U.S. Department of Housing and Urban Development ` District Office of the Inspector General Richard B. Russell Federal Building 75 Spring Street, SW, Room 700 Atlanta, GA 30303-3388 (404) 331-3369 May 20, 1996 Audit-Related Memorandum 96-AT-248-1818 MEMORANDUM FOR: John Perry, Director, Community Planning and Development, 4AD FROM: Nancy Cooper Acting District Inspector General for Audit, Southeast/Caribbean, 4AGA SUBJECT: Accounting System Evaluation Metro Atlanta Furniture Bank Atlanta, Georgia INTRODUCTION From April 2 - 15, 1996 we performed a limited review of the financial management system of the Metro Atlanta Furniture Bank as it relat es to its Supportive Housing Program. The Furniture Bank is designated as a program participant under grant no. GA06G15-1035 awarded o n November 2, 1995, by HUD to the Metro Atlanta Task Force for the Homeless. A subrecipient agreement was executed between the Furniture Bank and the Metro Atlanta Task Force o n January 12, 1996. The total grant award from HUD is $367,500 of which $350,000 has bee n awarded to the Furnitur e Bank as a subrecipient. The Furniture Bank intends to use its funds to provide furniture for 1,400 additional homeless families, hire more program staff, and buy a delivery truck. At the time of our review, the Furniture Bank board consisted of 13 members, a full time salaried Executive Director, and support staff. SCOPE OF REVIEW The purpose of our review was to provide you with reasonable assurance that this subrecipient of Supportive Housing funds has systems and controls in place to account for the receipt an d disbursement of grant funds, and to accumulate and document statistical data to demonstrat e program accomplishments. As you know , our review was not an audit made in accordance with generally accepted government audit standards. We interviewed the Executive Director and obtained documentation to determine whether: (1) a reasonable financial accounting system existed to capture and properly classify projec t expenditures, (2) the organization's staff appeared knowledgeable of its responsibilities as a recipient of Federal funds and under its contract with the Task Force for the Homeless, (3) the organization is legally established and appeared viable, and (4) the organization otherwis e appeared reasonably prepared to carry out the objectives of its Supportive Housing Program. We looked for areas which indicated a need for technical assistance and guidance by your office or the Task Force. OBSERVATIONS The Furniture Bank has established organizational systems necessary to deliver services under its Supportive Housing Program. The organization is administering supportive housing services through other grant funding, has obtained professional a uditing services, has a functioning Board of Directors, and has demonstrated success in helping homeless families or individuals of low and very low income levels. However, the Furniture Bank needs assistance with financia l management and performance data systems. During our review we made the followin g observations: a. The Furniture Bank staff lacked the basic accounting knowledge needed to maintai n proper accounting records. During our cursory review of the accou nting records we noted the monthly balance sheets did not balance and a misclassified entry related to th e Executive Director's loan. Also, the Executive Director stated he knew nothing abou t accrual accounting. We suggest the Furniture Bank obtain acc ounting assistance from the Task Force or a professional accounting firm. b. The Furniture Bank did not have a performance tracking system that captured data on the number of homeless individuals served. Instead, the system tracked the number o f furniture deliveries. Without the data on individuals served, we question how th e Furniture Bank can show they are complying with the grant agreement to serve a n additional 1,400 homeless people. The Task Force agreed to assist the Furniture Ban k with their performance tracking system. c. The Furniture Bank experienced recent financial problems. In November 1995, th e Executive Director loaned money to the organization by obtaining $3,800 in cas h advances through his personal credit card. T he Furniture Bank reimbursed him 2 months later. The Executive Director informed us that he recently purchas ed computer equipment on his credit card and expected to be reimbursed from HUD's grant. It appears th e Executive Director may have used his credit card to keep the organization afloat. d. The Furniture Ban k incurred a tax liability for payroll and sales taxes. By May 2, 1996, the Furniture Bank had reduced its liability by $8,000 but still owed $19,217. The y entered into a 3 month payment plan with the IRS and expected the debt to be paid b y August 1996. The annual audit report dated September 30, 1995, disclosed the payroll tax returns and sales tax returns were incorrectly prepared. Because the tax liabilit y includes taxes, penalties, and interest owed prior to the grant award, the Furniture Bank should be reminded that the liability can not be paid with HUD grant funds. e. The Furniture Bank did not have a proper segregation of duties because: (1) th e Operations Manager/Bookkeeper posted the record s and signed checks, (2) the Executive Director signed checks and performed bank reconciliations, and (3) the Communit y Relations Coordinator opened mail containing checks and made deposits. The annua l audit dated September 30, 1995, disclosed there was an inadequate separation of duties in the area of cash receipts, cash disbursements, and the posting of transactions. Ou r review confirmed this condition continued to exist. f. The Furniture Bank's procurement policy did not specify a dollar limit for when bids , quotes or negotiations should be used. Your staff and/or the Task Force should consider closely monitoring this organization until these conditions improve or are resolved. This memorandum is for your information; no response is necessary. If you have any questions or need additional information, please contact Nancy H. Cooper, Assistant District Inspector General for Audit, at 331-3369. DISTRIBUTION Director, Community Planning and Development Division, 4AD Director, Interagency Council on the Homeless, DEO Director, Metro Atlanta Furniture Bank Director, Atlanta Task Force for the Homeless
Atlanta Furniture Bank, Atlanta, GA
Published by the Department of Housing and Urban Development, Office of Inspector General on 1996-05-20.
Below is a raw (and likely hideous) rendition of the original report. (PDF)