oversight

Hodges Manor Apartments Limited Review of Operations Portsmouth, Virginia

Published by the Department of Housing and Urban Development, Office of Inspector General on 1996-08-13.

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




August 13, 1996

                                                  Audit Related Memorandum
                                                  No. 96-PH-212-1821


MEMORANDUM FOR:        Charlie Famuliner, Director, Multifamily
                          Division, Virginia State Office, 3FHM



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

SUBJECT:      Hodges Manor Apartments
              Limited Review of Operations
              Portsmouth, Virginia


We performed the subject review. The purpose of our review was to
determine whether the owner operated the project in accordance with
the terms and conditions set forth in the Regulatory Agreement and
applicable HUD directives.

We reviewed project records and reports, analyzed the financial
statements, performed on-site testing of cash disbursements, cash
receipts and surplus cash. We interviewed Asset Management Branch
staff in the Virginia State Office and project staff. We conducted
an on-site inspection of the project's vacant units.

Our review disclosed the following:

        -      Based on the OIG's calculation of surplus cash for Fiscal
               Year   1995,   the   owner   made   $85,697   in   excess
               distributions. These distributions included $7,800 to
               Dorchester Square Apartments.      Calculation's by the
               owner's CPA revealed a surplus cash deficiency of $93,497
               for Fiscal Year 1995. Paragraph 6b of the Regulatory
               Agreement prohibits distributions, unless there is
               surplus cash.

Expenditure documents and/or a project policy necessary to support
the following payments made from project funds were not available
or non-existent.
  Visit the Office of Inspector General's World Wide Web site at http://www.hud.gov/oig/oigindex.html


                                                                                                        2



     -       Payments classified as labor made to the former resident
             manager of Dorchester Square (1994) $960.

     -       A payment of $3,000 to a CPA.

     -       Payments totaling $120 were made to the project
             bookkeeper   for  trips   made to  Dorchester  Square
             Apartments. It appears these trips were agent related
             rather than project business.

     -       Monthly truck allowance for maintenance employees, $35
             per month are paid to the two maintenance employees.
             There are no written policies or vouchers to support
             these payments.

     -       Monthly gas allowances are paid to employees ranging from
             $30 to $100. There are no written policies or vouchers
             to support the payments.

     -       Payments totalling $630 were made to an independent
             contractor for trash removal.

     -       A local hardware store received $12,889, the invoice only
             identified the amount owed on account.         The items
             purchased is not known.

     -       Unsupported miscellaneous                       disbursements             to     various
             vendors totalled $1,424.

The owner is currently meeting the project's debt service
requirements. However, the absence of internal controls over the
disbursement of project expenditures is alarming. Such conditions
are an early warning for potential default in the future. Please
advise us on what action your office plans to take regarding these
matters.

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

Attachment - Distribution
CC: OSWALD
    CIANCI

3AGA:GUSS:AMP:08/06/96
 Correspondence
 Code             3AGA
 Concurrence      GUSS
 Date
                                                       Attachment


DISTRIBUTION

Director, Multifamily Division, Virginia State Office, 3FHM
Internal Control & Audit Resolution Staff, 3AFI
Assistant Director in Charge, US GAO, 820 1st St., NE Union Plaza,
  Bldg 2, Suite 150, Washington, DC 20002,
  Attn: Mr. Cliff Fowler (2)
                       REPORT NAME:      Hodges Manor Apartments
                                         Limited Review of Operations
                                         Portsmouth, Virginia
                       REPORT NO:        96-PH-212-1821
                       ISSUE DATE:       August 13, 1996




                          REGIONAL OFFICE (OIG)
Charlie Famuliner, Director Multifamily Division,                       1
 Virginia State Office, 3FHM

Internal Control & Audit Resolution Staff, 3AFI                         1

                             HEADQUARTERS (OIG)
James M. Martin, Director, Research & Planning                          1
 Division, GAP (Room 8180)

Central Files, (Room 8254)                                              2

Semi-Annual Report Coordinator, (Room 8254)                             1

                       DISTRIBUTION OUTSIDE HUD

Assistant Director in Charge, US GAO, 820 1st St. NE Union              2
Plaza, Bldg. 2, Suite 150, Washington, DC 20002                         8
Attn: Mr. Cliff Fowler

From:
Edward F. Momorella, DIGA, Mid-Atlantic
Wanamaker Building, Suite 1005
100 Penn Square East
Philadelphia, PA 19107-3380