Arkansas Audit Reports

Issue Date: March 30, 2007
Audit Report No.: 2007-FW-1007
File Size: 632.69KB

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
Audit Report No.: 2004-FW-1009
File Size: 1.24MB

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
Audit Report No.: 2004-FW-1008
File Size: 1.24MB

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.

Issue Date: January 26, 2004
Audit Report No.: 2004-FW-1001
File Size: 3.64MB

Title: City of Little Rock Housing Authority Procurement and Asset Control
Little Rock, Arkansas

We performed an audit of the City of Little Rock Housing Authority (Authority). The purpose of the audit was to determine whether the Authority maintained adequate controls over cash and procurement. Specifically, we determined whether the Authority: (1) Expended funds for eligible activities; (2) Accounted for collections and deposits; and (3) Complied with federal and Authority procurement requirements.

We expanded the audit to include observations of units and interviews with residents to determine the adequacy of the condition of the units.

Issue Date: January 10, 2003
Audit Memorandum No.: 2003-FW-1803
File Size: 142KB

Title: Coffman Investment Company, Inc. Multifamily Management Agent Little Rock, Arkansas

In response to a complaint, we have completed a limited review of Coffman Investment Company, Inc. (Coffman), a management agent of HUD-insured multifamily properties. The purpose was to determine whether the complaint against Coffman was true. Specifically, our objectives were to determine whether the management agent: (1) appropriately used proceeds from property insurance claims; (2) properly used funds released by HUD for property maintenance, repairs or improvements, and (3) maintained the properties in satisfactory condition. The review did not substantiate any of the allegations in the complaint.

Issue Date: August 27, 2001
Audit Report No.: 2001-FW-1005
File Size: 6,517KB

Title: Supportive Housing Program, Harmony House, Incorporated, Harrison, Arkansas

In response to an anonymous complaint, we performed an audit of the Harmony House, Incorporated (Harmony House) of Harrison, Arkansas. The complainant alleged Harmony House and Newton County Housing Council (Housing Council) used Supportive Housing Program (Program) funds more to support their agencies than to help the communities served by the grant. Specifically, the complaint alleged the Executive Director of Harmony House used the grant funds for inappropriate and ineligible costs but withdrew employment assistance from needy participants, and the Executive Director of Harmony House and the Director of Housing Council did not effectively utilize properties rented for transitional housing. Except for the withdrawing of employment assistance, the audit substantiated the allegations. With respect to the withdrawing of employment assistance, Harmony House paid Program funds to ineligible participants.

Issue Date: November 17, 1997
Audit Memorandum Number 98-FW-241-1805
File Size: 24KB

Title: HOME Housing Rehab., Fort Smith, AR

Our review showed the quality of the rehabilitation and construction work done by the McGill Center was excellent but there are two instances of potential conflicts of interest that threaten the HOME Program as carried out in Fort Smith, Arkansas. We noted no improper use of funds except for the conflicts of interest that had been previously noted by the Little Rock HUD Office.

Issue Date: September 16, 1996
Audit Related Memorandum 96-FW-211-1805
File Size: 12KB

Title: Terrace and Villa Apartments, Jonesboro, AR

Our review disclosed the owner did not comply with the Regulatory Agreements. However, you were able to satisfactorily settle the matter.

Issue Date: April 16, 1996
Audit Report Number 96-FW-219-1801
File Size: 25KB

Title: Ginny's Vineyard Apts., Little Rock, AR

The review covered property income and expenditures from January 1991 through August 1995. However, we extended the period to include a cursory review of expenditures from August 1988 forward because we needed to ensure that washers and dryers being rented to tenants by the owner did not belong to the project. The project was collecting rent on the washers and dryers and paying the owner. HUD permitted this when HUD approved an amendment to the Regulatory Agreement on September 19, 1985. The review included an examination of the project's bank accounts, accounting records, and supporting invoices and vouchers. We also interviewed the owner, management agent, and HUD personnel.