oversight

HA of New Orleans

Published by the Department of Housing and Urban Development, Office of Inspector General on 1996-09-30.

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

                                                 U. S. Department of Housing and Urban Development
                                                 Southwest District
                                                 1600 Throckmorton
                                                 P.O. Box 2905
                                                 Fort Worth, Texas 76113-2905
                                                 (817) 885-5551 Fax (817) 885-2725



September 30, 1996                                   96-FW-201-1806


MEMORANDUM FOR: Dominick Pittari, Acting HUD Target Team Leader
        for the Housing Authority of New Orleans


FROM:         D. Michael Beard
              District Inspector General for Audit

SUBJECT: Housing Authority of New Orleans
                 Vehicle Allowance


        During recent work at the Housing Authority of New Orleans (the Authority), we
learned the Authority was not including in taxable earnings an amount for using Authority
vehicles for those employees who take the vehicles home. As a result, we performed a review
to determine if the Authority was adhering to Internal Revenue Service requirements
regarding taxable income and the use of Authority vehicles. As part of that review, we
interviewed Authority staff, and reviewed Internal Revenue Service (IRS) publications on
fringe benefits and various documents obtained from the Authority.

        IRS Publication 535 requires employers to include in an employee's taxable income
the value of fringe benefits provided. The IRS Publication defines a fringe benefit as a form
of compensation provided to any person for the performance of services by that person. The
compensation may include any property provided by the employer such as an automobile,
even if the employer requires the employee to take the vehicle home. The IRS provides
various methods on how to determine the value of the fringe benefit, depending on applicable
criteria.

        C. J. Brown, which oversaw the Authority's operations until September 1994, had
procedures to include a value for the vehicle in taxable income. However, after removing
C. J. Brown, Authority staff discontinued the procedures and the Authority no longer includes
a value in the employee's taxable income for the value of company vehicles. Additionally, the
Authority does not keep mileage logs on each vehicle.

       The Authority recently adopted a written policy regarding the use of the vehicles taken
home by employees. On June 14, 1996, the Authority approved a Fleet Management Policy.
The policy states the Authority will include the value of owned, leased, or rented vehicles on
the earning statements of employees who receive take home vehicle privileges. However, the
policy does not include information on how the value will be computed or the procedures
needed to ensure compliance with the policy.
                                                                                                2


        The Authority has not yet implemented the Fleet Management Policy. Authority staff
are reviewing the policy to determine how it should be implemented. Meanwhile, the
Authority, and consequently its affected employees, are in violation of IRS requirements.


Recommendation:

1A.    We recommend your office ensure the Authority timely implements its new policy to
       ensure compliance with IRS directives.


        Within 60 days please give us, for the recommendation made in this report, a status
report on: (1) the corrective action taken; (2) the proposed corrective action and the date to be
completed; or (3) why action is considered unnecessary. Also, please furnish us copies of any
correspondence or directives issued because of this report.

       If you have any questions, please contact me or Frank Baca, Assistant District
Inspector General for Audit, at (817)885-5551.

cc:    Kevin Marchman, Board Chairman, Housing Authority of New Orleans
cc:   6AGA Chron
      6AGA Baca
      6AGA Dufrene
      6AGA Nixon

6AGA:BACA:fb/jm x5551   9-30-96