oversight

HA of St. James Parish Public Housing Drug Elimination Program, Lutcher, LA

Published by the Department of Housing and Urban Development, Office of Inspector General on 1998-11-06.

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

                                                                     Issue Date
                                                                            November 6, 1998
                                                                     Audit Case Number
                                                                             99-FW-202-1002




TO:    Judy Wojciechowski
       Director
       Troubled Agency Recovery Center, PB2


FROM:      D. Michael Beard
           District Inspector General for Audit, 6AGA

SUBJECT:       Housing Authority of St. James Parish
               Public Housing Drug Elimination Program
               Lutcher, Louisiana


As part of a nationwide review of the Public Housing Drug Elimination Program, we performed
an audit of the St. James Parish Housing Authority, Lutcher, Louisiana. This report contains one
finding.

Within 60 days, please give us, for each recommendation made in this report, a status report on:
corrective action taken, (2) the proposed corrective action and the date to be completed, or (3)
why action is considered unnecessary. Also, please furnish us copies of any correspondence or
directives issued related to the audit.

If you or your staff have any questions, please contact Darrel M. Vaught, Assistant District
Inspector General for Audit, at (817) 978-9309.
Management Memorandum




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99-FW-202-1002                    Page ii
Executive Summary
We conducted an audit of the Public Housing Drug Elimination Program administered by the St.
James Parish Housing Authority, Lutcher, Louisiana (Authority). Our review was to determine
whether the Authority, for grant years 1994 through 1996: (1) implemented its drug elimination
program awards with satisfactory outcomes and benefits and (2) expended program funds only for
eligible activities and in accordance with program requirements.

The Authority did not maintain data or have a system to measure the satisfactory outcomes and
benefits of its programs. Without this data, neither the Authority nor HUD can determine
whether the Drug Elimination Grant Program has provided satisfactory outcomes and benefits.

Further, the Authority did not properly administer the Drug Elimination Grant Program. The
Authority generally relied on the Sheriff’s Department to prepare the grant applications and
prepare periodic reports to HUD. Also the Authority did not maintain appropriate accounting
records and source documents to support its drawdown and use of grant funds. As a result, the
Authority: (1) did not have documentation to show how it used about $4,000 it drew down from
the 1994 and 1995 grants; (2) used $10,400 to reimburse the Sheriff’s Department for purchase of
ineligible police equipment; and (3) did not have invoices to support payments of about $1,300 for
cameras and travel.

HUD designated the Authority as “troubled” based on its Public Housing Management
Assessment Program scores for the year ended September 30, 1993. Subsequently, after the
Authority hired several different Executive Directors, HUD contracted with a consultant to
manage the day-to-day operations of the Authority and assist in the search for a new qualified
Executive Director. In March 1998, the Authority hired an experienced person for this position.
HUD’s Troubled Agency Recovery Center staff were working with the new Director and her staff
to increase the Authority’s capacity to effectively and properly manage the Authority’s programs
and operations.

We are recommending, in the event HUD awards any future Drug Elimination Grants,1 the
Authority: (1) establish an appropriate performance monitoring system; (2) develop strategies for
continuation of activities when specific funding is no longer available; and (3) develop the
necessary management and financial capacity to carry out the programs before drawing down
funds. We are also recommending the Authority repay HUD for any unsupported or ineligible
expenditure of Grant funds.

We provided a draft copy of the report to the Authority on October 9, 1998. We held an exit
conference with the Executive Director on October 20, 1998. We have summarized the
Authority’s October 20, 1998 response to the draft report in the finding and included it in its
entirety as Appendix C.




1
    The Authority initially submitted an application for a 1997 grant, but requested the HUD Louisiana State Office not forward
    the application to HUD Headquarters for review.

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Executive Summary




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99-FW-202-1002                  Page iv
Table of Contents

Management Memorandum                                                     i


Executive Summary                                                      iii


Introduction
1


Findings

1    Authority Has Not Properly Managed its Grant Program             5



Management Controls
13



Follow-Up on Prior Audit Findings                                     17



Appendices
      A Schedule of Grant Costs                                        17

      B Schedule of Questioned Costs                                  19

      C Auditee Comments
21

      D Distribution
23



Abbreviations

                                  Page v                    99-FW-202-1002
Table of Contents


       CFR       Code of Federal Regulations
       HUD       U.S. Department of Housing and Urban Development
       OIG       Office of Inspector General
       OMB       Office of Management and Budget




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99-FW-202-1002                           Page vi
Introduction
St. James Parish, Louisiana, established the St. James Parish Housing Authority in 1966
and the Parish President appointed a five-member Board of Commissioners to govern
Authority operations. The Board is responsible for hiring an Executive Director to manage
the Authority’s day-to-day operations. The Authority keeps its records at its
administrative office, located at 2627 King Avenue, Lutcher, Louisiana 70071. The
Authority has 318 Low-Rent units located at six different sites on both the east and west
banks of the Mississippi River.

Chapter 2, Subtitle C, Title V of the Anti-Drug Abuse Act of 1988 authorized the Public
Housing Drug Elimination Program. HUD makes grants to public housing authorities to
fund activities directed toward the elimination of drug-related crime in public housing
developments. Public housing authorities use the grants to carry out activities, which
include increased security and protective services, physical improvements to enhance
security, and (c) other permitted activities to reduce drug-related crime.

HUD has awarded Drug Elimination Grants to the Authority for fiscal years 1993 through
1996 programs. The following chart shows the funds HUD awarded and the funds the
Authority has drawn down from HUD’s Line of Credit Control System as of April 23,
1998:

          Public Housing Drug Elimination Program
          Grant Year Funding        Drawn Down            Balance
                                                          Available
          1993          $159,000       $159,000           $       -
          1994            95,000         95,000                   -
          1995           159,000        159,000                   -
          1996           158,500         44,918             113,582

          Totals        $571,500       $457,918           $113,582

Based on its Public Housing Management Assessment Program rating for September 30,
1993, HUD classified the Authority as “troubled.” Also, since, January 1995, the Authority
has had five Executive Directors, including one interim and one acting executive director.
Because of continued deterioration in management, HUD contracted with a consultant to
manage the day-to-day operations of the Authority and conduct a search for a qualified
Executive Director.


 Scope and Methodology             We conducted our examination of the St. James Parish
                                   Housing Authority to determine whether the Authority for
                                   grant years 1994 through 1996: (1) implemented its drug
                                   elimination program awards with satisfactory outcomes and


                                         Page 1                               99-FW-202-1002
Introduction


                 benefits and (2) expended program funds for only eligible
                 activities and in accordance with program requirements.

                 To accomplish these objectives, we obtained background
                 information by:

                 •   Reviewing relevant HUD regulations, guidelines, grant
                     agreements, and Notices of Funding Availability;
                 •   Examining records and reports maintained by the HUD
                     Louisiana State Office, Public Housing Division, and
                     interviewing Division staff;
                 •   Scanning the Authority’s accounting records, financial
                     reports, and policies, and interviewing Authority staff;
                 •   Reviewing the minutes of the Board of Commissioners
                     meetings; and
                 •   Reviewing independent public accountant audit reports.

                 To determine if the Authority properly followed HUD
                 requirements in monitoring program performance and
                 expending funds, we:

                 •   Reviewed the Authority’s grant year 1994 through 1996
                     grant applications;
                 •   Reviewed the Authority’s semiannual performance and
                     financial reports submitted to HUD for the reporting
                     periods occurring between January 1995 through
                     December 1997;
                 •   Interviewed Authority, HUD, and Parish Sheriff’s
                     Department staff regarding the Authority’s drug
                     elimination program;
                 •   Reviewed the Authority’s supplemental police services
                     contracts with the Parish Sheriff’s Department;
                 •   Scanned Public Housing Daily Activity Reports for
                     supplemental police services the Sheriff’s Department
                     maintained for the period January 1, 1994, through
                     September 30, 1997;
                 •   Scanned and randomly tested Sheriff’s Department time
                     sheets for officers assigned to the Drug Elimination
                     Grant funded activity, for the period October 1, 1994,
                     through September 30, 1997;
                 •   Reviewed the Sheriff’s Department Payroll History
                     Check Register for selected officers for the period
                     October 1, 1995, through September 30, 1997;
                 •   Scanned the Sheriff’s Department complaint files for
                     calls for service at Authority developments;
99-FW-202-1002            Page 2
                                                Introduction


•    Reviewed Sheriff’s Department drug elimination files,
     invoices, and supporting records for payments received
     from the Authority;
•    Reviewed available Authority financial records (general
     ledgers, check vouchers, invoices, billings, and bank
     statements) for the period January 1, 1994, through
     February 6, 1998;
•    Obtained from the Sheriff’s Department available crime
     statistics for January 1995 through December 1997; and
•    Obtained drug elimination program Line of Credit
     Control System reports, for fiscal years 1993 through
     1996 Grants, from the HUD Louisiana State Office.

We conducted the audit in accordance with generally
accepted government auditing standards. The audit period
for the Authority’s implementation of its drug elimination
program covered the 1994 through 1996 grant awards. For
the Authority’s use of program funds we reviewed
expenditures from October 1, 1994, through February 6,
1998, which included 1993 through 1996 Drug Elimination
Program Grant activities. The Authority did not have
complete and comprehensive records for financial
transactions, which limited the scope of our review. As a
result, the Authority could have additional eligible
expenditures and supporting documentation, which we were
unable to locate. We performed our review from January
through June 1998.

We provided a copy of this report to the Executive Director
of the Housing Authority of St. James Parish.




    Page 3                                    99-FW-202-1002
Introduction




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99-FW-202-1002                  Page 4
                                                                                                                  Finding 1


            Authority Has Not Properly Managed
                     its Grant Program
The Authority: (a) cannot demonstrate the effectiveness of its program in reducing drug
activity and crime; (b) has not developed a strategy to ensure that its activities are
sustainable for future periods; and (c) cannot support the propriety of about $15,700 of the
$457,918 in total Drug Elimination grant funds obtained from HUD. This occurred
because the Authority relied almost totally on the St. James Parish Sheriff’s Department to
prepare its Drug Elimination Grant application, carryout the program, and prepare
reports to HUD.2 Neither the Authority nor the Sheriff’s Department met regulatory
requirements for measuring and reporting on the beneficial impact of its grant-funded
activities or took action to develop a strategy for sustaining drug elimination and
prevention initiatives over a period of years. Further, the Authority did not meet HUD
requirements for maintaining appropriate and essential accounting records to support its
grant costs.


                                                 HUD regulations note that the purpose of the Public
    HUD Requirements                             Housing Drug Elimination Program is to: (a) eliminate
                                                 drug-related crime and problems associated with it in and
                                                 around the premises of low-income housing and (b)
                                                 encourage Public Housing Authorities to develop a plan that
                                                 includes initiatives that can be sustained over a period of
                                                 several years for addressing drug-related crime and its
                                                 problems in and around their premises.3

                                                 Further, these regulations4 note grantees are responsible for
                                                 managing the day-to-day operations of the grant and must
                                                 monitor each grant-funded program, function, or activity to
                                                 assure compliance with federal requirements and
                                                 achievement of performance goals and are required to
                                                 maintain records which adequately identify the source and
                                                 application of funds provided for financially assisted
                                                 activities. These records must: (a) contain information
                                                 pertaining to grant or subgrant awards and authorizations,
                                                 obligations, unobligated balances, assets, liabilities, outlays
                                                 or expenditures, and income, (b) be supported by source

2
    Although HUD’s Louisiana State Office rated the Authority’s capacity to carry out the grant program low and the application
    did not include baseline crime information for the Authority’s developments, HUD Headquarters approved and funded the
    applications.
3
    HUD regulations at 24 CFR §961.1 (applicable to 1994 and 1995 Grants) and 761.1 (applicable to 1996 Grant).
4
    HUD regulation at 24 CFR §85.20(b) and §85.40(a).

                                                          Page 5                                            99-FW-202-1002
Finding 1


                                               documentation; and (c) provide accurate, current, and
                                               complete disclosure of the financial results for any required
                                               reporting.

                                               HUD regulations also require grantees to provide
                                               semiannual reports to HUD setting forth actual
                                               accomplishments in comparison to the objectives established
                                               for the reporting period, including any change in crime
                                               statistics, successful completion of strategy components,
                                               problems encountered, and evaluation of the rate of
                                               progress5.

                                               Further, HUD requires grantees to provide a financial status
                                               report semiannually for periods ending June 30 and
                                               December 31. The grantee must submit the reports to the
                                               local HUD office by July 30 and January 31 of each year.6

                                               Representatives of the Parish Sheriff's Department stated
    Authority was not                          that after learning of the grant program, they approached
    actively involved in                       the Authority’s Executive Director about getting the
    carrying out the                           Authority to apply for the 1993 grant to help rid the
    program.                                   Authority developments of drug-related crime. They further
                                               stated that: (a) the Executive Director was not interested in
                                               the grant; (b) the Executive Director told them to prepare
                                               the application if they wanted the program; (c) they
                                               prepared the 1993 and subsequent applications; and (d) they
                                               prepared the semiannual performance reports for submission
                                               to HUD. They further noted that any questions or help the
                                               Sheriff's Department needed came from the local HUD
                                               office, and not the Authority. Further, they stated the
                                               Sheriff's Department assigned staff and prepared the work
                                               schedules for the additional police services at the
                                               developments without Authority oversight. These
                                               statements were generally confirmed by HUD’s August 3,
                                               1994 monitoring report of the Authority’s 1993 Drug
                                               Elimination Grant, which stated:

                                                   The St. James Parish Sheriff’s Department is to be
                                                   commended for taking the lead in implementing the
                                                   PHDEP in the Authority. The level of ongoing resident
                                                   involvement in implementing the program is

5
    HUD regulations at 24 CFR §961.28 (applicable to 1994 and 1995 Grants) and §761.35 (applicable to 1996 Grant).
6
    HUD regulations at 24 CFR §85.41(b) and (c) and §961.28(c)(1) and (2) for 1994 and 1995 Grants and §761.35(c)(1) and
    (2)(ii) for the 1996 Grant.


99-FW-202-1002                                            Page 6
                                                                              Finding 1


                              spearheaded by the sheriff’s deputies assigned within
                              the PHAs sites. … In essence, the St. James Parish
                              Sheriff’s Department is in control of the PHDEP at the
                              St. James Parish Housing Authority and are certainly
                              doing a fine job.

                           The report also noted that the Authority needed to establish
                           a system to evaluate the program, as follows:

                              We recommend that the grantee develop a self-
                              evaluation method which will document the progress of
                              the program and problems that have been encountered.
                              This will enable the grantee to analyze additional
                              needs, if any, for future funding requests. Also, this
                              information would be an aid to preparing the semi-
                              annual performance and financial reports.

Authority and Sheriff’s    Neither the Authority nor the Sheriff’s Office had assembled
Department had not         data on the extent of drug related crime in the
determined the extent of   developments. Therefore, the Authority did not have
drug-related crime.        baseline data to use in measuring the effectiveness of its
                           grant activities in reducing such crime. Further, the
                           Authority had not established well-defined goals or
                           objectives for its planned activities, e.g., to reduce drug
                           activity or crime by a specified percentage. Although the
                           Sheriff's Department had Parish-wide crime statistics and
                           detail records for the number and type of complaints
                           handled by its officers in each development, neither the
                           Sheriff’s Office nor the Authority had established a
                           management information system to compile, summarize, and
                           compare this information to measure the program’s
                           effectiveness in reducing drug activity and related crime.

                           The Authority application budgeted substantially all of its
Authority has not
                           grant funding for additional police services provided by the
adequately planned for
                           Sheriff’s Department. As of February 1998, the Authority
continuation of efforts.
                           had budgeted $412,500 and expended $319,136 of its 1994,
                           1995, and 1996 Grant funds for the following activities:




                             Page 7                                     99-FW-202-1002
Finding 1


                                                                              Amount                      Percent of Total
                                                                       Budgeted    Expended             Budgeted Expended
                               Law Enforcement
                                1994                                     $ 89,100          $ 89,099
                                1995                                      138,660           152,526
                                1996                                      106,246            69,166
                                         Subtotals                       $334,006          $310,791        81.0%      97.4%
                               Physical Improvements
                                1994                                       $ 2,000             $2,000
                                1995                                        10,000                  -
                                1996                                        13,291                  -
                                         Subtotals                         $25,291             $2,000       6.1%       0.6%
                               Other Costs
                                1994                                       $ 3,900         $    2,525
                                1995                                        10,340              3,820
                                1996                                             -                  -
                                         Subtotals                        $ 14,240         $    6,345       3.5%       2.0%
                               1996 Additional Categories
                                Voluntary Tenant Patrol                    10,540                 -
                                Drug Prevention                             4,620                 -
                                Drug Intervention                          23,803                 -
                                         Subtotals                       $ 38,963          $      -        9.4%         0.0%
                               Totals                                    $412,500          $319,136      100.0%       100.0%

                                                  The Sheriff’s Officers assigned to patrol the Authority’s
                                                  low-rent developments believe that their efforts have made a
                                                  significant impact toward reducing drug activity and crime.
                                                  However, the Sheriff's Department bases its use of officers
                                                  dedicated to patrol the low-rent developments, upon the
                                                  availability and continuation of Drug Elimination Grant
                                                  funding. One of HUD’s stated purposes is for grantees to
                                                  develop a plan with initiatives for addressing drug-related
                                                  crime and its problems that can be sustained over a period
                                                  of several years

                                                  As shown, the Authority’s primary use of 1993 through
                                                  1995 Grant funds has been for added police protection.7
                                                  Although the Authority included $38,963 for Voluntary
                                                  Tenant Patrols, Drug Prevention, and Drug Intervention
                                                  activities in its 1996 Grant application, as of February 1998,

7
    The 1993 Grant totaled $159,000 in the following categories - $139,680 for police services, $5,500 for physical
    improvements, and $13,800 for other program costs.

99-FW-202-1002                                                Page 8
                                                                                                                  Finding 1


                                                 the Authority had not started or expended any funds on
                                                 these activities.8 Consequently, the Authority’s primary use
                                                 of Drug Elimination Grant funding is for added police
                                                 protection, which the Authority can sustain only by using
                                                 continued HUD grants.

                                                 The Authority did not maintain proper accounting records
    Authority did not keep                       with source documents to support its use of grant funds for
    appropriate accounting                       Drug Elimination Activities and its reporting of financial
    records to support                           transactions to HUD. The HUD Louisiana State Office, in
    Grant drawdown and                           their August 3, 1994 letter to the Authority regarding the
    expenditures.                                1993 Drug Elimination Program noted the need to improve
                                                 financial accounting:

                                                          …“The financial records must contain accurate,
                                                      complete and up-to-date information on all of the grant
                                                      funds. From the records, the reviewer should be able to
                                                      determine how much was spent and how much money is
                                                      left…” …”The accounting records must contain
                                                      complete information about the receipt and
                                                      disbursements of grant funds…”

                                                 However, the Authority did not correct these accounting
                                                 and other management problems.9 The contract consultant
                                                 provided OIG with available records. These records did not
                                                 include an accurate general ledger, disbursements journal, or
                                                 a proper filing system for supporting invoices and
                                                 documents.

                                                 However, based on various files at either the Authority or
                                                 Sheriff’s Department, OIG was able to identify a total of
                                                 $319,136 expended through February 8, 1998, from the
                                                 1994 through 1996 Grants. Appendix A shows the amount
                                                 of identified expenditures for the 1994, 1995, and 1996
                                                 Grants as of February 28, 1998. The following shows the
                                                 amount of grant funds the Authority drew down compared
                                                 to the OIG identified expenditures:




8
    HUD has extended the grant through November 30, 1998.
9
    As noted in the Background Section, the Authority experienced turnover in its top management position and, because of
    continued ineffective management, HUD contracted with a consultant to take over management of the Authority.

                                                    Page 9                                                 99-FW-202-1002
Finding 1


                                                              Grant                             Grant Funds
                                                     Year10       Award            Drawn         Expended           Over
                                                                                                                   (Under)
                                                   1994           $ 95,000         $ 95,000       $ 93,624         $ 1,376
                                                   1995            159,000          159,000        156,346             2,654
                                                   1996            158,500           44,918         69,166          (24,248)
                                                   Totals         $412,500         $298,918       $319,136         $(20,218)


     Authority cannot                             The Authority did not have documentation to show
     support all expenditures                     expenditure of $4,030 it drew down for 1994 or 1995 Grant
     for 1994 and 1995                            activity. HUD closed the 1994 Grant on March 10, 1997,
     Grants and used funds                        based on the Authority’s Financial Status Report showing a
     for ineligible police                        total of $95,000 expended for grant activities. However,
     equipment.                                   the Authority’s documentation showing expenditures
                                                  attributable to the 1994 Grant year totaled $93,624.
                                                  Therefore, the Authority does not have support for $1,376
                                                  in 1994 Grant funds drawn down in excess of OIG
                                                  identified expenditures.

                                                  Further, the Authority has drawn down all $159,000 of
                                                  1995 Grant funds, but had documentation to support only
                                                  $156,346 in expenditures, or $2,654 less than the Grant
                                                  funds drawn down. The Authority and Sheriff’s
                                                  Department had adequate documentation to support the use
                                                  of $152,526 of 1995 Grant funds for law enforcement
                                                  salaries.11

                                                  The Authority’s 1994 expenditures for law enforcement and
                                                  1995 expenditures for other costs included $4,760 of
                                                  questionable or ineligible cost, as follows:

                                                     Date       Check No.               Description                Expended

                                                   3/29/95     017724          Two radar units                      $2,500.00
                                                   3/29/96     019341          Police radio microphone
                                                                               speakers                                998.26
                                                   3/29/96     019342          Travel for 2 Police
                                                                               Officers                                641.00
                                                                               Southern Camera Shop                    620.76
                                                                                    Total                           $4,760.02



10
     The 1994 Grant expired on September 30, 1995, and the 1995 Grant expired on January 31, 1998.
11
     OIG classified all payments to the Sheriff’s Department for salaries based on the time period worked within the 1995 Grant
     period up to the total authorized budget amount of $138,660 plus $13,866 (10% modification HUD regulations allow without
     obtaining prior HUD approval. OIG classified all subsequent payments for salaries to the 1996 Grant).

99-FW-202-1002                                                Page 10
                                                                                                                   Finding 1


                                                  The radar units and radio microphones are police equipment
                                                  and therefore not eligible for grant funding.12 The
                                                  Authority’s records did not contain supporting documents
                                                  for the travel and camera shop purchases. In addition, the
                                                  Authority did not have property records for any of the
                                                  equipment as required by HUD regulations.13 Sheriff’s
                                                  Department staff stated the radar units and police radios are
                                                  being used by the Sheriff’s Department. However, neither
                                                  Authority staff nor Sheriff’s Department personnel knew
                                                  where the camera equipment was located.

                                                  In addition, OIG inquiries regarding the police radio
                                                  microphones and radar units disclosed that the Authority
                                                  used $6,900 of 1993 Grant funds to purchase four police
                                                  radios. Therefore, OIG is also questioning the Authority’s
                                                  use of $6,900 to reimburse the Sheriff’s Department for this
                                                  ineligible police equipment.

     Authority was                                HUD requires Drug Elimination Grant recipients to provide
     consistently late in                         a financial report to HUD every 6 months for each active
     submission of its                            grant.14 Although the Authority submitted the required
     semiannual financial                         reports, they were not based on any underlying accounting
     reports.                                     records and were consistently late. As previously noted, the
                                                  Authority did not maintain proper accounting records to
                                                  support Grant financial activity. Further, of the ten reports
                                                  due during the audit period, the Authority submitted only
                                                  one by the due date. The remaining reports varied between
                                                  7 and 145 days late.



                                                  The Executive Director’s October 20, 1998 written
     Auditee Comments                             response did not disagree with the findings and
                                                  recommendations. The Executive Director noted the
                                                  Authority has made significant improvements in its
                                                  management practices to eliminate future findings.




12
     HUD regulations at 24 CFR §961.10(c) and Notice of Funding Availability (Federal Register, Volume 59, No. 63, and
     Volume 60, No. 3).
13
     HUD regulations at 24 CFR §85.32(d).
14
     HUD regulations at 24 CFR §85.41(b) and (b)(4) require grantees to use Standard Form 269 or 269A, to report the status of
     funds for all non-construction grants. The reports are due 30 days after the reporting period, which for Drug Elimination
     Grants was for the 6-month periods ending June 30th and December 31st.

                                                    Page 11                                                 99-FW-202-1002
Finding 1


 Recommendations   We recommend that the HUD Troubled Agency Recovery
                   Center:

                   1A.   Require the Authority, if it receives any additional
                         Drug Elimination Grants, to establish a system that
                         will identify baseline crime and drug activity
                         statistics, set forth goals and objectives for its
                         activities, and will measure activity performance in
                         accomplishing those goals and objectives;

                   1B.   Instruct the Authority, if it receives any additional
                         Drug Elimination Grants, to work to develop a
                         strategy for continuing drug elimination and
                         prevention activities in future years;

                   1C.   Continue to assist the Authority to develop
                         management capacity to carry out its operations and,
                         in the event of future Drug Elimination Grant
                         funding, require the Authority to demonstrate such
                         capacity prior to releasing funds;

                   1D.   Require the Authority to repay HUD for the
                         $10,398 used to purchase police equipment;

                   1E.   Require the Authority to either provide proper
                         supporting documentation or repay HUD for the
                         $1,262 used for purchase of cameras and travel;

                   1F.   Afford the Authority a reasonable period to identify
                         other proper 1994 and 1995 Grant expenditures
                         made within respective grant periods and, if not
                         provided, require repayment to HUD of $4,030 in
                         excess drawdown of funds; and

                   1G.   Require the Authority to prepare, maintain, and
                         submit timely financial reports on open grant
                         activities.




99-FW-202-1002             Page 12
Management Controls
In planning and performing our audit, we obtained an understanding of the management
controls that were relevant to our audit. Management is responsible for establishing
effective management controls. Management controls, in the broadest sense, include the
plan of organization, methods, and procedures adopted by management to ensure that its
goals are met. Management controls include the processes for planning, organizing,
directing, and controlling program operations. They include the systems for measuring,
reporting, and monitoring program performance.


  Relevant Management            We determined the following management controls were
  Controls                       relevant to our audit objectives:

                                 •   Performance evaluation system
                                 •   Reporting program performance
                                 •   Activity and cost eligibility
                                 •   Fiscal management system

                                 We assessed all of the relevant control categories identified
                                 above, to the extent they impacted on our audit objectives.

 Significant Weaknesses          A significant weakness exists if management controls do not
                                 give reasonable assurance that resource use is consistent
                                 with laws, regulations, and policies; that resources are
                                 safeguarded against waste, loss, and misuse; and that
                                 reliable data are obtained, maintained, and fairly disclosed in
                                 reports. Based on our review, we believe the following
                                 items are significant weaknesses as discussed in the finding:

                                 •   The Authority has not established well-defined goals or
                                     objectives for its activities or implemented a system to
                                     measure their effectiveness and

                                 •   The Authority did not have a system to ensure proper
                                     financial transactions were eligible and properly
                                     recorded.




                                       Page 13                                  99-FW-202-1002
Management Controls




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99-FW-202-1002                       Page 14
Follow-Up on Prior Audit Findings
William Daniel McCaskill, Certified Public Accountant, whose report is dated February 25, 1997,
performed the independent financial audit for the fiscal year ended September 30, 1996. He
disclaimed an opinion on the Authority’s financial statements because, in part, the inability to
confirm account balances including the Drug Elimination Program. The Auditor included the
following comment in his findings:

   The PHA has inadequate controls over it’s Modernization and PHDEP Programs and HUD
   Grants relative to those programs . . . the general ledger is not reconciled to the costs and
   grant funds. We could not tie the general ledger costs and grant costs to HUD documents.

OIG comments on these conditions relative to the Drug Elimination Grant Program in the report
finding.




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Follow-Up on Prior Audit Findings




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99-FW-202-1002                       Page 16
                                                                                                              Appendix A


Schedule of Grant Costs
For the Period October 1, 1994, through February 6, 1998

                                      Budget         Expended          Ineligible       Unsupported Allowable
       Grant Year 1994
    Law Enforcement                    $ 89,100        $ 89,099                                            $ 89,099
    Physical Improvement                  2,000           2,000                                               2,000
    Other Costs                           3,900           2,525               $2,500                             25
                Grant Totals           $ 95,000        $ 93,624               $2,500         $        -    $ 91,124
       Grant Year 1995
    Law Enforcement                    $138,660        $152,526                                            $152,526
    Physical Improvement                 10,000               -                                                   -
    Other Costs                          10,340           3,820                 998            1,262          1,561
                Grant Totals           $159,000        $156,346           $     998           $1,262       $154,087
       Grant Year 1996
    Law Enforcement                    $106,246        $ 69,166                               $       -    $ 69,166
    Physical Improvement                 13,291               -                                       -           -
    Voluntary Tenant Patrol              10,540               -                                       -           -
    Drug Prevention                       4,620               -                                       -           -
    Drug Intervention                    23,803               -                                       -           -
    Other Costs                               -               -                                       -           -
                Grant Totals           $158,500        $ 69,166            $        -        $        -    $ 69,166

Totals for all 3 years                 $412,500        $319,136            $3,4981            $1,262       $314,377




1
    OIG also identified another $6,900 of 1993 Grant funds used to purchase police equipment, making total of $10,398 in Grant
    funds used to purchase police equipment.

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Appendix A




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99-FW-202-1002                  Page 18
                                                                                                                  Appendix B


Schedule of Questioned Costs



                         Recommendation
                             Number                         Ineligible 1            Unsupported 2

                                   1D                         $10,398

                                   1E                                                   $1,262

                                    1F                                                    4,030

                     TOTALS                                   $10,398                   $5,292




1
    Ineligible costs are costs charged to a HUD-financed or insured program or activity that the auditor believes are not
    allowable by law, contract, or federal, state, or local policies or regulations.
2
    Unsupported costs are costs charged to a HUD-financed or insured program or activity and eligibility cannot be determined
    at the time of audit. The costs are not supported by adequate documentation or there is a need for a legal or administrative
    determination on the eligibility of the cost. Unsupported costs require a future decision by HUD program officials. This
    decision, in addition to obtaining supporting documentation, might involve a legal interpretation or clarification of
    Departmental policies and procedures.

                                                          Page 19                                              99-FW-202-1002
Appendix B




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99-FW-202-1002                  Page 20
                                 Appendix
C

Auditee Comments




                   Page 21   99-FW-202-1002
Appendix C




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99-FW-202-1002                  Page 22
                                                                                    Appendix
D

Distribution
Secretary's Representative, 6AS
State Coordinator, 6HS
Comptroller, 6AF
Director, Troubled Agency Recovery Center, PB2 (4)
Director, Accounting, 6AAF
Director, Public Housing, 6HPH
Saul N. Ramirez, Jr., Deputy Secretary, SD (Room 10100)
Hal C. DeCell III, A/S for Congressional and Intergovernmental Relations, J (Room 10120)
Karen Hinton, A/S for Public Affairs, W (Room 10132)
Jon Cowan, Chief of Staff, S (Room 10000)
Jacquie Lawing, Deputy Chief of Staff for Programs & Policy, S (Room 10226)
Robert Hickmott, Counselor to the Secretary, S (Room 10234)
Patricia Enright, Sr Advisor to the Secretary for Communication Policy, S (Room 10222)
Gail W. Laster, General Counsel, C (Room 10214)
Saul N. Ramirez, Jr., Acting Assistant Secretary for CPD, D (Room 7100)
Joseph Smith, Acting Assistant Secretary for Administration, A (Room 10110)
David Gibbons, Director, Office of Budget, ARB (Room 3270)
Art Agnos, Acting Assistant Secretary for Housing, H (Room 9100)
Director, HUD Enforcement Center, 1240 Maryland Ave., Ste. 200, Wash.D.C. 20024
Deborah Vincent, Acting General A/S for Public & Indian Housing, P (Room 4100)
Assistant to the Deputy Secretary for Field Management, SDF (Room 7106)
Assistant to the Secretary for Labor Relations (Acting), SL (Room 7118)
Public Housing ALO, PF (Room 5156) (3)
Acquisitions Librarian, Library, AS (Room 8141)
Chief Financial Officer, F (Room 10164) (2)
Deputy Chief Financial Officer for Operations, FF (Room 10166) (2)
Director, Hsg. & Comm. Devel. Issues, US GAO, 441 G St. NW, Room 2474
 Washington, DC 20548 Attn: Judy England-Joseph
Mr. Pete Sessions, Govt Reform & Oversight Comm., U.S. Congress,
 House of Rep., Washington, D.C. 20510-6250
The Honorable Fred Thompson, Chairman, Comm. on Govt Affairs,
 U.S. Senate, Washington, D.C. 20515-4305
The Honorable John Glenn, Ranking Member, Comm. on Govt Affairs,
        U.S. Senate, Washington, D.C. 20515-4305
Cindy Sprunger, Subcomm. on Gen. Oversight & Invest., Room 212,
        O'Neill House Ofc. Bldg., Washington, D.C. 20515
The Honorable Dan Burton, Chairman, Comm. on Govt Reform & Oversight,
        House of Representatives, Washington, D.C. 20515-6143
Inspector General, G
Housing Authority of St. James Parish




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