OFFICE OF AUDIT
REGION 10
SEATTLE, WA
Yakama Nation Housing Authority
Wapato, WA
Native American Housing Block Grant,
American Recovery and Reinvestment Act
2014-SE-1002 April 29, 2014
Issue Date: April 29, 2014
Audit Report Number: 2014-SE-1002
TO: Ken A. Bowring, Administrator, Office of Native American Programs, 0API
//signed//
FROM: Ronald J. Hosking, Regional Inspector General for Audit, 0AGA
SUBJECT: The Yakama Nation Housing Authority Did Not Always Spend Its Recovery Act
Funds in Accordance With Requirements
Attached is the U.S. Department of Housing and Urban Development (HUD), Office of
Inspector General’s (OIG) final results of our review of the Yakama Nation Housing Authority’s
Native American Housing Block Grant under the American Recovery and Reinvestment Act of
2009.
HUD Handbook 2000.06, REV-4, sets specific timeframes for management decisions on
recommended corrective actions. For each recommendation without a management decision,
please respond and provide status reports in accordance with the HUD Handbook. Please furnish
us copies of any correspondence or directives issued because of the audit.
The Inspector General Act, Title 5 United States Code, section 8L, requires that OIG post its
publicly available reports on the OIG Web site. Accordingly, this report will be posted at
http://www.hudoig.gov.
If you have any questions or comments about this report, please do not hesitate to call me at
(913) 551-5870.
Office of Audit Region 10
909 First Avenue, Suite 126, Seattle, WA 98104
Phone (206) 220-5360, Fax (206) 220-5162
Visit the Office of Inspector General Web site at www.hudoig.gov
What We Audited and Why unnecessary materials, (3) charged the grant for routine
maintenance staff meetings, (4) did not always pay the
prevailing Davis-Bacon wages, and (5) paid employees
We audited the Yakama Nation for hours not worked.
Housing Authority because it received a
nearly $4.9 million Native American In addition, it split purchases that would have required
Housing Block Grant under the it to obtain multiple price quotations and did not
American Recovery and Reinvestment properly report the project activity descriptions, the
Act of 2009. This was the largest grant number of homes it planned to repair, the amount of its
of its kind in the State of Washington vendor payments, and the number of jobs created in
and fourth largest in Region 10 (Alaska, FederalReporting.gov.
Idaho, Oregon, and Washington). Our
objectives were to determine whether
the Authority properly spent its
Recovery Act funds, correctly obtained
small purchases, and properly reported
Recovery Act information in
FederalReporting.gov.
What We Recommend
We recommend that the Administrator
of the Office of Native American
Programs require the Authority to
provide support showing that almost
$1.2 million was spent on the projects
or reimburse HUD for transmission to
the U.S. Treasury from non-Federal
funds for expenditures it is unable to
support and provide support showing
that $372,000 worth of materials
purchased was the best value possible
or reimburse HUD for transmission to
the U.S. Treasury from non-Federal
funds.
What We Found
The Authority did not always properly
spend its Recovery Act funds. It (1)
spent $1.2 million in Recovery Act
funds without being able to show that
the funds were used on the projects, (2)
purchased more than $177,000 worth of
TABLE OF CONTENTS
Background and Objectives 3
Results of Audit
Finding 1: The Authority Did Not Always Properly Spend Its Recovery Act 4
Funds
Finding 2: The Authority Split Purchases That Would Have Required It To 11
Obtain Multiple Price Quotations
Finding 3: The Authority Did Not Properly Report Its Recovery Act 13
Information
Scope and Methodology 16
Internal Controls 18
Appendixes
A. Schedule of Questioned Costs 20
B. Auditee Comments and OIG’s Evaluation 21
C. Criteria 46
D. Multiple Purchases From Vendors 52
2
BACKGROUND AND OBJECTIVES
The Yakama Nation, by exercise of the power of self-government, has designated the Yakama
Nation Housing Authority as a tribally designated housing entity under the Native American
Housing Assistance and Self-Determination Act at 25 U.S.C. 4101, et seq. As a tribally
designated housing entity, the Authority owns and manages a variety of low-income housing
developments to provide and promote safe and sanitary housing on a subsidized basis for
qualifying members of the Yakama Nation.
The American Recovery and Reinvestment Act of 2009 included a $510 million appropriation
for the Native American Housing Block Grants, also known as the Indian Housing Block Grant.
Of that amount, $255 million was disbursed based on a formula, and more than $242 million was
allocated competitively. The U.S. Department of Housing and Urban Development (HUD)
awarded almost $4.9 million to the Authority, of which almost $1.9 was formula based and $3
million was competitively granted. The Authority received the largest award in Washington and
the fourth largest in Region 10 (Alaska, Idaho, Oregon, and Washington).
The Authority used its Recovery Act funding to modernize front porches, install gutters, renovate
homes for low-income families, and purchase modular homes used for housing families whose
homes were undergoing renovation. This work was performed on its own housing stock and for
private homeowners.
The Recovery Act required the Authority to obligate its grant funds within 1 year of the date
funds were available. The Authority was also required to expend at least 50 percent of the grant
funds within 2 years and 100 percent within 3 years.
Our objectives were to determine whether the Authority properly spent its Recovery Act funds,
correctly obtained small purchases, and properly reported Recovery Act information in
FederalReporting.gov.
3
RESULTS OF AUDIT
Finding 1: The Authority Did Not Always Properly Spend Its Recovery
Act Funds
The Authority did not always properly spend its Recovery Act Native American Housing Block
Grant funds. This condition occurred because the Authority disregarded its control procedures,
lacked review processes, and failed to employ appropriate management techniques and
oversight. As a result, it could deprive its low- and very low-income families of needed benefits
because it might be required to reimburse HUD for transmission to the U.S. Treasury up to $1.2
million. In addition, more homeowners could have benefited from the unnecessary materials
stored in its warehouse.
The Authority Did Not Always
Properly Spend Its Grant
Funds
The Authority (1) spent $1.2 million in Recovery Act funds without
demonstrating that the funds were used on the Recovery Act projects, (2)
purchased more than $177,000 worth of unnecessary materials, (3) charged the
grant for routine maintenance staff meetings and maintenance operations, (4) did
not always pay the prevailing Davis-Bacon wages, and (5) paid employees for
hours not worked.
In accordance with 24 CFR (Code of Federal Regulations) 85.20(b)(2), grantees
and subgrantees must maintain records which adequately identify the source and
application of funds provided for financially-assisted activities. In addition,
according to 24 CFR 85.20(b)(4), the Authority’s financial information must be
related to performance or productivity data including the development of unit cost
information whenever appropriate. However, it recorded materials (purchased
mostly in bulk), goods and services, permit, environmental review, and
assessment costs under the general category of construction rather than showing
how they were used in the activities performed on the project. In addition, labor
expenditures were recorded as “other task” under a common project work order
entitled “60 Units Renovation” rather than being related to performance on the
project.
The Authority did not maintain adequate records identifying the application of
more than $1.2 million in grant funds. It spent almost $731,000 on materials and
supplies that it could not demonstrate were spent on the projects through source
documents such as purchase orders, requisition slips, invoices, work order system,
or financial and reporting system.
4
In addition, the Authority paid its vendors almost $198,000 without obtaining
proof that it received all the materials ordered. It did not always obtain signed and
dated receiving reports and match them to the invoices and purchase orders as
required by its policy. Receiving reports are confirmations that the Authority
received the materials and goods and that they were acceptable in quantity and
quality. Comparison of these reports identifies discrepancies between the amount
ordered and the amount received.
Further, the Authority recorded more than $289,000 in its financial and reporting
system on labor costs that were not adequately supported as spent on the projects.
Of this amount, timesheets showed that the Authority paid for time worked as
“other” task on the timesheets under “60 Units Rehab” and “60 Units Renovation”
in its accounting system. There was no documentation to support that the work
performed was for the projects. Timesheets showed that the Authority paid two
construction employees a total of more than $53,000, at the regular carpenter rate
of $31.79 and overtime carpenter rate of $47.69 for these unidentified tasks. In
contrast to the rest of the construction crew’s timesheets, these timesheets did not
identify the specific tasks performed or that those tasks applied to the projects.
The table below shows the two employees’ compensation for the undefined task.
Regular Regular Overtime Total
Task rate per time rate per Overtime amount
Employee performed hour paid hour paid paid
A Other $31.79 $41,542 $47.69 $1,955 $43,497
B Other 31.79 9,251 47.69 453 9,704
Total $50,793 $2,408 $53,201
The Authority purchased more than $177,000 in unnecessary materials. As of
July 19, 2013, almost a year after the date on which it was required to expend 100
percent of its grant funds, the Authority had more than $82,000, or 15 percent of
the materials purchased for its formula grant, and more than $95,000, or 40
percent of the materials purchased for its competitive grant, stored in its
warehouse. According to 2 CFR Part 225, appendix A, costs charged to Federal
grants must be reasonable and necessary. In addition, only materials and supplies
used for the performance of a Federal award may be charged as direct costs. The
Authority’s policy also states that materials will be procured only for the specific
job purpose.
The Authority charged the grant for routine maintenance staff meetings and
maintenance operations performed by maintenance staff. The Authority charged
its competitive grant more than $5,000 for staff meetings and maintenance
operations that were not related to Recovery Act projects. The time was charged
to the grant in the Authority’s accounting system as “60 Unit Rehab.” According
5
to the timesheets, these charges were for maintenance staff meetings and
maintenance operations.
The construction manager stated that these meetings covered safety issues, so they
applied to all workers. However, these employees did not work on Recovery Act
projects, so their time should not have been charged to Recovery Act grants.
According to the Native American Housing Assistance and Self-Determination
Act, since these hours were related to the Authority’s maintenance program, they
should have been charged to the Authority’s operating account, not to Federal
grants for rehabilitation or new construction.
The Authority did not always pay the prevailing Davis-Bacon wages. The
Authority paid one of its concrete workers $15.50 per hour instead of the
prevailing Davis Bacon wage rate of $29.32. It also paid some of its employees
below the prevailing wage rate for various other tasks. The following table shows
the hourly wage rate differences of the underpayment for the various tasks
performed by the affected employees. For the timesheets reviewed, the Authority
underpaid its employees $176.
Davis- Wage rate
Bacon Paid wage difference per
Task wage rate rate hour
Backhoe operator $ 39.39 $ 39.27 $ .12
Carpenter (full time) 27.45 27.33 .12
Concrete work 29.32 15.50 13.82
Heating, ventilation, 30.28 20.36 9.92
and air conditioning
Roofing 30.17 28.78 1.39
Plumbing 20.25 15.91 4.34
The Authority paid employees for hours not worked. The table below shows the
amounts paid to two employees for time not worked (that is, time paid for but not
reflected on the employees’ timesheets).
Excess hours
Employee paid Task performed Rate Excess pay
C 7.75 Roofing $ 31.34 $242.89
D 1 Plumbing 27.33 27.33
Total $270.22
6
The Authority Did Not
Consistently Adhere to its
Control Procedures
The Authority did not always adhere to its policy requiring staff to complete an
issue slip for the materials taken from inventory and to prepare necessary journal
entries to charge the cost of issuance to the specific unit. Although staff submitted
the warehouse requisition form, completing the fields identifying the unit and the
materials taken, staff failed to complete the field for the price of the materials.
Since the forms lacked price data from the time the materials were purchased,
many of the materials used for the respective units were not entered into the
Authority’s accounting system, assigning the materials to specific units.
In addition, the Authority disregarded its policy requiring a signed and dated
receiver’s report for vendor payment. The construction staff did not forward the
required reports to either the accounting staff or warehouse staff so the accounting
and warehouse staff made a verbal agreement with the vendor, in which the
vendor would invoice only for items that were delivered to the jobsites or picked
up by Authority construction staff. The accounting staff believed that this
procedure canceled the requirement for a separate receiver’s report. Further,
management told the accounts payable clerk to pay the vendor without obtaining
the receiving report.
The Authority also disregarded its policies to procure materials only for specific
identified units worked on and not allow materials in its inventory to exceed its
$5,000 threshold. It should have reviewed its inventory stock before approving
additional purchases to avoid unnecessary or duplicative materials and excess
inventory nearly a year after the grant activities were completed.
The Authority lacked review processes. The warehouse requisition forms
identifying the unit and the materials taken were neither reviewed for accuracy
and completeness nor approved by an approving authority. In addition, the
Authority’s management did not review the rates and the hours for which it paid
its employees to ensure that the correct project rates were selected and the hours
were entered correctly.
Management failed to employ appropriate management techniques and oversight.
The Authority did not have a system in place to demonstrate that all costs were
spent on the project. It used its own employee labor to conduct the scope of work
assessments of the eligible units to be renovated, but it did not require its
employees to identify these assessments on the employees’ timesheets or require
supervisor review and approval of time charged.
7
In addition, management did not provide budgetary and expenditure reports
regarding its projects to the program managers. If the maintenance supervisor had
received these reports, he would have noticed that maintenance meetings were
charged to the grant. This matter could have been resolved by reversing the
charges and charging these costs to the operations account.
HUD Lacked Assurance That
Funds Were Used
Appropriately and The
Authority Could Have Served
More Homes
The Authority could deprive its low- and very low-income families of needed
benefits because it might be required to reimburse HUD for transmission to the
U.S. Treasury up to $1.2 million. It could have applied the funds it spent for
unnecessary materials, which were being warehoused, on rehabilitating more
private homes and its own housing stock. It also could not ensure that it received
all the materials for which it paid and that the materials were received in good
condition.
Conclusion
The Authority did not track $1.2 million of Recovery Act funds adequately to
ensure funds were spent on the projects. It should have followed the policies and
procedures it had in place, reviewed documents for accuracy and completeness,
and employed appropriate management techniques. If the Authority had
adequately tracked the bulk purchases and other materials and labor, it would not
have expended more than $177,000 on unnecessary materials and HUD would be
assured that the materials and labor were used on the project and were used to
benefit low-income participants.
Recommendations
We recommend that the Administrator of the Northwest Office of Native American
Programs require the Authority to
1A. Provide support showing that $711,528 of materials, supplies and labor
charges were spent on the projects and benefited eligible low-income
participants or reimburse HUD for transmission to the U.S. Treasury from
non-Federal funds for any expenditures it is unable to demonstrate were
used on the projects. (Note: the total amount to be supported is
$1,131,381. However, the following amounts appear in other
recommendations and were, therefore, removed from this recommendation
8
to avoid double counting: $111,283 from recommendation 1B, and
$308,527 from recommendation 2A.)
1B. Provide support showing that materials costing $197,836 were received
and in acceptable condition or reimburse HUD for transmission to the U.S.
Treasury from non-Federal funds for invoices paid without corresponding
receiving reports ($111,283 of this amount was not shown to have been
used on the project and will also need to be supported under
recommendation 1A).
1C. Review all other Recovery Act Native American Housing Block Grant
invoices not reviewed as part of this audit and provide the results to HUD
for review and approval. The Authority should reimburse HUD for
transmission to the U.S. Treasury for any additional invoices found that
are not supported by a proper receiving report.
1D. Use its excess inventory on Native American Housing Assistance and
Self-Determination Act of 1996 (NAHASDA)-eligible activities within a
reasonable time or reimburse HUD for transmission to the U.S. Treasury
$177,133 from non-Federal funds.
1E. Reimburse the U.S. Treasury from its operating account $5,150 for
ineligible maintenance staff meetings and maintenance operations charged
to the grant.
1F. Review all other payroll charges to the grants not reviewed as part of this
audit and provide the results to HUD for review and approval. The
Authority should reimburse the U.S. Treasury from its operating account
for any additional maintenance staff meetings charged to the grant.
1G. Provide supporting documentation showing that restitution was made to
employees who were paid less than the Davis-Bacon wage determination
rate or compensate the employees $176 for the unsupported wages cited in
this report.
1H. Reimburse HUD for transmission to the U.S. Treasury $270 from non-
Federal funds for hours paid but not worked.
1I. Review all payments to its employees, who charged time to the grants not
reviewed as part of this audit, to determine whether additional wage
restitution is owed and provide the review results to HUD for review and
approval. If wage restitution is required, the Authority should make
restitution to the employees affected from non-Federal funds.
1J. Implement policies already in place to ensure that all costs of labor and
materials used and charged to the projects were used on the projects.
9
1K. Implement policies already in place to ensure that the receiver signs and
dates the receiver’s report confirming that materials have been received
and are in acceptable condition.
1L. Implement policies already in place to ensure that the value of materials
on hand does not exceed $5,000.
1M. Develop and implement policies to ensure that the unrelated grant
activities, such as maintenance staff meetings and maintenance operations,
are charged to its operating fund and not to Federal grants for
rehabilitation or new construction.
1N. Develop and implement policies to ensure the Authority pays employees
at the (Davis-Bacon) rates that are applicable to work performed.
We also recommend that the Administrator of the Northwest Office of Native
American Programs
1O. Conduct future monitoring to verify that the Authority follows its policies.
10
Finding 2: The Authority Split Purchases That Would Have Required It
To Obtain Multiple Price Quotations
The Authority split purchases that would have required it to obtain multiple price quotations.
This condition occurred because the Authority’s policy contradicted itself and incorrectly
permitted it to make multiple purchases from a single source and not obtain a price quotation as
long as each purchase order was less than $5,000. As a result, the Authority could not
demonstrate that it received the best value for more than $372,000 worth of materials purchased.
The Authority Split Purchases
The Authority split purchases that would have required it to obtain and document
price quotes. The Authority made multiple purchases of related items from one
vendor on 1 day or within 1 business day of less than $5,000 each, which when
combined, ranged from about $5,100 to almost $39,000 (see appendix D for
details). HUD’s Office of Public and Indian Housing Notice 2009-14 allowed
Indian Housing Block Grant recipients to purchase goods and services costing
less than $5,000 without obtaining and documenting price quotes to reduce the
burden of complying with the Federal procurement process for goods and services
of minimal cost. However, the Notice also prohibited recipients from breaking
down a purchase into multiple purchases to meet the threshold.
Based on review of the Authority’s 2010-2012 purchase order logs of more than
$1.1 million, the purchase orders were split on 32 separate occasions with a total
of 112 single purchases. The table below summarizes the number of occasions on
which the Authority split its purchases from each vendor on 1 day or within 1
business day. The specific approval dates for each occasion for each vendor are
shown in appendix D.
Total % of % of total
Vendor Occasion(s) purchases occasions purchases
A 27 $302,815.83 84.4% 81.4%
B 2 14,664.92 6.3% 3.9%
C 1 38,956.00 3.1% 10.4%
D 1 6,219.59 3.1% 1.7%
E 1 9,564.50 3.1% 2.6%
Total 32 $372,220.84 100% 100%
11
The Authority’s Procurement
Policy Permitted This
Approach
The Authority’s procurement policy permitted it to make multiple purchases from
a single source and not obtain price quotations as long as each purchase order was
less than $5,000. However, the Authority ignored the part of its policy stating
that it was not to break down the purchases, under any circumstances, to meet the
threshold.
The Authority Could Not
Demonstrate That It Received
the Best Value
Since the Authority split its purchases, it did not always obtain an adequate
number of price quotations to demonstrate that it received the best value for more
than $372,000 worth of materials purchased. The Authority could not show that it
took the most economical approach. It should have combined purchase orders to
one vendor for related items, which were approved on the same or the next
business day, to determine whether it should have obtained additional quotes to
obtain the best possible pricing.
Recommendations
We recommend that the Administrator of the Northwest Office of Native American
Programs require the Authority to
2A. Provide support showing that it received the best value for $372,221 paid
for materials it purchased or reimburse HUD for transmission to the U.S.
Treasury from non-Federal funds for any amount that is not supported
($308,527 of this amount was not adequately documented as used on the
projects and will also need to be supported under recommendation 1A if
the costs are found by HUD to be of best value under this
recommendation).
2B. Amend its policy to require that it combine its purchases from a single
source, within a reasonable timeframe, to determine whether the sum
exceeds the $5,000 threshold as this is not currently a part of their policy;
if the sum exceeds $5,000, we recommend that the Authority be required
to follow its policy to obtain additional price quotations to obtain the best
pricing possible for its small purchases.
12
Finding 3: The Authority Did Not Properly Report Its Recovery Act
Information
The Authority did not properly report its project activity descriptions, the number of homes it
planned to repair, the amount of its vendor payments, the total amount of payments to vendors
per award, and the number of jobs created in FederalReporting.gov. This condition occurred
because the Authority lacked review procedures and misunderstood the requirements for
calculating the number of jobs created. As a result, the public did not have access to an accurate
description of project activities, vendor payment information, the total amount of payment to
vendors per award, or the number of jobs created.
The Authority Did Not Properly
Report Information in
FederalReporting.gov
The Authority did not properly report its project activity descriptions in
FederalReporting.gov. The project descriptions stated that the Authority provided
grants as well as zero percent loans to homeowners. However, it renovated the
homes by providing only grants.
The Authority overstated the number of homes it planned to repair under the
competitive grant. It originally planned to repair up to 60 units. However, on
June 3, 2011, it amended its original application to repair 25 to 30 units, and to
purchase and install 10 to 15 modular units to be used for relocation of residents
while their houses were being rehabilitated. Although the Authority revised its
reporting to reflect the purchase and installation of the modular units, it did not
reduce the number of units to be rehabilitated as shown in its amended
application. It also failed to report the correct number of units it repaired and the
number of modular units it purchased and installed. The Authority rehabilitated
19 units and purchased and installed 12 modular units under the competitive
grant.
The Authority did not properly report the amount and number of payments to its
vendors. The Authority overstated its payments made to four vendors by more
than $657,000 and understated the amount paid to another vendor by almost
$561,000 for a net overstatement of more than $96,000.
Expenditures Expenditures
Vendor incurred reported Overstated (Understated)
A $ 410,473 $ 478,726 $ 68,253
B 17,792 25,772 7,980
C 61,109 81,433 20,324
D 390,264 951,163 560,899
13
E 760,912 200,013 (560,899)
Total $1,640,550 $1,737,107 $657,456 $ (560,899)
In addition, the Authority overstated the total amount of payments it made to
vendors that were awarded more than $25,000 and to those that were awarded less
than $25,000. These overstatements totaled more than $1.2 million from the
Authority’s formula grant for all vendors and about $1 million from its
competitive grant for vendors that were awarded more than $25,000. The
reported vendor amounts incorrectly included salaries and benefits relating to the
Authority’s in-house force account labor. The tables below show the amounts in
the Authority’s accounting records and the amounts of the total vendor payments
it reported.
Total
Total
payments
payments Salaries &
Formula to vendors Total vendor
to vendors related
grant greater payments
less than costs*
than
$25,000
$25,000
QuickBooks $506,567 $175,741 $682,309 $1,217,522
Recovery Act
reporting 620,017 1,278,914 1,898,931
Difference $113,450 $1,103,173 $ 1,216,622
*Grantees were required to report only amounts spent on vendors in FederalReporting.gov.
Total
Total
payments
payments Salaries &
Competitive to vendors Total vendor
to vendors related
grant greater payments
less than costs*
than
$25,000
$25,000
QuickBooks $1,658,848 $325,248 $1,984,096 $1,015,946
Recovery Act
reporting 1,658,848 1,341,152 3,000,000
Difference $0 $1,015,904 $1,015,904
*Grantees were required to report only amounts spent on vendors in FederalReporting.gov.
The Authority overstated the number of jobs created by reporting the number of
employees it hired for the projects. However, according to Office of Management
and Budget, Memorandum M-09-21, it should have reported its job estimate totals
by dividing the hours worked in the reporting quarter by the hours in a full-time
schedule in that quarter.
14
The Authority Lacked Review
Procedures and Misunderstood
Requirements
The Authority lacked review procedures. The reporting information was
compiled and submitted by the same individual and was not reviewed by the
supervisor to ensure that the information reported was correct. The Authority
should have had a different individual review the information to ensure that the
data were accurate before and after submitting the data in FederalReporting.gov.
In addition, the Authority misunderstood the requirements for calculating the
number of jobs created.
The Authority’s Reporting
Lacked Transparency
Because the Authority did not properly report its information in
FederalReporting.gov, the public did not have access to accurate project activity
descriptions, vendor payment information, or the number of jobs created.
Recommendation
We recommend the Administrator of the Northwest Office of Native American
Programs require the Authority to
3A. Make the necessary changes to the project activity descriptions and all
fields relating to final vendor payment figures in FederalReporting.gov.
Note that the reporting system allows only the final totals to be changed;
the quarterly jobs figures cannot be adjusted.
15
SCOPE AND METHODOLOGY
We conducted fieldwork at the Yakama Nation Housing Authority, located at 611 South Camas
Avenue, Wapato, WA, from January 15 through July 19, 2013. The audit covered the lifespan of
the grants from September 2009 through December 2012. To accomplish our objectives, we
Interviewed Authority and HUD staff;
Reviewed related laws, regulations, and requirements; a HUD monitoring report; and the
Authority’s general ledgers, work orders, purchase order log, Indian housing plan, annual
performance report, Recovery Act reporting submission documentation, single audit
reports, and policies and procedures;
Conducted site visits; and
Sampled expenditures and payroll records.
For the formula grant, we identified nearly $1.9 million in grant expenditures. Of this amount,
more than $638,000 was not attributed to specific units. From this population, we randomly
selected and reviewed 60 invoices classified as materials-other consisting of fuel, materials, and
other costs from various vendors, ranging from $300 to $6,000, totaling more than $178,000, or
28 percent of the population and did not find any discrepancies between the source documents
and what was reported in the Authority’s financial and reporting system.
Of the $1.9 million in expenditures, more than $1.2 million was assigned to specific units,
making this population of less risk. We selected the two units with the highest labor dollars
incurred to review. We reviewed the unit with the second highest labor expenditure of more than
$42,000, or 4 percent of the $1.2 million. We did not review the unit with the highest labor
dollars because the source documents were not provided in a timely manner. For this also, we
did not find any discrepancies between the source documents and what was reported in the
Authority’s financial and reporting system.
For the competitive grant, we identified $3 million in grant expenditures. Of this amount, we
selected and reviewed all expenditures that were classified as “60 Unit Rehab” and “60 Units
Renovation.” This amount was more than $219,000, or 29 percent of the $761,000 in
expenditures not attributed to specific units. We also selected for review the two units with the
most expenditures and the 12 modular homes purchased totaling nearly $1.2 million, or 53
percent of the more than $2.2 million in expenditures assigned to specific units.
We also reviewed the Authority’s 2009, 2010, 2011, and 2012 purchase order logs of more than
$1.1 million and selected and reviewed all of the more than $415,000 in purchase orders to one
vendor that were issued on 1 day or a few days apart, when each of those purchase orders was for
less than $5,000.
The Authority used QuickBooks. We did not test the reliability of the Authority’s computer-
processed data as QuickBooks is a small accounting software system that is widely accepted by
the accounting industry and we verified hardcopy documents to QuickBooks and found no
16
exceptions. Also our testing confirmed the Authority’s accounting staff statement that if
QuickBooks did not show the information, then the information was not available from the
hardcopy source documents to be recorded in QuickBooks. Our testing of the source documents
noted above proved this to be true. Thus we relied on QuickBooks to support our audit
conclusions.
We conducted the audit in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objectives.
17
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:
Policies and procedures implemented to reasonably ensure that funds were
spent on goods, materials, and labor for specific units that the Authority
worked on.
Policies and procedures implemented to reasonably ensure that reliable data
were obtained, monitored, and reported to adequately support procurement
and contracting activities.
Policies and procedures to ensure that payments made to vendors and
procurement activities complied with applicable laws and regulations.
We assessed the relevant controls identified above.
A deficiency in internal control exists when the design or operation of a control does
not allow management or employees, in the normal course of performing their
assigned functions, the reasonable opportunity to prevent, detect, or correct (1)
impairments to effectiveness or efficiency of operations, (2) misstatements in
financial or performance information, or (3) violations of laws and regulations on a
timely basis.
Significant Deficiencies
Based on our review, we believe that the following items are significant deficiencies:
18
The Authority did not have controls in place to ensure that it followed its policies
to
o Maintain records identifying the application of funds (finding 1).
o Obtain, sign, and date receiving reports for purchased materials (finding
1).
o Purchase materials for a specific job purpose and keep extra materials of
no more than $5,000, provided that the material could be used on other
federally funded projects in the near future (finding 1).
The Authority lacked procedures to ensure that
o Maintenance staff meeting time was charged to its operating fund and
not to the Recovery Act projects (finding 1).
o It paid employees the prevailing Davis-Bacon wage for the tasks they
performed (finding 1).
o Staff obtained additional price quotations to obtain the best pricing
possible for the Authority’s small purchases (finding 2).
o Filing of required information was complete and accurate (finding 3).
19
APPENDIXES
Appendix A
SCHEDULE OF QUESTIONED COSTS
Recommendation Ineligible 1/ Unsupported Unreasonable or
number 2/ unnecessary 3/
1A $711,528
1B 197,836a
1D $177,133
1E $5,150
1G 176
1H 270
2A 372,221b
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.
3/ Unreasonable or unnecessary costs are those costs not generally recognized as ordinary,
prudent, relevant, or necessary within established practices. Unreasonable costs exceed
the costs that would be incurred by a prudent person in conducting a competitive
business.
a
Of the $197,836, documentation of $111,283 did not demonstrate the items purchased were used on the projects.
Therefore, these costs will also need to be supported under recommendation 1A.
b
Of the $372,221, documentation of $308,527 did not demonstrate the items purchased were used on the projects.
If these funds are found by HUD to be the best value, they will also need to be supported under recommendation 1A.
20
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
January 6, 2014
Ronald J. Hosking
Regional Inspector General for Audit
U.S. Department of Housing and Urban Development
Office of Inspector General
Office of Audit Region 10
909 First Avenue, Suite 126
Seattle, WA 98104
RE: Yakama Nation Housing Authority Comments to HUD-OIG Draft Audit Report
Dear Mr. Hosking:
The Yakama Nation Housing Authority (the “Authority”) submits these written comments to
the U.S. Department of Housing and Urban Development (“HUD”) Office of Inspector General’s
(“OIG”) Draft Audit Report on its audit of the Authority’s 2009 federal stimulus grants under the Native
American Housing and Self-Determination Act of 1996 (“NAHASDA”) and the American Recovery and
Reinvestment Act of 2009 (“ARRA”).
We appreciated the opportunity to meet with the HUD-OIG auditors and the Grants
Management Division Director of the Northwest Regional Office of Native American Programs
(“ONAP”) for an exit conference on December 23, 2013, in Wapato, Washington. The Authority
consults regularly with ONAP Grants Management staff to ensure that the Authority is following HUD
guidelines and policy in administering its grants under NAHASDA. These comments restate and
supplement the verbal comments we shared at the exit conference.
COMMENTS TO BACKGROUND AND OBJECTIVES (P. 3)
The Authority is the Tribally designated housing entity of the Confederated Tribes and Bands
of the Yakama Nation, which is the largest Indian Tribe in the Pacific Northwest. The Yakama Nation is
comprised of descendents of 14 tribes and bands that were federally recognized under the Yakama Treaty
of 1855. The 1.3 million acre Yakama Reservation is located in south central Washington, along the
eastern slopes of the Cascade Mountain Range.
According to the 2012 American Community Survey, the poverty rate nationally for American Indians is
29%, twice the average for all Americans. About 40% of on-reservation housing in this country is
considered inadequate, compared to 6% of all housing nationwide (2003, National American Indian
Housing Council). There are approximately 10,000 enrolled members of the Yakama Nation, of which
about 60% reside on the Yakama Reservation. On this Reservation, 24% of Indian households live below
the poverty line, and 34% are unemployed. Over 40% of the
21
Letter to Ronald J. Hosking
January 6, 2014
Page 2 of 17
households have income of less than $25,000. The Authority houses 2,884 persons in units under
management, or nearly half of the Yakama Nation’s members who live on the Reservation.
There is a great need for housing on the Yakama Reservation and the funding that was
made available in 2009 through the ARRA appropriations for the Indian Housing Block Grant
(“IHBG”) program was put to good use. The IHBG program is authorized under the Native
American Housing and Self-Determination Act of 1996, as amended (“NAHASDA”). The
Authority received two IHBG grants from the ARRA appropriations: a formula grant of
$1,899,831, and a competitive grant of $3,000,000. The formula grant was based on the Authority’s
Fiscal Year (“FY”) 2008 IHBG allocation and was spent to replace defective steel steps on 77
housing units with poured in place concrete steps and railings, and to improve the indoor air quality
and weatherization of 54 housing units. The competitive grant was awarded based on a competitive
grant proposal the Authority submitted to HUD, and was spent on the extensive repair and
rehabilitation of 19 privately owned homes and the purchase and set up of 12 modular units, which
were used to relocate families during the rehabilitation efforts and have since housed many Indian
families as rental units.
Comment 1 The report recognizes that the Yakama Nation exercises powers of self-government, but
leaves out that Tribal self-determination is a guiding principle of NAHASDA. The NAHASDA
statute and regulations were terms of the Grant Agreements, as stated on the Funding
Approval/Agreement Forms HUD-52734-B that the Authority signed to receive the grants.
NAHASDA states that federal assistance
shall be provided in a manner that recognizes the right of Indian self-
determination and tribal self-governance by making such assistance available
directly to the Indian tribes or tribally designated entities under authorities
similar to those accorded Indian tribes in Public Law 93-638 (25 U.S.C. 450 et
seq.).
In Public Law 93-638, Congress declares its commitment to
the establishment of a meaningful Indian self-determination policy which will
permit an orderly transition from the Federal domination of programs for, and
services to, Indians to effective and meaningful participation by the Indian
people in the planning, conduct, and administration of those programs and
services.
In recognition of self-determination, NAHASDA allows a Tribal grantee to self-determine
the specific uses of IHBG funds as long as those funds are used to “carry out affordable housing
activities,” as defined in NAHASDA and in the grantee’s Indian Housing Plan (“IHP”).
NAHASDA, Section 102. A Tribe may adopt its own Tribal prevailing wage ordinances in lieu of
Davis Bacon wages, NAHASDA 104(b)(3). Procurements of less than $5,000 are exempt from
“any otherwise applicable competitive procurement rule or procedure.” NAHASDA, Section
203(g). In these ways and others, NAHASDA recognizes Tribal self-determination in how IHBG
grants are administered.
The auditors conducted fieldwork on site at the Authority’s offices for 7 months (p. 16), and were
still requesting documents from the Authority in December 2013. In the exit conference the
auditors affirmed that they had not found any spending under either of the grants that was not for
the benefit of eligible households. The funds were spent on affordable housing activities under
22
Letter to Ronald J. Hosking
January 6, 2014
Page 3 of 17
NAHASDA. Only two of the questioned costs were determined to be “ineligible costs” under the
grants: $5,150 paid to workers who attended safety meetings and $270 paid to workers for hours
they did not list on their timesheets. The other questioned costs in the report are based primarily on
the auditors’ interpretations of regulations and the Authority’s own policies (interpretations with
which the Authority disagrees, as discussed in these comments), and on opinions about reasonable
wages or the amount of materials stored in inventory.
COMMENTS TO RESULTS OF AUDIT
RESPONSE TO FINDING NO. 1: THE AUTHORITY DID NOT ALWAYS PROPERLY
SPEND ITS RECOVERY ACT FUNDS. (PP. 4-10)
Comment 2 In the first paragraph on page 4, the report states that the Authority disregarded its control
procedures, lacked review processes and failed to employ appropriate management techniques and
oversight and that “As a result, it completed only 19 of 60 planned units with its competitive grant.”
We believe this is an unfair characterization of the Authority’s performance and we will respond to
each of the statements in turn. The conclusion that as a result, only a third of the planned units
were completed is directly contradicted by the facts and should be removed from the report.
At the exit conference, the auditors seemed not to have reviewed the Amended Grant
Application, although they referred to it later in the meeting. The Amended Grant Application was
approved by HUD and contemplated between 20 to 30 repaired units and 10 to15 modular units.
The completion of 19 repaired units was only one short of that estimate. The grant application was
amended so that some of the funds could be used to purchase modular units to be used to relocate
the families whose homes were being repaired under the grants. The Authority had originally
intended to utilize FEMA mobile units for relocation purposes, but a disastrous fire destroyed 20
homes on the Yakama Reservation and all of the awarded FEMA mobile units were redirected to
the fire victims.
Also on page 4, the report states that “more homeowners could have benefited from the
unreasonable pay for labor and unnecessary materials stored in [the YNHA] warehouse.” The
Comment 3 inference is that this was a large amount, but less than $7,000 in wages has been identified as
“unreasonable” in the view of the auditors, and that would not have covered even one additional
unit. The stored materials are primarily metal roofing that will be used to benefit eligible families.
This conclusion is misleading and should also be removed from the report.
A. Comments to “The Authority Did Not Always Properly Spend Its Grant Funds.” (p.
4)
1. Comment to “Recovery Act funds were not always assigned to eligible units.”
(p. 4).
Comment 4 The report states that the auditors identified $1.3 million in costs that were not assigned to
specific units and are, therefore, treated as unsupported costs.1 The Authority will need to review
this number, but the auditors’ reliance on 24 C.F.R. Section 85.20(b)(2) as requiring the Authority
to assign all of its expenditures to specific units is misplaced.
________________________
1
Unsupported costs include those that “might involve a legal interpretation.” (p.20)
23
Letter to Ronald J. Hosking
January 6, 2014
Page 4 of 17
The financial recordkeeping requirements for IHBG projects are found in 24 C.F.R.
Comment 4 Section 1000.26, which states that recipients “shall comply with the requirements and standards of
Comment 5 OMB Circular No. A-87, ‘Principles for Determining Costs Applicable to Grants and Contracts
with State, Local and Federally Recognized Indian Tribal Governments,’” and with particular
sections of 24 C.F.R. Part 85.
Section 85.20(b)(2) states:
Grantees and subgrantees must maintain records which adequately identify the
source and application of funds provided for financially-assisted activities. These
records must contain information pertaining to grant or subgrant awards and
authorizations, obligations, unobligated balances, assets, liabilities, outlays or
expenditures, and income.
The auditors interpret “records which adequately identify the source and application of
funds” to mean that the Authority must maintain records per unit that would enable the auditors to
visit each home and count the boards and nails in the unit against those that were purchased for that
unit. We disagree that the plain language of Section 85.20(b)(2) or NAHASDA mandates that level
of specificity.
OMB Circular No. A-87, Item 26.a. of Attachment B, “Materials and Supply Costs”
states: “Costs incurred for materials, supplies, and fabricated parts necessary to carry out a Federal
award are allowable.” OMB Circular A-87 does not require that the recipient identify each item of
material that goes into a particular unit. The Inspector General has not found any noncompliance
with OMB Circular A-87. OMB Circular A-133 applies to audits of IHBGs, including formula and
Comment 5 competitive grants from ARRA funds, and does not state that expenditures for affordable housing
must be allocated to specific, individual units.
Each of the grants was a source of funds for an affordable housing project, as described in
the amended IHP (for the formula grant) and in the Amended Grant Application (for the
competitive grant). The Authority complied with acceptable accounting practices by maintaining
records which showed that the funds under each grant were applied to pay for materials, labor, and
related costs incurred to carry out the award. The Authority also maintained records which
demonstrated that the beneficiaries were eligible for the program, inventory records for materials
purchased and stored in the warehouse, and payroll records for the work.
The auditors said at the exit conference that if some of the expenditures were allocated to
specific units then all of the expenditures should have been allocated this way. Some procurements
were structured to apply purchases to specific units; however, absent a published standard that
requires a per unit allocation of costs, the Authority disagrees with treating expenditures as
unsupported because they are not allocated to specific units.
Further, the standard method in construction for accounting for performance of work on a project is
Comment 6 a percentage of completion. The construction industry does not account to a particular board or
nail. Had YNHA contracted the work on these projects, the contractor would not have the
24
Letter to Ronald J. Hosking
January 6, 2014
Page 5 of 17
type of records the auditors are requiring. It is not reasonable to treat the Authority differently
simply because the Authority utilized its own Tribal workforce.2
2. Comment to “The Authority paid its vendors almost $196,000 without obtaining
proof that it received all the materials ordered.” (p. 4)
We have not yet been able to determine the basis for the $196,000. While the auditors
have said that the documents they reviewed are in the Authority’s conference room, the auditors
pulled apart the documents and putting them back together will take time, according to accounting
Comment 7 staff. We understand that the auditors did not consider other types of documentation as being
acceptable to verify deliveries. The Authority’s policy does not prescribe the format of a receiver’s
Comment 8 report or prohibit other methods, and the delivery of materials may be verified by a packing slip or
invoice that is signed by an employee of the Authority.
3. Comment to “The Authority purchased more than $177,000 in unnecessary
materials. (p. 5)
The majority of the materials remaining in the warehouse as of July 29, 2013 (the date
specified in the report), were metal roofing materials. These materials were purchased in bulk to
Comment 9 obtain the best price, but due to the fire on the Reservation and the need to reprogram some of the
competitive grant to purchase modulars for relocation, the Authority had roofing materials that it
did not use for the home repairs. The Authority would generally return unused materials, but metal
roofing materials cannot be returned and it would have been wasteful to dispose of the materials.
The Authority disagrees that the materials were unnecessary. There is a regular need for roof
repairs, and the materials will be used for affordable housing consistent with the purposes of the
grants.
4. Comment to “The Authority charged the grant for routine maintenance staff
meetings and maintenance operations performed by maintenance staff.” (p. 5)
Comment 10 The report claims that the Authority paid $5,150 in wages to maintenance workers who
attended safety meetings but did not work directly on the ARRA projects. The Authority disagrees
that time spent in safety meetings needed to be assigned to specific units. The Authority will need
time to review the documentation to be able to prepare a more complete response.
5. Comment to “The Authority did not always pay the prevailing Davis Bacon
wages.” (p. 5-7)
The report asserts that the Authority underpaid employees a combined total of $186 below the
Comment 11 prevailing Davis Bacon wages by paying incorrect wage rates. The report does not explain how
this was calculated, but after the exit conference the auditors provided copies of spreadsheets that
gave the names of the employees, the pay periods, hourly wages paid for work, etc. The auditors
also provided copies of the wage rates from March 2010 which they said they used to compute the
_______________________________
2
The auditors’ lack of experience with Tribal projects was evident. At their first meeting with the Authority, which
included the Chairman of the Authority, one of the auditors asked jokingly if those present were going to do a “rain
dance.” The auditors said later that this was their first IHBG audit.
25
Letter to Ronald J. Hosking
January 6, 2014
Page 6 of 17
discrepancies, and said they had not independently determined the rates that applied to the projects.
The Authority will need more time to review the documentation in order to prepare a complete
response.
6. Comment to “the Authority paid employees for hours not worked.” (p. 6)
The report also asserts that the Authority paid two employees a combined total of $270.22
for hours not worked. The Authority has had time to review its records for one of the employees,
who the auditor found was overpaid for 8 hours or a total of $254.88. The records show that this
Comment 12 employee did work those hours, but on a different ARRA unit. Due to a miscoding in the
accounting department, the hours worked on the other unit were mistakenly assigned in the payroll
records to the unit the auditors reviewed. The employee worked the hours that he was paid. The
Authority will need more time to identify and review the remaining $15.34.
7. Comment to “The Authority sometimes paid unreasonable hourly rates.” (p. 6)
The report states that the Authority paid nearly $7,000 in unreasonable hourly rates to its
construction staff, by paying several construction employees more than the applicable Davis Bacon
rate. In the opinion of the auditors, that the amount of the wages above the Davis Bacon rate was
not a “reasonable and necessary” cost. The Davis Bacon Act prescribes minimum wages, not
maximum wages. HUD Program Guidance 2009-07 (ONAP) states,
Section 1606 of the Recovery Act requires all laborers and mechanics employed
by contractors and subcontractors on projects funded directly by or assisted in
whole or in part by and through the Recovery Act to be paid wages at not less
than…(Davis Bacon wages).
The Authority will need more time to review the information the auditors provided after
the exit conference, but we believe some of the differences may be traced to the wage determination
the auditors used. If the Authority paid more than it was required to pay under Davis Bacon, that is
not a violation of the law, as the auditors have tacitly acknowledged by not identifying these
Comment 13 amounts as ineligible costs. If the standard is whether the costs were “ordinary, prudent, relevant or
necessary” (p. 20), then we believe this should be considered in the context of NAHASDA and
Tribal self-determination. If Indian Tribes may adopt Tribal prevailing wages in lieu of Davis
Bacon wages, NAHASDA, Section 104(b)(3), then paying more than Davis Bacon in some
instances should not be treated as per se unreasonable. While Yakama has not yet adopted a Tribal
prevailing wage ordinance, whether or not a cost is “reasonable and necessary” depends upon the
circumstances of the payment.
The report also includes a paragraph about two employees who were paid $31.79 per hour for
“undefined tasks” while another employee performed purchasing functions for $20.65 per hour.
Comment 14 This was discussed at the exit conference and the auditors said they did not know what work the
higher paid employees performed. The employees performed administrative duties that included
purchasing but also other functions, such as scope of work assessments, and their compensation
reflected the value of their construction knowledge and background. The inference that those
employees were
26
Letter to Ronald J. Hosking
January 6, 2014
Page 7 of 17
overpaid for their work is without support. We note that this was not included in the schedule of
questioned costs and request that the paragraph and accompanying table be removed.
B. Comments to “The Authority Failed to Employ Appropriate Management
Techniques.” (pp. 7-8)
1. Comment to “The Authority disregarded its control procedures.” (p. 7)
Comment 15
The report states that the “Authority disregarded its policy requiring materials and goods
to be charged to specific units,” and that “Its policy required staff…to prepare necessary journal
entries to charge the cost of issuance to the specific unit.” (p. 7). On Appendix C, the report quotes
the YNHA Procurement Policy and Procedures, V.A.1(e), which states:
Issuing materials - Charging the cost of materials and supplies to the
appropriate project for which the materials and supplies are being used is a
primary goal of the inventory system. An issue slip will be filled and transmitted
weekly to the Accountant. The Accountant will charge the cost of issuance to
the appropriate programs and prepare the necessary journal entries to record the
transaction.
The statement that this policy requires materials to be “charged to specific units” is false.
The policy requires materials to be charged to “projects” and “programs.” Each of the ARRA
grants was a project or program under this policy, and the cost of purchased materials and supplies
was charged to the appropriate grant.
The report further states that the Authority disregarded its policy requiring a signed and
dated receiver’s report for vendor payments. On Appendix C, the report quotes the YNHA
Procurement Policy and Procedures, III.C, which states:
Comment 8 Receiver’s responsibilities3 - Upon receipt of the goods, the receiver shall
prepare the Receiver's Report. The report should be signed and dated. Upon
preparation, the receiver should forward the original receiver’s report and the
signed copy of the vendor's delivery receipt (if available) to the accounting
office.
There are other methodologies for verifying receipt of purchased materials and supplies, and while
receiver’s reports are preferred, by using the words “should” we believe the policy does not
preclude other methods of verification for accounting purposes. The delivery of materials may be
verified by reference to a packing slip or invoice that is signed by an employee of the Authority
who receives the goods. If the auditors discounted these type of records as not meeting the
requirements of the policy, that was an overly narrow interpretation.
Finally, the report states that the Authority disregarded its policies to procure materials
Comment 15 only for specific identified units, and to not allow materials to exceed $5,000 in value. On
Appendix C, the report quotes the following clause from page 62 of the YNHA Procurement Policy
and Procedures:
___________________________
3
The report states “Receiver’s Report,” but the actual language in this paragraph is “Receiver’s Responsibilities.”
27
Letter to Ronald J. Hosking
January 6, 2014
Page 8 of 17
Inventory of Materials: The YNHA shall only procure materials for the
Comment 15 specific job purpose. Any extra materials shall be 1. Returned to the supplier
for credit, 2. Sold as surplus using the procedures included in this section, 3.
Inventoried at a central location, keeping the material safe and secure, provided
that the material can be used on other federally funded projects in the near future
(the value of this material shall not exceed $5,000), or 4. Scrap the material.
The statement that this policy requires materials to be procured for “only for specific identified
units” is false. The policy refers to “job purpose,” and the purpose of the ARRA projects was to
Comment 9 rehabilitate homes. Most of the materials in the warehouse at the end of the project were for metal
roofing, which cannot be returned to the supplier for credit. It would be wasteful to sell that
material as surplus or scrap it. The material has been properly inventoried at the warehouse, which
is a central, safe and secure location, for use on affordable housing, consistent with the purpose of
the grants.
2. Comment to “The Authority lacked review processes.” (p. 7).
The report states that the time spent by the Authority’s employees to conduct the scope of
work assessments was not allocated to specific units on their timesheets and reviewed and approved
Comment 4 by the supervisor. We are not aware of any requirement that scope of work assessments be
Comment 5 allocated to specific units. The report also states that management did not provide budgetary and
expenditure reports to the program managers, and that if the maintenance supervisor had received
these reports he would have corrected the charges to the grant for safety meetings. The Executive
Director of the Authority held regular, weekly meetings with its managers, which the Chief
Comment 16 Financial Officer and the Maintenance Manager attended. The ARRA projects were discussed at
those meetings. Management provided a reasonable opportunity to its managers to ask questions
and discuss concerns. If an error was made, it was not due to lack of available information or
processes.
The report also claims cryptically that management specifically instructed payroll to pay
two employees $31.79 regardless of the work performed, without identifying the manager, the
Comment 13 payroll employee or the two employees. We assume this refers to the same employees who were
discussed on pages 6-7 of the report, and for the same reasons as stated therein, this reference
should also be removed from the report.
A. Comments to “The Authority Could Have Served More Homes, and HUD Lacked
Assurance that Funds Were Used Property.” (p. 8)
We incorporate our earlier comments.
B. Comments to Conclusion (p. 8)
We incorporate our earlier comments.
C. Comments to the Recommendations (pp. 8-10)
28
Letter to Ronald J. Hosking
January 6, 2014
Page 9 of 17
Recommendation 1A: Provide support showing that $709,367 (or $1,313,621) was spent
on eligible units or reimburse the U.S. Treasury from non-Federal funds for expenditures it is
unable to assign to a specific eligible unit.
Specific per unit accounting was not required by any applicable law, regulation or
Comment 4 standard at the time the funds were spent. The Inspector General has identified no areas of
noncompliance with OMB Circulars A-87 or A-133. The Authority complied with acceptable
accounting practices by maintaining records showing that the funds under each grant were applied
to purchase materials and pay for labor for the affordable housing purposes that were identified in
the grants. The Authority also maintained occupancy records which demonstrated that the
beneficiaries were eligible for the program, inventory records for materials purchased and stored in
the warehouse, and payroll records for work performed.
It would be a waste of resources for the Authority to have to create specific per unit
Comment 17 records for every cost and expenditure of funds under both of the grants. If there needs to be a per
unit record for accounting purposes, then the bulk purchases and other amounts may be assigned
based on a reasonable formula. We do not feel that there is a lawful basis to require the Authority
to reimburse the U.S. Treasury for these amounts. The amounts were expended for affordable
housing and by taking that amount out of the Authority’s budget, HUD would be hurting families
who depend on the Authority for housing.
Recommendation 1B. Provide support showing that materials costing $195,793 were
Comment 8 received and in acceptable condition or reimburse U.S. Treasury.
The Authority does not agree that its policy requires the accounting department to have a
corresponding receiver’s report for every purchase of materials before paying an invoice. Other
types of verification than just receiver’s reports should be acceptable. The auditors have not
identified any instance in which the accounting department paid for materials that were not
delivered or in acceptable condition. The Authority should not be required to reimburse the grants
just because there is not a receiver’s report.
Recommendation 1C. Review all other Recovery Act NAHBG invoices not
reviewed as a part of this audit and provide the results to HUD for review and approval. Reimburse
HUD for any invoices not supported by a proper receiving report.
If the Authority can verify the purchases that were reviewed with other available
documentation (Recommendation 1B), then it should not be necessary to review every other
invoice. If other invoices must be reviewed, then other types of verification than just receiver’s
reports should be accepted. Again, the Authority should not be required to reimburse the grants just
because there is not a receiver’s report.
Recommendation 1D. Use its excess inventory on NAHASDA eligible activities
within a reasonable time or reimburse U.S. Treasury $177,133 from non-Federal funds.
Comment 18 The Authority will use the materials still in its inventory for affordable housing activities under
NAHASDA. We do not understand the statement that this amount must be supported under
29
Letter to Ronald J. Hosking
January 6, 2014
Page 10 of 17
Recommendation 1A, when the materials have not yet been deployed. If the intent is to require the
Authority to assign the materials to specific units in its accounting system, then please see our
earlier comments.
Recommendation 1E. Reimburse the U.S. Treasury from non-Federal funds $5,150
for ineligible maintenance staff meetings and maintenance operations charged to the grant.
As already stated, the Authority will need time to review the documentation to prepare a
more complete response on whether these were ineligible costs under the Recovery Act projects,
including whether the employees worked on those projects. The Authority does not agree,
Comment 19 however, that if there is a reimbursement, it should be from non-Federal funds. The workers were
employed on affordable housing projects under NAHASDA and time spent attending safety
meetings benefits the program.
Recommendation 1F. Review all other payroll charges to the grants not reviewed,
provide results to HUD for review and approval, and reimburse the U.S. Treasury from non-Federal
funds for any other maintenance staff meetings charged to the grant.
See above. A review of all other payroll charges would be overbroad; if a review is
Comment 20 required, the scope should be on meetings the maintenance staff were paid to attend during the
relevant period. If it is determined they were paid incorrectly from the Recovery Act grants, then
the cost was related to a federal program and should not be paid from non-Federal funds.
Recommendation 1G. Provide supporting documentation showing restitution was
made to employees paid less than Davis-Bacon wages or compensate them $186 from non-Federal
funds.
The Authority has not yet had the opportunity to review the documentation relied upon by
the auditors to determine that some employees were paid less than the wages to which they were
Comment 21 legally entitled, but if this occurred and the amount is supported by the documentation, then the
Authority will properly compensate the employees $186. The Authority does not necessarily agree,
however, that the compensation should come from non-Federal funds, if the employees were
working on affordable housing under NAHASDA.
Recommendation 1H. Reimburse U.S. Treasury $270 from non-Federal funds for
hours paid and not worked.
The Authority can document that one of the employees, who was paid $254.88, did work
Comment 12 on the project, as discussed above. If upon review, the documentation shows that $15.34 was paid
for time not worked, the Authority will repay that amount.
Recommendation 1I. Reimburse the U.S. Treasury $6,617 for the unreasonable
wages cited in this report.
Comment 13 This recommendation is understood to correspond to the earlier reference to “nearly
$7,000.” We note that this is identified as an unreasonable cost, and not an ineligible or
unsupported cost. No
30
Letter to Ronald J. Hosking
January 6, 2014
Page 11 of 17
law was violated. We disagree with having to reimburse the grant solely on the basis that there
were instances in which the Authority paid more than the minimum required by Davis Bacon.
Recommendation 1J. Review all payments to employees who charged time to the
grants not reviewed4 to determine whether additional wage restitution is owed or additional
unreasonable wages were paid. If owed, make restitution from non-federal funds, and if
unreasonable wages were paid, reimburse the U.S. Treasury from non-federal funds.
Comment 22
We do not agree that the de minimus amount of wage restitution that has been identified
warrants a complete and exhaustive review of all payroll records for all employees over the life of
the two grants. The auditors identified only $186 in underpayments. We also do not agree that an
exhaustive records review to identify “unreasonable wages” is warranted, for reasons already stated.
Recommendation 1K. Implement policies already in place to ensure that all costs are
Comment 23 charged to corresponding units.
We incorporate our earlier comments.
Recommendation 1L. Implement policies already in place to ensure that the receiver
signs and dates the receiver's report confirming that materials have been received and are in
acceptable condition.
We incorporate our earlier comments.
Recommendation1M. Implement policies to ensure that value of materials on hand
does not exceed $5,000.
Comment 24
We incorporate our earlier comments. The Authority owns and operates its own
warehouse, which can accommodate more than $5,000 of materials safely and securely. If this is
against policy, then the Authority may consider amending its policy.
Recommendation 1N. Develop and implement policies to ensure that unrelated
activities are not charged to grants for rehabilitation or new construction.
The Authority will review its policies and consider any necessary amendments.
Recommendation 1O. Develop and implement policies to ensure that YNHA pays at
Davis Bacon rates or uses appropriate personnel.
The Authority will review its policies and consider any necessary amendments.
Recommendation 1P. ONAP should conduct future monitoring to ensure that the
Authority follows its policies.
__________________________
4
At the exit conference, the auditors clarified that this means to review the payments that were not reviewed in this
audit, not the grants not reviewed in this audit.
31
Letter to Ronald J. Hosking
January 6, 2014
Page 12 of 17
The report has not established that the Authority failed to follow its policies. Any
Comment 15 additional monitoring must be in accordance with NAHASDA.
II. FINDING 2: THE AUTHORITY SPLIT PURCHASES TO AVOID THE $5,000
THRESHOLD THAT WOULD REQUIRE IT TO OBTAIN MULTIPLE PRICE
QUOTATIONS. (PP. 11-12)
Comment 25
The report states that the Authority’s policy “contradicted itself and incorrectly permitted it to make
multiple purchases from a single source and not obtain a price quotation as long as each purchase
order was less than $5,000,” resulting in the Authority not being able to “demonstrate that it
received the best value for more than $372,000 worth of materials purchased.”
Section 203(g) of NAHASDA authorizes micro-purchases utilizing IHBG grants and
states:
DE MINIMUS EXEMPTION FOR PROCUREMENT OF GOODS AND
SERVICES. Notwithstanding any other provision of law, a recipient shall not be
required to act In accordance with any otherwise applicable competitive
procurement rule or procedure with respect to the procurement, using a grant
provided under this Act, of goods and services the value of which is less than
$5,000.
The report does not mention this statute in Appendix C. Nor does it identify any other provision of
law that the Authority violated when purchasing materials valued at under $5,000.
Appendix C lists 24 C.F.R. Section 85.36(d)1, which pertains to small purchase procedures.
Comment 26 Under the plain language of Section 203(g) of NAHASDA, purchases of less than $5,000 are
covered by a “de minimus exemption” from otherwise applicable competitive procurement rules.
The only reference we found in 24 C.F.R. Section 85.36 to dividing purchases appears at 24 C.F.R
85.36(e)2.iii, which refers to "Dividing total requirements, when economically feasible, into smaller
tasks or quantities to permit maximum participation by small and minority business, and women's
business enterprises." We have not found a law or regulation that required the Authority to
aggregate its purchases.
A. Comments to “The Authority Split Purchases.” (p. 11).
The report claims that the Authority split purchases to avoid having to obtain and document
price quotations. On Appendix D, the report identifies 112 separate purchases from 5 different
Comment 27 vendors and says those purchases should have been combined into 32 purchases based on the dates
the purchase orders were approved. Even if combined, all of these purchases would have been
small purchases and the majority would still be under $10,000, even in the aggregate. Under the
Authority’s policy, small purchases required three quotations by phone or other informal procedure.
YNHA Procurement Policies and Procedures, par. V.E.
32
Letter to Ronald J. Hosking
January 6, 2014
Page 13 of 17
Bid splitting by definition is dividing purchases for the purpose of avoiding competition.
Comment 28 Appendix C to the report includes a reference to HUD Notice PIH-2009-14 (TDHEs),5 which
states:
The Procurement or Contracting Officer should be aware of the prohibition
against breaking down requirements of a purchase for the purpose of bid
splitting to avoid the requirements that apply to larger purchases.
The notice does not identify an applicable law or regulation for the “prohibition,” but the focus is
on dividing purchases for the purpose of avoiding competition. The auditors do not consider
whether there were reasons that the Authority made smaller purchases, but just assume that it was
to avoid having to obtain three price quotations by phone.
The Authority is not able to respond as to each of the procurements without more
Comment 29 information, but there were many different reasons that the Authority would make smaller
purchases other than to avoid a phone procurement. Purchase orders were prepared and submitted
throughout the week, so the fact that they were signed on the same day does not point to bid
splitting. We note that there is no finding in the report that the prices were not reasonable. The
Authority is situated in a rural area, so there were a limited number of vendors from which the
Authority could obtain its materials, and based on its experience with the vendors, the Authority
could determine the costs to be reasonable. HUD Notice PIH-2009-14 (TDHEs) states:
Under a Micro Purchase, the Procurement or Contracting Officer determines
reasonableness based on prior purchases of a similar nature or other source of
information. When the purchase order is signed, it signifies that the cost has
been determined to be reasonable.
Comment 30 Both the Authority and its vendors had limited space to store bulk purchases. It was also not
always possible to predict the materials that would be required for a repair, because unexpected
conditions were regularly encountered that required more extensive work than was originally
anticipated. The Authority made some smaller purchases to help track some of the costs by unit. In
short, there are many other reasons for making smaller purchases, other than to avoid competition.
B. Comments to “The Authority’s Procurement Policy Permitted this Approach.” (p.
12)
The basis for the statement that the Authority’s policy “contradicted itself” is unclear.
The Authority’s policy on micro-purchases is identical in all relevant respects to the sample policy
HUD recommended for TDHEs in HUD Notice PIH-2009-14 (TDHEs).6
HUD’s sample policy:
Comment 25
For purchases of less than $5,000, also known as Micro Purchases, only one price quote is required,
provided the quote is considered reasonable. Quotes may be
__________________________
5
A HUD notice is not adopted under the federal rulemaking process and does not have the force of law.
6
The Authority’s Procurement Policies and Procedures handbook was originally adopted in 2001 and was modeled on
the HUD Handbook 7460.8 REV 1, “Procurement Handbook for Public and Indian Housing Authorities” (1/93).
33
Letter to Ronald J. Hosking
January 6, 2014
Page 14 of 17
obtained orally (either in person or by telephone), by catalog, fax, or email. If the
purchase is made for reasons other than price, the file must clearly describe the
reason for the purchase. Under no circumstances will a purchase be broken down
into more than one action in order to meet the Micro Purchase threshold. The
Micro Purchase must be documented by an authorized purchase order or
contract.
The Authority’s policy:
For small purchases of less than $5,000, (except for contracts of $2,000 or more
Comment 31 involving labor), only one price quote is required, provided the quote is
considered reasonable. Quotes may be obtained orally (either in person or by
telephone), by catalog, fax, or email. If the purchase is made for reasons other
than price, the file must clearly describe the reason for the purchase. Under no
circumstances will a purchase be broken down into more than one action in
order to meet the Micro Purchase threshold. The Micro Purchase must be
documented by an authorized purchase order or contract.
Comment 32 The report states that the Authority “ignored the part of its policy stating that it was not to
break down the purchases, under any circumstances, to meet the threshold.” This assumes that each
of the purchases identified by the auditors was a single purchase, which was then broken down for
the purpose of avoiding competition. The policy does not prohibit breaking down purchase orders
for other reasons, and there is no requirement that smaller purchases be aggregated into larger
purchases.
B. Comments to “The Authority Could Not Demonstrate That It Received the Best
Comment 33 Value.” (p. 12).
The report states that the Authority was not able to demonstrate “best value” because it
did not obtain more than one price quotation for purchases under $5,000. Purchases under $5,000
do not require documentation of “best value.” As stated in HUD Notice PIH-2009-14 (TDHEs),
“When the purchase order is signed, it signifies that the cost has been determined to be reasonable.”
See also NAHASDA, Section 203(g).
The report states that the Authority “should have combined purchase orders to one vendor
Comment 26 for related items…to determine whether it should have obtained additional quotes to obtain the best
possible pricing.” (p. 12) The report does not state any law or rule that requires an IHBG grantee
to aggregate its purchases and we are not aware of one that would apply here.
C. Comments to the Recommendations (p. 12)
Recommendation 2.A. Provide support showing that the Authority received the best
value for $372,221 worth of materials it purchased or reimburse the U.S. Treasury from nonfederal
funds for any amount that is not supported.
34
Letter to Ronald J. Hosking
January 6, 2014
Page 15 of 17
The auditors explained that the exit conference that the amount they would recommend to
Comment 34 be reimbursed was not the entire $372,221, but the difference between the “best value” cost and the
actual cost. This should be clarified in the recommendations.
The report does not state how the “best value” is to be determined. It would not be
appropriate to require the Authority to aggregate the 112 purchases into 32 purchases (as the report
does in Appendix D) and then evaluate whether there could have been a cost savings, because the
Comment 35 Authority was not required to aggregate its purchases. If there is evidence that any of the purchases
was intentionally split, there still may have been other reasons for dividing the purchase other than
to avoid competitive procurement, in which case bid splitting cannot be established. We do not
believe there is a legal basis for requiring the Authority to document “best value” for a micro-
purchase or reimburse the grant.
Recommendation 2.B. Amend the Authority’s policy to require that purchases from
a single source, within a reasonable timeframe, be combined to determine whether they exceed the
$5,000 threshold, and if so, obtain additional price quotations.
Comment 26 The report does not identify any legal basis for requiring the Authority to amend its
policy. Sometimes aggregating purchases may make sense, but there may be good reasons for not
aggregating purchases, as recognized in 24 C.F.R. Section 85.36(e)2.iii, and as already discussed.
III. FINDING 3: THE AUTHORITY DID NOT PROPERLY REPORT ITS
RECOVERY ACT INFORMATION (PP. 13-15)
The Authority acknowledges that some errors occurred in its reporting utilizing the
Comment 36 FederalReporting.gov system. The project descriptions stated that the Authority would offer zero
percent loans and grants, which was accurate when written. The initial plan was to use zero percent
loans, secured by mortgages, for some of the homes and that the loans would “convert” to grants
over a 10-year period. When the Bureau of Indian Affairs was unable to approve trust land
mortgages in a timely manner, the Authority decided not to use loans.
The report also states that the Authority overstated its payments made to four vendors.
The ARRA guidance for recording payments to vendors was not very clear and the Authority
reported certain vendor payments in a cumulative fashion, and reported the number of employees it
Comment 37 hired rather than the FTEs of the jobs that were funded. The Authority’s reporting methodology did
not cause any general ledger duplication of payments. Given the lack of clear guidance, having the
reporting information reviewed by the supervisor may not have made much difference. We
understand these were common reporting errors among ARRA grantees. Any lack of transparency
was certainly not purposeful.
Recommendation 3A. Make the necessary changes to reports on FederalReporting.gov.
The Authority agrees with the recommendation to make the necessary changes to the
project descriptions and fields relating to final vendor payment figures in FederalReporting.gov. If
it were possible, the Authority would also change the jobs information, but unfortunately those
numbers cannot be adjusted.
35
Letter to Ronald J. Hosking
January 6, 2014
Page 16 0f 17
COMMENTS TO INTERNAL CONTROLS: SIGNIFICANT DEFICIENCIES (P. 18)
Our comments to the deficiencies and lack of procedures identified in the report are as follows:
Comment 4 A. Comment to “The Authority did not have controls in place to ensure that it followed
its policies to…”
Comment 15
1. Maintain records identifying the source and application of funds. We believe the
records identified the source and application of funds in compliance with the applicable regulations
and circulars. We do not believe HUD should find a significant deficiency solely on the basis that
not all costs were identified to a specific unit.
Comment 8 2. Obtain, sign and date receiving reports for purchased materials. We believe
there are other ways to document and verify the receipt of purchased materials. The Authority’s
policy does not proscribe the use of other methods, and we do not believe there is a basis for a
determination of a significant deficiency on the basis that not all purchases have receiving reports.
Comment 9 3. Purchase materials for a specific job purpose and keep extra materials of no
more than $5,000. We believe purchases are made for a job purpose even when they are not
assigned to a specific identified unit, and under certain circumstances it may be more economical
for the Authority to store more than $5,000 of materials in its warehouse.
B. Comment to “The Authority lacked procedures to ensure that...”
1. Maintenance staff meeting time was charged to its operating fund and not to the
Comment 16 grants. If this occurred, then it was an isolated mistake. Managers knew that only the labor costs
associated with the two projects should be charged to the grant. The Executive Director also held
weekly managers’ meetings to provide an opportunity for the managers to exchange relevant
information around a conference table.
2. It paid employees the prevailing Davis-Bacon wage for the tasks they performed.
Comment 22 The report identifies only $186 in underpayments. The Authority will evaluate the circumstances
and determine whether it needs to revise its procedures, but given the total amount of wages paid on
these two projects we do not agree that $186 represents a significant deficiency.
3. Staff obtained additional price quotations to obtain the best pricing possible for
Comment 26 small purchases. We do not agree that it was a significant deficiency not to have procedures in
place to aggregate micro purchases, when there was no regulation or circular that required
aggregation.
4. Filing of information was complete and accurate. We agree that there were
Comment 36 some errors in reporting, but we do not agree that the reason was a lack of internal procedures.
Comment 37 HUD provided limited guidance in how to report the vendor payments and the job FTEs and many
grantees were confused.
36
Letter to Ronald J. Hosking
January 6, 2014
Page 17 of 17
COMMENTS TO SCHEDULE OF QUESTIONED COSTS (P. 20)
Comment 38 The schedule of questioned costs shows that only .3% of the questioned costs are considered to be
“ineligible costs,” meaning the auditors believe those costs are not allowable by law. Those are the
costs of safety meetings and hours not worked. The bulk of the questioned costs, 87.1% are
identified as “unsupported costs.” The report explains that
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.
That includes the costs not assigned to specific identified units, those paid without receiver’s
reports, split purchases, and de minimus underpayments under Davis Bacon. The remaining 12.6%
are identified as “unreasonable costs” and include the stored materials and payments above Davis
Bacon.
We have responded to each of the costs in our comments. With 99.7% in costs identified
as either “unsupported” or “unreasonable,” we anticipate there will be the opportunity to work with
the HUD ONAP officials to address the issues we have raised in these comments and others as they
arise. We have had a positive working relationship with the Regional HUD ONAP staff and we
anticipate being able to work through these findings. Our comments are, of course, preliminary,
because we either do not have the source information or we have not had the time yet to analyze it.
We have been advised that in order to obtain a copy of the auditors’ working papers, we will need
to submit a Freedom of Information Act (“FOIA”) request after the report is published.
We appreciate the opportunity to provide these comments. If there are any questions, I
may be reached at (509) 877-6171.
Sincerely,
William Picotte, Executive Director
Yakama Nation Housing Authority
37
OIG Evaluation of Auditee Comments
Comment 1 The Authority stated that the report recognizes that the Yakama Nation
exercises powers of self-government, but leaves out that Tribal self-
determination is a guiding principle of NAHASDA. We agree that Tribal
self-determination is a guiding principle within the constraints of
NAHASDA.
Comment 2 The Authority believed our statement “As a result, it completed only 19 of
60 planned units with its competitive grant” was an unfair characterization
of the auditee’s performance, contradicted the facts, and should be
removed from the report. We relied on the Authority’s original
application, its final Recovery Act report submission as of September
2012, and its 2011 annual performance plan in which it stated that it
planned to repair up to 60 homes, and purchase up to 15 modular homes.
Although the Authority provided a copy of the signed approval for the
purchase of the 12 modular homes, there was not a signed amended
application reducing the number of units to be repaired and the HUD
approval did not mention the decrease in the number of planned units for
rehabilitation. However, as a result of HUD's assertion that the reduction
in the number of units to be rehabilitated was approved, we changed our
effect to state that the Authority could not demonstrate that it spent $1.2
million of grant funds on eligible housing activities.
Comment 3 The Authority believed our conclusion that “more homeowners could have
benefited from the unreasonable pay for labor and unnecessary materials
stored in [the YNHA] warehouse” is misleading and should be removed
from the report because less than $7,000 in wages that was identified as
“unreasonable” would not have covered even one additional unit. As a
result of the auditee’s response and our discussions with HUD, we
removed the unreasonable wages from the report. However, we also
identified $177,000 in unnecessary materials that remained in inventory
and could have been used to benefit eligible families.
Comment 4 Part 1000.28 of the Native American Housing And Self-Determination
Act (NAHASDA) requires the Authority, as a self-governance Indian
tribe, to have administrative requirements, standards and systems that
meet or exceed the comparable requirements of 24 CFR 1000.26. This
requires the Authority to meet requirements in 24 CFR 85.20, which
requires grantees to maintain financial records that are accurate, current,
and complete and that adequately identify the source and application of
funds provided for assisted activities. It also requires financial
information to be related to performance or productivity data, including
the development of unit cost information whenever appropriate. The
38
Authority could not demonstrate that bulk materials purchased and labor
paid with Recovery Act grant funds were used in the performance of the
work and to benefit eligible units and recipients.
In addition, Federal Regulations at 24 CFR 1000.156, as clarified by HUD
Notice PIH 2010-47, maintains that the Authority, “…is responsible for
ensuring that the amount of funds from all sources used to construct each
unit does not exceed the TDC [total development cost] limits…” and that
units that improperly exceed total development cost limits without
appropriate HUD approval will not be considered to be “…affordable
housing…” All Indian Housing Block Grant funds expended on such
units will be disallowed. Consequently, it needs to know the amount of
block grant funds that went into each unit to demonstrate that total
development cost limits were not exceeded.
Further, Section 205 (a)(2) of the NAHASDA requires each dwelling unit
to remain affordable according to binding commitments for the remaining
useful life of the property. The useful life restrictions in the binding
commitments, according to HUD program guidance No. 2007-07, provide
that the NAHASDA funds invested in a property be refunded, either in
full, or as a prorated amount in the event of a default. Consequently, the
Authority needs to know the amount of block grant funds that went into a
specific unit to determine the amount to be refunded in the event of
default.
We modified the finding to include additional information and the
additional criteria are now included in appendix C. In addition, we
requested further documentation on the Authority’s calculation of total
development costs and the useful life of the units it assisted with these
grants, but it did not provide the support.
Comment 5 The Authority stated that we have not found any noncompliance with
OMB Circular A-87, and that OMB Circular A-133 applies to audits of
Indian Housing Block Grants and does not state that expenditures for
affordable housing must be allocated to specific, individual units. It also
stated that it complied with acceptable accounting practices by
maintaining records which showed that the funds under each grant were
applied to pay for materials, labor, and related costs incurred to carry out
the award. Cost principles in 2 CFR 225 (OMB Circular A-87) state that,
“only materials and supplies actually used for the performance of a
Federal award may be charged as direct costs.” We did not dispute that
the Authority complied with acceptable accounting practices. However,
although the Authority stated that it maintained these records and applied
the costs to the grants, the Authority could not demonstrate that it used the
materials purchased and the labor charged on the eligible projects. This
criterion was added to appendix A. Also, see Comment 4.
39
Comment 6 Whether the construction industry accounts for its performance of work on
a project using the percentage of completion method is irrelevant.
According to 2 CFR 225 Appendix B, Selected Items of Cost, number 26,
“…only materials and supplies actually used for the performance of a
Federal award may be charged as a direct cost.” The Authority must show
the materials were used in the performance of the award.
Comment 7 The Authority claimed that it had not had time to determine the basis for
the $196,000 as it would take time to put together the documents that were
pulled apart and reviewed by the auditor. The Authority’s documentation
(purchase orders, invoices, checks, and timesheets) was contained in boxes
it provided to the auditors. However, because the Authority’s filing
system within these boxes was a challenge to work with, it was agreed that
Authority staff would pull the documentation from those boxes and
provide it to the auditors. Upon completion of the fieldwork, the auditors
presented the documentation back to the Authority in the condition in
which it had been received.
Comment 8 We did not take exception to documentation of delivery receipts as long as
there was evidence that the Authority received the materials and goods in
the correct quantity and quality. For example, a purchase order that was
stamped, signed, and dated was considered acceptable. We found that use
of only a vendor’s invoice was unacceptable to document receipt of the
correct quantity and quality of materials since no one compared the
vendor’s invoice to what was received.
Comment 9 Note the date specified in the report is July 19, 2013, not July 29, as stated
in the response. The Authority purchased $38,366 of additional inventory
after it stopped charging labor to the formula grant projects at the end of
June 2011. Also, the Authority claimed that it purchased roofing materials
in bulk to obtain the best price, but needed to reprogram some of the grant
funds due to a fire so did not use all of these roofing materials. However,
review of its accounting system showed the Authority purchased $21,360
of roofing materials on March 16, 2011, and $22,800 on August 25, 2011.
These purchases were made after the February 14, 2011 fire and after it
knew that it was not going to repair as many homes as shown in its grant
application. In addition, the second of these purchases was made after the
Authority received approval of its amended grant application.
Comment 10 The Authority disagrees that time spent in safety meetings needed to be
assigned to specific units. We rephrased the audit report to delete the
wording, “…and was not allocated to particular units” in this instance
because it detracted from the issue that these costs should not have been
charged to the grant.
40
Comment 11 The Authority stated that the report did not explain how we calculated the
underpayment of the prevailing Davis Bacon wages, and that during the
exit we stated that we used the March 2010 wage rates. We used the wage
rates adopted by the Authority at the beginning of the grant period to test
and recalculate the labor costs. We also corrected this amount to be $176
as pointed out during the exit conference.
Comment 12 The timesheet in question showed 10.25 hours worked on the days in
question, but 18 hours were entered into the system. When asked about
the discrepancy, the Authority was not able to provide documentation to
support this difference. If the Authority is now able to produce the
documentation, it should work with HUD to resolve the recommendation.
Comment 13 The Authority stated that paying more than it was required to pay under
Davis Bacon was not a violation of the law. We considered the
Authority’s comment and removed this from the report because the Davis
Bacon Act addresses the minimum wage rate, not the ceiling rate.
Comment 14 One employee told us he worked on administrative tasks such as typing up
purchase orders and scope of work assessments as well as coordinating
purchases for the supervisors by calling or faxing for bids, whichever
means was called for in the particular circumstance. The other employee
was no longer with the Authority at the time of our payroll review and was
unavailable to be interviewed. However, although one employee
described some activities he performed, the Authority did not provide
documentation of the “other” work that was performed. The Authority
needs to provide documentation to HUD for resolution.
These costs were included in the unsupported costs in Recommendation
1A and in the Schedule of Questioned costs.
Comment 15 The Authority’s policy requires that costs be charged to the “appropriate
project” or “appropriate programs.” However, the Authority’s policy also
states that an issue slip (requisition form) will be filled and transmitted
weekly to the accountant. This slip includes detailed information for
charging the costs to specific units such as the address of the unit, the
workorder number, and the materials unit cost. This form was not always
complete.
Comment 16 Although the Executive Director of the Authority held regular, weekly
meetings with its managers and discussed the Recovery Act projects, the
maintenance program manager said that no budgetary and expenditure
reports were provided to the program managers for review to identify
whether maintenance labor was incorrectly charged to Recovery Act
grants and he was not aware that maintenance costs were charged to the
grants.
41
Comment 17 The Authority claimed that it would be a waste of resources for it to have
to create specific per unit records for every cost and expenditure of funds
under both of the grants. The Authority had already created and assigned
accounting codes to each individual unit that it worked on in its
accounting software as it had for the $3.5 million to which the audit did
not take exception. It needed to do this to determine the remaining useful
life of the property it assisted to comply with the criteria cited in comment
4.
Comment 18 As stated in comment 4, “only materials and supplies actually used for the
performance of a Federal award may be charged as direct costs.”
Inventory held in the Authority’s warehouse has not been used for the
performance of a Federal award. Further, the grants were completed about
1 ½ years ago and all materials purchased should have been used on the
projects at that time.
Comment 19 The Authority does not agree that if there is a reimbursement to be made
for the maintenance staff meetings and maintenance operations, it should
be from non-Federal funds. We rephrased the recommendation to state
that the reimbursement should be made from the Authority’s operating
account rather than from non-Federal funds.
Comment 20 The Authority stated a review of all other payroll charges would be
overload; if a review is required, the scope should be on meetings the
maintenance staff were paid to attend during the relevant period.
Reviewing all payroll charged to the Recovery Act projects should
identify any ineligible costs charged to the grants in addition to
maintenance meetings. Also see comment 19.
Comment 21 We have rephrased the recommendation to delete the requirement that the
restitution come from non-Federal funds because the Authority should
have compensated the employees from its operating account.
Comment 22 We reviewed labor charges to two units rehabilitated with competitive
grant funds. Of the 20 pay periods reviewed, the Authority made errors
for multiple employees in 14 pay periods or 70 percent of the time. This
was a pervasive problem on these units for this grant. Therefore, the
Authority should be required to review all payments charged to the grants
to determine whether additional wage restitution is owed.
Comment 23 After review of the auditee and HUD's comments, we removed this
recommendation from the report because we are emphasizing that the
costs should be attributed to the project.
42
Comment 24 The Authority stated that it owns and operates its own warehouse, which
can accommodate more than $5,000 of materials safely and securely. If
this is against policy, then it may consider amending its policy. We
quoted the policy and made the recommendation based on the policy that
was in effect during the scope of the audit.
Comment 25 The Authority’s policy adopted the provisions of the HUD Office of
Public and Indian Housing Notice 2009-14. Its policy states, “under no
circumstances will a purchase be broken down into more than one action
in order to meet the Micro Purchase threshold.” This is contradicted by
the statement in the Authority’s policy, which states, “Single purchases for
the purpose of this policy and procedure shall be considered to mean the
total cost of one or more similar items to be obtained at any one time from
a single source and listed on a single purchase order.” Consequently, by
creating multiple purchase orders under $5,000 each, the Authority was
able to circumvent the requirement for obtaining 3 price quotations.
Comment 26 Regulations at 24 CFR 85.36(b)(4) state, “Grantee…will provide for a
review of proposed procurements to avoid purchase of unnecessary or
duplicative items. Consideration should be given to consolidating or
breaking out procurements to obtain a more economical purchase.” This
criterion has been added to appendix C.
Comment 27 We agree that the purchases listed in appendix D if combined would still
be under $10,000 even in aggregate. However, since they would be over
$5,000, the Authority would have been required by its policy to obtain
three quotations, documented in writing or by fax for each.
Comment 28 We identified specific evidence of splitting purchases. On June 1, 2010,
the Authority obtained an estimate for storage containers from one vendor;
one type of container at $3,995 and another type of container at $3,495
with a $125 delivery fee. The Authority purchased two containers totaling
$8,240 on two separate purchase orders on the same day; P10-7171 was
for $4,120 and P10-7172 was for $4,120. The Authority did not obtain
additional price quotes to obtain the best possible pricing. There was no
documentation why the purchase was made on two separate purchase
orders other than “…no bid required…”
On July 12, 2010, the Authority obtained an estimate of $5,153.40 from
one vendor for various construction supplies. The estimate shows a hand-
drawn line and total about half way down, indicating the Authority split
this estimate into two separate purchase orders, P10 7376 for $1,197.90,
and P10 7377 for $3,955.70. These were separately invoiced on August 3,
2010. This indicated that the split of the purchase was intentional.
43
Comment 29 The Authority stated that it was not able to respond as to each of the
procurement issues without more information. It also stated that there
were many reasons it would make smaller purchases other than to avoid a
phone procurement, and that purchase orders were prepared and submitted
throughout the week. However, we noted that the purchase orders
questioned were not only signed on the same day, but the purchase order
dates were the same day or within one day. The Authority is correct that
the audit did not find that the costs were unreasonable. We also did not
find that the costs were reasonable and so we recommend that the
Authority provide documentation supporting that it received the best value
for the materials it purchased or reimburse HUD for the transmission to
the U.S. Treasury from non-Federal funds for any amount that is not
supported.
Comment 30 The Authority stated that it and its vendors had limited space to store bulk
purchases, and that it was also not always possible to predict the materials
that would be required for a repair. It also said it made some smaller
purchases to help track some of the costs by unit and bought smaller
purchases for many reasons, other than to avoid competition. We
considered space as a reason the Authority made multiple purchases on the
same day, but noted that the Authority purchased a total of 6 40-foot and 2
20-foot standard container storage units in August, and September 2010,
to store Recovery Act project materials. In addition, it made many
purchases of less than $5,000 that if combined, would not have taken
additional storage space since the purchases were made on the same day or
within one day. Further, the Authority said that it, “…made some smaller
purchases to help track some of the costs by unit,” but it did not identify
the unit on these purchase orders. Finally, the Authority stated that it
owns and operates its own warehouse, which can accommodate more than
$5,000 of materials safely and securely (see comment 24).
Comment 31 The issue is not what the requirements are for purchases of less than
$5,000, but that the Authority broke down purchases so that they would be
less than $5,000. At this point, the Authority would be responsible for
following its policy as stated in comments 24 and 25.
Comment 32 The Authority stated that the report assumed that the purchases were
broken down for the purpose of avoiding competition and its policy does
not prohibit breaking down purchase orders for other reasons. However,
the Authority’s policy states that “under no circumstances will a purchase
be broken down into more than one action in order to meet the Micro
Purchase threshold.” The policy does not allow breaking down purchase
orders for any reason. See comments 27 and 28.
Comment 33 These purchases were under $5,000 as a result of splitting them into
multiple single purchases or not combining them. These purchases were
44
from the same vendor, on the same day, and in many cases in sequential
order. It would have been prudent to create one purchase order and obtain
quotes from multiple vendors to determine which would provide the best
value.
Comment 34 The Authority stated that the difference between the $372,221 materials
and the best value be clarified in the recommendations. We clarified in
the exit conference that the recommended reimbursement would be the
difference between the $372,221 paid for materials the Authority
purchased and the documentation it is able to provide showing that it
received the best value.
Comment 35 It is the Authority’s responsibility to work with HUD to determine how to
document that it received the best value for the grant funds spent. See
comments 27, 32, and 33.
Comment 36 The final submission of the Recovery Act reporting was for the quarter
ending September 30, 2012. There were many previous filings, beginning
in October 2009, during which the Authority could have updated its data
to reflect accurate information.
Comment 37 The Authority was unable to provide documentation for determining how
it arrived at the data it reported. The chief financial officer obtained the
data verbally from a temporary project coordinator over the phone.
Although guidance was not clear at the beginning, clarification was made
throughout the grant period. In addition, if there had been documentation
for review, it is possible that at least some of the mistakes would have
been caught.
Comment 38 The Authority commented on the questioned costs stating that .3% was
determined to be ineligible, 87.1% unsupported, and 12.6% unreasonable
or unnecessary. Although only a small portion of the questioned costs
were ineligible, the unsupported costs require supporting documentation to
be eligible. Without that documentation, the costs are ineligible and need
to be returned to HUD for transmission to the U.S. Treasury.
45
Appendix C
CRITERIA
Native American Housing Assistance and Self-Determination Act of 1996 Section 203 Program
Requirements (b) Maintenance and Efficient Operation
SEC. 203. (b) Maintenance and Efficient Operation – each recipient who owns or operates (or is
responsible for funding any entity that owns or operates) housing developed or operated pursuant
to a contract between the [HUD] Secretary and an Indian housing authority pursuant to the
United States Housing Act of 1937 shall, using amounts of any grants received under this Act,
reserve and use for operating assistance under section 202(1) such amounts as may be necessary
to provide for the continued maintenance and efficient operation of such housing.
Native American Housing Assistance and Self-Determination Act of 1996 Section 205 (a)(2) Low
Income Requirement and Income Targeting
(a) IN GENERAL.—Housing shall qualify as affordable housing for purposes of this Act only
if—(2) except for housing assisted under section 202 of the United States Housing Act of 1937
(as in effect before the date of the effectiveness of this Act), each dwelling unit in the housing
will remain affordable, according to binding commitments satisfactory to the Secretary, for the
remaining useful life of the property (as determined by the Secretary) without regard to the term
of the mortgage or to transfer of ownership, or for such other period that the Secretary
determines is the longest feasible period of time consistent with sound economics and the
purposes of this Act, except upon a foreclosure by a lender (or upon other transfer in lieu of
foreclosure) if such action—
2 CFR 225 (OMB Circular A-87) Appendix B 26 to Part 225 (26) c. Selected Items of Costs
(26) Materials and Supplies Costs
c. Only materials and supplies actually used for the performance of a Federal award may be
charged as direct costs.
24 CFR 85.20(b) Standards for Financial Management Systems
The financial management systems of other grantees and subgrantees must meet the following
standards:
(1) Financial reporting. Accurate, current, and complete disclosure of the financial
results of financially assisted activities must be made in accordance with the financial
reporting requirements of the grant or subgrant.
(2) Accounting records. Grantees and subgrantees must maintain records which
adequately identify the source and application of funds provided for financially- assisted
activities. These records must contain information pertaining to grant or subgrant awards
and authorizations, obligations, unobligated balances, assets, liabilities, outlays or
expenditures, and income.
(3) Internal control. Effective control and accountability must be maintained for all grant
and subgrant cash, real and personal property, and other assets. Grantees and subgrantees
must adequately safeguard all such property and must assure that it is used solely for
authorized purposes.
46
(4) Budget control. Actual expenditures or outlays must be compared with budgeted
amounts for each grant or subgrant. Financial information must be related to performance
or productivity data, including the development of unit cost information whenever
appropriate or specifically required in the grant or subgrant agreement. If unit cost data
are required, estimates based on available documentation will be accepted whenever
possible.
24 CFR 85.36(b)(4) Procurement Standards
Grantee and subgrantee procedures will provide for a review of proposed procurements to avoid
purchase of unnecessary or duplicative items. Consideration should be given to consolidating or
breaking out procurements to obtain a more economical purchase. Where appropriate, an
analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to
determine the most economical approach.
24 CFR 85.36(d)1
If small purchase procedures are used, price quotations shall be obtained from an adequate
number of qualified sources. Small purchase procedures are those relatively simple and informal
procurement methods for securing services, supplies, or other property that do not cost more than
$100,000.
24 CFR 1000.26 What are the administrative requirements under NAHASDA?
(a) Except as addressed in §1000.28, recipients shall comply with the requirements and standards of OMB
Circular No. A–87, “Principles for Determining Costs Applicable to Grants and Contracts with State,
Local and Federally recognized Indian Tribal Governments,” and with the following sections of 24 CFR
part 85 “Uniform Administrative Requirements for Grants and Cooperative Agreements to State and
Local Governments.” For purposes of this part, “grantee” as defined in 24 CFR part 85 has the same
meaning as “recipient.”
24 CFR 1000.28 May a self-governance Indian tribe be exempted from the applicability of §1000.26?
Yes. A self-governance Indian tribe shall certify that its administrative requirements, standards and
systems meet or exceed the comparable requirements of §1000.26. For purposes of this section, a self-
governance Indian tribe is an Indian tribe that participates in tribal self-governance as authorized under
Public Law 93–638, as amended (25 U.S.C. 450 et seq. ).
24 CFR.1000.156 Is affordable housing developed, acquired, or assisted under the IHBG program subject
to limitations on cost or design standards?
Yes. Affordable housing must be of moderate design. For these purposes, moderate design is defined as
housing that is of a size and with amenities consistent with unassisted housing offered for sale in the
Indian tribe's general geographic area to buyers who are at or below the area median income. The local
determination of moderate design applies to all housing assisted under an affordable housing activity,
including development activities ( e.g., acquisition, new construction, reconstruction, moderate or
substantial rehabilitation of affordable housing and homebuyer assistance) and model activities.
Acquisition includes assistance to a family to buy housing. Units with the same number of bedrooms must
be comparable with respect to size, cost and amenities.
United States Office of Management and Budget Memorandum M-09-21 Section 2 – Basic
Principles and Requirements of Recovery Act Recipient Reporting
47
2.1 What recipient reporting is required in Section 1512 of the Recovery Act? Section 1512 of
the Recovery Act requires reports on the use of Recovery Act funding by recipients no later than
the 10th day after the end of each calendar quarter (beginning the quarter ending September 30,
2009) and for the Federal agency providing those funds to make the reports publicly available no
later than the 30th day after the end of that quarter. Aimed at providing transparency into the use
of these funds, the recipient reports are required to include the following detailed information:
Total amount of funds received; and of that, the amount spent on projects and activities;
A list of those projects and activities funded by name to include:
o Description
o Completion status
o Estimates on jobs created or retained;
Details on sub-awards and other payments.
Report United States Office of Management and Budget Memorandum M-09-21 Section 4 –
Data Quality Requirements
4.1 What is the scope of required data quality reviews?
Data quality (i.e., accuracy, completeness and timely reporting of information) reviews required by
this Guidance are intended to emphasize the avoidance of two key data problems -- material
omissions and significant reporting errors.
Significant reporting errors are defined as those instances where required data is not reported
accurately and such erroneous reporting results in significant risk that the public will be misled or
confused by the recipient report in question.
4.2 Who is responsible for the quality of data submitted under Section 1512 of the Recovery Act?
Data quality is an important responsibility of key stakeholders identified in the Recovery Act. Prime
recipients, as owners of the data submitted, have the principal responsibility for the quality of the
information submitted.
Prime Recipient
o Owns recipient data and sub-recipient data
o Initiates appropriate data collection and reporting procedures to ensure that Section
1512 reporting requirements are met in a timely and effective manner
o Implements internal control measures as appropriate to ensure accurate and complete
information
o Performs data quality reviews for material omissions and/or significant reporting
errors, making appropriate and timely corrections to prime recipient data and working
with the designated sub-recipient to address any data quality issues
United States Office of Management and Budget Memorandum M-09-21 Section 5 – Reporting
on Jobs Creation Estimates by Recipients
5.2 What information are recipients covered by Section 1512 required to report? Recipients will
be required to report an aggregate number for the cumulative jobs created or retained for the
quarter in a separate numeric field.
48
The estimate of the number of jobs required by the Recovery Act should be expressed as “full-
time equivalents” (FTE), which is calculated as total hours worked in jobs created or retained
divided by the number of hours in a full-time schedule, as defined by the recipient (see Section
5.3 for more information). The FTE estimates must be reported cumulatively each calendar
quarter.
Housing and Urban Development Office of Native American Program Guidance No. 2007-07
Record of Use Restrictions: The Record of Use Restrictions is a form that can be used by
recipients to record both NAHASDA and other useful life/use restrictions. Restrictions can vary
both in how they are imposed and their length. Since recipients may have properties that are
subject to other use restrictions, this model reporting form is designed to be the registry of all of
the various use restrictions that are placed on recipient properties.
Binding Commitments: There are a number of different ways to place both NAHASDA and
other use restrictions on assisted properties. The four attached sample Useful Life/Use
Restriction Agreements can be used for this purpose. Whichever form is used, it must be
properly recorded with the appropriate land records offices. Additional use restrictions may be
imposed on such properties as long as they do not contradict the NAHASDA useful life
restrictions.
2.2 Recovery of Amounts Contributed by the Tribe. The Tribe has contributed through loan(s) or grant(s)
the sum of __________________ ($__________) to the Owner or Property and shall be entitled to
recover this amount in its entirety for any violation of the Land Restriction agreement during the Term of
the Land Restriction.
4.0 USEFUL LIFE.
4.1 Term of Land Restriction Should Meet HUD Requirements. NAHASDA requires that the Secretary of
the U.S. Department of Housing and Urban Development determine that the Property is minimally
restricted for a period of time acceptable to its Secretary, 25 U.S.C. § 4135(a)(2). In section 1.4 of this
Land Restriction agreement, a Term has been set for this Land Restriction and that Term should not be
less than what is acceptable to the Secretary of HUD based on the nature and the amount of IHBG funds
to this Property. The Tribe should ensure that a Land Restriction has been obtained for a Term that meets
HUD’s standards.
Housing and Urban Development Office of Native American Program Guidance No. 2009-07
In the formula program and competitive program, the provisions of Section 104(b) of the Native
American Housing Assistance and Self-Determination Act (NAHASDA), and 24 CFR
1000.16(b) govern the use of Recovery Act IHBG/NAHBG [Native American Housing Block
Grant] formula and competitive funds. In accordance with Section 104(b)(1) of NAHASDA,
Davis-Bacon applies to projects assisted with IHBG/NAHBG funds.
Housing and Urban Development Office of Public and Indian Housing Notice 2009-14
This Notice allows the Authority to adopt and implement the Micro Purchase Procurement
clause in its procurement policy for purchases of goods and services with a value of less than
$5,000. The intent of Micro Purchasing is to reduce the burden of complying with the federal
procurement process for goods and services of minimal cost. It also prohibits the Authority
49
breaking down requirements of a purchase for the purpose of bid splitting to avoid the
requirements that apply to larger purchases.
Housing and Urban Development Office of Native American Program Guidance No. 2010-47
The tribe/TDHE is responsible for ensuring that the amount of funds from all sources used to
construct each unit does not exceed the TDC limits. The tribe/TDHE must maintain records
showing that housing was developed in accordance with these limits and other applicable
NAHASDA requirements. Units that improperly exceed TDC limits without appropriate HUD
approval will not be deemed to be “affordable housing” and all IHBG funds expended on such
units will be disallowed.
Yakama Nation Housing Authority Financial Administration Policy
Accounting Records: The Authority must maintain records that adequately identify the source
and application of funds provided under IHBG [Indian Housing Block Grant].
Yakama Nation Housing Authority Financial Administration Policy
Inventory of Materials – the Authority shall only procure materials for a specific job or
purpose.…any extra materials shall be 1. returned to the supplier for credit, 2. sold as surplus 3.
inventoried at a central location, keeping the material safe and secure, provided that the material
can be used on other federally funded projects in the near future (the value of this material shall
not exceed $5,000), or 4. scrap the material.
Yakama Nation Housing Authority Property Accountability Policy
Part V, Section A.1(e), Issuing materials – charging the cost of materials and supplies to the
appropriate project for which the materials and supplies are being used is a primary goal of the
inventory system. An issue slip will be filled and transmitted to the Accountant. The
Accountant will charge the cost of issuance to the appropriate programs and prepare the
necessary journal entries to record the transaction.
Yakama Nation Housing Authority Procurement and Contract Administration Procedures
Part III, Section C, The Receiver’s Report – upon receipt of the goods, the receiver shall prepare
the Receiver's Report. The report should be signed and dated. Upon preparation, the receiver
should forward the original receiver’s report and the signed copy of the vendor’s delivery receipt
(if available) to the accounting office.
Yakama Nation Housing Authority Procurement and Contract Administration Procedures
Part V, Section F, Procurement of Less than $5,000 states that for small purchases of less than
$5,000, (except for contracts of $2,000 or more involving labor), only one price quote is
required, provided the quote is considered reasonable. Quotes may be obtained orally (either in
person or by telephone), by catalog, fax, or email. If the purchase is made for reasons other than
price, the file must clearly describe the reason for the purchase. Under no circumstances will a
purchase be broken down into more than one action in order to meet the Micro Purchase
threshold. The Micro Purchase must be documented by an authorized purchase order or contract.
Yakama Nation Housing Authority Procurement and Contract Administration Procedures
50
Part IV, Section D.1. Definition of Single Purchases – single purchases for the purpose of this
policy and procedure shall be considered to mean the total cost of one or more similar items to be
obtained at any one time from a single source and listed on a single purchase order.
51
Appendix D
MULTIPLE PURCHASES FROM VENDORS
Vendor A
approval Purchase
date order Amount Items
P10-7376 $ 1,196.62 Trim molding
P10-7377 3,955.30 Sheetrock & plywood
7/26/10
P10-7378 1,826.89 Drywall materials
Total (3) $ 6,978.81
P10-7502 $ 4,528.49 Plumbing materials
8/23/10 P10-7505 4,522.04 Painting materials
Total (2) $ 9,050.53
P10-7619 $ 489.90 Door locks
P10-7620 197.91 Drop cloths
9/14/10 4,577.90 Plumbing materials
P10-7621
Total (3) $ 5,265.71
P11-7914 $ 3,175.36 Paint
P11-7915 313.80 Sheetrock
11/22/10
P11-7919 1,611.63 Security fencing
Total (3) $ 5,100.79
P11-8149 $ 4,377.85 Stock materials
P11-8153 3,284.73 Stock materials
02/01/11
P11-8154 3,162.13 Stock materials
Total (3) $ 10,824.71
P11-8190 $ 4,998.75 Stock materials
02/11/11 P11-8198 1,782.00 Stock materials
Total (2) $ 6,780.75
P11-8289 $ 2,692.80 Insulation
P11-8290 4,259.84 Paint sealer
03/16/11
P11-8291 4,912.28 Paint & doors
Total (3) $ 11,864.92
P11-8376 $ 3,622.21 Steps project materials
P11-8380 4,328.40 Doors & misc.
P11-8390 2,257.95 Stock materials
P11-8400 1,923.77 Stock materials
04/12/11 P11-8401 3,344.33 Stock materials
P11-8402 3,445.33 Stock materials
P11-8408 4,347.27 Stock materials for windows
P11-8410 730.00 Stock materials and windows
Total (8) $ 23,999.26
52
Vendor A
approval Purchase
date order Amount Items
P11-8442 $ 2,376.52 Windows, vents, doors & shelves
P11-8445 2,623.32 Nails & screws
04/25/11
P11-8446 2,638.62 Nails & screws
Total (3) $ 7,638.46
P11-8454 $ 4,986.25 Doors
P11-8458 1,081.20 Panels
04/28/11
P11-8460 4,904.30 Windows
Total (3) $ 10,971.75
P11-8472 $ 2,129.38 Stock materials
P11-8473 2,373.30 Stock materials & sheet rock
P11-8474 2,165.48 Caulk, toilet supplies & plywood
05/02/11 P11-8475 4,553.95 Stock materials, plywood
P11-8476 4,073.89 Stock materials, caulk & tile
P11-8477 3,213.48 Stock materials & insulation
Total (6) $ 18,509.46
P11-8505 $ 2,682.57 Stock materials, toilets, closets
05/06/11 P11-8506 3,738.13 Stock materials, elbows & sinks
Total (2) $ 6,420.70
P11-8565 $ 4,980.00 Stock materials & windows
P11-8566 4,283.05 Stock materials & laminate
05/24/11 P11-8567 2,796.03 Stock materials, windows & trims
P11-8568 3,253.00 Stock materials & windows
Total (4) $ 15,312.08
P11-8595 $ 4,707.94 Materials
P11-8601 2,629.80 Plywood
P11-8603 439.05 Hammer tacker staples
06/06/11 P11-8604 2,961.28 Materials
P11-8605 1,651.45 Materials for formula projects
Total (5) $ 12,389.52
P11-8659 $ 4,860.69 Materials for formula projects
06/29/11 P11-8662 4,090.16
Total (2) $ 8,950.85
P11-8691 $ 3,867.83 Windows, sheetrock & paint
P11-8692 4,708.68 Plywood & trim
P11-8694 877.23 Materials for formula projects
07/06/11
P11-8696 2,695.06 Materials for formula projects
Total (4) $ 12,148.80
P11-8795 $ 4,792.91 Stock materials for formula
P11-8796 4,756.51 projects
07/29/11 Total (2) $ 9,549.42
53
Vendor A
approval Purchase
date order Amount Items
P11-8843 $ 4,782.14 Plumbing materials
P11-8844 4,735.20 Insulation
08/09/11
P11-8845 2,333.99 Stock materials
Total (3) $ 11,851.33
P11-8908 $ 4,914.00 Foundation materials
P11-8909 4,953.00 Foundation materials
08/19/11 P11-8910 3,561.89 Foundation materials
P11-8911 4,470.12 Foundation materials
Total (4) $ 17,899.01
P11-8956 $ 3,860.66 Stock materials, plumbing &
P11-8957 1,796.10 bathroom fixtures
09/07/11
P11-8958 2,439.04
Total (3) $ 8,095.80
P11-8991 $ 4,797.25 Restock materials & insulation
P11-8992 395.18 Restock materials & insulation
09/01/11 P11-8993 1,286.04 Restock materials & insulation
P11-8994 4,375.00 Restock materials & insulation
Total (4) $ 10,853.47
P11-9005 $ 276.83 Materials
P11-9007 2,128.26 Restock
09/20/11
P11-9011 4,803.99 Vinyl windows
Total (3) $ 7,209.08
05/18/12 P12-9776 $ 4,080.87 Materials
P11-9777 4,143.65
Total (2) $ 8,224.52
P12-9826 $ 3,229.25 Materials
P12-9827 4,060.50
P12-9828 3,488.43
06/04/12 P12-9829 872.25
P12-9830 4,867.95
P12-9831 2,301.98
Total (6) $ 18,820.36
P12-9843 $ 4,366.43 Materials & restock materials
P12-9844 2,193.31
P12-9845 4,414.47
06/05/12 P12-9847 1,893.77
06/06/12 P12-9849 2,718.87
P12-9850 1,770.76
Total (6) $ 17,357.61
P12-9928 $ 4,452.90 Plumbing materials
07/05/12 P12-9929 3,573.16
Total (2) $ 8,026.06
54
Vendor A
approval Purchase
date order Amount Items
P12-9965 $ 4,900.74 Materials
P12-9966 3,698.35
07/20/12
P12-9967 4,122.99
Total (3) $ 12,722.08
Total (94) $302,815.84
Vendor B
approval Purchase
date order Amount Items
02/11/11 P11-8184 $ 4,097.91 Steel & electrical
02/10/11 P11-8185 2,597.40 Electrical
Total (2) $ 6,695.31
P12-9902 $ 657.85 Electrical materials
P12-9903 2,608.48
06/26/12
P12-9904 4,703.28
Total (3) $ 7,969.61
Total (5) $ 14,664.92
Vendor C
approval Purchase
date order Amount Items
P11-8919 $ 4,990.00 Cabinets & granite counter tops
P11-8920 4,990.00
P11-8921 4,924.00
P11-8922 4,818.00
08/26/11 P11-8923 4,568.00
P11-8924 4,924.00
P11-8926 4,924.00
P11-8927 4,818.00
Total (9) $ 38,956.00
Vendor D
approval Purchase
date order Amount Items
P11-8949 $ 2,992.17 Stock materials, plumbing &
09/02/11 P11-8950 3,227.42 bathroom fixtures
Total (2) $ 6,219.59
55
Vendor E
approval Purchase
date order Amount Items
P11-9013 $ 4,620.50 Stock materials
09/20/11 P11-9014 4,944.50 Stock materials
Total (2) $ 9,564.50
56
The Yakama Nation Housing Authority Did Not Always Properly Spend Its Recovery Act funds
Published by the Department of Housing and Urban Development, Office of Inspector General on 2014-04-29.
Below is a raw (and likely hideous) rendition of the original report. (PDF)