Arkansas Audit Reports
Issue Date: March 30, 2007
Title: The Jacksonville Housing Authority, Jacksonville, Arkansas, Mismanaged Public Housing Capital Fund Program Funding
We audited procurements by the Jacksonville Housing Authority (Authority), Jacksonville, Arkansas. The audit addressed U.S. Department of Housing and Urban Development (HUD) allegations of mismanagement at the Authority. We conducted the audit to determine whether the Authority complied with its procurement policy and satisfied HUD-mandated timeframes for the obligation of program funding.
Due to its mismanagement of the program, the Authority overstated its obligations to prevent HUD's recapture of $132,788 in funding. Therefore, the Authority did not satisfy HUD-mandated timeframes for the obligation of funding. In addition, it did not comply with its procurement policy regarding soliciting bids, documenting bids, and accepting the work misspending $164,203 of its funding.
We recommended that HUD assist the recently replaced board of commissioners (board) and the new executive director in establishing board oversight and controls to ensure that the Authority implements sound funding plans, enters valid obligations in the Line of Credit Control System, and complies with its procurement policy. This should result in current available funding of $281,462 being put to better use. HUD also should penalize the Authority for slow obligation of funding, as regulations require. In addition, HUD should direct the Authority to either support or repay HUD for procurements not conducted in conformity with policy and/or supported for which the Authority spent $164,203 in program funding.
Issue Date: September 17, 2004
Title: Mays Property Management, Inc. Multifamily Management Agent Little Rock, Arkansas
Mays officials disbursed project-operating funds for items that violated project regulatory agreements with HUD. They charged management agent expenses to projects, paid for unsupported expenditures, diverted project funds to Mays and a property owner, and overcharged expense to projects. In addition, Mays split its management fee with a project owner and transferred project funds to other projects having cash-flow problems. As a result, Mays' officials misspent $979,333 of project-operating funds and made unauthorized advances of $20,150 from five projects to other projects. This had a negative financial impact on the projects.
We recommend that HUD require Mays to: (1) repay either the projects or HUD for ineligible payments and (2) either furnish supporting documentation or repay the funds for unsupported payments. For owed funds, we recommend immediate payment of the debt. If Mays does not repay amounts officials misspent, we recommend that HUD impose administrative sanctions against the former principals of Mays.
On July 7, 2004, we provided Mays a copy of the draft report and Mays provided a written response to the draft dated July 12, 2004. In an email dated July 19, 2004, Mays stated that an exit conference would not be necessary. The written response indicates Mays does not agree with many segments of the finding. He said the report misrepresents actions taken by Mays and the local HUD office to save high-risk, troubled apartment complexes. The response did not cause us to change the draft report. We have included the main points of the response at the end of the finding with our evaluation. Mays' complete response is attached as Appendix C.
Issue Date: September 14, 2004
Title: United Properties Management, Inc., Multifamily Management Agent, Little Rock, Arkansas
United officials disbursed project funds for items that violated project regulatory agreements with HUD. Officials used project funds to pay United's supervisory expenses, unsupported accounting costs, and a property owner's debt. In addition, officials made erroneous payments, loaned money to a site manager, and made unsupported payments. As a result, United officials misspent $445,612, which negatively affected the financial condition of the properties.
We recommend that HUD require United's owners to: (1) repay the projects for ineligible payments and (2) either furnish supporting documents or repay the projects for unsupported payments. If the owners do not payback amounts they misspent, we recommend that HUD impose administrative sanctions against them.
We provided United officials a copy of the draft on June 21, 2004, and received a written response from them on July 15, 2004. They do not agree with the findings and say we have been unwilling to listen to their explanations. They say they provided support for questioned costs contained in our report. They declined to have an exit conference. Their response did not change our position. They did not provide documentation required to adequately support the questioned costs.
Date: January 26, 2004
City of Little Rock Housing Authority Procurement and Asset Control
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