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 14, 1996 Audit-Related Memorandum No. 96-AT-256-1814 MEMORANDUM FOR: Charles T. Ferebee, Director, Community Planning and Development Division, 4FD FROM: Kathryn Kuhl-Inclan District Inspector General for Audit-Southeast/Caribbean, 4AGA SUBJECT: HUD State Office Request Housing Authority of the City of High Point HOPE 3 Program High Point, North Carolina We have completed a limited survey of the HOPE 3 Program of the Housing Authority of th e City of High Point, North Carolina (Authority), for the period December 4, 1992, throug h December 7, 1995. Our objectives were to determine if the Authority (1) had provided it s required local match, and (2) kept proper accounting records of the receipt and expenditure of funds from property sales. We initiated the review based on your request. BACKGROUND HUD awarded the Authority a HOPE 3 grant of $885,600 on December 4, 1992. The grant was to be used to rehabilitate 38 scattered site public housing units and to sell the properties to low- income first time homebuyers. The grant required the Authority to provide a 33 percent cash or in-kind match which the Authority agreed to provide in cash. Effective May 11, 1995, HUD suspended the Authority's approval to draw grant funds because it (1) had not provided its match and (2) had not expeditiously used proceeds from sellin g properties. SCOPE We interviewed Authority staff pertaining to accounting procedures and the local match. W e reviewed balances in Authority accounts for (1) Accounts Receivable HOPE 3 Home Sales and (2) Accounts Payable HOPE 3 Home Sales. We conducted our review in December 1995 and March 1996. We discussed the results of our review with you and your staff on March 25, 1996. REVIEW RESULTS The Authority provided its local match but did not record the transaction correctly in it s accounting records. The required match in December 1995 was about $90,750 based on 3 3 percent of grant expenditures. The Authority provided a match of $161,331 from money HUD allowed the Authority to retain from home sales in its Turnkey III Program. The Authority used the money to make loans to families so they could purchase homes rehabilitated in the HOPE 3 Program. The Authority incorrectly recorded the $161,331 as an account receivable in th e Turnkey III Program. To be credited as the Authority's local match , the funds should be recorded as an account receivable and equity contribution in the HOPE 3 Program. The Authority needed to improve its reporting of HOPE 3 Program activities. The Authorit y accounted for HOPE 3 activities within the Public Housing Program accounting system. Th e account for property sales, titled Accounts Payable HOPE 3 Home Sales, recorded sales of 13 houses totaling $544,292, and expenditures of $182,012. While the Authority had accounting control over HOPE 3 activities, it's annual financial report did not include a separate balanc e sheet for the HOPE 3 Program. As a result, the financial statements did not give HUD sufficient information for effective program monitoring. As an example, the Authority had HOPE 3 Program sales income of $455,517 in 1994 which was not identified as such in the annua l financial report. We suggest that you require the Authority to (1) record the Turnkey III Program funds whic h were considered local match as an account receivable and equity contribution in the HOPE 3 Program, and (2) provide separate financial statements for the HOPE 3 Program as part of it s annual audit. We provided a copy of this memorandum to the Authority. We appreciate your cooperation during the review. Sho uld you or your staff have any questions, please call Rudy E. McBee, Assistant Distri ct Inspector General for Audit, at (423) 545-4368, or Bruce Milligan, Senior Auditor, at extension 4056. Attachment - Distribution Attachment DISTRIBUTION Secretary's Representative, 4AS Comptroller, 4AF Audit Liaison Officer, 4AFI Director, Field Accounting Division, 4AFF Director, Community Planning and Development, 4FD State Coordinator, Greensboro, North Carolina, 4FS Audit Liaison Officer, Community Planning and Development, D (Room 7100) Chief Financial Officer, F, Room 10164 (2) Director, Office of Internal Control and Audit Resolution, FOI (Room 10176) (2) Associate Director, US GAO, 820 1st St. NE Union Plaza, Bldg. 2, Suite 150, Washington, DC 20002, (2) (Room 4122) (3) Assistant to the Deputy Secretary for Field Management, SDF (Room 7106) Executive Director, Housing Authority of the City of High Point 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 14, 1996 Mr. H. K. Martin Executive Director Housing Authority of the City of High Point P. O. Box 1779 High Point, NC 27261-1779 Dear Mr. Martin: An informational copy is enclo sed of the report dated May 14, 1996, on our limited survey of the Authority's HOPE 3 Program. Charles Ferebee, Director, Community Planning an d Development Division, is the HUD action official for the report. He or his representative wil l contact you to initiate any action resulting from the report. We appreciate the cooperatio n given our auditor during the review. Please call me (404-331- 3369) if you have any questions. Sincerely, Kathryn Kuhl-Inclan District Inspector General for Audit-Southeast/Caribbean Enclosure
HA of the City of High Point, High Point, NC
Published by the Department of Housing and Urban Development, Office of Inspector General on 1996-05-14.
Below is a raw (and likely hideous) rendition of the original report. (PDF)