oversight

Allegations Against the Northeast Oregon Housing Authority Were Unsubstantiated or Did Not Violate HUD Requirements

Published by the Department of Housing and Urban Development, Office of Inspector General on 2014-07-28.

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

OFFICE OF AUDIT
   =\
REGION 10
   ]
SEATTLE, WA




               Northeast Oregon Housing Authority
                         La Grande, OR

                    Public Housing Programs




2014-SE-1004                                        JULY 28, 2014
                                                                    Issue Date: July 28, 2014

                                                                    Audit Report Number: 2014-SE-1004




TO:            Laure Rawson, Program Center Coordinator, Office of Public Housing, Portland
               Field Office, 0EPH

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


SUBJECT:       Allegations Against the Northeast Oregon Housing Authority Were
               Unsubstantiated or Did Not Violate HUD 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 Northeast Oregon Housing
Authority.

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

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

   If you have any questions or comments about this report, please do not hesitate to call me at
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.
                                            July 28, 2014

                                            Allegations Against the Northeast Oregon Housing
                                            Authority Were Unsubstantiated or Did Not Violate HUD
                                            Requirements


Highlights
Audit Report 2014-SE-1004



 What We Audited and Why                     What We Found

We reviewed a complaint against the         The allegations about the Northeast Oregon Housing
Northeast Oregon Housing Authority.         Authority were unsubstantiated. The Authority did not
Our objective was to determine whether      violate HUD rules, generally followed its own
the allegations in hotline complaint        procurement and property disposal policies, and
number 2014-0087 were valid. The            appropriately calculated payroll withholdings and
complainant alleged that the Authority      maintenance charge rates. Further, the tenant
improperly used its credit cards, had a     commissioner was eligible for the position and was
conflict of interest with hired             appropriately housed.
contractors, improperly disposed of
vehicles, incorrectly calculated payroll
withholdings and maintenance charge
rates, and that its tenant commissioner
was not eligible for the position and was
improperly housed.

 What We Recommend

This report contains no
recommendations, and no further action
is necessary with respect to this report.
The Authority declined to provide
comments on our report.




                                                   
                           TABLE OF CONTENTS

Background and Objective                                           3

Results of Audit
      Allegations Against the Northeast Oregon Housing Authority
        Were Unsubstantiated                                       4

Scope and Methodology                                              6

Internal Controls                                                  7

Appendix
      A.     Auditee Comments and OIG’s Evaluation                 9




                                            2
                      BACKGROUND AND OBJECTIVE

Northeast Oregon Housing Authority

The Northeast Oregon Housing Authority is a municipal corporation located in La Grande, OR.
The Authority was organized for the purpose of providing low-income housing in Union, Baker,
Grant, and Wallowa Counties. It is governed by a nine-member board of commissioners. The
U.S. Department of Housing and Urban Development (HUD) requires that the board of
commissioners have at least one resident commissioner directly assisted by the Authority.

The Authority is responsible for the development, maintenance, and operation of subsidized
housing in the counties it serves. It receives funding from local, State, and Federal Government
sources and must comply with the requirements of these funding sources. The Authority has
more than 800 low-rent and Section 8 units and disbursed more than $6 million in low-rent
public housing and Housing Choice Voucher funds between 2012 and 2013.

Complaint Allegations

We received a hotline complaint expressing several concerns about the Authority’s procurement,
asset disposal, payroll withholdings, and tenant commissioner housing issues. Specifically, the
complaint alleged that the Authority

      Paid for ineligible expenses and used its credit cards to pay for spouses’ and significant
       others’ travel costs,
      Had conflicts of interest between Authority staff and hired contractors,
      Inappropriately disposed of a truck and a lawn tractor,
      Did not correctly calculate retirement benefits for its maintenance staff pensions and
       maintenance charge rates for damage and move-out costs, and
      Had a resident board commissioner who was not eligible for the position and was
       improperly housed.

Our objective was to determine whether the allegations in hotline complaint number 2014-0087
were valid.




                                                3
                                RESULTS OF AUDIT


Allegations Against the Northeast Oregon Housing Authority Were
Unsubstantiated
The complaint lodged against the Authority was unsubstantiated. While some of the events
described in the complaint occurred, the Authority’s actions did not violate HUD requirements.


 Procurement

              The complaint alleged that the Authority paid for ineligible expenses and used its
              credit cards to pay for spouses’ and significant others’ travel costs. In addition, it
              alleged that Authority staff had conflicts of interest with hired contractors.

              In general, the Authority followed HUD’s Public and Indian Housing Handbook
              7460.8, Procurement Handbook for Housing Agencies, and its procurement
              policy. HUD funds were not inappropriately used on the expenses identified in
              the complaint. In addition, Capital Fund projects and services were appropriately
              and competitively procured. There were no conflicts of interest between
              Authority staff and hired contractors.

              The Authority used its credit cards to arrange and pay for spouses’ and significant
              others’ travel costs. However, the staff member would then reimburse the
              Authority for those costs. There were no regulations directly prohibiting this
              practice, and this payment occurred with HUD voucher funds in only 1 of the 14
              credit card statements reviewed.

 Property Disposal

              The complaint alleged that the Authority inappropriately sold a truck and lawn
              tractor to the executive director, circumventing its property disposition policy. It
              also alleged that the executive director did not pay for the truck outright but was
              paying for it over time. However, the Authority generally followed its property
              disposition policy, which complied with HUD requirements. It solicited bids in
              the local newspapers and sold the truck to the executive director, the only bidder,
              at a price comparable to the truck’s Kelly Blue Book value in January 2013. The
              executive director made payments on the truck and paid the promissory note in
              full by March 2014. The Authority did not violate any HUD regulations or
              Authority policies when selling this truck to the executive director.

              The Authority did not receive any bids when it advertised for the sale of the lawn
              tractor. About 9 months later, it had the lawn tractor serviced, and the executive


                                                4
           director agreed to purchase it in January 2014. However, since the cost of
           servicing the lawn tractor was not considered in the sale to the executive director,
           the Authority agreed to readvertise its sale and sold the lawn tractor for the
           highest bid to an outside party in April 2014.

Retirement Benefits and
Maintenance Rate Calculations

           The complaint alleged the Authority did not correctly calculate and pay the
           retirement benefits for its maintenance staff. It then used these incorrect retirement
           benefit amounts to incorrectly calculate its maintenance rates for damages and
           move-out costs charged to public housing tenants.

           The Authority was a participating employer in the Oregon Public Employee
           Retirement System (PERS), the public employee retirement system established in
           Oregon. The PERS system calculated and billed the Authority for its employer
           retirement contributions for the maintenance staff. The Authority did not make this
           calculation.

           The Authority used an acceptable method of calculating and charging damages and
           move-out costs to tenants. The maintenance rate included factors for the
           maintenance staff’s hourly wage and benefits and material costs. In addition, HUD
           does not have a standard on how housing agencies calculate charges to tenants for
           damages and move-out costs.

Resident Tenant Commissioner

           The complaint alleged that the resident tenant commissioner was ineligible for the
           position because she did not live in public housing. In addition, she was housed in a
           unit larger than she was eligible for under her tenant-based Section 8 housing choice
           voucher.

           According to HUD regulations, the resident tenant commissioner must be directly
           assisted by the housing authority; however, this assistance includes receiving tenant-
           based Section 8 housing assistance. The resident tenant commissioner’s three-
           bedroom housing voucher was granted to house her two-person household and to
           reasonably accommodate her medical equipment. Thus, the tenant commissioner
           was eligible for the position and appropriately housed.

Recommendations

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




                                              5
                         SCOPE AND METHODOLOGY

We performed our onsite audit work during March 2014 at the Authority’s main office located at
2608 May Lane, La Grande, OR. Our audit period covered the period January 2012 through
December 2013.

To accomplish our objective, we obtained and reviewed applicable sections of the Housing Act
of 1937, Office of Management and Budget circulars, HUD regulations, and HUD handbooks;
interviewed HUD and Authority staff members; and examined the Authority’s policies and
procedures.

We also reviewed documents provided by the Authority, including

      Credit card statements and other supporting documents,
      Office supplies and cell phone reimbursement documents,
      The Authority’s chart of accounts,
      Capital Fund program project files,
      Property disposition files,
      Authority PERS documents and information,
      Authority maintenance rate calculations and standard charges, and
      The tenant commissioner’s housing file.

We did not rely on computer-processed data for this audit. Instead, we traced or verified
information for the allegations to supporting documentation, from which we drew our
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
objective. We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objective.




                                                6
                              INTERNAL CONTROLS

Internal control is a process adopted by those charged with governance and management,
designed to provide reasonable assurance about the achievement of the organization’s mission,
goals, and objectives with regard to

      Effectiveness and efficiency of operations,
      Reliability of financial reporting, and
      Compliance with applicable laws and regulations.

Internal controls comprise the plans, policies, methods, and procedures used to meet the
organization’s mission, goals, and objectives. Internal controls include the processes and
procedures for planning, organizing, directing, and controlling program operations as well as the
systems for measuring, reporting, and monitoring program performance.


 Relevant Internal Controls

               We determined that the following internal controls were relevant to our audit
               objective:

                     Controls to ensure that Authority procurement complied with HUD rules and
                      regulations, including the safeguarding of assets, cost eligibility, and
                      conflict-of-interest requirements.
                     Controls to ensure that public housing tenants are appropriately charged for
                      damages and move-out costs.
                     Controls to ensure that the tenant housing commissioner was eligible for the
                      position in accordance with HUD rules 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.

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



                                                 7
Separate Communication of
Minor Deficiencies

           We reported minor deficiencies regarding the credit card purchases to the auditee in
           a separate management letter.




                                             8
Appendix A

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation                    Auditee Comments

             The Authority declined to provide comments on the report.




                                            9