehicle, not exceeding $25,000, does not have to
            be advertised and let out for bids. $18, 000, was placed in the 2009 CFP under line 1475-
            Non dwelling Equipment and approved by the local HUD field office.

Comment 2   1G: Supporting documents or repayment shall be made to HUD for the amount of
            $437,710, used in capital funds. Invoice documents have been received and attached to
            the payments mentioned within this line item totaling $75,667.

Comment 2   1H: The Authority shall follow the recommendation to show support or repay $122,774
            to its operation funds.

            1I: The Authority shall follow the recommendation to show support or repay $109,492
Comment 2   to the U.S. Treasury.

Comment 2   1J: The Authority shall show support or repay any funds owed to the U.S. Treasury for
            the cost of any appliances that it cannot account for. Through the Authority’s program
            software, it is able to maintain an up to date and accurate account of its inventory. Of the
            89 appliances 6 were re-purchased, four gas stoves and 2 refrigerators. 83 appliances
            have been accounted for. $18,672 was returned to the Authority due to a credit. No
            known supporting document to show the disbursement. The refund was issued in four
            separate checks. No known disbursement in those amounts.

            1K: The Authority will review all policies and procedures and revise accordingly as
Comment 2
            recommended.
Comment 2   1L: The Authority shall follow the recommendation to maintain accurate contract
            administration system to assure all specifications are followed as required.

Comment 2   1M: Members have received written instructions on their roles and responsibilities. The
            Authority will provide HUD approved procurement training to Board Members. The
            Authority will provide management training to employees to assure clarification that the
            programs are maintained accurately and specifications are followed as required.




                                                12
                                 OIG Evaluation of Auditee Comments

Comment 1         The Authority provided additional documentation with its written response related
                  to the questioned costs for 9 of the 13 disbursements discussed in the draft
                  memorandum. Due to its size, we did not include this documentation in the final
                  memorandum. Based upon our review, we determined that the documentation (1)
                  was not sufficient to support five of the disbursements; (2) partially supported the
                  questioned costs for three of the disbursements; and (3) fully supported the
                  questioned costs for one disbursement. As such, we revised the memorandum and
                  reduced the questioned costs by $4,864 ($134,704 18 - $129,840 for the remaining
                  12 unsupported disbursements) as shown in table 5.

                  Table 5
                                                 Original questioned     Revised questioned
                  Payee                                amount                 amount                Difference
                  Mike Estes, PC                             $     530                 $       30          $ 500
                  Pan American Engineers, Inc.                   3,322                          0           3,322
                  Van’s Plumbing Repairs and
                  Construction                                   1,050                       225                 825
                  KDC Construction Company                      36,895                    36,895
                  Town of Colfax                                 9,186                     9,186
                  CitiBusiness Card                                294                        77                 217
                  Colfax Banking Company                         2,725                     2,725
                  KDC Construction Company                      12,800                    12,800
                  Pan American Engineers, Inc.                   3,286                     3,286
                  Petron, LLC                                    7,754                     7,754
                  Petron, LLC                                   32,263                    32,263
                  James Decker Builders                         21,686                     1,686
                  LHC Employee Benefits                          2,913                     2,913
                  Total                                       $134,704                  $129,840           $4,864

Comment 2         The Authority generally agreed with our conclusions and recommendations and
                  asserted that it has taken or will take the appropriate actions to resolve the
                  recommendations. We recognize the Authority’s efforts in addressing the errors
                  identified in the memorandum and improving its processes.

Comment 3         The Authority disagreed and commented that, per its procurement policy, a
                  vehicle purchase not exceeding $25,000 does not require advertisement for bids.
                  In addition, the Authority indicated that its HUD approved budget included
                  $18,000 under line item 1475-Non dwelling Equipment of 2009 capital funds;
                  thus, suggesting that the budget allowed for the vehicle purchase. We agree that
                  the procurement policy did not require advertisement for bids and that the HUD
                  approved budget included $18,000 under the line item. We removed this issue
                  from the audit memorandum even though the Authority did not properly justify in
                  its files that this vehicle purchase was an emergency purchase.

18
     The total $134,704 differs from the $134,703 referenced in the auditee comments under 1A due to rounding.




                                                       13
          Appendix C

                                   EXPENDITURE REVIEW RESULTS

                                        Total                                       Funding
              Payee                 disbursements   Supported    Unsupported         source              Comment(s)
N.J. Bonnette                            $ 27,950     $ 27,950
Mike Estes, PC                             11,030       11,000        $      30    Operating      Exceeded contract amount
Pan American Engineers, Inc.                3,322        3,322
Petron, LLC                                55,438       55,438
Robert L. Kennedy                             200          200
Service Air & Electrical Co.               10,347       10,347
Van’s Plumbing Repairs and
Construction                                1,050          825              225    Operating      Incomplete documentation
Bass International Software                 2,000        2,000
Chevron & Texaco Credit Card                  743          743
Dempsey Business Systems                    6,505        6,505
Service Air & Electrical Co.               70,670       70,670
Arthur Gallagher Risk Management           31,548       31,548
Foster Construction, Inc.                  87,099       87,099
Futrell Chevrolet, Inc.                    16,305       16,305
KDC Construction Company                   36,895                         36,895   Capital Fund   No invoice
Lowe’s Home Improvement                     2,111        2,111
Sayes Office Supply                         1,223        1,223
Town of Colfax                              9,186                          9,186   Operating      No invoice
Allstate Insurance Company                  1,215        1,215
Bayou State Alarms &
Communications                              6,877        6,877
                                                                                                  No support/explanation for
CitiBusiness Card                             294         217                 77   Operating      costs
Colfax Banking Company                      2,725                          2,725   Operating      Insufficient documentation
Fidelity National Property                  6,840        6,840
Housing Solutions Alliance                  7,785        7,785
KDC Construction Company                   12,800                         12,800   Capital Fund   No invoice
Lindsey Software Systems, Inc.             16,860       16,860
Lowe’s Home Improvement                     2,262        2,262
Lowe’s Home Improvement                       710          710
Lowe’s Home Improvement                       269          269
Mike Estes, PC                             10,230       10,230
                                                                                   Capital Fund
                                                                                   ($1,049);
                                                                                   Recovery Act
Pan American Engineers, Inc.                8,692        5,406             3,286   ($2,237)       Partially supported
Petron, LLC                                 7,754                          7,754   Capital Fund   No invoice
Petron, LLC                                32,263                         32,263   Capital Fund   No invoice
Price Office Supply & Equipment               434         434
James Decker Builders                      21,686                         21,686   Capital Fund   No invoice
                                                                                                  No invoice/other
LHC Employee Benefits                       2,913                       2,913      Operating      documentation
TOTALS                                   $516,231     $386,391       $129,840




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       Appendix D

                          PROCUREMENT REVIEW RESULTS

                          Total                   Funding
     Contractor       Disbursements Unsupported    Source                      Comment(s)
                                                            No contract or procurement file to document the
                                                            history of procurement (Note: Unsupported
James Decker                                    Capital     amount includes $21,686 questioned under
Builders                  $205,286     $205,286 Fund        expenditure review)
Bayou State Alarms
& Communications,                               Capital     No contract or procurement file to document the
LLC                          9,001        9,001 Fund        history of procurement
Housing Solutions
Alliance                    28,387       28,387 Operating   No cost analysis or independent cost estimate
KDC Construction                                Capital     No contract (Note: Unsupported amount includes
Company                     78,300       78,300 Fund        $49,695 questioned under expenditure review)
                                                            No contract or procurement file to document the
Robert L. Kennedy           13,452       13,452 Operating   history of procurement
                                                            No procurement file to document history of
                                                            procurement (Note: Unsupported amount includes
Mike Estes, PC              59,330       59,330 Operating   $30 questioned under expenditure review)
                                                Capital     No cost analysis or independent cost estimate and
                                                Fund and    insufficient records to detail the history of the
Pan American                                    Recovery    procurement (Note: Unsupported amount includes
Engineers, Inc.             13,590       13,590 Act         $3,286 questioned under expenditure review)
                                                            No contract; no cost analysis or independent cost
                                                            estimate; insufficient records to detail the history
                                                Capital     of the procurement and no performance and
Petron, LLC                 75,833       75,833 Fund        payment bond
                                                Recovery
Foster Construction        109,492      109,492 Act         No cost analysis or independent cost estimate
                                                            No cost analysis or independent cost estimate;
                                                            insufficient records to detail the history of
                                                            procurement details; no performance and payment
Service Air &                                   Capital     bond; contract did not include all provisions as
Electric                    81,017       81,017 Fund        required
                                                            No contract; insufficient records to detail the
                                                Capital     history of the procurement; no written justification
N.J. Bonnette               49,350       49,350 Fund        to support use of procurement method
                                                            No contract or procurement file to document the
Van’s Plumbing                                              history of procurement (Note: Unsupported
Repairs and                                                 amount includes $225 questioned under
Construction                 2,374        2,374 Operating   expenditure review)
Lindsey & Company           20,721       20,721 Operating   No costs analysis or independent cost estimate
TOTALS                    $746,133     $746,133




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