Allegheny Housing Rehab. Corp., Pittsburgh, PA

Published by the Department of Housing and Urban Development, Office of Inspector General on 1996-01-17.

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

                                                                    Issue Date

                                                                         January 17, 1996
                                                                    Audit Case Number


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

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

SUBJECT:       Allegheny Housing Rehabilitation Corporation
               Management Agent Operations
               Pittsburgh, Pennsylvania

We audited the management agent operations of the Allegheny Housing Rehabilitation
Corporation (AHRCO) to determine whether its management activities were administered in
accordance with HUD requirements.

The report's five findings identifies that AHRCO: improperly paid employees from project funds;
incurred ineligible and unsupported costs; mismanaged various aspects of the Flexable Subsidy
Program; did not allocate computer costs to all entities managed and requires improvement in
administering Section 8 occupany requirements.

Report issuance was delayed because of Federal government shut downs.

Within 60 days please give us, for each recommendation 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 the audit.

Should you or your staff have any questions, please contact Irving I. Guss, Assistant District
Inspector General for Audit at (215) 656-3401.
Management Memorandum

96-PH-214-1005          Page ii
Executive Summary
The purpose of the audit was to assess whether AHRCO complied with HUD requirements in
managing its portfolio of HUD insured and subsidized projects.

AHRCO generally managed HUD insured projects as required, and projects inspected were
properly maintained. Issues identified in the report indicate that AHRCO's oversight of financial
and certain program areas requires improvement. From a monetary standpoint these conditions
resulted in ineligible and unsupported costs of $455,034 and $73,486 respectively.

                                     AHRCO used funds from eleven HUD-insured projects to
 AHRCO employees
                                     pay salaries of employees which should have been paid
 salaries paid by projects
                                     from the management fee. AHRCO's unfamiliarity with
                                     HUD requirements resulted in the ineligible expenditure of
                                     project funds totalling $315,596.

                                     Between January 1993 and April 1995, AHRCO inflated
 AHRCO inflated the cost
                                     the cost of materials, labor and delivery fees which were
 of operations charged to
                                     charged to HUD insured projects and tenants contrary to
                                     requirements. As a result, AHRCO received $86,096 of
                                     ineligible project funds, unsupported project funds of
                                     $50,753, and unsupported tenant funds of $674.

                                     Under the Flexible Subsidy Program, salaries for three
 Flexible Subsidy Program
                                     employees were paid from both the flexible subsidy account
 overcharged and
                                     and the project operating accounts. Also, applicable
 contracting questionable
                                     procurement procedures were not followed. As a result, the
                                     projects overpaid $41,050 for salaries and fringe benefits
                                     and there is no assurance the rehabilitation work was
                                     performed by the lowest bidder as required.

                                     AHRCO did not properly prorate expenses for computer
 Computer expenses
                                     equipment and service contracts among all projects and
 improperly allocated
                                     identity-of-interest companies which utilized the equipment
                                     as required. As a result, unsupported costs totaling $22,059
                                     were charged to HUD-insured projects.

                                              Page iii                               96-PH-214-1005
Executive Summary

                          AHRCO's noncompliance with HUD occupancy
 Non compliance with
                          requirements included: failure to house tenants in
 various aspects of
                          appropriate sized units; inadequate verification of income,
 occupancy requirements
                          assets and allowances to income; incorrect total tenant
                          payment calculations; and failure to place tenants in order
                          from the waiting list. Because tenants remained overhoused
                          and were not required to pay market rent, $12,292 in excess
                          Housing Assistance Payments (HAP) were made.

                          We recommend AHRCO: (1) repay ineligible costs to the
                          projects and excess HAP to HUD; (2) justify the eligibility
                          of unsupported costs; and (3) comply with requirements
                          governing management activities, procurement, and

                          During our audit, the finding issues were discussed with
                          AHRCO and where appropriate, AHRCO's comments are
                          summarized in the findings. The draft findings were
                          provided to AHRCO and responses received were
                          considered in our report. AHRCO's written response and
                          appropriate exhibits are included as Appendix B.

                          An exit conference was held with AHRCO on September
                          29, 1995.

96-PH-214-1005                    Page iv
Table of Contents

Management Memorandum                                               i

Executive Summary                                                  iii

Introduction                                                        1


    1      Employees Salaries Improperly Paid From
           Project Funds                                            3

    2      Ineligible And Unsupported Costs Paid From
           HUD-Insured Project Funds                                5

    3      AHRCO Needs To Improve Its Administration Of
           The Flexible Subsidy Program                           11

    4      AHRCO Did Not Properly Prorate Computer
           Expenses                                               17

    5      AHRCO Needs To Improve Compliance With
           Occupancy Requirements                                 21

Internal Controls                                                 31

Follow Up On Prior Audits                                         33

                             Page v                     96-PH-214-1005
Table of Contents


         A       Schedule Of Ineligible And Unsupported Costs               35

         B       Auditee Comments                                           37

         C       Distribution                                          51

         AHRCO      Allegheny Housing Rehabilitation Corporation
         CFR        Code of Federal Regulations
         HAP        Housing Assistance Payments
         HUD        U.S. Department of Housing and Urban Development
         MIOP       Management Improvement and Operating Plan
         OIG        Office of Inspector General
         TTP        Total Tenant Payment

96-PH-214-1005                             Page vi
Allegheny Housing Rehabilitation Corporation is a management agent located in Pittsburgh,
Pennsylvania. An identity-of-interest exists between AHRCO, the projects managed, and
companies doing business with the projects. Milton A. Washington is the Owner and a General
Partner of AHRCO. Mr. Washington and AHRCO are the owners of the projects. Mr.
Washington is also the President of Temple Maintenance Company and Beacon Construction
Company, entities providing services for AHRCO.

AHRCO manages 12 projects which have HUD insured mortgages and/one non-insured project.
These projects have 1,293 units of which 1,197 units receive HUD Section 8 subsidy payments.

Project records are maintained at the projects and at AHRCO's office at 5604 Baum Boulevard,
Pittsburgh, Pennsylvania.

                                   The objective of the audit was to determine whether
 Audit Objective
                                   AHRCO managed the projects in accordance with HUD
                                   requirements. Based on survey results, the audit focused on
                                   management and other fees charged to the projects, Section
                                   8 occupancy, procurement activities for work under the
                                   Flexible Subsidy Program, distribution of payroll expenses,
                                   and inventory costs.

                                   We reviewed pertinent Pittsburgh Area Office and AHRCO
 Audit Scope and
                                   records, and independent auditor reports. We interviewed
                                   Pittsburgh Area Office and AHRCO staff, contractors, and
                                   other persons as necessary. We performed physical
                                   inspections and tenant file reviews at four projects using a
                                   random number generator to select ten percent of the
                                   occupied units.

                                   Audit work was performed between February 1995 and
 Audit Period
                                   September 1995 and covered the period from January 1,
                                   1994 through February 25, 1995. When appropriate, the
                                   review was extended to include other periods.

                                   We conducted the audit in accordance with generally
                                   accepted government auditing standards.

                                           Page 1                                  96-PH-214-1005
                                                                                  Finding 1

    Employees Salaries Improperly Paid From
                Project Funds
AHRCO used funds from eleven HUD-insured projects to pay salaries of employees which
should have been paid from the management fee. AHRCO's unfamiliarity with HUD
requirements resulted in the expenditure of ineligible project funds totalling $315,596.

                                 HUD Handbook 4381.5 REV-1, Change 3, Chapter 2,
                                 Paragraph 2-14.B. states:

                                 "Supervisory personnel are paid from the management fee
                                 whether or not they perform supervisory or front-line tasks
                                 (e.g. if agent or agent's staff fills in for manager, agent
                                 cannot charge project for time....)"

                                 HUD Handbook 4370.2 REV-1 for Account 6310, Office
                                 Salaries, states:

                                 "....Front-line responsibilities include for example, taking
                                 applications, verifying income and processing maintenance
                                 requests. The account does not include salaries paid to
                                 occupancy, maintenance and regional supervisors who
                                 carry out the agent's responsibility for overseeing for
                                 supervising project operations and personnel. These
                                 salaries are paid from the management fee."

                                 Between January 4, 1992 and June 2, 1995, AHRCO
 Two management
                                 charged portions of the salaries for the Vice-President and
 officials salaries charged
                                 the Management Development Officer to the operating
 to projects
                                 accounts of eleven projects.

                                 The Vice-President's duties included supervision of the
                                 maintenance staff and management offices as well as
                                 functioning for the manager during vacations. In addition,
                                 the Vice-President, stated housing management is a very
                                 small part of what AHRCO does. In our opinion, the
                                 functions performed by the Vice-President are supervisory
                                 and agent related and his salary is AHRCO's responsibility.

                                         Page 3                                  96-PH-214-1005
Finding 1

                    The Management Development Officer's duties included
                    handling insurance for the agent, implementing safety
                    procedures, and reviewing legal and tax matters for real
                    estate. The duties listed are not "front-line responsibilities",
                    they are agent responsibilities compensated by the
                    management fee.

                    AHRCO staff was unfamiliar with HUD handbook
                    requirements. The Controller said the Vice-President's
                    salary was charged to the projects because the Vice-
                    President fills in for the project managers when they are
                    out. The Controller also thought the duties of the
                    Management Development Officer qualified as "front-line"
                    and would be eligible as project expenses.

                    Because the projects were charged with salaries of AHRCO
                    personnel, eleven projects expended $315,596 of project
                    funds that are ineligible.

Auditee Comments    AHRCO believed "the auditors did not consider job
                    function and responsibility" and instead focused on job
                    titles in this finding. AHRCO again stated the duties of the
                    Management Development Officer were front-line duties
                    and not supervisory.

OIG Evaluation of   Comparison of the employee duties with the requirements
Auditee Comments    of the cited HUD handbooks was the basis of classifying
                    the salaries as ineligible. The duties of the Management
                    Development Officer and Vice-President were not front-

                    AHRCO's comments did not address the handbook
                    requirements, and the ineligible costs as stated in the
                    finding, remain in tact.

Recommendations     We recommend AHRCO:

                    1A.    Repay the eleven projects the $315,596 of ineligible
                           costs cited through June 2, 1995 and any ineligible
                           salaries incurred thereafter. Refrain from charging

96-PH-214-1005               Page 4
                                             Finding 1

      the projects the salaries of personnel who do not
      perform front-line tasks.

1B.   Implement the requirements of HUD Handbook
      4381.5 REV-1 and 4370.2 REV-1.

       Page 5                               96-PH-214-1005
                                                                                      Finding 2

  Ineligible And Unsupported Costs Paid From
           HUD-Insured Project Funds
Between January 1993 and April 1995, AHRCO inflated the cost of materials, labor and delivery
fees which were charged to the HUD-insured projects and tenants. The costs were inflated
contrary to HUD requirements. AHRCO staff said the additional charges covered the cost of
maintaining a central warehouse; overhead relating to the maintenance operation; and, disruption
of the maintenance schedules. As a result, AHRCO received ineligible project funds totalling
$86,096; unsupported project funds totalling $50,753; and unsupported tenant funds totalling

                                    Paragraph 12(b) of the Regulatory Agreement states:

                                    "Payment for services, supplies, or materials, shall not
                                    exceed the amount ordinarily paid for such services,
                                    supplies or materials furnished."

                                    HUD Handbook 4381.5 REV-1, CHG 3, Chapter 2,
                                    Paragraph 2-15.A.2) states:

                                    "If the staff work is performed out of the agent's office for
                                    several properties; ... Agents may not impose surcharges
                                    or administrative fees on top of the actual costs."

                                    Paragraph 4b of the Management Certification requires
                                    AHRCO to:

                                    "Exert reasonable effort to maximize project income and to
                                    take advantage of discounts and credit the project with all
                                    discounts, rebates or commissions (including any sales or
                                    property tax relief granted by the State or local
                                    government) received with respect to purchases, service
                                    contracts and other transactions made on behalf of the

                                    A. Inflated material costs

                                    AHRCO purchased materials needed for project
 Material purchases billed
                                    maintenance and stored them in a central warehouse.
 20 percent above cost

                                             Page 5                                  96-PH-214-1005
Finding 2

     When the materials were used by a project or a tenant, AHRCO billed the project or the
     tenant the purchase price plus 20 percent. For example, AHRCO paid $56.45 for a kitchen
     faucet but billed the HUD-insured projects $71.13 for the same faucet. In another example,
     a tenant was billed $233.37 for materials which cost AHRCO $186.14.

                                    AHRCO also purchased two sets of kitchen cabinets and
                                    related accessories at a discounted price of $1,570.
                                    Although these cabinets and accessories were shipped
                                    directly to the project, eliminating the use of the warehouse,
                                    the project account was charged $2,709. The difference of
                                    $1,139 equals a mark-up of approximately 73 percent.

                                    According to AHRCO's Vice-President and Controller, the
 20 percent mark
                                    20 percent mark-up on materials was used to cover the costs
 up on materials covers
                                    AHRCO incurred in maintaining a central warehouse, i.e.
 AHRCO's overhead
                                    utilities, tools, security, and salaries of warehouse staff. The
                                    Controller said the mark-up also covered AHRCO's cost of
                                    billing and recordkeeping.

                                    Both the Vice-President and the Controller said charging
 Application of mark up is
                                    the 20 percent warehouse fee resulted in a greater cost
                                    savings than charging the projects and tenants for the actual
                                    costs involved in maintaining the warehouse. However, the
                                    Controller admitted no analysis of the actual costs of
                                    maintaining the warehouse versus the 20 percent markup
                                    had been done. Without such documentation, there is no
                                    basis to support the validity of its 20 percent fee.

                                    According to AHRCO's Controller, it is common practice to
                                    charge projects the original cost for large items and not pass
                                    along vendor discounts. After further discussions, the
                                    Controller said AHRCO discontinued charging both the
                                    projects and the tenants the 20 percent mark-up for
                                    materials as of June 1, 1995. Actual costs based on an
                                    approved allocation method will be charged instead.

                                    As a result of the unjustified mark-up, and contrary to HUD
                                    requirements, the HUD-insured projects paid $47,762 in
                                    excessive materials costs and the tenants paid $674 in
                                    excessive materials costs. Of the total $48,436, $47,297 is
                                    unsupported while the remaining $1,139 is ineligible.

96-PH-214-1005                               Page 6
                                                                             Finding 2

                            B. Inflated labor costs

                            Between January 1993 and December 1994, AHRCO
Excessive labor rates not
                            charged the HUD-insured projects labor rates of $21.50 per
                            hour without regard for the actual rate paid the employee or
                            whether the employee's salary was charged to another
                            HUD-insured project. For example, on work order 16950,
                            AHRCO charged the Bethesda/Wilkinsburg project $21.50
                            per hour for two employees. The hourly rate, including
                            benefits, of the one employee was only $11.06 and the
                            salary of the second employee was routinely charged to the
                            Bethome project. In addition, AHRCO did not use the
                            funds received from Bethesda/Wilkinsburg to reimburse
                            Bethome. In a few instances, the work orders did not
                            document the maintenance person assigned to the job.

                            According to AHRCO's Controller, the $21.50 per hour
                            labor rate along with the 20 percent material mark-up were
                            to cover AHRCO's overhead costs relating to the
                            maintenance operation. Subsequently, the Controller said
                            AHRCO's future plans are to charge the projects only the
                            actual rate of the non-project employees who assist with
                            project maintenance.

                            Contrary to the Regulatory Agreement, AHRCO has not
                            justified overhead costs for its maintenance operation labor
                            fees received from the HUD-insured projects. As a result
                            $81,476 charged for labor is ineligible.

                            C. Inflated delivery fees

                            Between January 1993 and December 1994, AHRCO
Delivery costs exceed
                            charged the HUD-insured projects a delivery fee of $25 per
industry standards
                            appliance for ranges and refrigerators. This fee was
                            assessed whether AHRCO purchased the appliance from a
                            vendor or moved a used one from the warehouse.
                            Discussions with the vendors and a review of vendor
                            invoices disclosed an average per appliance delivery cost of
                            $14. Also, some work orders did not adequately document
                            the point of origin or the condition (new or used) of the

                            Regarding the delivery charge for new appliances, the
                            Controller stated, the delivery fee of $25 per appliance is

                                    Page 7                                  96-PH-214-1005
Finding 2

                    being charged since the deliveries are being made on an
                    emergency basis. This disrupts the maintenance personnel
                    work schedules; therefore the need for a higher billing rate.
                    As for the delivery charges for the used appliance, the
                    Controller was not aware this occurred.

                    AHRCO's Management Plan describes the duties and
                    responsibilities of maintenance personnel as "performing
                    maintenance service in response to resident generated work
                    requests, scheduled preventative maintenance service and
                    repairs originated as a result of inspection reports." The
                    delivery and removal of appliances could reasonably be
                    considered to be included in these duties and

                    While the Controller cited a need for the higher costs
                    because the appliances were delivered on an emergency
                    basis, a unit without a working range or refrigerator would
                    fail housing quality standards. Therefore, it is the
                    responsibility of the owner to replace the unit, at cost, no
                    matter how disruptive it is for their work schedules.

                    Because AHRCO's delivery cost exceeded those of the
                    vendor and AHRCO charged for delivery of used
                    appliances, contrary to the Regulatory Agreement, the
                    projects were charged ineligible costs of $3,481. Failure to
                    document the origin and condition of the appliances
                    resulted in unsupported charges of $4,130.

Auditee Comments    AHRCO submitted figures which listed warehouse expense
                    and maintenance overhead costs totalling $201,682 from
                    January 1993 through April 1995. AHRCO then subtracted
                    the unsupported and ineligible costs of $137,523 which
                    were reported in the finding and requested the remaining
                    $64,159 be reimbursed to AHRCO. AHRCO also
                    submitted figures showing wholesale costs of eight items
                    and the alleged savings by not buying the items wholesale.

OIG Evaluation of   AHRCO's response did not adequately address the
Auditee Comments    recommendation which required appropriate documentation
                    that the mark-up did not exceed the overhead necessary for

96-PH-214-1005               Page 8
                                                                                      Finding 2

   the services. For example, AHRCO did not show what the actual mark-up would equal if
   the amounts AHRCO is requesting are added to the materials and labor costs. Therefore
   AHRCO has not shown their mark-up to be less than purchasing the items wholesale. Also,
   the eligibility of some of the items AHRCO is including in their expense and overhead
   calculations, such as rent, interest on inventory, incentives paid to maintenance employees
   and payroll taxes on these incentives are questionable.

                                   The actual expense and maintenance costs alleged by
                                   AHRCO have not been verified through audit.

                                   The unsupported and ineligible costs cited in the finding
                                   remain as presented.

Recommendations                    We recommend AHRCO:

                                   2A.    Repay the HUD-insured projects the $1,139 of
                                          ineligible costs. Justify to HUD with appropriate
                                          documentation that the mark-up is cost beneficial to
                                          the projects and tenants, and does not exceed the
                                          overhead costs necessary for services provided.
                                          Repay the projects and tenants any portion of the
                                          $47,297, and any mark-up charged since April 30,
                                          1995, which cannot be justified.

                                   2B.    Repay the HUD-insured projects ineligible labor
                                          costs of $81,476 and delivery fees of $3,481 and
                                          any excess labor costs or delivery fees received
                                          since December 31, 1994. Charge the projects only
                                          the actual delivery fees and the actual salaries of the
                                          non-project maintenance employees who perform
                                          work on the projects. Repay any portion of the
                                          $4,130 of delivery fees not adequately supported.

                                            Page 9                                   96-PH-214-1005
                                                                                    Finding 3

AHRCO Needs To Improve Its Administration
    Of The Flexible Subsidy Program
The following deficiencies occurred during AHRCO's administration of the Flexible Subsidy

   •   Salaries for three employees were paid from both the flexible subsidy account and the
       project operating account.

   •   AHRCO did not follow the procurement procedures applicable to the Flexible Subsidy

AHRCO staff said the deficiencies were caused by miscommunication, oversight and
unfamiliarity with program requirements. As a result, AHRCO overcharged four projects
$41,050 for salaries and fringe benefits and there is no assurance work was performed by the
lowest bidder, as required.

                                   A. Employee salaries

                                   HUD Handbook 4370.2 REV-1, Chapter 2, Paragraph 2-
                                   6.B. states:

                                   "All disbursements from the Regular
                                   Operating Account ... must be supported by
                                   approved invoices/bills or other supporting

                                   AHRCO charged the project operating accounts the salaries
 Salaries improperly
                                   of three employees who worked on the Flexible Subsidy
 charged to projects
                                   Program. For example, an employee whose salary is
                                   normally charged to two projects, worked 40 hours per
                                   week for 43 weeks on the Flexible Subsidy Program.
                                   AHRCO charged each project $10,424 for the employee's
                                   salary and fringe benefits, although such costs were payable
                                   from the Flexible Subsidy Program.

                                           Page 11                                 96-PH-214-1005
Finding 3

                 AHRCO's Controller said miscommunication caused the
                 projects to be charged with the salaries of the employees.
                 As a result, the projects were overcharged as follows:

                 B. Procurement procedures

                 AHRCO did not properly procure work to be performed
                 under the Flexible Subsidy Program.       AHRCO's
                 noncompliance included the following:

                 •   All work exceeding $5,000 was not properly bid.

                 •   AHRCO provided verbal work specifications and
                     changed solicited bids through verbal negotiations.

                 •   Work was awarded to contractors AHRCO felt were not
                     capable of doing the entire job.

                 AHRCO staff cited unfamiliarity with the requirements, and
                 the desire to give work to minority contractors as reasons
                 for the deficiencies. As a result, there is no assurance the
                 work was procured at the lowest price; the work will be
                 performed satisfactorily; and favoritism was not a factor in
                 awarding contracts.

                 1. Work not bid

                 Section 10 of the Financial Assistance Contract states:

                 "The Housing Owner shall solicit written cost estimates (i.e.
                 bids) from at least three contractors or suppliers for any
                 work item which the Housing Owner and the Commissioner
                 estimate will cost $5,000 or more."

                 AHRCO did not solicit bids for the following:

96-PH-214-1005           Page 12
                                                                           Finding 3

  Work Item                   Amount

                          The demolition work was added to the contract between
Identity of interest
                          AHRCO and Beacon Construction Company. Beacon
companies received
                          Construction Company has an identity-of-interest with
benefit of non-bid work
                          AHRCO. The flue relining and register replacement were
                          added to the contract between Beacon Construction
                          Company and Temple Maintenance Company. Temple
                          Maintenance also has an identity-of-interest with AHRCO.

                          According to the Management Development Officer, not
                          bidding the demolition work was an oversight. However,
                          AHRCO did the demolition so the other rehabilitation work
                          could be done. The additional flue work was not added to
                          the bid because AHRCO did not think of it. The register
                          replacement was not bid because the money became
                          available after the original work was bid. Since Temple
                          Maintenance was already putting in the furnaces, the
                          register replacement work was just added to their contract.

                          2. Verbal changes to specifications and bids

                          The Specifications for Alterations to Mon View Heights,
                          Information for Bidders, Paragraph 9 states:

                          "No interpretation of the meaning of the plans,
                          specifications or other pre-bid documents will be made to
                          any bidder orally.

                          "Any and all such interpretations and any supplemental
                          instructions will be in the form of written addenda to the
                          specifications ..."

                          Although the lead based paint abatement was included in
                          the Management Improvement and Operating Plan (MIOP)

                                  Page 13                                96-PH-214-1005
Finding 3

                             submitted to HUD, the item was not included in the detailed
                             specifications. The Construction Manager for Beacon
                             Construction explained to each bidder what was needed for
                             the lead based paint encapsulement work.

                             AHRCO received the following bids for lead based paint
                             encapsulement work:

                             Through verbal negotiations with Contractor A, AHRCO
 Verbal contract changes
                             added a second coat of paint and the use of a more
 caused cost to exceed low
                             expensive encapsulement for lead based paint to the
                             contractor's bid. These changes made the bid price of
                             Contractor A equal to the bid price of Contractor B.
                             AHRCO then split the work between the two contractors.
                             When writing the contracts, AHRCO increased the scope of
                             work to include additional cleaning and interior painting.
                             Exterior painting was also added but at no specified cost.
                             These changes brought the base contract amount to
                             $399,350. This exceeded the $374,900 bid of Contractor C
                             which included the cleaning that was added to the other

                             AHRCO's Management Development Officer was not
                             familiar with the requirements of the Addenda and
                             Interpretations stated in the specifications, and resulted in
                             the improper splitting and increased cost of the work.

                             3. Responsible bidders

                             Section 10 of the Financial Assistance Contract states:

                             "The Housing Owner agrees to accept the bid which
                             represents the lowest price taking into consideration the
                             bidder's reputation for quality or workmanship or
                             materials, timely performance ..."

96-PH-214-1005                       Page 14
                                                                     Finding 3

                    AHRCO split the work described in the previous subsection
                    of the finding between Contractor A and Contractor B
                    because they did not feel either was capable of doing the
                    work for all of the units involved.

                    AHRCO said the contractors were small and they liked to
                    give work to minority contractors. Contractor A was a
                    minority contractor.

                    By not bidding all work exceeding $5,000 and awarding the
                    work which was bid to responsible bidders, AHRCO cannot
                    assure the work was procured at the lowest price and that
                    favoritism was not a factor in selecting the contractors.

                                        *   *    *   *

                    AHRCO charged both the flexible subsidy account and the
                    project operating accounts for employees who performed
                    work under the Flexible Subsidy Program, and did not
                    follow the procurement procedures applicable to the
                    Flexible Subsidy Program. Miscommunication, oversight
                    and unfamiliarity with program requirements led to these
                    deficiencies according to AHRCO staff. As a result,
                    AHRCO overcharged four projects $41,050 for salaries and
                    fringe benefits and there is no assurance work was
                    performed by the lowest responsible bidder, as required.

Auditee Comments    AHRCO agreed to repay the four projects $40,450 for
                    payroll distribution due to an administrative error
                    conditioned upon the OIG agreeing the amount be offset
                    against the amount AHRCO states they are due from
                    Finding 2. AHRCO subtracted $600 for an employee
                    which AHRCO said did not work the week of December
                    31, 1994.

                    AHRCO agreed with the two remaining recommendations
                    for this finding.

OIG Evaluation of   The amount cited in this finding did not include any amount
Auditee Comments    for the cited employee for the week ending December 31,

                            Page 15                                96-PH-214-1005
Finding 3

     1994. Further, the ineligible $41,050 is not impacted by Finding 2 and repayment to the
     projects is necessary.

Recommendations                    We recommend AHRCO:

                                   3A.   Repay the four projects the $41,050 and any
                                         duplicate employee salaries paid after the payroll
                                         ending June 2, 1995.

                                   We recommend your staff verify AHRCO:

                                   3B.   Solicit's bids from at least three independent
                                         contractors to ensure costs       charged by the
                                         identity-of-interest firms under part B1 were the
                                         lowest. Repay the flexible subsidy account any
                                         amount which exceeds the lowest solicited bid.

                                   3C.   Assure staff is aware of and follows applicable
                                         bidding and contract requirements.

96-PH-214-1005                             Page 16
                                                                                    Finding 4

  AHRCO Did Not Properly Prorate Computer
AHRCO did not properly prorate expenses for computer equipment and service contracts among
all projects and identity-of-interest companies which utilized the equipment as required.
According to AHRCO's Controller the costs were allocated to the HUD-insured projects because
they generate most of the computer work. As a result, unsupported costs totaling $22,059 were
charged to HUD-insured projects.

                                   According to HUD Handbook 4381.5 REV-1, CHG 3,
                                   Chapter 2, Section II, Paragraph 2-15.A.2a:

                                   "If the staff work is performed out of the
                                   agent's office for several properties; a.
                                   prorate the associated costs among the
                                   projects served in proportion to actual use:
                                   ... actual office expenses, fees and contract
                                   costs directly attributed to the front-line

                                   Section II, Figure 2-4 illustrates as an example of funds
                                   paid from the project account:

                                   "... costs allowed by HUD for prorated
                                   share of centralized, computer accounting
                                   systems ..."

                                   AHRCO charged all costs related to a purchase of computer
 Computer costs not
                                   equipment and maintenance service contracts to the HUD-
 allocated to all projects
                                   insured projects only. These costs were allocated to the
 and companies
                                   HUD-insured projects on a straight line method even
                                   though the number of units in the HUD-insured projects
                                   ranged from 38 to 326. Two identity-of-interest companies
                                   and a 115-unit project which received HUD Section 8
                                   subsidy but was not HUD-insured, utilized the equipment,
                                   but were not allocated any of the costs.

                                   According to the AHRCO's Vice-President, tenant
                                   certifications/recertifications, vacancy and damage reports

                                           Page 17                                 96-PH-214-1005
Finding 4

                    for the non HUD-insured project are computerized. The
                    Controller stated the costs were charged to the HUD-
                    insured projects only because they generate most of the
                    computer workload. The straight line basis was used
                    because it was easy to calculate. The Controller stated the
                    computers are utilized by data entry staff responsible for
                    entering information relating to the HUD projects.

                    By not following HUD requirements for allocating project
                    expenses, AHRCO improperly allocated costs totalling
                    $22,059, for computer equipment and maintenance
                    contracts; to the HUD-insured projects.

                    The draft finding included unsupported costs of $130,986
                    for administrative/computer fees. Based on AHRCO's
                    written response and information provided by the Pittsburgh
                    Area Office, this portion of the draft finding was removed
                    from the final report.

Auditee Comments    AHRCO did "not concur with the guideline provided by ...
                    Handbook 4381.5 REV-2." saying the Handbook is
                    "designed to serve as a reference for ... Management
                    Agents." AHRCO said the Handbook "provides basic
                    guidance regarding ... agent responsibilities and HUD
                    procedures and is not regulation." AHRCO agreed a
                    portion of the computer costs should have been allocated to
                    all users of the equipment but proposed "no prior allocation
                    be made". AHRCO said, while they disagreed with the per-
                    unit cost allocation, they would accept either the per-unit or
                    straight line allocation method for future use.

OIG Evaluation of   AHRCO's comments failed to recognize the requirement of
Auditee Comments    Paragraph 2.a. of the Management Certification which
                    states they agree to comply with the project's "Regulatory
                    Agreement, Mortgage and Mortgage Note, any Subsidy
                    Contract or Workout/Modification Agreement, and any
                    applicable HUD Handbooks, notices or other policy
                    directives that relate to the management of the project."
                    Therefore, reallocation of the computer costs based on the
                    per-unit method is necessary.

96-PH-214-1005              Page 18
                                                               Finding 4

Recommendation   We recommend AHRCO:

                 4A.   Provide HUD the cost allocation to prorate the
                       $22,059 of unsupported computer costs to all
                       managed projects and entities. Repay the HUD-
                       insured projects for improper assessments covering
                       the period January 1992 to date.

                       Page 19                                96-PH-214-1005
                                                                                   Finding 5

AHRCO Needs To Improve Compliance With
       Occupancy Requirements
A sample of thirty-six tenant files at four projects disclosed non-compliance with HUD
requirements in the following areas:

   •      Tenants were housed in inappropriately sized units.

   •      Income and assets were not adequately verified.

   •      Allowances to gross income were not verified.

   •      Total tenant payment calculations were incorrect.

   •      Tenants were not selected from waiting lists.

AHRCO's noncompliance with requirements resulted in a lack of assurance the Total Tenant
Payment (TTP) and Housing Assistance Payments were correct and that all applicants were
treated fairly. Because tenants remained overhoused and were not required to pay market rent,
$12,292 in excess Housing Assistance Payments were made.

                                   A. Unit size inappropriate

                                   AHRCO's Resident Selection Criteria states under unit size

                                   "In order to avoid overcrowding and make
                                   the best use of available space and subsidy,
                                   (AHRCO) has designated unit size
                                   standards that conform with state and local
                                   laws as follows:

                                       Efficiency          1 Occupant
                                       1 Bedroom Apartment    1 to 2 Occupants
                                       2 Bedroom Apartment    2 to 4 Occupants
                                       3 Bedroom Apartment    3 to 6 Occupants

                                   Those properties with 4, 5 or 6 bedrooms will increase the
                                   number of occupants accordingly."

                                           Page 21                                96-PH-214-1005
Finding 5

                          According to number five of AHRCO's eligibility criteria:

                          "... When an appropriate size unit becomes
                          available, a transfer can be required with
                          proper notice."

                          The Residential Lease between AHRCO and tenants under
                          Section 19 - Size of Dwelling states:

                          "The Tenant understands that HUD
                          requires the Landlord to assign units
                          according to the household and the age and
                          sex of the household members. If the
                          Tenant is or becomes eligible for a different
                          size unit and the required size becomes
                          available, the Tenant agrees to: a. Move
                          within thirty (30) days after the Landlord
                          notifies him/her that a unit of the required
                          size is available within the project; or b.
                          Remain in the same unit and pay the HUD
                          approved market rent.

                          24 CFR Section 886:325(c) states:

                          "If the owner fails to offer the family a unit
                          appropriate for the size of the family when
                          such unit becomes vacant and ready for
                          occupancy, HUD may abate housing
                          assistance payments to the owner for the
                          unit occupied by the family...."

                          In addition to the 36 files selected for review, a tenant
 Sample identified five
                          recertification provided by the Pittsburgh Area Office was
 tenants overhoused
                          included in the review for this area. Five of the 37 tenants
                          reviewed resided in units which were too large based on
                          family size.

                          For example, the tenant file showed one person living in a
                          four bedroom unit from at least June 1, 1987 through the
                          recertification effective June 1, 1994. In a letter dated
                          October 25, 1990, the Pittsburgh Area Office instructed
                          AHRCO to move the tenant into "an appropriate sized unit
                          or adjust the contract rent to an amount comparable to a

96-PH-214-1005                    Page 22
                                                  Finding 5

one-bedroom unit". AHRCO wrote a letter to the tenant
dated February 8, 1991 requiring a transfer to a one-
bedroom unit or demanding market rent effective April 1,
1991. According to the most recent recertification effective
June 1, 1994, the tenant remained in the four-bedroom unit
and did not pay market rent.

Although only five of the 37 tenants from our sample were
overhoused, the MIOP showed 63 families at one project
were not residing in units matching their household needs.

Two project managers believed tenants were no longer
transferred because of the expense of preparing two units
instead of one but deferred to the Vice-President for an
explanation. The Vice-President provided several reasons
tenants may not be transferred. These were:

•      AHRCO had been unsuccessful in enforcing the
       lease which requires the tenant to pay market rent if
       they do not transfer when requested. Because of
       their past experience of losing before the magistrate,
       the matter of transferring tenants has not been
       pursued. The Vice-President provided no evidence
       to support tenants were ever taken before a
       magistrate or judge.

•      It is not realistic to require tenants to move to
       smaller sized units after they have lived in the same
       unit for many years.

•      It is AHRCO's policy not to transfer tenants who are
       delinquent because the tenant would receive a 30-
       day notice to vacate. It would not make sense to
       transfer a tenant you were trying to evict.

•      An agreement with the Pittsburgh Area Office
       allowed AHRCO to keep tenants at one project in
       their units in order to keep the project integrated.
       The Pittsburgh Area Office stated it would be a Fair
       Housing & Equal Opportunity violation if tenants
       were allowed to live in units of a certain size to
       achieve a racial mix at the project.

        Page 23                                  96-PH-214-1005
Finding 5

                 While the Vice-President stated a tenant who was
                 delinquent would not be transferred because AHRCO
                 would try to evict them, the file review showed the history
                 of delinquent rent and 30-day notices could continue for
                 years. In the case cited above, the tenant received seven
                 30-day notices dating back to at least April 25, 1988. As of
                 the recertification effective June 1, 1994, the tenant had not
                 been evicted. By using delinquency of rent as a criteria for
                 not transferring tenants, AHRCO is, in effect, rewarding
                 overhoused tenants for being delinquent by not transferring
                 them into smaller, appropriately sized units.

                 AHRCO agreed in the MIOP to transfer tenants at the
                 project receiving flexible subsidy funds. The MIOP does
                 not exclude transferring tenants with delinquent rent or 30-
                 day notices. This gives the appearance AHRCO will only
                 transfer tenants when additional HUD funding is dependent
                 upon such transfers.

                 By not requiring tenants to move into the proper size units
                 or pay market rent, HUD paid assistance for five tenants of
                 at least $12,292 which was excessive. In addition, HUD
                 subsidy was not efficiently used because AHRCO did not
                 house as many families as it could.

                 B. Income and asset verification

                 HUD Handbook 4350.3 CHG-1, Chapter 3 states:

                 Section 1, Paragraph 3-1.b.(1): "Net family
                 assets DO include cash in savings and
                 checking accounts ...".

                 Section 3, Paragraph 3-17.a.: "Owners
                 must verify all income, expenses, assets,
                 household          characteristics        and
                 circumstances that affect eligibility or
                 tenant rent."
                 Section 3, paragraph 3-19.a.(3):             "When written
                 verification is not possible, the next most acceptable form
                 is direct contact with the source, in person or by telephone.
                 The owner must document the conversation in the
                 applicant's file including all information that would have
                 been included in a written verification."

96-PH-214-1005           Page 24
                                                                               Finding 5

                             AHRCO either did not verify or did not adequately verify
Inadequate verification of
                             income and assets for five tenants.          For example, a
five tenants income and
                             telephone verification included in a tenant file had only the
                             monthly assistance payment. It did not include the date and
                             time the information was verified; the name of the AHRCO
                             employee who placed the call, or the name of the person at
                             the Department of Public Assistance who verified the
                             information. In addition, AHRCO did not verify income for
                             an adult member of the household. Project managers
                             attributed these deficiencies to staff oversight, delays in
                             obtaining information from public assistance agencies, and
                             failure of a tenant to provide documentation.
                             Without proper verification, there is no assurance the proper
                             assistance has been calculated.

                             C. Allowances to income

                             HUD Handbook 4350.3 CHG-1, Chapter 3, Section 3,
                             Paragraph 3-17.a. states:

                             "Owners must verify all income, expenses,
                             assets, household characteristics and
                             circumstances that affect eligibility or
                             tenant rent."

                             HUD Handbook 4350.3 CHG-5, Chapter 3, Exhibit 3-2,
                             Paragraph T.2. states:

                             "For handicapped head or spouse --
                             evidence of receipt of Supplemental
                             Security Income for the disabled,
                             handicapped or blind or Social Security
                             disability benefits. If none of these benefits
                             is received, a physician's certificate is

                             HUD Handbook 4350.3 CHG-4, Chapter 3, Exhibit 3-2,
                             Paragraph P.2.states:

                             "Verifications must specify the hours and
                             days during which the care is provided, the
                             names of the children cared for, and the
                             frequency and amount of compensation

                                     Page 25                                  96-PH-214-1005
Finding 5

                             AHRCO did not verify allowances adjusting gross income
 Income allowances for
                             for four tenants.         One tenant was allowed a
 four tenants inadequately
                             handicapped/disability allowance of $400 annually when
                             the handicap/disability was not verified. For two other
                             tenants, expenses for child care were not adequately
                             verified because the hours and days the care was provided
                             were not specified on the verifications. For the remaining
                             tenant, AHRCO's written response to the report stated three
                             children were living in the unit. The tenant did not receive
                             an allowance for dependent children as required.

                             An assistant project manager thought the disability pension
                             from the Veteran's Administration was sufficient to verify
                             the handicap/disability. The Vice-President said HUD
                             Handbook 4350.3, Chg. 24, Chapter 2, Paragraph 2-26d
                             prevented AHRCO from asking the tenant about their
                             handicap. This paragraph, however refers to applicants--not
                             in-place tenants. The Vice-President provided written
                             comments saying "Verification of disability has been
                             requested from the Veteran's Administration. Because
                             AHRCO's response did not include verifying
                             handicap/disability status as required, the potential exists
                             for ineligible tenants to be placed in housing and to
                             improperly receive handicap/disability allowances.

                             A project manager was unaware of the HUD Handbook
                             requirements for verifying child care expenses. Without
                             adequate verification for allowances, there is no assurance
                             the proper assistance for the cited tenants was paid.

                             D. Incorrect total tenant payment

                             HUD Handbook 4350.3, CHG-1, Exhibit 3-1 Part A,
                             Paragraphs 2.a. and 2.b. state annual income includes:

                             "The gross amount (before deductions for
                             medicare, etc.) of periodic social security

                             "Annuities, insurance policies, retirement
                             funds, pensions, disability or death benefits
                             and other similar types of periodic

96-PH-214-1005                       Page 26
                                                                 Finding 5

                Paragraphs 3-6. regarding alimony and child support states:

                "Count the amount specified in a divorce
                settlement or separation agreement unless
                the applicant: a. certifies the income is not
                being provided; and b. has made
                reasonable efforts to collect the amount
                due, including filing with courts or agencies
                responsible for enforcing payments."

                AHRCO did not properly calculate rent for five tenants at
Improper rent
                three projects. Rents were not based on the total income for
                these tenants. For example, a verification showed a tenant
                received public assistance of $403 per month and court-
                ordered child support of $50 per month. When determining
                TTP, AHRCO did not include the child support amount. As
                a result, the HAP was overstated by $15 per month.

                AHRCO staff said some amounts were not included in the
                TTP calculations because they were not certain the tenants
                received the income. Other errors in HAP calculations were
                attributed to oversight.

                As a result, the HAP for cited tenants was overstated.
                AHRCO provided revised recertifications for two tenants
                retroactively correcting the HAP.

                E. Tenant admissions

                AHRCO's Resident Selection Criteria, Applications and
                Screening-Procedures states:

                "... If the applicant appears to meet the
                criteria for eligibility in (this) community,
                the application will be placed on a waiting
                list in the order of the date and time
                received, according to unit size and
                program requirements."

                HUD Handbook 4350.3 CHG-24, Chapter 2, Paragraph 2-
                29.b. states:

                        Page 27                                 96-PH-214-1005
Finding 5

                            "The owner's records should indicate the
                            date and time the applicant is placed on the
                            waiting list."

                            A review of 23 tenants at three projects disclosed 15 placed
 Improper use and control
                            into units were not on the waiting list. A review was not
 of waiting lists
                            performed at the fourth project because no prior waiting list
                            was available. In addition, the time of day the applications
                            were submitted was not included on the lists.

                            AHRCO stated some were prior tenants and household
                            members of existing tenant households which were
                            transferred to other units. No explanation was provided for
                            tenants who were placed but did not fit into either preceding
                            category. Also, AHRCO provided no explanation for not
                            including time of application on the waiting list but said the
                            time will be included in the future.

                            Because AHRCO placed applicants who were not on the
                            waiting list into units, there is no assurance all applicants
                            were considered fairly when housing tenants.

                            In summary, AHRCO's noncompliance with requirements
                            resulted in a lack of assurance the Total Tenant Payment
                            and Housing Assistance Payments were correct and that all
                            applicants were treated fairly. Because tenants remained
                            overhoused and were not required to pay market rent,
                            $12,292 in excess Housing Assistance Payments were

                            Details for the deficiencies cited in the finding's five
                            sections were provided to AHRCO.

Auditee Comments            AHRCO did not concur with the finding and felt
                            appropriate investigation by the auditors would have
                            eliminated the need for most of the comments.

                            Regarding the example used for inappropriate unit size,
                            AHRCO said the tenant received a court order granting the
                            tenant custody of her grandchildren in April 1994. AHRCO
                            also submitted documentation showing the tenant received
                            monthly income for foster care of the grandchildren.

96-PH-214-1005                      Page 28
                                                                       Finding 5

                    AHRCO stated the comments made by the Vice-President
                    regarding transferring tenants were either not made or were
                    taken out of context. AHRCO stated they "routinely
                    transferred residents that met the transfer requirements" and
                    stated 115 transfers had been made since 1990.

                    Regarding verifying income, assets and allowances to
                    income, AHRCO stated the staff had been instructed to
                    follow proper procedures or was given additional training
                    on the proper procedures.

                    AHRCO said some applicants may have been left off of the
                    updated waiting lists in error. However, "the management
                    staff has been instructed to insure that all applicants appear
                    on the waiting list until they are housed." AHRCO also
                    stated tenants may not appear on the waiting list because
                    they occasionally provide housing for families in various
                    witness protection programs.

OIG Evaluation of
Auditee Comments    On several occasions AHRCO was asked to provide
                    documentation of the items cited in the findings. AHRCO
                    failed to provide the information. For instance, at no time
                    during the audit was documentation provided to show more
                    than one person residing in the four-bedroom unit. The
                    recertifications in the file show only one tenant and do not
                    include the income received for the children. The
                    recertifications also do not give the tenant an allowance for
                    dependent children. In addition, the waiting list provided
                    with the documentation was not the waiting list provided
                    during the audit. Documentation provided to support the
                    auditee comments only proved to support the need for
                    better verification procedures and resulted in an increase in
                    the number of cases where: (1) income and assets were not
                    properly verified; (2) allowances to income were not
                    properly verified; and, (3) Total Tenant Payment was not
                    properly calculated.

                    Although AHRCO stated a tenant received custody of their
                    grandchildren in April 1994, documents submitted by
                    AHRCO show the tenant received custody of one
                    grandchild in February 1994. Therefore, the excessive

                            Page 29                                   96-PH-214-1005
Finding 5

                  subsidy paid for the tenant from February 1994 through
                  June 1995 was deleted from the total excessive Housing
                  Assistance Payments. This reduced the ineligible amount
                  from $16,406 to $12,292.

                  All comments in the report which were attributed to
                  AHRCO staff were made by AHRCO staff and were
                  presented in context.

                  Analysis of the documents submitted by AHRCO showed
                  only 89 transfers completed since 1990. Of the 89
                  completed transfers, only 21 appear to have been completed
                  in order to correct over-or under-housing conditions. The
                  remaining 68 transfers were same-size unit transfers (one-
                  bedroom to one-bedroom, two-bedroom to two-bedroom,
                  etc.) and/or were completed at Mon View Heights where
                  transfers were required by the Flexible Subsidy Contract.

                  At no time during the audit did AHRCO state a tenant was
                  placed into a unit as a result of a witness protection

Recommendations   We recommend AHRCO:

                  5A.    Repay HUD $12,292 for excess HAP received for
                         the overhoused tenants.

                  5B.    Transfer all over and underhoused tenants according
                         to HUD requirements and the residential lease.
                         Verify all income and allowances adjusting income
                         for tenants cited and adjust rent as necessary from
                         the most recent certification or recertification.
                         Recertify tenants, if necessary, and adjust HAP
                         retroactively for the most recent certifications as

                  5C.    Establish a system to ensure waiting lists are
                         maintained in order of date and time of application
                         and applicants are properly selected from the list.
                         Maintain documentation to support applicants are
                         properly selected.

96-PH-214-1005            Page 30
                                                Finding 5

We recommend your staff:

5D.   Abate rents for the cited overhoused tenants and any
      additional tenants which remain over or
      underhoused due to AHRCO's failure to transfer
      them when the correct unit size becomes available.

       Page 31                                96-PH-214-1005
Internal Controls
In planning and performing our audit, we considered internal control systems of the management
of the Allegheny Housing Rehabilitation Corporation to determine our auditing procedures and
not to provide assurance on internal controls. Internal control is the process by which an entity
obtains reasonable assurance as to achievement of specific objectives. Internal control consists
of interrelated components, including integrity, ethical values, competence, and the control
environment which includes establishing objectives, risk assessment, information systems,
control procedures, communication, managing change, and monitoring.

                                         We determined the following internal control categories
 Internal controls assessed
                                         were relevant to our audit objectives:

                                         •      Management fees

                                         •      Occupancy requirements

                                         •      Payroll distribution

                                         •      Procurement activities

                                         •      Project maintenance costs

                                         We evaluated all of the relevant control categories
                                         identified above, by determining the risk exposure and
                                         assessing control design and implementation.

                                         A significant weakness exists if internal control does not
 Significant weaknesses
                                         give reasonable assurance that the entity's goals and
                                         objectives are met; that resource use is consistent with
                                         laws, regulations, and policies; that resources are
                                         safeguarded against waste, loss and misuse; and that
                                         reliable data are obtained, maintained and fairly
                                         disclosed in reports. Based on our review, we believe
                                         the following items are significant weaknesses in
                                         AHRCO's operations:

                                         •      Occupancy requirements

                                         •      Payroll distribution

                                         •      Procurement activities

                                         •      Project maintenance costs

                                             Page 31                                   96-PH-214-1005
Internal Controls

                    These weaknesses are detailed in the findings in this

96-PH-214-1005          Page 32
Follow Up On Prior Audits
All prior audit findings have been resolved.

                                               Page 33   96-PH-214-1005
                                                                     Follow Up On Prior Audits

                                                                                     Appendix A

Schedule Of Ineligible And
Unsupported Costs

                     Number                              Ineligible 1/         Unsuported 2/
                         1                                  $315,596                $51,427
                         2                                    86,096
                         3                                    41,050
                         4                                                           22,059
                         5                                    12,292
                                                            $455,034                $73,486

1/ Ineligible costs are not allowed by law, contract, HUD or local agency policies or regulations.

2/ Unsupported costs are not clearly eligible or ineligible but warrant being contested because
   of the lack of documentation supporting the need to incur such costs.

                                              Page 35                                 96-PH-214-1005
                                                                                Appendix B

Auditee Comments
Please note that AHRCO's response is in draft finding order. Report finding presentation has
been changed as follows:

              Draft Finding               Report Finding

                 1                         4
                 2                         5
                 3                         1
                 4                         2
                 5                         3

                                           Page 37                               96-PH-214-1005
                                                                  Appendix B

                                                                  Appendix C

Director, Multifamily Division, Pittsburgh Area Office, 3EHM
Regional comptroller, 3AF
Director, Housing Division, 3AH
Director, Field Accounting Division, 3AFF
Manager, Pittsburgh Area Office, 3ES
Assistant Secretary for Field Management, SC (Room 7106)
Comptroller/ALO (Room 5131)
Acquisitions Librarian, Library, AS (Room 8141)
Director, Participation & Compliance Division, HSLP (Room 6274)
Director, Division of Housing Finance Analysis, TEF (Room 6274)
Chief Financial Officer, F (Room 10166)
Deputy Chief Financial Officer for Operations,
 F (Room 10166)
Assistant Director in Charge, US GAO, 820 1st St. NE Union
Plaza, Bldg. 2, Suite 150, Washington, DC 20002
Attn: Mr. Cliff Fowler

                                         Page 51                  96-PH-214-1005