oversight

Boise City HA, Boise, ID

Published by the Department of Housing and Urban Development, Office of Inspector General on 1996-09-11.

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

                         U. S. Department of Housing and Urban Development
                                   Washington, D.C. 20410-4500
                           Office of the Inspector General for Audit
                                      Northwest/Alaska
                                  909 First Avenue, Suite 125
                                   Seattle, WA 98104-1000


                                                                     96-SE-202-1801
                                                                     Audit-Related Memorandum

September 11, 1996


MEMORANDUM FOR: Elizabeth J. Santone, Director, Public Housing, OEPH


FROM: A. George Tilley, District Inspector General for Audit, OAGA

SUBJECT:       U.S. Attorney Request for Assistance
               Boise City/Ada County Housing Authority
               The former Executive Director's travel vouchers
                and credit card usage
               Boise, Idaho


    At the U.S. Attorney's request for assistance, we reviewed the Boise City/Ada County Housing
Authority's (Housing Authority) records pertaining to the former Executive Director's travel vouchers
and use of the Housing Authority's credit card. As you are aware, the Board has primary oversight
responsibility for the Executive Director's actions. To ensure the Executive Director's actions are
consistent with Housing Authority policy, it is essential that the Board be aggressive, actively
involved, and diligent in monitoring the Executive Director's actions.

   Our review period was October 1994 through May 1996. Specifically, we reviewed:

   •   applicable requirements and policies related to travel and credit card use.

   •   the former Executive Director's travel vouchers and supporting receipts for the period.

   •   credit card statements, available receipts, and charges for the period.

    While performing our work, we identified weaknesses in the Housing Authority controls over the
former Executive Director's travel and credit card usage. The control weaknesses that we identified
were:

   •   lack of effective Board of Commissioner (Board) oversight in authorizing the former
       Executive Director's travel; and diligent review and approval of the related travel vouchers.

   •   not complying with the Board adopted travel policy.
    •    not consistently following a policy and process when authorizing the former Executive
         Director's travel.

    •    not completing travel vouchers within the prescribed time frame; and the former Executive
         Director did not fill out her own travel vouchers.

    •    lack of a written policy and specific procedures regarding use of the Housing Authority's
         credit card.

    In conjunction with our review of the former Executive Director's travel vouchers, we found that
the travel policy did not, but should:

    •    require written justification for travel costs that were higher than anticipated when the Board
         approved travel; and

    •    establish an upper limit for actual, reimbursable travel costs.

    In addition to strengthening controls, the Board should recover funds from the former Executive
Director for amounts she owed the Housing Authority, for expenses unrelated to Housing Authority
business, and for expenses that could have been avoided. We identified recoverable expenses totalling
$1,094.10 (Attachment 1) and questionable charges needing further review by the Housing Authority
(Attachment 2).

   Should you or your staff have any questions, please contact myself or Bill Taylor at
206-220-5360.




96-SE-202-1801                                    Page ii
                                                                           Results




                      Results
                  By Resolution dated April 16, 1987, the Board adopted a
Travel Vouchers
                  travel policy comparable to the city of Boise. The Board also
                  established per diem rates of $25 per day without submission
                  of receipts. Daily expenses totalling more than $25 would be
                  reimbursed only if original receipts were submitted and
                  approved by the Board.

                  While the former Executive Director's travel vouchers were
                  signed by the former Executive Director (with one exception)
                  and approved by the Board Chairman (with two exceptions),
                  we found that her travel vouchers did not comply with the
                  Housing Authority's travel policy. The travel policy stated:

                      •   the traveler must use the most economical mode of
                          travel from the standpoint of time, cost, and
                          practicality to the Housing Authority, and the purpose
                          of travel.

                  The January 31, 1996 minutes contained Board authorization
                  for the former Executive Director to use full fare tickets when
                  necessary to address scheduled conflicts, or to fulfill contracts,
                  appointments and obligations. However, none of the former
                  Executive Director's travel vouchers contained justification for
                  higher costs of airline tickets.

                  For example: The former Executive Director's travel vouchers
                  for trips to Washington DC showed quite a variance in the
                  cost of airline tickets. For a September 1995 trip to
                  Washington DC to attend a Public Housing Authorities
                  Directors Association (PHADA) conference the cost of the
                  airline ticket was $1,354. However, travel vouchers for four
                  other trips to Washington DC showed airline ticket prices
                  ranged from $354 to $634. The travel voucher for the
                  September 1995 trip did not show justification for the
                  excessive cost of the airline ticket.

                      •   within two weeks of the final day of travel, all
                          expenses and reimbursement requests must be
                          submitted on a form approved by the Authority.




                           Page 1                                      96-SE-202-1801
Results



                 The former Executive Director's travel vouchers were not
                 filled out within two weeks after travel, as required in the
                 travel policy. For example,

                    •   seven travel vouchers for trips taken from October
                        1995 to April 1996 were not completed and signed
                        until May 17 or 20, 1996, more than seven months
                        after the first trip.

                    •   eight trips to American Falls for the Comprehensive
                        Improvement Assistance Program from October 1995
                        to April 1996 were all on one travel voucher dated
                        May 20, 1996.


                 In addition to departures from the written travel policy, we
                 observed other practices that we believe the Housing
                 Authority should consider changing. Those practices were:

                    •   The former Executive Director did not fill out her own
                        travel vouchers. While the former Executive Director
                        is the person most knowledgeable about her travel, the
                        Housing Authority's chief accountant filled out all the
                        former Executive Director's travel vouchers.

                 We believe the Executive Director must be the person who
                 completes his/her travel voucher and is solely accountable for
                 its accuracy.      Otherwise, it is too easy to transfer
                 accountability and blame for any mistakes to the preparer.

                    •   Settlement of amounts due to or due from the former
                        Executive Director was not done when travel vouchers
                        were completed and signed. According to the chief
                        accountant and Housing Authority records, settlement
                        for amounts owed was only done when the former
                        Executive Director submitted local receipts for
                        reimbursement. On travel vouchers from October
                        1995 to April 1996, settlement of amounts due to or
                        due from the former Executive Director had not been
                        done.

                 As a result, the Housing Authority carries a balance owed by
                 the former Executive Director for her travel. (See Attachment
                 1)


96-SE-202-1801            Page 2
                                                        Results



   •   We also found that the travel policy allows
       reimbursement of reasonable actual costs, but does not
       specify an upper limit for actual costs. As a result, the
       amount of actual costs reimbursed by the Housing
       Authority could be unreasonable in comparison to
       local practice.

In conjunction with our review of the former Executive
Director's travel vouchers, we reviewed the Board minutes to
find its authorization for her travel. Of the 32 trips recorded
on the former Executive Director's travel vouchers, we found
that:

   •   10 trips were authorized per a contract with American
       Falls Housing Authority to oversee Comprehensive
       Improvement Assistance Program work;

   •   6 trips were discussed and authorized in the Board
       minutes; and

   •   16 were not discussed or authorized in the Board
       minutes.

The minutes showed that the Board did not always record
Board authorization for the former Executive Director's travel.
However, proper Board oversight must include a consistent
policy and process when authorizing the Executive Director's
travel.


In general, the Board and the Executive Director are
responsible for developing an effective management system to
support internal controls. At housing authorities where the
Board provides clear and concise policies and guidelines to the
Executive Director, opportunities for fraud or mismanagement
are greatly reduced. The Executive Director is responsible for
implementing internal controls in the Housing Authority's daily
operations and must set a positive example for the staff.

Specifically, the Board must be conscientious in its oversight
responsibility to ensure the Executive Director is doing his or
her job. Based on our work, the Board must set the example
for the control environment by authorizing the Executive
Director's travel and effectively reviewing and approving the


         Page 3                                    96-SE-202-1801
Results



                       corresponding travel vouchers to ensure compliance with the
                       Housing Authority travel policies and procedures.


                       The Board authorized the former Executive Director to apply
 Credit Card Charges
                       for and receive a credit card. The only authorization and
                       guidance regarding use of a Housing Authority credit card that
                       we found was in the July 17, 1986 Board minutes which
                       stated:

                              "using the Authority's credit authority and that said
                              card shall bear the name Judith E. Worrell,
                              Executive Director and that said card shall be used
                              for travel and expenses while on Authority
                              business and/or representation."

                       Our review of the credit card statements and receipts showed
                       that the former Executive Director used the credit card for
                       expenses which appear unreasonable and questionable. For
                       example, during the review period, the former Executive
                       Director charged:

                          •   over $1,000 for local meals while not on official travel
                              status.

                       Handwritten notations on the receipts showed that local meals
                       were for lunches with Housing Authority staff, HUD officials,
                       and officials from neighboring Housing Authorities. Also,
                       according to the former Executive Director, a $132 charge on
                       the Housing Authority credit card was for a Friday night
                       dinner with a prospective employee and his spouse.

                          •   over $2,900 for miscellaneous purchases.

                       According to the former Executive Director, many purchases
                       were for bingo prizes and Christmas gifts for the elderly
                       residents. For example, a charge of $468.83 at one
                       department store included novelties, basket sets, air
                       fresheners, and other assorted items. Four other charges
                       totalling $272.86 were for raffle items to raise money for a
                       scholarship fund sponsored by PHADA.

                          •   over $290 for telephone calls on one airline flight.



96-SE-202-1801                  Page 4
                                                                                Results



                        The credit card statement showed that the former Executive
                        Director charged 10 telephone calls totalling $290 on April
                        12, 1996 while travelling from Boise to Washington DC.

                        Based on our review of the former Executive Director's travel
Recommendations to
                        vouchers, we recommend that the Housing Authority's Board:
improve controls over
travel.
                               •     authorize all the Executive Director's travel
                                     considering the cost and benefit to the Housing
                                     Authority; and diligently review and approve all
                                     the Executive Director's travel vouchers.

                           •   develop a process for authorizing the Executive
                               Director's travel and for ensuring compliance with
                               Housing Authority travel policies.

                           •   ensure the Executive Director submits his or her travel
                               vouchers for Board approval within the time frame
                               established in the travel policy.

                           •   require the Executive Director and all staff to fill out
                               their own travel vouchers and certify to their accuracy.

                           •   require the Executive Director to provide written
                               justification for higher costs if travel costs exceed the
                               amounts authorized by the Board.

                           •   establish an upper limit for actual costs of meals and
                               incidentals that the Housing Authority will reimburse.


                        Based on our review of the former Executive Director's use of
Recommendations to
                        the Housing Authority's credit card, we recommend the
improve controls over
                        Housing authority's Board:
credit card usage.
                           •   determine whether the Housing Authority can
                               reasonably conduct its business without a credit card;
                               or consider allowing the Executive Director and staff
                               to make purchases with personal credit cards and seek
                               prompt reimbursement upon submission of receipts.

                           •   establish a written policy and implement procedures
                               regarding credit card use, consistent with local law, if
                               a credit card is deemed necessary.


                                   Page 5                                  96-SE-202-1801
Results



                    •   actively monitor how the Executive Director uses the
                        Housing Authority's credit card to ensure compliance
                        with its policy.

                    •   establish criteria for what goods and services may be
                        purchased with the credit card.


                 In addition to strengthening controls, the Board should
 Other Matters
                 recover funds from the former Executive Director for amounts
                 she owed the Housing Authority, for expenses unrelated to
                 Housing Authority business, and for expenses that could have
                 been avoided. We identified recoverable expenses totalling
                 $1,094.10 (Attachment 1), and questionable charges needing
                 further review by the Housing Authority (Attachment 2).

                 Also, the former Executive Director's travel vouchers show
                 that of the 32 trips recorded on the former Executive
                 Director's travel vouchers, 19 were to national or regional
                 housing organization conferences and meetings. Considering
                 the time and travel associated with the former Executive
                 Director's involvement in these national or regional housing
                 organizations, the Board may want to reevaluate its
                 membership and degree of participation in them. The Board
                 should determine the benefit to the Housing Authority given
                 the costs (including travel) and time spent away from
                 operational duties associated with being members in national
                 or regional housing organizations.




96-SE-202-1801            Page 6
                                                                                       Attachment 1




                             Recovery of Funds
During our review, we identified $1,094.10 in expenses paid by the Housing Authority that we
believe should be recovered from the former Executive Director. The expenses were as follows:

       •      The amount charged to the hotel for room service and movies was not
              reconciled on the former Executive Director's travel voucher for an
              October 21, 1994 trip to Baltimore:
                                                                                              $30.90

       •      The net amount due from the former Executive Director determined
              by reconciling the travel vouchers from October 1995 to May 1996:
                                                                                            $103.87

       •      The per diem amount ($50) and difference in airfare (estimated at $86)
              for a February 3 & 4, 1996 trip to Medford, Oregon when no Housing
              Authority business was conducted:
                                                                                            $136.00

       •      The former Executive Director had no explanation for the amount paid
              for tapes/videos at the Stage Stop in Boise on February 8, 1996:
                                                                                              $20.97

       •      The per diem amount (no lodging amount claimed) for an April 12 to
              21, 1996 trip to Washington DC when the former Executive Director
              stayed two additional days and could not remember what business
              purpose was served by doing so:
                                                                                              $50.00

       •      The charge for an extra hotel room on a February 1, 1996 trip to
              Portland. According to the former Executive Director, there was a
              mixup in hotel reservations at two Red Lion hotels in the Portland
              area. She stayed at one hotel but apparently had reserved a room at
              the other hotel; and the Housing Authority's credit card was charged
              for both rooms. The amount for the second room was:
                                                                                              $76.30

       •      The former Executive Director acknowledged taking two trips using
              the Housing Authority's vehicle that were personal and not related to
              Housing Authority business. Using the mileage rate adopted by the
              Board in February 1994 and approximate mileage, we estimated the
              following amounts for the two trips:



                                              Page 7                                     96-SE-202-1801
Attachment 1



                         Round trip Boise to Bend, Oregon
                                       658 miles x 29 cents/mile = $190.82
                         Round trip Boise to Glenns Ferry, Idaho
                                       148 miles x 29 cents/mile = $42.92
                         Total                                                            $233.74

         •       From the descriptions listed on the gasoline receipts, we identified
                 purchases of merchandise that were also paid for by the Housing
                 Authority with no stated business purpose. For the period, the amount
                 of merchandise purchased with gasoline in town or with no supporting
                 travel voucher totalled:
                                                                                           $69.82

         •       According to the chief accountant, the Housing Authority was charged
                 for two hotel rooms on its credit card that were not used. The hotel
                 rooms were reserved for planned travel by the former Executive
                 Director which was cancelled. However, the reservations for the two
                 rooms were not cancelled; and the Housing Authority's credit card was
                 charged for both rooms as recorded on its June 1996 statement:

                         May 9, 1996 Hay Adams Hotel                 $170.00
                         May 20, 1996 Hyatt Hotel                    $132.50
                               Total                                                      $302.50

         •       The Housing Authority's travel agent provided information that
                 showed an airline ticket the former Executive Director used to fly to
                 San Francisco was reduced. The $247 fare was reduced to $177
                 which the former Executive Director repaid to the Housing Authority.
                 The former Executive Director was given a $70 credit for the
                 difference in cost. During our field work, the Housing Authority did
                 not receive the credit or a payment in lieu of the credit.
                                                                                           $70.00


         Total amount:                                                                   $1,094.10


The amounts listed above were based on information available to us at the time of our review.




96-SE-202-1801                                   Page 8
                                                                                       Attachment 2




Questionable Expenses Needing Further Review
            by Housing Authority
In addition, we identified charges for six airline tickets on the Housing Authority's credit card
statement which were not accounted for on the former Executive Director's travel vouchers. At the
time we did our work the information was not available for us to use to determine why the tickets
were purchased or who used the tickets.

However, since completing our field work, the Housing Authority received information from the
credit card company that shows an airline ticket for $1,030 was used in March 1996 with the former
Executive Director listed as the passenger.

As a result, the Housing Authority should be required to determine if these airline tickets were used
for Housing Authority business, and if not, pursue whatever course of action it deems necessary.
Following are the dates of purchase, airlines, and amounts charged for the six tickets:

       September 20, 1994       United Airlines      $1,328
       January 19, 1995         Horizon Air           $316
       July 27, 1995      Horizon Air           $408
       October 23, 1995         Horizon Air           $294
       October 23, 1995         Horizon Air           $294
       March 7, 1996            United Airlines      $1,030

                       Total                                 $3,670




                                                Page 9                                   96-SE-202-1801
Distribution




Distribution
Director, Public Housing Division, Oregon State Office, OEPH (3)
Primary Audit Liaison Officer, K. J. Brockington, 6AF
Director, Field Accounting Division, 0AFF
Assistant to the Secretary for Field Management, SC (Rm. 7106)
Assistant to the Deputy Secretary for Field Management, SC (Rm. 7106)
Public & Indian Housing Audit Liaison Officer, PF (Rm. 4122) (3)
Director, Participation & Compliance Division, HSLP (Rm. 6274)
Chief Financial Officer, F (Rm. 10166) (2)
Deputy Chief Financial Officer for Operations, FO (Rm. 10166) (2)

Assistant Director In Charge
US GAO
Union Plaza, Bldg. 2, Suite 150
820 - 1st St. NE
Washington DC 20002

Boise City/Ada County Housing Authority
680 Cunningham Place
Boise, ID 83702




96-SE-202-1801                             Page 10
                                                              Distribution




OIG INTERNAL DISTRIBUTION - NOT SHOWN ON FINAL COPY

Inspector General, G (Rm. 8256)
Deputy Inspector General, G (Rm. 8256)
Assistant Inspector General for Audit, GA (Rm. 8286)
Deputy Assistant Inspector General for Audit, GA (Rm. 8286)
Director, Research & Planning Division, GAP (Rm. 8180)
Central Records, GF (Rm. 8266) (2)
Semi-Annual Report Coordinator, GFM (Rm. 8254)
Special Agent In Charge, 0AGI




                                           Page 11            96-SE-202-1801