Audit Report
District Inspector General for Audit
New York/New Jersey District
Report: 98-NY-206-1004 Issued: June 8, 1998
TO: Joan K. Spilman, Director of Public Housing, 2CPH
FROM: Alexander C. Malloy, District Inspector General for Audit, 2AGA
SUBJECT: Watervliet Housing Authority
Low-Rent Housing Program
Watervliet, New York
We completed an audit of the Watervliet Housing Authority, referred to herein as the Public
Housing Authority (PHA) pertaining to its Federal Low-Rent Housing (LRH) program. The
purpose of the audit was to determine the adequacy of internal controls over the safeguarding
of cash and other assets, and to determine whether the PHA has complied with the terms and
conditions of the Annual Contributions Contract (ACC) and other applicable U.S. Department
of Housing and Urban Development (HUD) regulations and requirements. The audit covered
the period October 1, 1995 to September 30, 1997 and was extended, where appropriate, to
include other periods. We performed the audit field work from September 15, 1997 to
January 12, 1998.
The audit showed that the PHA generally has complied with program requirements and
regulations pertaining to its LRH program, and that decent, safe and sanitary housing has been
provided to tenants. However, the audit also showed that the PHA needs to improve
operating controls to ensure that assets are properly safeguarded against waste and loss, and
to increase assurance that its programs are operated in a way that achieves full compliance
with the terms and conditions of the ACC and other applicable HUD regulations and
requirements.
The report contains nine findings. The findings show that the PHA lacked sound internal
controls over its operations and that its administrative policies and procedures did not always
comply with applicable HUD regulations and requirements. These weaknesses caused the
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PHA to incur ineligible costs of $2,420.20; unsupported costs of $181,048.86 and a cost
efficiency of $139,675 has also been realized. To ensure compliance, the PHA needs to: (a)
improve its system for procurement and contracting; (b) ensure that costs will be eligible,
necessary and supported prior to incurrence; (c ) ensure that travel and conference costs are
economical and in accordance with requirements; (d) control the use of gasoline by
employees; (e) ensure that its personnel practices conform with established policies; and (f)
improve its administrative and accounting controls.
Within 60 days, please furnish this office, for each recommendation cited 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 not considered necessary. Also, please furnish us
copies of any correspondence or directives issued related to the audit.
Should you or your staff have any questions, please contact William H. Rooney, Assistant
District Inspector General for Audit, at 212-264-8000, extension 3976.
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Executive Summary
We performed an audit of the Watervliet Housing Authority, herein referred to as
the Public Housing Authority (PHA), pertaining to its Federal Low-Rent Housing
(LRH) program. The primary objectives of the audit were to evaluate the PHA’s
internal controls for safeguarding cash and other assets, and to determine whether
it complied with the terms and conditions of the Annual Contributions Contract
(ACC) as well as other applicable HUD regulations and requirements.
The audit disclosed that the PHA is generally providing decent, safe and sanitary
housing to its tenants. However, the PHA did not always comply with program
requirements and regulations pertaining to various activities of its LRH program.
The noncompliances were generally caused by inadequate controls, which led to
the ineligible and unsupported use of funds and the cost efficiency, as discussed in
the findings.
The results of our audit are discussed in the findings of this report and are
summarized below.
1. Improvements Are Needed in the System of Procurement and
Contracting
Our review of the system for procurement and contracting showed that the
PHA did not comply with proper procurement procedures for: (1) public
bidding; (2) competitive proposals; and (3) small purchases, as required. The
non-compliances are attributed to the PHA’s general unfamiliarity with
applicable regulations and requirements. As a result, assurance that the related
procurement and contract costs were proper and reasonable has been
diminished and the PHA has incurred costs of $99,286.84 that are
unsupported.
2. Ineligible Activity Included in the Comprehensive Grant Program
The PHA’s 1996 Comprehensive Grant Program included an activity that is
ineligible according to program regulations. The activity was intended to be
accomplished because the PHA was unaware that it was ineligible. However,
upon advising officials that the program does not allow utility services to be
converted from individual meters to a master meter system, the PHA
eliminated the activity from its plan. Accordingly, the cost attributed to the
utility conversion of $139,675 is claimed as a cost efficiency.
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3. Ineligible and Unsupported Payments Were Made From the General
Fund
The PHA did not maintain adequate control over disbursements from its
General Fund. The controls were inadequate because procedures were not in
effect to ensure that costs were eligible and properly supported prior to
payment. As a result, the PHA charged its LRH program with ineligible and
unsupported costs totaling $1,789.20 and $41,179.60 respectively.
4. Improper Payment for Consultant Services
The PHA paid for consulting services without the benefit of competition and
that were computed based on additional subsidies obtained from HUD, thereby
representing an improper payment. The payment was made because officials
believed that the services rendered would financially benefit the PHA. As a
result, program funds were expended for services that were not determined to
be reasonable and the amount paid of $16,002.08 is considered to be
unsupported.
5. Controls Over Legal Services and Costs Need to be Strengthened
Contrary to HUD regulations and requirements, the PHA has: (1) used an
improper method of procurement; (2) executed a multi-year contract without
HUD approval; and (3) routinely paid for legal services without adequate
documentation being provided as evidence that the contracted services were
rendered. These deficiencies can be attributed to the PHA’s general
unfamiliarity with applicable regulations and requirements. As a result,
assurance that the related procurement and contract costs were proper and
reasonable has been diminished and the PHA has incurred costs of $15,909.85
that are unsupported.
6. Ineligible and Unsupported Travel Costs
The PHA has not instituted adequate controls over travel costs to ensure that
the costs are necessary and reasonable and that the costs are adequately
supported, as required. As a result, ineligible and unsupported travel costs of
$631.00 and $7,884.40 respectively have been incurred. The travel
deficiencies are attributed to the PHA’s general unfamiliarity with the
procedural and documentation requirements.
7. Controls Are Lacking Over Gasoline Charges
Because the PHA did not enforce procedures to prevent the purchase of
gasoline by its employees, unsupported gasoline costs of $786.09 were
incurred. The weakness in preventing the purchase of gasoline by employees is
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attributable to a decision by the PHA not to enforce certain provisions of the
personnel and procurement policies.
8. Personnel Management Deficiencies Were Identified
Contrary to its personnel policy and/or the employee union agreement, the
PHA: (1) has allowed vacation leave balances to exceed the agreement limits;
(2) does not have an employment contract with the Executive Director; (3)
provided unsupported salary increases; and (4) provided employees with an
extra personal day not specified in the policy or agreement. These deficiencies
can be attributed to the PHA’s general unfamiliarity with applicable
requirements. As a result, the PHA does not have adequate assurance that the
liability and the costs incurred were necessary and reasonable.
9. Need to Improve Administrative and Accounting Controls
Our review showed various deficiencies involving administrative and
accounting controls and procedures that have weakened the PHA’s system of
internal control. The deficiencies occurred because procedures were not
implemented to ensure that adequate administrative and accounting controls
were executed to meet program requirements. As a result, the PHA does not
have assurance that funds are properly safeguarded against waste and loss and
that its housing programs are administered in accordance with Federal
regulations and requirements.
As part of each finding, we have recommended certain actions which we believe
will correct the problems discussed in the findings and strengthen the PHA’s
administration of its housing programs.
The results of the audit were discussed with PHA officials during the course of the
audit, and at an exit conference held on April 15, 1998. The exit conference was
attended by:
PHA Officials
Charles V. Patricelli, Executive Director
William J. Fitzpatrick, Chairman, Board of Commissioners
Harry J. Cushing, Vice-Chairman, Board of Commissioners
Frank M. Kelly, Commissioner
HUD- Office of Inspector General (OIG)
William H. Rooney, Assistant District Inspector General for Audit
Thomas F. Cosgrove, Senior Auditor
Michelle M. Rizzo, Program Auditor
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The Executive Director generally agreed with our findings and recommendations
and provided written comments, which are included as Appendix D to this report.
Regarding findings 3 and 4, the Executive Director provided comments that
required responses. Thus, for findings 3 and 4, the Executive Director’s
comments and our evaluation of those comments are included at the end of the
findings.
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Table of Contents
Management Memorandum ..................................................................i
Executive Summary............................................................................iii
Table of Contents ..............................................................................vii
Introduction.........................................................................................1
Findings and Recommendations
1. Improvements Are Needed in the System of Procurement and
Contracting.....................................................................................2
2. Ineligible Activity Included in the Comprehensive Grant
Program .........................................................................................6
3. Ineligible and Unsupported Payments Were Made From the
General Fund..................................................................................8
4. Improper Payment for Consultant Services ...................................10
5. Controls Over Legal Services and Costs Need to be
Strengthened ................................................................................13
6. Ineligible and Unsupported Travel Costs ......................................16
7. Controls Are Lacking Over Gasoline Charges ..............................19
8. Personnel Management Deficiencies Were Identified ...................21
9. Need to Improve Administrative and Accounting Controls ...........23
Internal Controls................................................................................27
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Follow-up on Prior Audits .................................................................29
Appendices
A. Schedule of Ineligible and Unsupported Costs and Costs
Efficiencies ..................................................................................30
B. Schedule of Ineligible and Unsupported Payments From the
General Fund................................................................................31
C. Schedule of Ineligible and Unsupported Travel Costs ...................33
D. Auditee Comments .......................................................................34
E. Distribution...................................................................................38
Abbreviations:
ACC Annual Contributions Contract
CFR Code of Federal Regulations
HUD Department of Housing and Urban Development
LRH Low-Rent Housing
OIG Office of Inspector General
PHA Watervliet Housing Authority
RFP Request for Proposal
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Introduction
The PHA is governed by a seven member Board of Commissioners. Five members are
appointed by the Mayor and serve five year terms. The remaining two members are
elected by the tenants and serve two year terms. The Board establishes policy and takes
official action as required by Federal and State law. The Executive Director, who is
responsible for managing the overall day-to-day operations of the PHA, is Charles V.
Patricelli. The books and records are located at the administration office located at 2400
Second Avenue, Watervliet, New York, 12189.
The PHA’s fiscal year is from October 1 through September 30. The PHA operates five
developments containing 306 units. The developments consist of 238 family units and 68
senior units. In addition, the PHA administers 115 units of Section 8 housing along with
Drug Elimination and Comprehensive Grant Programs.
The primary objective of the audit was to evaluate internal controls for safeguarding cash
and other assets and to determine whether the PHA complied with the terms and
conditions of the ACC and other applicable regulations and requirements.
We evaluated controls and procedures over travel, legal services and gasoline purchases;
determined whether the PHA complied with applicable guidelines governing procurement
and contracting requirements; evaluated personnel procedures; determined whether costs
charged to the PHA’s housing and grant programs were reasonable and eligible; and,
evaluated procedures and practices relating to general accounting and administrative
controls.
Audit procedures included examination of records and files, interviews with PHA staff,
and site visits to the housing developments. In addition, the PHA’s policies, procedures
and practices for managing its operations were reviewed. Specific audit testing was based
primarily on judgmentally or randomly selected samples representative of the transactions
in the areas reviewed.
The audit covered the period from October 1, 1995 to September 30, 1997. However,
activity prior and subsequent to this period was reviewed, as we deemed necessary. The
audit field work was conducted between September 15, 1997 and January 12, 1998.
A copy of this audit report has been provided to the Executive Director of the PHA.
The audit was conducted in accordance with generally accepted government auditing
standards.
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Findings
Finding 1
Improvements Are Needed in the System of
Procurement and Contracting
Our review of the system for procurement and contracting showed that the PHA did not
comply with the required procurement procedures for: (1) public bidding; (2) competitive
proposals; and (3) small purchases. The noncompliance’s are attributed to the PHA’s
general unfamiliarity with applicable regulations and requirements. As a result, assurance
that the related procurement and contract costs were proper and reasonable has been
diminished and the PHA has incurred costs of $99,286.84 that are unsupported.
As part of our review, we randomly selected eight instances of procurement by the PHA.
The selection involved three instances that required formal bids, two instances that
required competitive proposals, and three instances that required procurement by small
purchase procedures. The particulars pertaining to each of the three deficient methods of
procurement by the PHA are described in the subsections below. Also, details pertaining
to the deficiencies are contained in the audit working papers.
Public Bidding Requirements Were Not Followed
Both the PHA’s procurement policy and the New York State Public Housing Law require
formal bidding procedures to be followed for purchases in excess of $10,000.00. In such
cases, Title 24 Part 85.36 (d)(2) of the Code of Federal Regulations (CFRs) pertaining to
procurement by sealed bids would apply. The CFRs require the PHA to prepare
specifications which clearly and accurately describe the technical requirements of the
service or supply contract being procured. In addition, an invitation for bids containing
the specifications is to be publicly advertised and bids are to be solicited from an adequate
number of known suppliers. Finally, the contract is awarded to the lowest responsible
bidder.
Our review of the three instances where formal bids were required showed one instance
where the PHA incurred costs of $19,103.00 for work performed under a landscaping
contract. However, the PHA did not prepare specifications describing the work requested
and awarded the contract without the benefit of competitive bidding. PHA officials
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agreed with our finding; however, they explained that one other proposal was received for
the work requested. Nonetheless, by not complying with the applicable procurement
regulations, the PHA does not have adequate assurance that the work was provided at the
lowest possible price. Thus, the amount paid of $19,103.00 is considered to be
unsupported.
In two other instances, the PHA procured goods and services in amounts totaling
$21,359.35 and $27,045.00 without executing a contract. In fact, in both instances,
specifications describing the work requested were not prepared, an invitation for bids was
not prepared, and bids were not solicited. As a result, the PHA was denied the benefit of
competitive bidding and full and open competition as intended by the Federal procurement
regulations. Moreover, the failure to execute a contract in both instances precludes the
PHA from determining that the services intended have been provided in a complete and
satisfactory manner. Accordingly, assurance that the work was performed by the lowest
possible bidder has been diminished, and the costs incurred in amounts of $21,359.35 and
$27,045.00 are considered unsupported.
Proposals Were Not Solicited
We reviewed two instances where the PHA procured consulting services. Accordingly,
Title 24 Part 85.36 (d)(3) of the CFRs pertaining to procurement by competitive proposals
would apply. The regulations require the PHA to prepare and publicize requests for
proposals (RFPs) identifying all evaluation factors and their relative importance. The
PHA is required to solicit proposals from an adequate number of qualified sources.
Finally, awards are to be made to the responsible firm whose proposal is most
advantageous, with price and other factors considered.
Contrary to the above regulations, the PHA procured the consulting services without
preparing RFPs or soliciting proposals from other qualified sources. Thus, the PHA was
denied the benefit of competitive proposals to ensure that the best possible price and
quality services were obtained. Accordingly, costs incurred in amounts of $3,267.49 and
$12,619.00 are considered to be unsupported.
Small Purchase Procedures Were Not Followed
The PHA’s procurement policy provides that all purchases in excess of $1,500.00, but
under $5,001.00 shall be made on the basis of at least three informal price quotations. A
memorandum signed by the purchase initiator shall accompany the purchase order listing
the vendors solicited, the quotation provided by each vendor and explanatory remarks
where appropriate. In addition, Title 24 Part 85.36 (d)(1) of the CFRs requires price or
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rate quotations to be obtained from an adequate number of qualified sources when
procurement by small purchase procedures is used.
Contrary to their policy and the Federal regulations, the PHA paid $3,025.00 for painting
services, without obtaining price quotations from other qualified sources. Even though
PHA officials advised that other price quotations may have been obtained, they were
unable to provide any documentation to show the vendors solicited or quoters obtained.
As such, there is inadequate assurance that the services were provided by the lowest,
acceptable source. Thus, the amount paid of $3,025.00 is considered to be unsupported.
The PHA’s procurement policy provides that all purchases in excess of $5,000.00, but
under $10,000 shall be made on the basis of at least three written price quotations.
During the audit period, the PHA made payments totaling $6,158.00 for routine lawn
service provided at its housing developments. Discussions with PHA officials disclosed
that the contractor providing the lawn service had been used for similar work in the past
and that the services provided during the audit period were part of a renewed contract.
However, the PHA was unable to provide either a contract or any written price
quotations. As a result, there is inadequate assurance that the PHA obtained the lowest
possible price for the services. Hence, the entire amount paid of $6,158.00 is considered
unsupported.
In another instance, the PHA paid $6,710.00 for repairs to hand rails at one of the
developments. The amount paid would dictate that written price quotations should have
been solicited from at least three qualified sources. However, no written price quotations
were obtained. Consequently, assurance that the work was provided by the lowest,
acceptable source has been diminished. Therefore, the amount paid of $6,710.00 is
considered to be unsupported.
The deficiencies cited in this finding indicate a general weakness in the PHA’s system of
procurement and the awarding of contracts. Unless the PHA recognizes its responsibility
to implement controls that will ensure compliance with the Federal procurement
regulations and its own procurement policy, these or similar deficiencies will continue.
Recommendations
We recommend that you require the PHA to:
1A. Provide justification for the unsupported costs so that an eligibility determination
can be made.
1B. Reimburse from non-Federal funds, the amount of any unsupported costs
determined to be ineligible.
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1C. Establish procedures to ensure that specifications are prepared, invitations for bids
are prepared and advertised, and bids are obtained when procurement by sealed bids
is required.
1D. Establish controls to ensure that RFPs are prepared and proposals are solicited
when procurement by competitive proposals is applicable.
1E. Establish controls to ensure that price quotations are obtained from an adequate
number of qualified sources when procurement by small purchase procedures is
used.
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Finding 2
Ineligible Activity Included in the Comprehensive Grant
Program
The PHA’s 1996 Comprehensive Grant Program included an activity that is ineligible
according to program regulations. The activity was intended to be accomplished because
the PHA was unaware that it was ineligible. However, upon advising officials that the
program does not allow utility services to be converted from individual meters to a master
meter system, the PHA eliminated the activity from its plan. Accordingly, the cost
attributed to the utility conversion of $139,675 is claimed as a cost efficiency.
Our review of the PHA’s 1996 Comprehensive Grant Annual Statement and Performance
and Evaluation Report showed that $139,675 was allocated to change the heating system
at one of its housing developments from electric to gas. Further review disclosed that the
change in the type of heating system also included a conversion of the metering system
from the current individual unit meters to a master meter system.
Title 24, Part 968.112 (o)(5) of the CFRs provides that certain costs as specified by HUD
are ineligible for inclusion in the Comprehensive Grant Program. In this regard, HUD
stipulates in the Comprehensive Grant Program Guidebook that certain physical
improvement costs are ineligible under the program. Among the items specifically cited as
ineligible is the conversion of retail electric, gas or water utility services to master meter
systems.
We discussed the ineligible activity with PHA officials who advised that they were
unaware of the regulation cited; but would discuss the matter with HUD. PHA officials
later informed us that HUD confirmed our determination that the utility conversion from
individual meters to a master meter represents an ineligible physical improvement cost. As
a result, the PHA has eliminated the ineligible activity from their Comprehensive Grant
Plan and an alternative method for converting the utility service is being considered.
It should be noted that the exact amount attributable to the installation of the master
meter system that is included in the total estimated cost of the electric to gas utility
conversion could not be readily determined. Therefore, the entire amount identified for
the utility conversion of $139,675 is being shown as a cost efficiency.
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Recommendation
We recommend that you require the PHA to:
2A. Adopt controls that will ensure that all activities identified for Comprehensive
Grant Program funding are eligible prior to their inclusion in the program.
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Finding 3
Ineligible and Unsupported Payments Were Made From
the General Fund
The PHA did not maintain adequate control over disbursements from its General Fund.
The controls were inadequate because procedures were not in effect to ensure that costs
were eligible and properly supported prior to payment. As a result, the PHA charged its
Low-Rent Housing program with ineligible and unsupported costs totaling $1,789.20 and
$41,179.60 respectively.
Initially, we selected disbursements at random to test for compliance. However, due to
the wide variety of deficiencies found, it became necessary to include disbursements
during the entire audit period. The costs contained in this finding should not be
considered all inclusive; rather, they represent only those ineligible and unsupported costs
that were found as a result of our testing.
Ineligible costs include the payment of penalties, interest, contributions, donations and one
instance of a duplicate payment. Unsupported costs include payments for which: (1)
there is no purchase order; (2) the supporting documentation does not describe the costs;
(3) there is no invoice or bill to support the cost; (4) the cost is questionable as to being
necessary and reasonable; and (5) only a purchase order supports the charge. These
ineligible and unsupported costs are further described in Appendix B to this report.
Attachment B of Office of Management and Budget (OMB) Circular A-87 provides the
standards for the determination of allowable and unallowable costs. Section 4, Part A of
the ACC provides that the PHA shall operate each project in a manner that promotes
serviceability, economy, efficiency and stability of the project. In addition, Section 2, Part
A of the ACC provides that operating expenditures shall be necessary for the operation of
the project.
We believe that incurring many of these costs have reduced the PHA’s assurance that
projects were operated economically and efficiently and that all costs incurred were
necessary. Accordingly, the ineligible costs should be paid from non-Federal funds and
PHA should be required to submit further documentation and justification for unsupported
costs.
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Auditee Comments
The PHA Executive Director stated that he completely disagreed with the auditor’s
opinions that the PHA may have reduced the PHA’s ability to operate economically and
efficiently.
OIG Evaluation of Auditee Comments
A review of Appendix B identifies indications of questionable disbursements. In many
instances, the PHA did not have support for disbursements and when a PHA does not
have supporting documentation, we question the PHA’s ability to operate economically
and efficiently.
Recommendations
We recommend that you require the PHA to:
3A. Implement procedures that will prohibit the incurrence of ineligible costs and will
ensure that all costs are properly supported prior to payment. Also, implement
procedures to ensure that all costs meet the economy, efficiency and necessity
requirements.
3B. Reimburse the General Fund, from non-Federal funds, the amount of the ineligible
costs.
3C. Provide additional documentation and information as justification for the
unsupported costs so that an eligibility determination can be made.
3D. Reimburse the General Fund from non-Federal funds, the amount of any
unsupported costs determined to be ineligible.
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Finding 4
Improper Payment for Consultant Services
The PHA paid for consulting services without the benefit of competition and paid the
consultant based upon a percentage of the additional subsidy that the PHA obtained from
HUD. The payment was made because officials believed that the services rendered would
financially benefit the PHA. As a result, program funds were expended for services that
were not determined to be reasonable; therefore, the amount paid of $16,002.08 is
considered to be unsupported.
Sometime during 1994, an employee of a nearby housing authority contacted an official of
the PHA and advised the official that part of their job involves applying for subsidies on
behalf of the housing authority. The employee advised the official that based on
discussions with a HUD official in the Buffalo Area Office, the original calculations for
subsidies under the Performance Funding System (PFS) for lost dwelling rental and for
excess Social Security (FICA) contributions were in error and that re-calculations for
these items resulted in additional subsidy funds for the housing authority.
The employee advised that it was likely that the PHA would also be entitled to additional
subsidy for these items and agreed to act as a consultant to gather the necessary
information for the submission to HUD. The PHA verbally agreed to pay this employee as
a consultant, 25 percent of any additional subsidies that the PHA obtained from HUD.
Our review of the consultant file showed:
No RFPs were prepared for the service.
No contract was prepared or executed.
No evidence in the minutes of meetings indicating that the services were brought before
the PHA Board of Commissioners for approval.
Furthermore, information in the file showed that PHA employees assisted the consultant in
gathering and preparing information needed to produce the re-calculations.
Since the services provided represented consultant services, the procurement requirements
pertaining to competitive proposals would apply. Regarding competitive proposals,
Section 85.36(d)(3) of the CFRs stipulates that:
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The technique of competitive proposals is conducted with more than one source
submitting an offer, and either a fixed price or cost-reimbursement type contract is
awarded.
RFPs will be publicized and identify all evaluation factors and their relative importance.
RFPs will be solicited from an adequate number of qualified sources.
Grantees and subgrantees will have a method for conducting technical evaluations of the
proposals received and for selecting awardees.
Awards will be made to the responsible firm whose proposal is most advantageous to the
program, with price and other factors considered.
Discussions with PHA officials disclosed that the consultant’s offer was considered a “win-
win” situation since payment for services would be based only on any additional funds
obtained for the PHA. We reminded the PHA officials that not only did they fail to follow
any of the procurement regulations applicable to competitive proposals, but that only a
fixed price or cost-reimbursement type contract is authorized under competitive proposals.
Therefore, the amount paid for the services of $16,002.08 is considered to be
unsupported.
Auditee Comments
The Executive Director stated that many vendors offer similar services for electric or
telephone savings. This was such a unique knowledge that the thought of competitive
competition was not considered.
OIG Evaluation of Auditee Comments
We remind the Executive Director that the PHA is required to follow the Code of Federal
Regulations (CFR) and these regulations require competitive proposals.
Recommendations
We recommend that you require the PHA to:
4A. Establish controls that will ensure that the requirements pertaining to competitive
proposals are followed. The controls should ensure that RFPs are prepared and
solicited; evaluations are performed and awards made as required; and either a
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fixed price or cost-reimbursement type contract be prepared and awarded.
4B. Provide additional documentation and justification for the unsupported costs so
that an eligibility determination can be made.
4C. Reimburse from non-Federal funds, the amount of any unsupported costs
determined to be ineligible.
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Finding 5
Controls Over Legal Services and Costs Need to be
Strengthened
Contrary to HUD regulations and requirements, the PHA has: (1) used an improper
method of procurement; (2) executed a multi-year contract without HUD approval; and
(3) routinely paid for legal services without adequate documentation being provided as
evidence that the contracted services were rendered. These deficiencies can be attributed
to the PHA’s general unfamiliarity with applicable regulations and requirements. As a
result, assurance that the related procurement and contract costs were proper and
reasonable has been diminished and that the PHA has incurred costs of $15,909.85 that
are unsupported. The details pertaining to the above deficiencies are described below:
Improper Method For Procuring Legal Services
We reviewed the PHA’s process for requesting proposals for legal services and found that
it did not meet requirements. Rather than providing prospective attorneys with a clear and
accurate description of the services being solicited, the PHA merely sent notices to six
attorneys who were pre-selected advising that it was soliciting proposals for a three year
legal contract. There was no description of the type or extent of the services and the
attorneys were advised to call the PHA if interested.
Title 24 , Section 85.36( c)(3) of the CFRs provides that procedures for procurement
transactions will ensure that all solicitations incorporate a clear and accurate description of
the technical requirements for the material, product, or service to be procured. The intent
of the regulation is to promote full and open competition when conducting procurement
transactions.
Because the services requested were not adequately described, only two responses were
received. One from the PHA’s previous attorney and another from an attorney who
became aware of the PHA’s need for the services through discussions with PHA officials.
The contract files showed that no evaluations or ranking of the two responses had been
performed even though the attorney selected submitted a bid that was $1,687.40 more
than the other response. Furthermore, we found that the attorney who was awarded the
contract, was also the previous PHA attorney.
Title 24 CFR, Section 85.36(d)(3)(iii ) stipulates that grantees and subgrantees will have a
method for conducting technical evaluations of the proposals received and for selecting
awardees.
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Multi-Year Contract Executed Without HUD Approval
At the time the PHA executed a three year contract for legal services in May 1995,
Section 315 of the Annual Contributions Contract (ACC) prohibited PHAs from entering
into contracts for personal, management, legal, or other services where the initial period or
term of the contract was in excess of two years, or where the contract contained a renewal
provision for any period of time without HUD approval.
In March 1995, the PHA received a letter from HUD reminding them of this requirement.
HUD further advised that if the PHA wished to execute a contract covering a period in
excess of two years, they should forward a request to HUD providing justification and
documentation as to the reasons why contracting for a period of two years or less would
not be feasible. Despite the requirement, the PHA executed a three year contract for legal
services in May 1995 without providing HUD any justification for the three year period.
Apart from the above, it should be noted that the PHA did not have an executed copy of
the contract available at the time of our review.
Inadequate Documentation For Services Provided
Various deficiencies were noted in connection with the paid vouchers and invoices
submitted for legal services. The deficiencies included invoices that did not identify what
services were provided. The contract for legal services identifies nine types of services to
be provided; yet the invoices submitted for payment merely state: For professional
services rendered during a calendar quarter. In fact, in one instance, payment was made
without an invoice having been submitted. Moreover, in each instance where invoices
were submitted, we found that the invoices had been submitted and paid prior to the end
of the period billed. For example, the invoice for legal services from January 1,1996
through March 31,1996 was dated March 11,1996 and was paid on March 15,1996.
Finally, we found two instances where reimbursement was made for miscellaneous
expenditures by the attorney, but the source documentation such as a receipt from the
County Clerk’s office for recording fees was not provided.
Section 6, Part II of the Low-Rent Housing Accounting Handbook 7510.1 stipulates that
the PHA must maintain source documentation and files that support the financial
transactions recorded in the books of account, and that provide an adequate audit trail.
This includes such items as documents identifying the source of cash receipts, canceled
checks, and paid bills. In addition, Section 2, Part A of the ACC provides that operating
expenditures shall mean all costs incurred by the PHA for administration, maintenance,
and other costs and charges that are necessary for the operation of the project.
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Since payments were made for legal costs without supporting documentation to show
what services had been provided, the payments may not represent a necessary operating
expenditure. Therefore, the amount paid during the audit period of $15,796.85 is
considered to be unsupported. Similarly, the reimbursement for miscellaneous
expenditures without receipts amounting to $113 is also considered to be unsupported.
Recommendations
We recommend that you require the PHA to:
5A. Adopt necessary controls to ensure compliance with procurement requirements
when RFPs are solicited. The controls should provide for an evaluation of the
proposals received.
5B. Establish procedures to ensure HUD approval is obtained prior to executing
personal service contracts whenever necessary.
5C. Adopt controls that will ensure that adequate documentation for services rendered
is obtained prior to payment.
5D. Provide justification for the unsupported costs so that an eligibility determination
can be made.
5E. Reimburse, from non-Federal funds, the amount of any unsupported costs
determined to be ineligible
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Finding 6
Ineligible and Unsupported Travel Costs
The PHA does not have adequate controls over travel activities to ensure that travel costs
are necessary, reasonable and adequately supported, as required. As a result, ineligible
and unsupported travel costs of $631.00 and $7,884.40 respectively have been incurred.
The travel deficiencies are attributed to the PHA’s general unfamiliarity with the
procedural and documentation requirements.
We reviewed 23 payments for out-of-town travel costs incurred during our audit period.
Deficiencies were found in 19 of the 23 payments reviewed. The deficiencies involve both
ineligible and unsupported costs.
The types of ineligible and unsupported travel costs include:
Ineligible Travel Costs
Ineligible travel costs represent out-of-town travel costs incurred by the PHA’s attorney to
attend a Public Housing Authorities Directors Association (PHADA) conference at Lake
Buena Vista, Florida. The attorney is a third-party contractor and therefore is neither a
Commissioner nor employee of the PHA. Accordingly, the out-of-town conference costs
do not represent a necessary or reasonable cost and are considered ineligible.
Unsupported Costs
Unsupported costs include payments for travel costs that were not supported by a hotel
invoice or an airline ticket; travel costs paid without documentation to identify the purpose
of the trip; travel costs paid without documentation to show how the payment was
determined; meal costs paid for more than one traveler without documentation identifying
all the travelers; travel costs reimbursed for an amount exceeding the costs incurred; and
payment made for airline tickets in which the traveler did not return from his original
destination.
The ineligible and unsupported costs are further described in Appendix C of this report.
Part A, Section 2 of the ACC defines operating expenditures as those necessary for the
operation of the project. In addition, Chapter II of the Public and Indian Housing Low-
Rent Technical Accounting Guide 7510.1 stipulates that the PHA must maintain source
documents and files that support the financial transactions recorded in the books of
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account, and that provide an adequate audit trail. This includes such items as documents
identifying the source of cash receipts, canceled checks, and paid bills.
Travel Policy and Control Deficiencies
A review of the PHA’s travel policy showed that several aspects of the policy are
deficient. For example, the policy does not specify any limitation on the dollar amount of
actual expenses that will be reimbursed. The lack of any limit could allow for the
incurrence of costs that may not be necessary or reasonable.
In addition, travelers are not required to prepare and submit a travel voucher. A travel
voucher is necessary for all travel performed on behalf of the PHA. The voucher should
specify the different types of reimbursement requested such as mileage, tolls, taxis, hotels,
meals, along with departure and arrival times, etc. Such documentation is essential in
order to consolidate and control the costs associated with a particular trip.
Part A, Section 15 of the ACC provides that the PHA must maintain complete and
accurate books of account for the projects in such a manner as to permit the preparation
of statements and reports in accordance with HUD requirements, and to permit a timely
and effective audit.
We believe that the PHA needs to amend its travel policy to identify the maximum
limitation for reimbursement of travel costs. Such limitation should conform with local
policy requirements. Procedures should also be implemented to ensure that travel
vouchers are prepared and that source documentation is obtained to support all costs
prior to reimbursement. Unless the policy and documentation controls are implemented,
deficiencies similar to those cited above will continue.
Recommendations
We recommend that you require the PHA to:
6A. Reimburse, from non-Federal funds, the amount of the ineligible costs.
6B. Provide additional documentation and justification for the unsupported costs so
that an eligibility determination can be made.
6C. Reimburse, from non-Federal funds, the amount of any unsupported costs
determined to be ineligible.
6D. Amend its travel policy to identify the maximum limitation for reimbursement of
travel costs.
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6E. Implement procedures to ensure that travel vouchers are prepared and that source
documentation is obtained to support all costs prior to reimbursement.
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Finding 7
Controls Are Lacking Over Gasoline Charges
Because the PHA did not enforce procedures to prevent the purchase of gasoline by its
employees, unsupported gasoline costs of $786.09 were incurred. The weakness in
preventing the purchase of gasoline by employees is attributable to a decision by the PHA
not to enforce certain provisions of the personnel and procurement policies.
Part A, Section 4 of the ACC requires the PHA to operate each project in a manner which
promotes serviceability, efficiency, economy, and stability. In addition, Part A, Section 2
of the ACC requires that operating expenditures be necessary for the operation of such
project.
The PHA usually purchases gasoline for its vehicles from the City. Payment is made at the
price paid by the City and there is no written contract or agreement for the purchases.
However, we found that during the audit period, certain employees purchased gasoline for
their privately owned vehicles using the PHA credit cards. Such purchases are contrary to
both the PHA’s Personnel Policy and to the Procurement Policy.
Paragraph 17d. of the Personnel Policy provides that each year the director shall submit to
the board appropriate miles reimbursement rate for any employee authorized to use his
private vehicle for busing purposes. In addition, Section II C.1. of the Procurement
Policy provides that one or more gasoline company credit cards will be provided by the
Executive Director to approved employees for the purchase of gasoline, oil, and routine
service for Authority-owned vehicles.
We discussed the use of the credit cards with PHA officials who advised that in December
1997, the credit cards were canceled and will no longer be used. The officials further
advised that they were aware of the policy provisions; but that over the years employees
ran errands and performed other local travel for the PHA. Hence, it was decided to allow
them to purchase gasoline for their vehicles rather than enforce the policy provisions.
Since the Personnel Policy provides that employees be reimbursed at an approved mileage
rate for use of their vehicles and since the Procurement Policy provides that the gasoline
credit cards be used only in connection with PHA owned vehicles, the gasoline purchased
by employees for their privately owned vehicles totaling $786.09 is considered to be
unsupported.
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Recommendations
We recommend that you require the PHA to:
7A. Implement controls that will ensure compliance with the established Personnel
and Procurement policies.
7B. Provide additional documentation for the unsupported costs so that an eligibility
determination can be made.
7C. Reimburse from non-Federal funds the amount of unsupported costs determined to
be ineligible.
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Finding 8
Personnel Management Deficiencies Were Identified
Contrary to its personnel policy and/or the employee union agreement, the PHA: (1) has
allowed vacation leave balances to exceed the agreement limits; (2) does not have an
employment contract with the Executive Director; (3) provided unsupported salary
increases; and (4) provided employees with an extra personal day that is not specified in
the policy or agreement. These deficiencies can be attributed to the PHA’s general
unfamiliarity with applicable requirements. As a result, the PHA does not have adequate
assurance that the liability and the costs incurred were necessary and reasonable. The
details pertaining to the above deficiencies are described in further details below.
Vacation Balances Exceed Union Agreement
The PHA’s Personnel Policy requires that all employees adhere to the provision on
maximum vacation leave accruals cited in Article IX, Section 1 of the Civil Service
Employees Association (CSEA) Agreement. The agreement allows vacation leave to be
accrued up to a maximum of 25 days and that only in exceptional cases will the maximum
authorized be exceeded.
A review of leave records for the years 1995, 1996, and 1997 showed that three
employees had accumulated vacation leave in excess of the 25 day limit specified in the
CSEA agreement. The leave balances ranged from 30.75 days to 40 days of accrued
vacation leave and there was no authorization to allow the excess balances to occur.
Apart from the above, we found that the PHA’s Personnel Policy does not address the
accrual, use, or carry over of sick leave. Nonetheless, it was noted that three employees
not included in the CSEA agreement had sick leave balances that exceeded the maximum
number of days allowed in the CSEA agreement. In fact, one employee’s sick leave
balance exceeded the agreement limit by 50 days.
Employment Contract is Needed With Executive Director
The CSEA agreement specifically excludes the position of Executive Director from
inclusion under the agreement. Moreover, further review showed that there is no separate
contract or agreement between the Executive Director and the PHA to cover employment.
The lack of a written employment contract prevents the PHA from maintaining a basis to
support and justify the responsibilities and benefits of the employee, such as, duties, salary,
leave, health insurance, etc.
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Unsupported Salary Increases
During the years 1996 and 1997 all PHA employees received salary increases of five and
four percent respectively. The justification cited for providing the salary increases was the
CSEA agreement. However, a review of the agreement shows that it specifically excludes
the positions of Executive Director, Modernization Coordinator, Maintenance Mechanic,
and Clerk/Typist to the Executive Director from the bargaining unit. Moreover, it should
be noted that a review of the personnel files for these four employees showed that annual
performance evaluations had not been prepared. Accordingly, there is no documented
basis to support the pay increases that were provided to the four employees whose
positions are excluded from the CSEA agreement.
Extra Personal Day Not Specified in Policy or Agreement
During March 1997, the Executive Director authorized an extra personal day to each
employee as a reward for the PHA attaining a 1996 Public Housing Management
Assessment Program (PHMAP) score of 100 percent. We found that neither the CSEA
agreement nor the Personnel Policy include provisions for granting employees additional
personal days for high scores or performance. The granting of additional personal days to
employees affects PHA policy and should be decided and authorized by the Board of
Commissioners rather than by another employee. Such authorization should be supported
by a resolution adopted and approved by the Board.
Recommendations
We recommend that you require the PHA to:
8A. Adopt controls that will ensure that employee leave balances do not exceed the
established limits and that any exceptions be justified and authorized.
8B. Execute an employment contract with the Executive Director that will document
the responsibilities and benefits that apply to the position.
8C. Justify and support the salary increases provided to employees whose positions
are excluded from the CSEA agreement.
8D. Establish procedures that will require the Board of Commissioners to authorize
the granting of additional personal days to employees.
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Finding 9
Need to Improve Administrative and Accounting
Controls
Our review showed various deficiencies involving administrative and accounting controls
and procedures that have weakened the PHA’s system of internal control. The
deficiencies occurred because procedures were not implemented to ensure that adequate
administrative and accounting controls were executed to meet program requirements. As
a result, the PHA does not have assurance that funds are properly safeguarded against
waste and loss and that its housing programs are administered in accordance with Federal
regulations and requirements.
The following items should not be considered all inclusive; rather, they represent only
those deficiencies that were identified as a result of our review.
Sales tax was paid on many of the vouchers reviewed even though the PHA is a tax-
exempt organization. An example of a voucher on which sales tax was paid is:
Voucher No. Date Amount of Sales Tax Paid
15548 6/06/97 $116.80
b. Various instances were noted where the PHA failed to claim cash discounts offered
even though the payments were made within the discount period. For example:
Voucher No. Date Discount Not Claimed
14704 1/17/97 $ 20.00
Other instances were noted where cash discounts could have been realized had the
payments been made on a timely basis such as:
Voucher No. Date Discount Lost By Untimely
Payment
11694 10/13/95 $17.30
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c. A review of disbursements showed that the only documentation available to support
various disbursements was an adding machine tape attached to the check voucher.
Examples are:
Voucher No. Date Amount
14648 1/10/97 $239.64
15662 6/26/97 141.56
15968 8/01/97 136.08
16126 8/15/97 160.26
Chapter 2, of the Public and Indian Housing Low-Rent Technical Accounting Guide
7510.1, provides that the PHA must maintain source documents and files that support the
financial transactions recorded in the books of account, and that provide an adequate audit
trail.
d. One instance was noted where a second check was issued for the same procurement.
However, follow up on the duplicate payment showed that the vendor returned the
second check uncashed since payment was previously received. Further review
showed that the returned check was in the files but had not been voided.
In another instance, a duplicate payment was made that has not been detected.
Voucher No. 14138, dated October 18, 1996, paid for apartment painting in the
amount of $300. However, Voucher No. 14088, dated October 11,1996, had already
paid the cost.
e. Deficiencies associated with purchasing and the payment for services include:
A. There was no Purchase Order.
B. There is either no documentation to support the cost or the
documentation is inadequate.
C. The amount paid did not agree with the documentation available.
f. Even in those instances when Purchase Orders were prepared, they were found to be
deficient. The deficiencies include:
A. Description of items to be purchased not shown.
B. Price and price extensions not shown.
C. The person confirming the Purchase Order not shown.
g. The Accounts Payable Voucher used for disbursements is inadequate. The voucher
does not provide for certain basic and essential information such as the payee, date
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paid, check number, amount paid, description of purchase, account number charged,
and person recommending the voucher for payment.
h. Certain employees purchased gasoline for their privately owned vehicles (POV’s) with
the PHA’s credit card even though the Personnel Policy provides an authorized
mileage rate of reimbursement for employees using their POV’s for busing purposes.
In addition, the Procurement Policy provides that the gasoline credit cards should
only be used in connection with PHA owned vehicles.
i. Although the PHA’s Admission and Continued Occupancy Policy provides for all units
to be inspected at least once annually, a review of three projects totaling 148 units
showed that four units had not received the required inspections. In addition, we
found that the checklists used for the units that were inspected were not fully
completed. Rather than completing each item on the checklist that was inspected, the
majority of the checklists only showed general comments such as “clean” or the
inspector’s initials.
j. A review of several petty cash vouchers showed four instances where the travel costs
for out-of-town training workshops such as tolls and lunches were charged to petty
cash rather than the appropriate travel accounts. Such procedures not only cause the
charges to be misclassified for accounting purposes; but precludes the PHA from
requiring travelers to prepare a travel voucher.
Title 24 CFR, Part 85.20, Standards for Financial Management Systems, requires that
effective controls and accountability must be maintained for all assets and that the assets
must be safeguarded. In addition, Part A, Section 15 of the ACC provides that, the PHA
must maintain complete and accurate books of account to permit a timely and effective
audit. The above deficiencies have precluded the PHA from complying with the
requirements cited. Unless corrective actions are implemented, deficiencies similar to
those described above will recur.
Recommendations
We recommend that you require the PHA to:
9A. Implement controls to ensure that invoices containing ineligible sales taxes are
not processed for payment.
9B. Adopt procedures that will ensure that:
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1. Cash discounts offered are deducted from the amounts paid when
payments are made within the discount period.
2. Invoices are promptly processed for payment so that all cash discounts
offered are realized.
9C. Institute procedures that will require all costs be properly supported and
documented prior to payment.
9D. Establish controls to prevent duplicate payments. Such controls should ensure
that invoices are thoroughly reviewed and amounts are determined to be proper
prior to payment.
9E. Implement controls over purchasing and the payment for services to ensure that:
1. Purchase Orders are prepared.
2. Adequate supporting documentation is obtained prior to payment.
3. Documentation agrees with the amount paid.
9F. Establish procedures that will assure that purchase orders:
1. Contain a description of the items to be purchased.
2. Contain prices and price extensions for the items to be purchased.
3. Identify the employee preparing and confirming the order.
9G. Revise its accounts payable voucher. At a minimum, the voucher should show the
payee, date paid, amount paid, check number, description of purchase, account
number charged and the person recommending the voucher for payment.
9H. Implement procedures that will prohibit employees from purchasing gasoline for
their privately owned vehicles with the PHA’s credit card.
9I. Strengthen its procedures to ensure that all units are inspected at least once
annually. The inspections should show that all checklist items have been
inspected.
9J. Adopt controls that will prohibit travel costs from being paid from petty cash and
that will ensure that travel vouchers are prepared for all out-of-town travel.
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Internal Controls
In planning and performing our audit, we considered the internal control systems of the PHA to
determine our auditing procedures and not to provide assurance on internal control. Internal controls
are the process by which an entity obtains reasonable assurance as to achievement of specific objectives.
They consist 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 that the following internal control categories were relevant to our audit objectives:
• Controls over the administration of its HUD programs.
• Controls over disbursements.
• Controls over supporting documentation for expenditures.
• Controls over gasoline purchases.
• Controls over personnel procedures.
• Controls over procurement and contracting.
• Controls over travel.
• Controls over accounting and record keeping.
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 controls do not give reasonable assurance
that : (a) the entity’s goals and objectives are met; (b) resource use is consistent with laws, regulation,
and policies; (c ) resources are safeguarded against waste, loss and misuse; and (d) reliable data are
obtained, maintained, and fairly disclosed in reports.
Our review identified the following significant internal control weaknesses:
• Controls over the administration of its HUD programs (Finding 2).
• Controls over disbursements (Findings 1,3,4,5,6,7, and 9).
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• Controls over supporting documentation for expenditures (Findings 3,4,5,6, and 9).
• Controls over gasoline expenditures (Findings 7 and 9).
• Controls over personnel procedures (Finding 8).
• Controls over procurement and contracting (Findings 1,4, and 5).
• Controls over travel (Findings 6 and 9).
• Controls over accounting and record keeping (Findings 6 and 9).
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Follow-up on Prior Audits
A prior audit of the PHA was performed by an Independent Auditor for the twelve month period ended
September 30, 1995. The report contained two findings. One finding showed a time lag in bank
deposits. The other finding showed that the PHA’s system for taking an annual inventory and
maintaining fixed asset records was not in accordance with HUD requirements. Both findings were
cleared by HUD on November 5, 1996.
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Appendices
Appendix A
Schedule of Ineligible and Unsupported Costs and Cost
Efficiencies
Finding Ineligible (1) Unsupported (2) Cost
Number Efficiency (3)
1 $99,286.84
2 $139,675.00
3 $1,789.20 41,179.60
4 16,002.08
5 15,909.85
6 631.00 7,884.40
7 786.09
Total $2,420.20 $181,048.86 $139,675.00
(1) Cost clearly not allowed by law, contract, HUD or local agency policies and regulations.
(2) Costs not clearly eligible or ineligible but warrant being contest (e.g. lack of satisfactory
documentation to support the eligibility of the costs, etc.)
(3) A cost efficiency is an action by management in response to the Inspector General’s
recommendations to prevent improper obligation or expenditure of funds or to avoid further
unnecessary expenditures.
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Appendix B
Schedule of Ineligible and Unsupported Payments From the
General Fund
Date Voucher Description Amount Amount Notes
Number Ineligible Unsupported
09/22/95 11549 None $2,500.00 1
10/13/95 11679 6 Waterheaters at $135.00 each 1,000.00 2
10/27/95 11769 Sheriff fees 152.88 3
11/17/95 11887 Statement of charges 5,184.40 4,5
11/17/95 11888 Statement of charges 2,101.50 5
12/08/95 12021 Van registration 71.25 3
12/15/95 12086 Closing costs 2,500.00 3
12/22/95 12120 Newsletter and TV guide 100.00 3,4
01/05/96 12202 Credit union deduction- week ended 1/5/96 130.00 6
01/26/96 12326 Labor, materials and trailer 916.00 4,5
02/23/96 12488 Albany County Sheriff 76.44 3
03/01/96 12545 Dues- Grater Capital Assoc. of Realtors $25.00 254.00 4,7,8
04/05/96 12755 Donation to St. Brigids softball league 225.00 9
07/12/96 13352 NYS Museum Shed trip 107.00 3,4
07/19/96 13406 Shed trip 60.00 3,4
07/19/96 13413 Dues- Grater Capital Assoc. of Realtors 191.00 4,7
07/26/96 13491 Donation to Police Benevolent Assoc. 200.00 9
08/09/96 13588 Bouncer- Block party 300.00 3,4
08/09/96 13608 Horse drawn carriage- Block party 255.00 3,4
08/16/96 13651 Block party 40.00 3,4
08/23/96 13700 Sheriff for 82 Day and 545 Joslin 152.88 3
08/23/96 13706 Cranberry the clown- Block party 250.00 3,4
08/23/96 13708 Great Escape bus trip 205.00 3,4
09/13/96 13853 Donation to Pop Warner Association 500.00 9
10/18/96 14131 Zoning application 50.00 3
10/18/96 14138 Paint apartment no. 34 at Project NY25-1 300.00 10
11/29/96 14391 Private Investigator Services- tenant fraud 300.00 4,7
12/27/96 14558 Painting various apartments 4,171.00 11
01/03/97 14613 Donation to Watervliet Dad's Club 100.00 9
01/24/97 14730 Dues- Greater Capital Assoc. of Realtors 279.00 4,7
02/14/97 14878 38 yards of gravel 199.50 4,12
02/28/97 14938 Use of City dumpster 4/1/95-12/31/96 10,500.00 4,7,13
04/25/97 15248 None 132.00 17
05/09/97 15344 None 30.00 4,16
05/09/97 15349 Payment to employees for retirement 149.45 3
05/09/97 15352 Refund 50.00 3
05/16/97 15399 Statement of charges and Bill of lading 3,710.00 4,5
05/16/97 15401 Donation to St. Brigids softball league 75.00 9
05/16/97 15404 Contributions to Police Benevolent Assoc. 200.00 9
Subtotal- Page 1 $1,625.00 $36,118.30
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Date Voucher Description Amount Amount Notes
Number Ineligible Unsupported
Balance Forward- Page 1 $1,625.00 $36,118.30
06/26/97 15672 Penalty and interest 164.20 15
06/26/97 15684 Regular and 3 additional memberships 59.40 4,7
07/10/97 15789 Dues- Greater Capital Assoc. of Realtors 231.00 4,7
07/16/97 15863 Photos 366.90 4,5
08/01/97 15990 Reimbursement for electric usage 23.00 3
08/01/97 15992 None 75.00 3,4
08/15/97 16127 Use of City Dumpster 1/97-6/97 3,000.00 4,7,13
08/22/97 16184 3 gift certificates at $25.00 for Block party 75.00 3,4
08/29/97 16216 Rental of Bouncity Bounce 140.00 14
08/29/97 16238 Postage 500.00 3,4
08/29/97 16239 Cookies for Block party 51.00 14
09/05/97 16303 Professional services 7/19-8/15/97 500.00 4,5
09/26/97 16403 Refrigerator repairs 40.00 4,18
Totals $1,789.20 $41,179.60
Notes
1 Only a blank sheet of paper is attached to the payment voucher.
2 Amount billed was $810; but $1,810 was paid.
3 There is no invoice to support the charge; only a handwritten note by the PHA exists.
4 There is no purchase order.
5 Supporting documentation does not support charges.
6 Amount paid was$1,113.78; but supporting documentation is for $983.78.
7 Cost is questioned as to being necessary and reasonable.
8 Represents $25.00 penalty for late payment which is not an allowable cost.
9 Contributions and donations are not an allowable cost.
10 Represents duplicate payment since check no. 14088 had already paid this cost.
11 Bill is dated 12/03/96; but most of the charges are subsequent to 12/03/96.
12 The invoice and bill are to the City; but was paid by the PHA.
13 There is no invoice for the cost; only a letter from the City Finance Director.
14 Only support is a note to pay and one page of tenant lease.
15 There is no documentation to support the charge.
16 Penalties and interest are not allowable costs.
17 There is no invoice to support the charge; only a Purchase Order.
18 The three charges on the bill total $345; yet $385 was paid.
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Appendix C
Schedule of Ineligible and Unsupported Travel Costs
Payment Voucher Destination Ineligible Unsupported Notes
Date Number Costs Costs
10/13/95 11673 Lake Buena Vista, FL $130.00 1
10/27/95 11768 Lake Buena Vista, FL 130.00 1
11/24/95 11935 not applicable $345.00 2
01/26/96 12333 Lake Buena Vista, FL 910.00 1
01/26/96 12340 Lake Buena Vista, FL 186.20 3
01/26/96 12341 Lake Buena Vista, FL 286.00 2,4
01/26/96 12365 Lake Buena Vista, FL 286.00 3,4
12/13/96 14477 Phoenix, AZ 1,097.44 1
01/03/97 14598 Phoenix, AZ 464.05 3
01/10/97 14664 Phoenix, AZ 459.00 3
03/19/97 15023 not applicable 400.00 5
05/01/97 15278 Hauppauge, NY 39.00 6,7
05/16/97 15391 New Orleans, LA 628.38 1,6
05/16/97 15405 New Orleans, LA 777.90 1,6
06/06/97 15545 New Orleans, LA 307.20 3,6
06/06/97 15550 New Orleans, LA 323.60 3,6
06/26/97 15691 New Orleans, LA 323.60 3,6
07/04/97 15742 New Orleans, LA 375.72 6,8
07/10/97 15784 New Orleans, LA 1,046.31 3
Totals $631.00 $7,884.40
Notes:
1 Hotel bill was not attached to paid voucher.
2 Represents travel costs paid for an ineligible traveler.
3 Inadequate documentation; airline receipt was not attached to support payment.
4 Although the conference was held in Orlando, FL, the airline return was
from Miami, FL without any justification.
5 There is no documentation to support the amount of registration fee paid.
6 Purpose of trip was not identified.
7 Amount reimbursed exceeded the costs documented.
8 Documentation indicates meal costs for more than one traveler; but the travelers
are not identified.
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Appendix D
Auditee Comments
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Appendix E
Distribution
Director, Office of Public Housing, 2CPH (2)
Secretary’s Representative, New York/New Jersey, 2AS
Buffalo Area Coordinator, 2CS (2)
Assistant to the Deputy for Field Policy and Management, SDF, Room 7106
Office of Public & Indian Housing, PF (Attn: Comptroller, Rm. P8202) (5)
Acquisitions Librarian, AS (Room 8141)
Chief Financial Officer, F (Room 10164) (2)
Deputy Chief Financial Officer, FF (Room 10166) (2)
Associate General Counsel, Office of Assisted Housing & Community
Development, CD (Room 8162)
Secretary for Labor Relations, (Acting), SL (Room 7188)
Field Comptroller, Midwest Field Office, 5AF
CFO, Mid-Atlantic Field Office, 3AFI
Director, Housing & Community Development Issue Area, U.S. GAO, 441 G Street,
NW, Room 2474, Washington, DC, (Attention: Judy England-Joseph)
Executive Director, Watervliet Housing Authority, Watervliet, New York
Inspector General, G (Room 8256)
Public Affairs Officer, G, (Room 8256)
Internet Coordinator, GAA, (Room 8172)
Council to Inspector General, GC (Room 8260)
Assistant Inspector General for Audit, GA (Room 8286)
Subcommittee on General Oversight & Investigations
O’Neill House Office Building - Room 212
Washington, DC 20515-4305
Honorable Pete Sessions
Government Reform and Oversight Committee
Congress of the United States
House of Representatives
Washington, DC 20515-4305
Honorable John Glenn, Ranking Member
Committee on Governmental Affairs
United States Senate
Washington, DC 20510-6250
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Honorable Dan Burton
Chairman
Committee on Government Reform and Oversight
House of Representatives
Washington, DC 20515-6143
Honorable Fred Thompson
Chairman
Committee on Governmental Affairs
United States Senate
Washington, DC 20510-6250
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Watervliet HA, Watervliet, NY
Published by the Department of Housing and Urban Development, Office of Inspector General on 1998-06-08.
Below is a raw (and likely hideous) rendition of the original report. (PDF)