Alabama Audit Reports

Issue Date: October 25, 2006
Audit Report No.: 2007-AT-1001
File Size: 686KB

Title: The Housing Authority of the Birmingham, Alabama District Did Not Ensure That Section 8 Units Were Decent, Safe, and Sanitary

As part of the U.S. Department of Housing and Urban Development (HUD), Office of the Inspector General's (OIG) strategic plan, we audited the Housing Authority of the Birmingham District's (Authority) Section 8 Housing Choice Voucher program.

We found that the Authority failed to ensure that its Section 8 housing stock met housing quality standards. We determined that 88 percent, or 58 of 66 units, did not meet housing quality standards. Of the 58 units, 38 were in material noncompliance. The Authority's management did not implement adequate internal controls over its inspection process and did not have adequate procedures for conducting inspections. As a result, tenants lived in units that were not decent, safe, and sanitary, and the Authority made housing assistance payments for units that did not meet standards. We estimate that over the next year, the Authority will pay housing assistance payments of more than $10.4 million for units in material noncompliance with housing quality standards if it does not implement adequate controls.

We recommend that HUD require the Authority to inspect the 58 units that did not meet housing quality standards to verify that the owners took appropriate corrective action to make the units decent, safe, and sanitary. If appropriate actions were not taken, the Authority should abate the rents or terminate the housing assistance payment contracts. HUD should also require the Authority to implement internal controls, policies, and procedures that ensure units meet housing quality standards and inspections meet HUD requirements to prevent more than $10.4 million from being spent on units that are in material noncompliance with standards. In addition, HUD should require the Authority to develop and implement quality control inspection procedures.


Issue Date: January 13, 2006
Audit Report No.: 2006-AT-1004
File Size: 1.21MB

Title: The Housing Authority of the City of Prichard, Alabama, Did Not Ensure Section 8 Subsidy Payments Were for Eligible Units, Eligible Tenants, and Eligible Landlords

As part of the Department of Housing and Urban Development (HUD), Office of the Inspector General's (OIG) strategic plan, we audited the Housing Authority of the City of Prichard's (Authority) Section 8 Housing Choice Voucher program. We found the Authority failed to ensure that its Section 8 housing stock met housing quality standards. We determined that 97 percent, or 63 of 65 units, did not meet housing quality standards. Of the 63 units, 45 were in material noncompliance with housing quality standards. In addition, the Authority paid $63,545 for ineligible units including $8,512 for failed units requiring housing assistance payment abatements and $55,033 for units that lacked annual inspections. The Authority also earned $6,373 in administrative fees for ineligible units. As a result, HUD lacked assurance that more than $14 million in Section 8 funds was effectively used to benefit the Authority's Section 8 tenants. The Authority's internal controls over processing Section 8 tenant files were inadequate. As a result, HUD should reduce the Authority's administrative fees by $232,974 for fiscal years 2003 and 2004. Finally, the Authority violated federal and local conflict-of-interest provisions by allowing an Authority employee and board member to have interest in Section 8 properties resulting in $22,482 of ineligible costs.


Issue Date: January 11, 2006
Audit Report No.: 2006-AT-1002
File Size: 911.05KB

Title: The Housing Authority of the City of Prichard, Alabama's Controls over the Sale of Affordable Housing Units, Use of Sales Proceeds, and Expenditure of Low-Income Funds Were Inadequate

We audited the Housing Authority of the City of Prichard's (Authority) administration of its nonprofit activities and homeownership programs, based on a request from the Alabama State Office of Public Housing. The Office of Public Housing expressed concerns regarding the nonprofit's ventures into areas other than housing, such as the purchase of a shopping center and the Authority's use of the proceeds from the sale of its public housing units.

Although we noted that the Authority did not use low-income housing funds to pay for unauthorized nonprofit entity activities, we noted that the Authority's homeownership programs to make affordable homes available to low- and moderate-income persons were inadequate. Although the Authority continually receives applications for its homeownership programs and maintains a waiting list of more than 250 potential homebuyers, as of June 1, 2005, the Authority had 139 homes available for sale. Many of the homes have been for sale for more than four years. Although the Authority was not selling the homes in its inventory, it plans to seek approval to use $3,811,668 in HUD grant funds to build additional homes. In addition, the Authority did not include sale proceeds of $6,619,859 and estimated sale proceeds of $5,013,000 from its homeownership programs in its five-year public housing authority plan. The funds have remained idle since 2002. Finally, the Authority's controls over the expenditure of public housing funds were inadequate. As a result, the Authority inappropriately advanced $806,502 in public housing funds to pay for other programs' expenses.

We recommend that HUD require the Authority to aggressively market the Section 5(h) and HOPE 1 homes as affordable housing to assure the HUD funds provided for the construction of these homes are used as intended and the homes are not allowed to deteriorate. We also recommend that HUD require the Authority to demonstrate it has the capability to sell its remaining units before requesting the remaining $3,811,668 in HOPE VI grant funds to build additional homes. Further, we recommend that HUD require the Authority to include the $11,632,859 in sales proceeds and how it plans to use the funds in its plan.


Issue Date: September 7, 2005
Audit Memorandum No.: 2005-AT-1803
File Size: 465.13

Title: Section 8 Housing Choice Voucher Program, Montgomery Housing Authority Montgomery, Alabama

HUD/OIG reviewed the Montgomery Housing Authority's (Authority) Section 8 Housing Choice Voucher program. The review was conducted as part of our strategic plan goal to assist the U.S. Department of Housing and Urban Development (HUD) in reducing erroneous rental assistance payments. Our objectives were to determine whether the Authority made Section 8 subsidy payments only for eligible housing and tenants and whether additional audit work was warranted.

Our review identified that the Authority is generally administering its Section 8 program in accordance with the program's requirements. However, the review disclosed weaknesses over the controls relating to the Authority's procedures for processing Section 8 tenant files. HUD/OIG also identified minor errors with the tenant files regarding subsidy calculations, missing documents, recertifications, and third party verifications. As a result, the Authority overpaid $3,348 in housing assistance payments and paid $572 in erroneous housing assistance payments.

OIG recommended that HUD require the Authority to repay HUD $3,920 from nonfederal funds for ineligible housing assistance payments. We also recommended that HUD require the Authority to establish and implement an internal control plan to ensure the cited deficiencies are corrected and all Section 8 tenant files are adequately processed.


Issue Date: February 24, 2005
Audit Report No.: 2005-AT-1006
File Size: 1.82MB

Title: The Jefferson County Housing Authority Birmingham, Alabama

We completed an audit of the Jefferson County Housing Authority's (Authority) administration of its housing development activities as part of our audit of the U.S. Department of Housing and Urban Development's (HUD) oversight of Public Housing Agency development activities with related non-profit entities. Our primary objective was to determine whether the Authority had diverted or advanced resources subject to its low-income housing Annual Contributions Contract (Contract) or other low-income housing agreements or regulations to the benefit of the other entities without specific HUD approval. Our objective included determining whether the Authority's cost allocation method complied with requirements.

The Authority inappropriately used funds in its Revolving Fund account to pay the expenses of its programs and nonprofit entities, including affiliated nonprofit corporations, in excess of the funds the programs or entities had on deposit. As of December 31, 2003, 19 programs or entities, including nonprofit corporations and other programs, owed the Revolving Fund account $2.7 million. However, the programs and entities only had $2 million on deposit. Therefore, the Authority inappropriately used funds to pay the expenses for the programs or entities. In addition, the Authority violated its Contract with HUD by inappropriately advancing public housing funds for some of its activities, and activities of the nonprofit entities. At the end of 2003, the Authority had advanced more than $396,000 of public housing funds to other activities. These actions occurred because the Authority did not have adequate controls in place to monitor the Revolving Fund account.

Furthermore, the Authority did not support its payment of administrative and maintenance salary costs with activity reports or equivalent documentation as required. Thus, it did not have a record of the time spent on various activities and some activities may have paid a disproportionate share of the costs. For fiscal years 2000 through 2003, the Authority did not support $3.3 million of salary costs allocated to Federal programs for employees dividing their time between several programs.

We recommend that HUD require the Authority to settle the current balance owed to the Revolving Fund account, and repay the $396,000 advanced to fund other activities. We also recommend that HUD require the Authority to provide documentation to justify the $3.3 million of salary costs charged to Federal programs from 2000 through 2003.


Issue Date: July 23, 2004
Audit Report No.: 2004-AT-1011
File Size: 591.5KB

Title: Opelika Housing Authority (OHA) Public Housing Programs, Opelika, Alabama

An OIG audit disclosed the OHA improperly sold 9.932 acres of land for $116,000 and loaned $130,000, to its affiliated non-profit, OHDC, without HUD approval. The OHA sold the land to OHDC without a current appraisal of the property. The Executive Director also signed agreements stating that the OHA guaranteed third party obligations for a proposed housing development on the aforementioned land. Additionally, the OHA improperly paid at least $56,098 of OHDC costs, and $91,250 of ineligible housing assistance payments (HAP) to the OHDC. These improper transactions occurred because the Board of Commissioners (Board) and Executive Director served in conflicting roles, respectively, as the Board and President of the OHDC, and did not establish management controls to safeguard OHA resources and ensure compliance with HUD requirements. These improper actions weakened the OHA's financial position to the benefit of the OHDC, and expose the OHA to potential liability if the OHDC or its development project fails.

We recommended and HUD agreed to require OHA obtain an appraisal of the transferred property and recover any shortfall in the sale price, amend the agreements to limit OHA liability, and recover any ineligible costs.


Issue Date: May 20, 2004
Audit Report No.: 2004-AT-1009
File Size: 1.32MB

Title: Housing Authority of the City of Northport, Northport, Alabama

An OIG audit disclosed that the Housing Authority of the City of Northport violated its Annual Contributions Contract by improperly advancing $434,735 of public housing funds for a non-Federal development, and inappropriately guaranteeing performance for its tax credit properties. Subsequent repayments of $375,000 left $59,735 due to the Authority. However, HUD should recapture $78,334 of the $375,000 repayments. Additionally, the Authority did not allocate costs, including salaries and rental space, attributable to non-profit activities. As a result, $434,735 of ineligible advances reduced funds for its Low Rent Housing and Capital Fund Programs. Further, the Authority's Executive Director signed guaranty agreements and loan obligations, without HUD approval. The Executive Director also signed other documents that included inappropriate guarantees by the Authority as a guarantor or key principal. Further, the Executive Director violated the Annual Contributions Contract's conflict of interest provision by functioning as the Authority's Executive Director while serving as President of both General Partnerships.


Issue Date: June 11, 2003
Audit Report No.: 2003-AT-1005
File Size: 677KB

Title: City of Montgomery, Alabama Community Development Block Grant Madison Park

In response to a Congressional request, we performed an audit of the City of Montgomery, Alabama, Community Development Block Grant (CDBG) activities related to the Madison Park sewer project. The Congressional request was based on a citizen's complaint alleging misappropriated funds, suspected improprieties, and inadequate controls over the Madison Park project. We found that the City did not: (1) use its CDBG funds prudently for the Madison Park community to connect 25 residences to sewer facilities after it spent over $700,000 to do so; and (2) maintain adequate records on CDBG activities for Madison Park. We recommend that HUD require the City to: (1) finish the project it started by allocating CDBG funds to connect residents to existing sewer facilities in the Madison Park community and (2) establish an adequate recordkeeping system and other basic controls to ensure its activities are in accordance with applicable HUD requirements.


Issue Date: March 24, 2003
Audit Report No.: 2003-AT-1003
File Size: 1.37MB

Title: Fairfield, Alabama, Housing Authority Housing Programs Operations
Fairfield, Alabama

We completed an audit of the Fairfield, Alabama Housing Authority. Our audit objectives were to determine if the Authority was operating its housing programs in compliance with applicable HUD requirements and had established controls to assure effective and efficient administration of program funds. We determined the Authority: (1) improperly provided conventional and Section 8 assistance to individuals; (2) had continuing problems in procuring goods and services; (3) did not maintain an adequate system of controls over its general accounting and disbursements; and (4) did not have adequate controls to ensure that travel expenses were necessary, reasonable, adequately supported, and recorded. We questioned a total of $560,251 for recovery and recommended that HUD require the Authority to implement basic controls to ensure its activities are in accordance with applicable HUD requirements.


Issue Date: November 9, 2001
Audit Memorandum No.: 2002-AT-1803
File Size: 69KB

Title: Mowa Choctaw Housing Authority Hotline Complaint - Mt. Vernon, Alabama

We completed an audit survey of a complaint received by the Department of Housing and Urban Development (HUD) Hotline alleging improper activities by the Mowa Choctaw Housing Authority (MCHA). The complaint alleged that MCHA: overpaid painters; misused vehicles; inappropriately provided housing to felons; improperly awarded a drainage ditch contract; and, due to nepotism, did not correct operations deficiencies.

Our review found no merit to the complaint allegations. MCHA personnel provided information and documentation sufficient to refute the allegations and our review found no evidence supporting the allegations.


Issue Date: August 17, 2001
Audit Memorandum No.: 2001-AT-1805
File Size: 101KB

Title: Parrish Housing Authority, Parrish, Alabama

The OIG conducted a limited review of the Parrish Housing Authority�s (PHA) program operating funds to determine whether the Board Chairman misused the PHA�s credit card. The review disclosed that the PHA�s Chairman of the Board of Commissioners used the PHA�s American Express credit card for personal expenses. Top management at the PHA did not implement the necessary controls over the operating funds. The PHA�s Chairman intentionally disregarded existing internal controls maintained by the Executive Director. Further, the abuse continued because the Executive Director did not timely notify HUD. The Chairman�s actions were not in the best interest of the PHA, its staff, or residents; and resulted in $6,454 of ineligible personal expenses paid, in which the PHA was not reimbursed. Therefore, PHA funds intended to benefit housing residents were not available. The review recommended that HUD's Alabama State Office of Public and Indian Housing require the PHA to terminate the Chairman of the Board and take appropriate sanctions to prohibit future participation in HUD-related programs and/or developments. Also, require the Chairman to reimburse the PHA $6,454 from personal funds for the ineligible expenses, and determine if any other expenses were incurred after January 2001, if so, reimburse the funds to the PHA.


Issue Date: November 21, 2000
Audit Report No.: 01-AT-204-1003
File Size: 543KB

Title: Mobile Housing Board Procurement Operations, Mobile, Alabama

We completed an audit of the Mobile Housing Board�s procurement operations. The review was initiated in response to a citizen�s complaint. Our review disclosed significant weaknesses in the Mobile Housing Board�s administration of its procurement activities. Specifically, the audit disclosed that:

The Mobile Housing Board utilized incorrect procedures to procure certain goods and services and did not procure contracts in accordance with HUD�s requirements. The MHB used small purchase procedures to procure flooring, paint, and window installation services when it should have used sealed bidding. Frequently, MHB: (1) obtained less than the required three quotes; (2) selected other than the lowest quote; and (3) repeatedly solicited and selected the same vendors. Also, contract deficiencies included: (1) issuing purchase orders without valid contracts in place; (2) improperly soliciting and awarding contracts without adequate competition; (3) awarding a sole source procurement without prior HUD approval; and (4) not performing independent cost estimates or cost and price analyses. As a result, the MHB procured services on a piecemeal basis when it would have been more efficient and cost effective to award larger contracts combining the work. Therefore, HUD lacked assurance that the MHB obtained goods and services at the most advantageous terms.

We presented three findings to the Mobile Housing Board and HUD�s Alabama State Office officials during the course of the audit and at the exit conference on September 27, 2000.

The Mobile Housing Board provided written comments on October 21, 2000. We considered the comments in finalizing the report and combined the three findings. The MHB generally agreed with the finding in this report. The MHB�s comments are summarized in the finding and included in their entirety as Appendix B.

We recommend HUD require the Mobile Housing Board to : implement procurement policies and procedures to ensure proper procurement planning, appropriate selection methods, use of authorized staff, proper contract administration, contract solicitations, cost estimates, price analyses and training of the MHB�s procurement personnel.


Issue Date: August 31, 2000
Audit Report No.: 00-AT-202-1008
File Size: 652KB

Title: Cullman Housing Authority, Public Housing Programs, Cullman, Alabama

We have completed a limited review of selected operations of the Cullman Housing Authority (CHA). The review was initiated in response to a citizen�s complaint. We conducted our review to determine whether CHA administered its activities in an efficient, effective, and economical manner, and in compliance with the Department of Housing and Urban Development (HUD) requirements. Our report presents two findings that detail the Authority�s need for improvement with recommendations for corrective action.


Issue Date: June 3, 1998
Audit Report No.: 98-AT-247-1805
File Size: 89KB

Title: Good Samaritan Hospital, Selma, AL

The project had not met a national objective of the CDBG Program, in part because the obligor changed the intended purpose and physical configuration of the project without HUD, State or borrower approval. As a result, loan security was reduced, as well as potential rental income to make loan payments. The project is unfinished and the objectives cited in the application were not met. We believe all project costs totaling $2,200,000 are ineligible because of the change in the project and the failure to meet an objective of the CDBG Program.

In addition, the ADECA audit questioned costs totaling $290,062 for different reasons, such as lack of documentation. We reviewed ADECA's audit report and audit work papers, and agree with their conclusions. If the issues discussed in Finding 1 are resolved, the cost questions raised in ADECA's audit need to be addressed.


Issue Date: April 30, 1997
Audit-Related Memorandum No.: 97-AT-202-1807
File Size: 17K

Title: Cullman HA, Cullman, AL

The activities reviewed, which consisted of a wide variety of CHA operations, were generally properly carried out, and we plan no additional work at CHA.


Issue Date: February 21, 1996
Audit Report No.: 96-AT-219-1002
File Size: 126K

Title: Lakeside Apartments, Auburn, AL

The report presents one finding: the costs included $564,318 in ineligible development fees, which were paid to an affiliate of the mortgagor. As a result, the owners did not contribute $239,187 needed to meet the Housing Development Grant (HDG) minimum equity investment. Issue Date: October 26, 1995 Audit Related Memorandum 96-AT-201-1803 File Size: 18K Title: Selma Housing Authority, Selma, AL Based on the survey results, we will not do a detailed audit of SHA. However, we confirmed conflict of interest involvement by the SHA's Section 8 Director with Section 8 properties, which your Division and SHA should resolve. In addition, we noted the following questionable practices: - SHA Commissioners set their salaries, and - There were Section 8 non-compliances with HUD administrative requirements


Issue Date: October 26, 1995
Audit Related Memorandum No.: 96-AT-201-1803
File Size: 18K

Title: Selma Housing Authority, Selma, AL

Based on the survey results, we will not do a detailed audit of SHA. However, we confirmed conflict of interest involvement by the SHA's Section 8 Director with Section 8 properties, which your Division and SHA should resolve. In addition, we noted the following questionable practices: - SHA Commissioners set their salaries, and - There were Section 8 non-compliances with HUD administrative requirements.

 

 
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