Wilkins House, Wilkinsburg, PA

Published by the Department of Housing and Urban Development, Office of Inspector General on 1995-12-05.

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

                                    U.S. Department of Housing and Urban Development
                                                       Wanamaker Building, Suite 1005
                                                                 100 Penn Square East
                                                          Philadelphia, PA 19107-3380

                                                   District Inspector General for Audit

                                                Audit Related Memorandum
                                                No. 96-PH-212-1004
December 5, 1995

MEMORANDUM FOR:     Edward J. Palombizio, Director, Multifamily
                      Division, Pittsburgh Area Office, 3EHM

FROM:    Edward F. Momorella, District Inspector General
           for Audit, Mid-Atlantic, 3AGA

SUBJECT:     Wilkins House
             Survey of Operations
             Wilkinsburg, Pennsylvania

Based on your request, we have completed a survey of operations of
Wilkins House. The purpose of the survey was to address concerns
noted by your staff in a July 25, 1995 memo to the Owner; most
notably the Owners salary costs charged to the project.

We interviewed Field Office staff, reviewed HUD                files and the
latest IPA audit report. We visited Wilkins House,            interviewed the
staff, and reviewed financial records including the           general ledger,
cash receipts and disbursements journals, cancelled           checks and bank

Our survey disclosed that:

        1.   The Owner of Wilkins House had received $57,000 in salary
             from Wilkins House payroll from January through
             September, 1995. The Assistant Director of Wilkins House
             stated that HUD Area Office staff had verbally approved
             the Owner's salary since the Owner was considered an
             employee of Wilkins House. Your office contends that
             prior written HUD approval was necessary before the Owner
             could collect a salary. The Assistant Director concurred
             that written approval was not obtained from HUD before
             the Owner collected the salary. The status of this issue
             remains vested with your office for a decision.

     2.   Your office stated in a July 25, 1995 memo it appeared
          the Notes Payable to the Owner decreased $204,300 during
          1994.    The decrease in the Notes Payable actually
          occurred in 1993; $195,000 was paid to a former investor
          and the remaining $9,300 was paid to the Owner.

          On February 24, 1995 your office advised the former owner
          that $206,000 was an unauthorized distribution and
          reimbursement was required to the project's operating
          account. This issue was disclosed in the Audit Related
          Memorandum issued to your office on July 11, 1995. The
          $195,000 addressed above is not included in the
          unauthorized distribution.

          Please advise our office what action you have taken to
          have the unauthorized distribution reimbursed to the

     3.   The bookkeeping expenses totalling $84,114 were primarily
          for financial services provided by a CPA firm. The CPA
          firm had recovered bad debt payments on behalf of Wilkins
          House and received a portion of the bad debt recovered.
          The firm also prepared several workout agreements, none
          of which were submitted by Wilkins House management to

No other reportable deficiencies were noted regarding the
operations of Wilkins House.     The results of our review were
discussed with Wilkins House staff.

We have addressed the major issues identified in your letter to the
owner dated July 25, 1995, and concerns expressed in our previously
issued ARM.   Although no controlled findings resulted from our
review we are requesting your office provide us with the final
disposition of the three issues listed.

If you have any questions please contact Irving I. Guss, Assistant
District Inspector General for Audit at (215) 656-3401.

Attachment - Distribution

 Code             3AGA
 Concurrence      GUSS

Director, Multifamily Division, Pittsburgh Area Office, 3EHM
Regional Comptroller, 3AF

Assistant Director in Charge
820 1st St. NE Union Plaza
Bldg 2, Suite 150
Washington, DC 20002
Attn: Mr. Cliff Fowler