Delaware Audit Reports
Issue Date: September 30, 2002
Title: Congressionally Requested Audit of the Outreach and Training Assistance Grant and Intermediary Technical Assistance Grants Awarded to the Delaware Housing Coalition, Grants Number FFOT00009DE and FFIT98005NT Dover, Delaware
Pursuant to Section 1303 of the 2002 Defense Appropriations Act (Public Law 107-117), we completed an audit of the Delaware Housing Coalition's (Grantee) Outreach and Technical Assistance Grant (OTAG) and Public Entity Grant (PEG). The primary objective of our review was to determine whether the Grantee expended Section 514 grant funds for only eligible activities as identified in the OTAG/PEG agreements and in accordance with U.S. Department of Housing and Urban Development (HUD) and other Federal requirements to further the Mark-to-Market Program. Also, the review was conducted to determine whether the Grantee used grant funds to pay expenses associated with lobbying activities. Federal regulations specifically prohibit the use of grant funds for lobbying activities.
The audit identified that the Grantee assisted ineligible projects; could not provide adequate support for $38,883 in salaries and fringe benefits; and did not properly support $17,082 in other direct and indirect costs. In addition, the Grantee charged $21,553 in ineligible expenditures to the grant. We also noted the Grantee did not comply with other requirements under the Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA), and Office of Management and Budget's (OMB) Circulars A-110 and A-122, which included using grant funds to participate in various lobbying activities. Accordingly, we made recommendations that will correct the above deficiencies and will improve the Grantee's controls over administering OTAG and PEG funds.
Issue Date: September 28, 2000
Title: Wilmington Housing Authority Public Housing Operations,Wilmington, DE
We completed an audit of selected aspects of the operations of the Wilmington Housing Authority (WHA). The purpose of the audit was to determine whether the WHA administered the activities in an efficient, effective, and economical manner, and in compliance with the terms and conditions of the Annual Contributions Contract, HUD Regulations and other applicable laws and directives. Our audit generally covered operations from April 1, 1995 through September 30, 1999.
We found the WHA lacked fiscal responsibility over its operations during the period of review. This occurred because the former Executive Director ignored applicable Federal regulations and WHA operating guidelines governing the administration of the WHA. Specifically, the former Executive Director routinely allowed expenditures to be made, and/or approved expenditures that were contrary to the WHA's approved operating budget and Federal and WHA requirements. As a result, the WHA incurred $1,331,315 of ineligible cost ($687,349, $629,716, and $14,250 in Findings 1, 2, and 4, respectively) and $373,105 of unsupported cost ($309,273 and $63,832 in Findings 1 and 4, respectively). In addition, we identified another $174,609 in expenditures which, although were considered eligible to the program they were charged, we believe should have been deferred due to the nature of the expenditures and deteriorating financial position of the WHA.
Within a two-year period, the actions of the former Executive Director depleted the WHA's Operating Reserve by more than $2.3 million while operating expenditures rose to a record high of $12.4 million. The Operating Reserve decreased from over $2.9 million in 1997 to only $596,000 by the end of 1999. The former Executive Director's financial mismanagement has placed the WHA in a difficult financial situation that will likely have long term effects on the financial stability of the WHA.
The above condition is further magnified when consideration is given to the deficiencies that existed in the WHA's procurement operations. We found the WHA: allowed various departments to make purchases contrary to policy; awarded contracts without competition; did not perform cost estimates of planned work; did not obtain the Board's required approval; did not ensure that the work was performed in accordance with contract requirements; and did not obtain services properly. These conditions occurred because the former Executive Director and WHA's staff ignored Federal and WHA procurement requirements. Furthermore, the former Executive Director did not take appropriate actions to ensure the staff followed those requirements.
During our audit, the State of Delaware, Office of Auditor of Accounts, performed an audit of the WHA and issued an audit report with 21 findings on September 29, 1999. In addition, the WHA's independent auditor performed a Single Audit of the WHA activities for the two-year period ending March 31, 1999. That report was issued on January 11, 2000, and contained 53 findings. The conditions in those reports also indicate a need to improve the financial management of the WHA's operations.
Because of the questions and problems raised during the course of the HUD and State audits, local press coverage, and the concerns expressed about the WHA's operations, the Mayor of Wilmington, Delaware, removed four members of the nine member Board of Commissioners and three others resigned. On March 23, 1999, the Mayor appointed seven new Commissioners to the WHA's Board. The new Board immediately suspended the former Executive Director and former Deputy Executive Director, and on June 11, 1999, terminated their employment with the WHA. An interim Executive Director was appointed and a new Executive Director was hired in March 2000. The WHA's new Board and new management team have taken appropriate actions to improve WHA's operations.
Since a new Board was appointed and the former Executive Director and Deputy Director were removed during the audit, no recommendation to replace the WHA's management was necessary. However, we made a recommendation that administrative action be taken against the former Executive Director to prevent this situation from occurring at another PHA in the future.
We also made recommendations designed to improve WHA operations. Specifically, we recommended the WHA (1) update its procurement policy and improve its contract administration; (2) update its travel policy to improve the method of budgeting, authorizing, reporting, reimbursing, and accounting for official travel; (3) establish a policy for credit card purchases; and (4) reimburse HUD for all ineligible costs and unsupported costs which it can not adequately support.
We discussed the findings and recommendations with WHA and HUD staff during the audit and at an exit conference on September 18, 2000. The WHA chose not to make any comments at this time other than it will review each of the findings and provide any supporting documentation that may exist.
Issue Date: September 30, 1996
Title: Citizen Complaint, Wilmington HA Request for Proposal-Physical Needs Assessment, Wilmington, DE
We believe the scope of the current RFP was larger and more detailed than the previous contract for a Physical Needs Assessment for various projects and scattered sites. Based on our limited review, some of the principal differences between the current RFP and the previous contract with the complainant were:
- The current contract includes scattered sites for review;
- The current contract requires a detailed energy conservation survey for 2,000 units; and
- The winning contractor will train and employ five Authority residents.
Moreover, it appears the previous contract resulted in the need for a current assessment of the Authority's properties. We believe a review of the work produced under the 1986 contract with the complainant's firm and a comparison with the current RFP would have identified any areas of duplication, as alleged by the complainant. However, this information is apparently no longer available. Based on our limited review, therefore, we found no indications that the scope of the RFP duplicates the work previously performed by the complainant's firm. Accordingly, no further audit work is warranted at this time.
Issue Date: August 13, 1996
Title: Herring Manor, Wilmington, DE
The report contains three findings. Ineligible and unsupported costs total $44,638 and $29,311, respectively, restricted reserve funds were used without HUD approval and the method for allocating payroll costs is inadequate.
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