Georgia Audit Reports
Issue Date: April 30, 2007
Audit
Report No.: 2007-AT-1008
File Size: 92.38KB
Title: Housing Authority of DeKalb County, Decatur, Georgia, Section
8 Units Generally Met Housing Quality Standards
We reviewed the Housing Authority of DeKalb County's (Authority)
Section 8 Housing Choice Voucher program as part of the U.S. Department
of Housing and Urban Development (HUD), Office of Inspector General's
(OIG) strategic plan. Our objective was to determine whether the
Authority carried out its Section 8 program housing quality standards
inspections in accordance with federal requirements.
Based on our review of 15 inspections of Authority-administered
Section 8 units, the Authority adequately performed housing quality
standards inspections and required timely correction of inspection
discrepancies. Our inspections identified minor deficiencies in
10 of the 15 units inspected. We identified two units that had insignificant
preexisting violations not identified by the Authority's inspectors.
We discontinued further inspections and provided our inspection
reports to the Authority.
The Authority agreed with our inspection results, notified the
owners of the conditions, and required them to correct the violations.
The report contained no finding, and no further action is necessary.
Issue Date: April 10, 2007
Audit
Report No.: 2007-AT-1006
File Size: 279.51KB
Title: The Housing Authority of DeKalb County, Decatur, Georgia,
Did Not Adequately Monitor Contract Payments
As part of the U.S. Department of Housing and Urban Development
(HUD), Office of Inspector General's (OIG) strategic plan, we reviewed
the Housing Authority of DeKalb County's (Authority) administration
of its procurement and financial management systems. Our objective
was to determine whether the Authority has complied with its low-income
program contractual and regulatory requirements since being released
from its memorandum of agreement (agreement) with HUD.
We found that the Authority did not adequately monitor contract
payments and did not comply with federal requirements or its financial
management policies. These deficiencies occurred because the Authority
did not have proper internal controls over its procurement payment
processes. Its staff did not ensure that its financial management
policies were followed, nor did all staff follow the established
procedures for processing contract payments. As a result, the Authority
incurred $47,051 in ineligible costs and $36,404 in unsupported
public housing funds.
We recommend that HUD require the Authority to repay $47,051 to
its public housing program for ineligible contract payments from
non-federal funds and either support $36,404 in unsupported contract
payments or repay its public housing program from non-federal funds.
HUD should also require the Authority to develop and implement internal
controls to ensure that contract payments are complete, accurate,
and in accordance with established procedures. In addition, HUD
should ensure that the financial management policies are followed
and that all Authority staff members follow the established procedures
when processing contract payment requests.
Issue Date: January 31, 2007
Audit
Report No.: 2007-AT-1003
File Size: 326.76KB
Title: Gwinnett County, Georgia, Subrecipients Did Not Provide
Funds Required by Their Contracts
As part of the HUD OIG strategic plan, OIG audited the Gwinnett
County's Community Development Block Grant and HOME programs.
The Block Grant and HOME projects reviewed were eligible and met
HUD's national objectives, and the subrecipients were operating
the projects in accordance with their contract with the grantee.
However, the grantee's subrecipients did not provide their share
of the project funding as required by their contracts. As of October
31, 2006, the subrecipients had not provided $278,418 toward the
projects. If the subrecipients had provided the funds specified
in their contracts, the grantee's contribution would have been less.
The grantee would then have had additional funds to further its
community development activities.
HUD OIG recommended that HUD require the grantee to either collect
the funds due from the subrecipients, according to the contracts,
or amend the contracts appropriately. In the future, if the grantee
does not require the subrecipients to provide funding to the projects,
the contracts should not contain this requirement. Also, the grantee
should establish controls to assure that all contract requirements
are enforced.
Issue
Date: November 3, 2006
Audit
Report No.: 2007-AT-1002
File Size: 5.99MB
Title:
Pine State Mortgage Company, Atlanta, Georgia, Did Not Always Comply
with Federal Housing Administration Underwriting and Quality Control
Requirements
We
audited loans Pine State Mortgage Company (Pine State) underwrote
at its Atlanta, Georgia, branch office. Pine State is a nonsupervised
direct endorsement lender with headquarters located in Atlanta,
Georgia. Our audit objective was to determine whether Pine State
acted in a prudent manner and complied with U.S. Department of Housing
and Urban Development's (HUD) regulations, procedures, and instructions
in the underwriting process for cash assets, income, and general
creditworthiness of its Federal Housing Administration-insured mortgages.
Pine State did not always follow HUD's underwriting and quality
control requirements for Federal Housing Administration-insured
loans. It improperly underwrote 21 of the 108 loans reviewed. The
improperly underwritten loans contained deficiencies that affected
the insurability of the loans, including improper assessment of
borrowers' income, debts, credit histories, and eligibility for
interest rate buydowns. As a result, HUD insured 21 loans that placed
the Federal Housing Administration insurance fund at risk for $151,687
in questioned costs and $713,495 in funds to be put to better use.
Pine State also did not maintain proper quality controls over its
underwriting process. The improper quality control procedures placed
HUD's insurance fund at risk for an additional 15 loans. Our assessment
of Pine State's quality control reviews showed these loans involved
material violations not recognized by Pine State and reported to
HUD. The violations affected the loans' insurability. These conditions
exposed HUD's insurance fund to unnecessary risk of default, claims,
and foreclosure.
We
recommend that the assistant secretary for housing-federal housing
commissioner take appropriate administrative action against Pine
State. This action should, at a minimum, require Pine State to reimburse
or hold HUD harmless against any losses for the 21 improperly underwritten
loans in finding 1 that involve $151,687 in questioned costs and
$713,495 in funds to be put to better use, and any of the 15 loans
in finding 2 that involve material violations.
Issue Date: April 25, 2006
Audit
Report No.: 2006-AT-1008
File Size: 764.03KB
Title: The Housing Authority of the City of Macon, Georgia's Controls
for Expending Low-Income Housing and HOPE VI Program Funds and Safeguarding
Low-Income Housing Assets Were Inadequate
We reviewed the Housing Authority of the City of Macon'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 nonprofit entities.
Our audit objectives were to determine whether the Authority inappropriately
used low-income housing and HOPE VI Program funds for unauthorized
purposes to benefit other entities without specific HUD approval
and whether the Authority complied with applicable laws and regulations
and properly safeguarded low-income resources when it conducted
business with affiliated nonprofit entities and consultants.
The Authority violated its annual contributions contract (contract)
with HUD by using funds from its low-income housing general fund
account to pay expenses of its programs and affiliated entities.
As of December 31, 2004, 11 programs or entities, including nonprofit
firms and other programs, owed the general fund account $395,211.
As a result, the Authority made ineligible disbursements with low-income
housing funds totaling $395,211. Further, the Authority violated
its contract with HUD by using low-income public housing assets
as collateral to guarantee loans for two affiliated nonprofit entities
totaling $2.2 million, thereby placing contract assets at risk.
The original $2.2 million in loan balances guaranteed has been reduced
to $125,000, which is the amount currently at risk.
Additionally, the Authority violated federal contracting requirements
by entering into an open-ended contract with a consultant without
a ceiling price. The Authority spent $227,684 on the contract, which
has been in effect since November 2001. We recommend that the director
of the Office of Public Housing require the Authority to collect
the $395,211 or current balance owed to the general fund account
and repay the low-income public housing reserve the amounts collected.
In addition, the director of the Office of Public Housing should
require the Authority to pursue terminating the loan guarantees,
so the contract collateral used to guarantee the unpaid loan balances
of $125,000 will not be at risk.
Finally, the acting deputy assistant secretary for Public Housing
Investments should require the Authority to justify the necessity
and reasonableness of the payments made for the consultant's contract.
Any amounts that cannot be supported should be reimbursed from nonfederal
funds. The acting deputy assistant secretary should require the
Authority to terminate or amend the consultant's contract in accordance
with applicable federal requirements.
Issue
Date: June 30, 2005
Audit
Memorandum No.: 2005-AT-1801
File Size: 45KB
Title:
Residential Lending Corporation, Duluth, Georgia
We
performed an audit survey of Residential Lending Corporation (Residential),
operating from its home office in Duluth, Georgia. Residential was
a nonsupervised direct endorsement lender approved to originate
and approve Federal Housing Administration-insured single-family
mortgages. We selected Residential due to its high default and claim
rates. We found that Residential did not obtain the required independent
audit for the fiscal year ended December 31, 2004, and planned to
liquidate company assets without notifying HUD. Thus, Residential
could not support that it had the $250,000 net worth needed to maintain
its HUD approval to originate and approve Federal Housing Administration-insured
mortgages. We made no recommendations because Residential voluntarily
terminated its HUD approval during our survey on May 9, 2005.
Issue Date: April 21, 2005
Audit
Report No.: 2005-AT-1009
File Size: 722.21KB
Title: Housing Authority of Fulton County Atlanta, Georgia
We reviewed the Housing Authority of Fulton County's (Authority)
administration of its housing development activities as part of
our audit of HUD's oversight of Public Housing Agency development
activities with related nonprofit entities.
The Authority inappropriately used Public Housing funds to pay
for other programs' and related entities' expenses in excess of
funds the programs or entities had on deposit. As of July 31, 2004,
six programs or entities owed Public Housing $640,221. 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. These actions occurred because the Authority
did not have adequate controls in place to limit the amount of funds
disbursed by the amount of funds on deposit. As a result, $640,221
of Public Housing funds could be put to better use. The Authority
did not support its allocation of salary and benefit costs with
activity reports or equivalent documentation as required. As of
September 30, 2004, the Authority had allocated $1,329,901 more
to its federal programs than had comparable housing agencies. The
Authority also did not maintain adequate records for Public Housing
expenses totaling $770,651 that were incurred during fiscal years
2001 through 2004. The Authority (1) reclassified $552,700 in salary
and benefit costs without support, (2) could not provide support
for $181,012 in reclassified expenses, and (3) could not provide
any documentation for $36,939 in expenses. This occurred because
the Authority had not established internal controls to maintain
adequate records. As a result, $770,651 in Public Housing expenses
is unsupported.
We recommend that HUD require the Authority to repay the $640,221
or current balance owed to Public Housing and ensure future transactions
comply with the Contract and other HUD requirements, provide documentation
to justify allocating $1,329,901 more in salary and benefit costs
than was allocated by comparable housing agencies, or reimburse
its Public Housing program. Further, we recommend that HUD require
the Authority to develop internal controls to ensure that $770,651
of Public Housing expenses are properly supported and that supporting
documentation is made readily available upon request.
Issue Date: November 1, 2004
Audit
Report No.: 2005-AT-1001
File Size: 211.3KB
Title: The Housing Authority of the City of Carrollton, Carrollton,
GA
As part of our audit of HUD's oversight of public housing agency
development activities with related parties entities, the OIG reviewed
the Housing Authority of the City of Carrollton, GA. We found the
Authority advanced more than $316,495 to its private housing program,
Little River Management, without specific HUD approval. The advances
were made because the private housing program did not have sufficient
income to pay its obligations and reimburse the Authority. HUD required
the Authority to repay the funds and discontinue the advances. The
Authority repaid the HUD program $249,247, the amount owed at May
31, 2002, however; it continued to advance funds. As of May 31,
2004, the Authority had advanced an additional $43,309. The repayment
included the cash payment and an adjustment of $120,993 the Authority
did not support. As a result, $359,804 of ineligible advances reduced
funds for its public housing program needed to serve its low-income
residents. In addition, the Authority failed to realize approximately
$15,116 of interest income because the funds were not available
for investment. In addition, the Authority did not support its allocation
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. As of June
30, 2003, the Authority had allocated $1,062,846 to its Federal
programs. Further, the Authority executed five loan agreements for
the purchase of private property that put $1,489,819 of its HUD
funds at risk. The agreements included set-off provisions that allowed
the lender to withdraw the HUD funds on deposit if the loan payments
were not made.
We recommend requiring the Authority to repay from non-federal
funds, the $43,309 balance and the $15,116 interest lost, ensure
that no further advances are made without prior HUD approval, and
provide documentation to support the $120,993 adjustment, or reimburse
its public housing program. Also, ensure the Authority uses activity
reports to support its allocation of costs and makes appropriate
adjustments to the $1,062,846 allocation. Further, we recommend
requiring the Authority to take immediate action to terminate the
agreements that have the $1,489,819 of HUD funds at risk by either
seeking a wavier of the set-off provisions, closing its accounts
with the local lender, or refinancing the loans with another lender.
Issue Date: April 21, 2004
Audit
Memorandum No. 2004-AT-1005
File Size: 336KB
Title: Cotton State Mortgage, Inc.
Non-Supervised Loan Correspondent
Atlanta, Georgia
An OIG audit disclosed that Cotton State Mortgage did not properly
originate FHA-insured loans in accordance with HUD requirements
and prudent lending practices. Cotton State Mortgage did not exercise
due diligence in the verification of the borrower's liabilities,
credit, assets, and income. Of the 26 loans reviewed, we identified
loan origination deficiencies in 4 of the loans. The deficiencies
included: (1) inadequate verification of employment, rent, and gift
funds, (2) inadequate verification of funds used to pay off debts,
and (3) inconsistencies in the credit reports and loan applications.
The conditions existed because Cotton State's quality control review
was ineffective in identifying the deficiencies. Cotton State's
quality control process was not in compliance with HUD's requirements
for reviewing defaulted and rejected loans and did not include monthly
quality control reviews. As a result of the deficiencies, Cotton
State Mortgage was originating loans for mortgagors who were not
qualified for FHA-insured loans. In addition, the inappropriate
loans contributed to high default rates and increased HUD's risk
to the FHA insurance fund. Cotton State Mortgage needs to indemnify
HUD for two FHA-insured loans with a total unpaid balance of $221,007.
Issue Date: January 15, 2004
Audit
Memorandum No.: 2004-AT-1001
File Size: 465.5KB
Title: Housing Authority of the City of Cuthbert
Cuthbert, Georgia
We found the Authority violated its ACC with HUD by inappropriately
advancing funds and pledging assets for non-Federal development
activities. As of April 2002, management had advanced $792,802 of
low-income housing (LIH) funds to SGHDC to pay its development expenses.
As of June 2003, SGHDC had reimbursed the Authority all but $327,326.
The advances reduced LIH funds available for Authority operating
expenses. Management also inappropriately pledged assets when it
guaranteed repayment of two SGHDC loans totaling $690,050. Further,
the Authority's Executive Director, who was also the Secretary/Treasurer
of SGHDC, violated conflict of interest restrictions, and the Authority
did not allocate costs. These actions occurred because the Board
of Commissioners did not establish sufficient controls to monitor
the nonprofit and ensure transactions adhered to Federal regulations.
Also, the Executive Director misunderstood provisions in the Quality
Housing and Work Responsibility Act of 1998 (QHWRA).
Issue Date: July 31, 2003
Audit
Memorandum No.: 2003-KC-1007
File Size: 725.2KB
Title: Management Solutions of America,
8010 Roswell Road, Suite 100
Atlanta, GA 30350
We have completed an audit of Management Solutions of America,
Inc., a Philadelphia Home Ownership Center contractor performing
insurance endorsement review procedures. Our objective was to determine
if the contractor followed HUD's regulations and their contract
terms for reviewing "Late Requests for Endorsement."
Management Solutions of America, Inc. endorsed mortgages when the
loan files did not contain the documentation required to insure
loans submitted for endorsement more than 60 days after closing.
For 51 of the 155 files we tested, the files did not contain the
information required for endorsement. We recommended the Assistant
Secretary for Housing-Federal Housing Commissioner seek indemnification
for any of the 51 improperly endorsed loans for which significant
documentation cannot be produced or where documentation, when produced,
indicates a deficiency according to Handbook procedures. We also
recommended the Assistant Secretary ensure Management Solutions
develops and implements procedures to properly endorse future loans,
and that he take appropriate administration action.
Issue Date: June 6, 2003
Audit
Report No. 2003-AT-1004
File Size: 1.95MB
Title: Historic Westside Village Project, Section 108 Loan and
Economic Development Initiative Grant
Atlanta, Georgia
We audited the City of Atlanta's administration of a Section 108
loan and EDI grant totaling $7,208,000 for a project known as Historic
Westside Village, in response to a request from HUD's Georgia State
Office, Office of Community Planning and Development. The City and
its sub-recipient, the Atlanta Development Authority (ADA) did not
adequately manage and control the Project. The City allowed significant
violations of HUD requirements to occur without early detection
or prompt corrective action. The City did not adequately monitor
the performance of sub-recipients to ensure compliance with HUD
program requirements.
The City and ADA improperly allowed an ADA affiliate, Inner City
Development Corporation (ICDC), to perform as a grant sub-recipient
without executing a sub-recipient agreement. ICDC improperly paid
$1.35 million of Section 108 funds for non-competitively selected
service vendors and $163,279 for other ineligible and unsupported
costs. The City and ADA did not competitively procure 22 service
contractors and did not execute a contract with a "for-profit" company,
Historic Westside Partners (HWP) to perform as the Project's exclusive
development and management agent. The City and ADA allowed "for-profit"
affiliates of HWP and ICDC to become exclusive developers with ownership
interests in Project land and leases without competition, and without
compensation to the City or the Section 108 Program. The opportunity
to collect at least $1.7 million of program income from the sale
of one land parcel was not pursued and Project related revenue totaling
$403,603 was not properly recorded as Project revenue. The City
and ADA did not comply with HUD requirements pertaining to Project
budget approvals, and accounting.
We recommended that HUD initiate sanctions against City, ADA, and
ICDC officials responsible for serious program violations. We also
recommended HUD require the City to (1) provide evidence that its
management control and accounting systems comply with HUD requirements
before awarding any further funding (2) recover land or appropriate
program income from those parcels, and (3) repay $1.65 million of
non-competitively procured services, and ineligible and unsupported
costs.
Issue Date: July 25, 2002
Audit
Report No.: 2002-AT-1003
File Size: 488KB
Title: Audit of the Supportive Housing Program Grant to the National
Scholarship Service and Veteran's Opportunity and Resource Center,
Atlanta, Georgia
We audited NSS-VORCI's expenditures of a 3-year 1997 Supportive
Housing Grant for $1,885,338 as requested by the Director, Office
of Community Planning and Development, in Atlanta, Georgia. Our
objectives were to determine whether grant and matching funds were
properly accounted for and expended for eligible costs. We also
assessed whether a subsequent 2000 renewal grant was properly accounted
for.
NSS-VORCI's management did not responsibly manage grant accounting,
expenditures, and compliance with SHP requirements. They did not
establish (1) accounting system procedures and controls needed to
comply with Federal requirements for grant fund accounting, (2)
procedures to ensure only eligible and necessary expenditures were
charged to SHP grant funds, and (3) procedures to monitor and compare
SHP expenditures to the approved budget. Salaries and other costs
that benefited multiple programs were not allocated to programs
and fund sources in a documented and systematic manner. VORCI's
accounting journals and general ledger were incomplete, inaccurate,
and contained numerous misclassified costs. As a result, VORCI spent
grant funds on ineligible and unnecessary costs, deviated significantly
from its approved budget without HUD approval, and did not meet
matching fund requirements. We attribute these conditions to NSS-VORCI's
Executive Director and Board of Directors not ensuring responsible
management practices and compliance with HUD requirements for grants
management.
Issue Date: November 9, 2001
Audit
Memorandum No.: 2002-AT-1802
File Size: 20KB
Title: Macon-Bibb County Economic Opportunity Council, Inc. Supportive
Housing Program (SHP) Macon, Georgia
At the request of the Office of Community Planning and Development,
we conducted a survey of the 1996 and 1998 Supportive Housing Grants
awarded to the Macon Housing Authority and the Macon-Bibb Economic
Opportunity Council (EOC) as the subrecipient and project sponsor.
The objective of the survey was to access the validity of a complaint
alleging that Macon-Bibb EOC officials mismanaged HUD funds including
the possible theft of HUD funds, and altered reporting documents
to show compliance with HUD regulations.
The survey found no evidence to support the allegations that HUD
funds were mismanaged and annual reports on the use of HUD funds
and SHP program results were improperly altered. However, we found
that the EOC had claimed, and was reimbursed, $5,148 for ineligible
costs and $185 for unsupported costs under its 1996 and 1998 SHP
grants. We recommended that EOC repay the ineligible costs and provide
adequate support for, or repay the unsupported cost.
Issue Date: September 25, 2001
Audit
Memorandum No.: 2001-AT-1807
File Size: 554KB
Title: Family Home Providers, Inc., Cumming, Georgia, Nonprofit
Participation in FHA Single Family Insurance Program
As part of a nationwide audit of the Federal Housing Administration's
(FHA) Single Family Insurance Program, we audited Family Home Providers
(FHP) purchase of Real Estate Owned (REO) properties. Our objectives
were to determine whether FHP was legitimate and independent (not
under the influence, control, or direction of other parties) and
passed on the benefits of discounts received on the purchase of
Department of Housing and Urban Development (HUD) homes to low and
moderate-income homebuyers.
FHP did not comply with requirements of HUD's single-family property
disposition program. For the 5 properties we reviewed, FHP passed
along only $27,822 of the $64,860 in discounts it received from
HUD thus depriving the low and moderate-income homebuyers of the
program's intended benefits. We also identified at least $147,023
in sales commissions FHP's President paid to his own realty firm
from September 1997 through November 2000 on 20 properties FHP purchased
from HUD, and $20,061 in profits he paid to a business in which
he and his wife were once officers. These transactions violated
conflict of interest prohibitions. We observed poor quality workmanship
on four houses FHP sold. In addition to its failure to meet HUD's
objectives of the program, we question FHP's charitable intent.
From 1998 - 2000, FHP's President obtained personal benefit (aside
from salary and realty commissions) from the non-profit's operations.
Those acts violated HUD's eligibility criteria for participation
in its programs.
We recommended HUD require FHP to pay $42,503 in excess profits
to reduce the mortgage of three homebuyers and correct or pay for
rehabilitation deficiencies identified by our audit.
Issue Date: June 5, 2001
Audit
Memorandum No.: 2001-AT-1804
File Size: 92KB
Title: Hotline Complaint, DeKalb County Housing Authority and
Decatur Housing Authority, Decatur, Georgia
We conducted a survey to assess the validity of a complaint alleging
mismanagement of the DeKalb County Housing Authority and the Decatur
Housing Authority (DDHA) in Decatur, Georgia. The complaint alleged
that DDHA management altered Section 8 Management Assessment Program
(SEMAP) certifications to improve its performance score, awarded
units to applicants who were not first on the waiting lists, allowed
a former employee to occupy office space and use DDHA equipment
and supplies without cost to the former employee, and improperly
executed contracts with a contractor whose brother is a DDHA Division
Director with contract oversight responsibility.
Although DDHA was not selecting applicants from its Section 8
waiting lists as envisioned in the SEMAP performance indicators,
we found the SEMAP Certifications DDHA submitted to HUD were prepared
in accordance with HUD's written and oral instructions. DDHA did
not follow its established controls to assure the integrity of its
Public Housing waiting list selection process, and DDHA did not
follow its procurement policy, which created a conflict of interest
in the handling of one contract. We found that the former employee
maintained an office in DDHA's administration building and had access
to supplies and equipment. We determined, however, the services
provided by the employee were beneficial to DDHA and there were
no significant costs charged to the HUD programs.
Issue Date: April 23, 2001
Audit
Memorandum No.: 2001-AT-1803
File Size: 35KB
Title: Accounting System Evaluation, Veterans Opportunity and
Resource Center, Inc., Atlanta, Georgia
We conducted an evaluation to determine if the Veterans Opportunity
and Resource Center, Inc. (VORCI) had implemented an adequate financial
management system to account for the grant funds for which it has
applied. This review was not an audit made in accordance with generally
accepted auditing standards. Our evaluation included a review of
the Supportive Housing Program grant proposal and budget, discussions
with the Executive Director and Administrative Operations Manager,
a "walk through" of the new accounting system, a review of various
accounting forms, and VORCI's Financial Management System Handbook
that establishes, among other things, internal control and purchasing
procedures.
Based on our review, we determined that VORCI has an adequate financial
management system in place to account for Supportive Housing Program
grant funds. We noted that although VORCI has developed new forms
to keep track of the time an employee spends on each grant, they
were currently not being used. The use of these forms applies primarily
to administrative personnel, such as the Executive Director and
Administrative Operations Manager, who perform administrative functions
for the various grants. The budget for the proposed grant shows
the Administrative Operations Manager charging 100 percent of her
time to the grant. Discussions with the Manager, however, show she
will also be spending time on other grants. We discussed this with
the Executive Director and the Administrative Operations Manager.
They agreed the forms would be used to track the employees' time.
Issue Date: September 15, 2000
Audit
Report No.: 00-AT-222-1009
File Size: 2,992KB
Title: Southeast Alliance of Foreclosure Specialists, LLC.
We completed an audit of Southeast Alliance of Foreclosure Specialists,
LLC., a Management and Marketing (M&M) contractor. This report presents
the results of our audit of Southeast Alliance's ability to manage
and market FHA's single family properties.
Under Secretary Andrew Cuomo, HUD has undergone significant changes
in response to the Secretary's "HUD 2020 Reorganization Plan." One
major change is the outsourcing of FHA's management and marketing
of its single family properties. In March 1999, FHA awarded 7 companies
a total of 16 Management and Marketing (M&M) contracts to manage
its single family property inventory.
The contractor demonstrated success in three key areas. The contractor
reduced both the number of properties in inventory and the number
of properties in inventory over 6 months. It also reduced the average
losses from property sales. Despite these accomplishments, improvements
are still needed. The contractor demonstrated the willingness to
improve its operations.
Our audit confirmed what FHA repeatedly reported in its monthly
performance assessment reports. As discussed in Finding 1, the contractor
did not maintain properties as required. The contractor did not
perform timely initial property inspections, did not always identify
serious property defects, did not conduct routine inspections as
required, and did not correct hazardous conditions within mandatory
24 hours. The poor property conditions decrease marketability; increase
FHA's holding costs; have negative effects on surrounding communities;
reflect poorly on the Department's image; and in some cases, threaten
the health and safety of neighbors and potential buyers.
Also, as discussed in Finding 2, the contractor did not comply
with other contract requirements. For example, the contractor did
not review HUD-1 Settlement Statements, did not obtain timely property
appraisals, and billed FHA for unauthorized expenses and ineligible
expenses. The noncompliance could significantly increase the risk
of loss to the insurance fund.
Issue Date: August 4, 2000
Audit
Related Memorandum No.: 00-AT-201-1803
File Size: 42KB
Title: Design and Construction Management Department, Housing
Authority of the City of Atlanta, Atlanta, Georgia
We conducted a survey of certain activities of the Housing Authority
of the City of Atlanta (HACA) Design and Construction Management
Division. The primary objective of the survey was to determine the
validity of an anonymous complaint referred to us by your office.
We also determined if HACA had resolved certain procurement and
cash management issues reported in our prior audit of HACA's operations.
Issue Date: April 26, 2000
Audit
Related Memorandum No.: 00-AT-202-1802
File Size: 29KB
Title: Misuse of HUD Funds, Fort Valley Housing Authority, Fort
Valley, Georgia
A limited review of the Fort Valley, Georgia Housing Authority
was performed because of alleged misuse of Authority funds. Based
on our combined review, we found at least $19,600 in receipted cash
was missing, and over $198,000 in CIAP funds was drawn by the Authority
prior to a documented need.
Issue Date: October 4, 1999
Audit
Report No. 00-AT-225-1001
File Size: 2346KB
Title: Mego Mortgage Corporation Title I Approved Lender, Atlanta,
Georgia
We completed a review of Mego Mortgage Corporation (Mego), an
approved Title I Lender, generally for the period January 1, 1996,
through August 31, 1998. We conducted the review because Mego had
a default rate which exceeded the national average for Title I lenders.
The audit objective was to determine if Mego originated HUD insured
Title I loans according to HUD requirements for borrower income,
liabilities, loan amount, and property inspections. We identified
noncompliance with requirements for each area.
Mego did not properly process and underwrite Title I loans. Mego
consistently approved excessive ($176,518) and inadequately supported
($126,930) loan amounts, and in six cases without a proper review
of borrowers' income and or liabilities. We also identified instances
where Mego approved loans without adequately clarifying differences
between work items listed in the application and the detailed cost
estimates. The deviations from requirements increased HUD's insurance
risk on the loans approved for excessive amounts and whose eligibility
Mego did not clearly establish. These matters provided the opportunity
for fraud and abuse of the Title I program. We identified several
instances where such abuses had occurred.
Mego also needed to improve certain practices and or procedures
related to property inspections. We noted (a) two instances where
Mego failed to notify HUD about program abuses that came to its
attention; (b) one instance where Mego's inspections did not document
the borrower's failure to complete repairs; and (c) one instance
where Mego did not timely resolve issues raised by a borrower who
filed a complaint concerning deficient work by a dealer. These deviations
from requirements deprived HUD of information it could have used
to protect the integrity of the Title I program. They also reduced
assurance that borrowers used their Title I loans for allowable
repairs that were reasonably priced and completed with acceptable
workmanship.
The forgoing program violations occurred because Mego did not
follow or consistently follow HUD requirements and prudent lending
practices.
We recommend that the Atlanta Homeownership Center take appropriate
administrative action against Mego.
We discussed the issues in this report with Mego representatives
during the review and at an exit conference held at Mego's office
on August 30, 1999. Mego officials took exception to the report
and recommendations. Mego's comments are summarized at the end of
each finding, and presented as Attachment B.
Issue Date: August 2, 1999
Audit
Report No. 99-AT-201-1810
File Size: 77KB
Title: Tenant Opportunity Program Grantees of Atlanta Housing
Authority Developments, Atlanta, Georgia
At the request of the Department of Housing and Urban Development
(HUD) Office of Public Housing, we completed a review of four Tenant
Opportunity Program (TOP) grantees in Atlanta, Georgia. The objective
of the audit was to determine whether the four resident associations,
(McDaniel Glenn Resident Association, Martin Luther King Senior
Highrise Resident Association, and Jonesboro North and South Resident
Associations) administered their programs and expended HUD funds
in accordance with federal requirements.
The TOP grantees still lacked the capacity to administer their
grants as reported in prior Office of Inspector General (OIG) reviews.
The four grantees did not adequately administer their grants and
account for grant funds in accordance with federal requirements.
We also determined that the grantees did not follow proper procurement
procedures and did not maintain adequate documentation to evidence
the procurement procedures used in awarding contracts to consultants
and trainers. Two of the grantees had made little progress towards
accomplishing the tasks cited in their work plans. We attribute
these conditions to HUD not properly monitoring the grantees and
the ineffective monitoring and technical assistance performed by
the Atlanta Housing Authority. As a result, the grantees incurred
$37,945 of ineligible and unsupported costs and lacked the capacity
to continue their grants. We recommend that you terminate all four
grantees and recover the outstanding grant amounts.
Issue Date: December 4, 1998
Audit
Report No. 99-AT-241/242/255-1002
File Size: 4,510KB
Title: Augusta-Richmond County Consolidated Government, Community
Development Block Grant, HOME, and Urban Development Action Grant
Programs, Augusta, Georgia
Our review disclosed no significant deficiencies regarding the
city's award of HOME funds to CHDOs and its monitoring. However,
we did find serious problems with the city's management of CBDG
and UDAG funds. We identified about $1.6 million of ineligible and
$.6 million of unsupported costs.
* The city's grant program to improve facades of commercial buildings
in the downtown area did not meet national objectives of the CDBG
Program. Our review of 27 of 46 construction projects funded by
the city during calendar years 1992 through 1997 found 11 projects
totaling about $443,000 that did not address slum and blight and
did not comply with city program policy. The city did not maintain
adequate documentation on the other 16 projects totaling about $588,000
to determine whether they met the objectives or complied with city
policy. (See Appendices A and B) In addition, we identified inconsistency
in the awards and requirements placed on some property owners by
the city that had the appearance of favoritism. These deficiencies
occurred, in part, because the city's administrative policy for
awarding facade grants did not contain procedures for documenting
files and monitoring and enforcing compliance. Also city program
officials disregarded policy.
* From 1992 through 1996, the city made 10 special economic development
loans to 9 for-profit entities totaling $559,250. Three of the loans
totaling about $208,000 were forgiven by the city. At the time of
our review in May 1998, seven of the entities (78 percent) had gone
out of business owing the city about $193,000. Recovery is not likely.
Only one entity was current with its payments. (See Appendix C)
Our review revealed that the city did not maintain documentation
to determine if the loans met program requirements and/or national
objectives. We found little evidence that the city monitored and
enforced loan requirements. We also identified inconsistency in
how some loans were handled that had the appearance of favoritism.
(See Finding 1) These deficiencies occurred, in part, because the
city had no written policies and procedures for making economic
development loans, documenting files, and monitoring and enforcing
compliance. Because of the nature and extent of the deficiencies,
we consider $559,250 ineligible.
* The city improperly charged the CDBG Program $548,100 spent for
street lighting and sidewalk improvements in 1995 and 1996. The
city reported to HUD that these expenditures benefited low and moderate
income persons. However, we determined that the projects did not
meet this program objective because they were in commercial areas
of downtown Augusta; not residential areas. The city improperly
classified the costs as benefiting low and moderate income persons.
* The city may have lost millions in potential revenue and significantly
reduced program benefits when it approved the refinancing of a developer's
first mortgage without assessing the impact the refinancing had
on the city. The mortgage was part of an agreement that the city
had with the developer in order for the developer to obtain a 30-year
$7.5 million no-interest UDAG loan. The funds were needed to build
a $45.6 million hotel/office/conference center complex on the downtown
river front. In return for the loan, the developer agreed to: (1)
pay the city a percentage of the project's excess net cash flow
based on certified financial reports and (2) employ up to 600 persons
including 75 percent low and moderate income persons. We found that
in addition to not assessing the impact of refinancing, the city
had not obtained timely certified financial reports from the developer,
and was unaware of the number of low and moderate income persons
employed by the complex. These deficiencies occurred because the
city did not effectively monitor and enforce agreement provisions.
Issue Date: September 28, 1998
Audit
Report No. 98-CH-259-1005
File Size: 317KB
Title: City of Atlanta Empowerment Zone Program Atlanta, Georgia
Based on our review of 16 of the 123 activities reported to HUD
in its June 30, 1997 Performance Review, we concluded that the City
did not maintain adequate control over its Empowerment Zone Program
to assure efficient and effective use of the funds or accurate reporting
of the Program's accomplishments. The City inappropriately: paid
$739,178 for services from Empowerment Zone funds and was billed
$53,979 for services that did not benefit Zone residents; used $429,241
of Zone funds to assist in the relocation of a business to the Zone,
but the relocation of the business resulted in decreased employment
and the closing of the business in its original location which is
not an appropriate use of Zone funds; committed $400,000 of Zone
funds to assist in the relocation of another business to the Zone
which will result in the closing of the business and decreased employment
in the original location; and provided $8,000 of Zone funds to assist
in the purchase of a home located outside of the Zone. The City
also did not competitively bid a contract awarded under the Empowerment
Zone Program, inaccurately reported the accomplishments of its Zone
activities, and incorrectly reported nine activities as Zone activities
when they were not. As a result, Zone funds were not efficiently
and effectively used, and HUD was provided with the impression that
the benefits of the Program were greater than actually achieved.
Date Issued: September 3, 1998
Audit
Report No. 98-AT-251-1009
File Size:145KB
Title: Metro Atlanta Task Force for the Homeless, Inc. Innovative
and Supportive Housing Homeless Programs Atlanta, Georgia
The Task Force did not efficiently and effectively manage its
programs to ensure compliance with regulations. As a result, MATFH
spent $1,243,854 of IHP grant funds without proper support. Also,
MATFH charged $6,607 of ineligible administrative costs to the IHP
grant. In addition, the Task Force did not adequately maintain its
accounting records or monitor the subrecipients under its SHP grant.
Issue Date: March 31, 1998
Audit
Report No. 98-AT-206-1004
File Size: 191KB
Title: HA City of Atlanta, Atlanta, GA
We recommend HUD require the Authority to: repay HUD for all ineligible
costs and unresolved unsupported costs; develop and implement controls
and procedures to ensure compliance with procurement and contract
administration requirements; develop and implement fiscal controls
to ensure proper reporting; develop procedures to ensure private
management fees are paid according to contracts; adopt policies
restricting special considerations to Board members and for making
recommendations to the Mayor for prospective Board members; provide
training to resident Board members on their responsibilities and
duties; and develop other avenues of assistance independent of the
Authority's operations to address emergency requests for assistance
from residents.
Issue Date: January 20, 1998
Audit
Report No. 98-AT-201-1001
File Size: 125KB
Title: Alma HA, Alma, GA
AHA's prior Executive Director (ED), Board, and ARC mismanaged
HUD programs. The mismanagement adversely affected program operations
and resulted in wasted funds. Specifically, the ED, Board and ARC
ignored program budgets, and did not implement several major components
of the Comprehensive Grant, Drug Elimination Grant, and Tenant Opportunity
Programs. As a result the programs did not meet their intended objectives.
Also, tenants were not provided improved living conditions and/or
services that AHA and ARC represented to HUD that they would provide.
Instead, AHA spent the funds for other activities which were either
not in the budgets or the amounts spent substantially exceeded the
budgets. These issues are discussed in the findings along with other
violations that include instances where AHA and/or ARC:
1. Incurred $119,929 for costs that are not allowable.
2. Incurred $592,732 in unsupported costs and diverted $28,198
in insurance proceeds from fire losses to pay other program costs.
3. Obtained or made $150,976 in unauthorized loans.
4. Failed to maintain proper accounting records for the Drug Elimination
Grant and Tenant Opportunity Program. We recommend HUD require AHA
and or ARC to seek recovery of wasted funds.
We also recommend AHA and ARC improve controls needed to safeguard
program assets.
Issue Date: August 8, 1997
Audit
Report #97-AT-201-1814
File Size: 157KB
Title: Atlanta HA, Atlanta, GA
Our assessment shows that the Authority is improving its operations
in the areas we reviewed which included: housing management, security,
vacancies and unit turnaround, admissions and continued occupancy,
maintenance, modernization and redevelopment, and annual inspections.
Although improvements are being made, the Authority should continue
to work to assure its operational improvements are institutionalized.
Issue Date: May 29, 1997
Audit-Related
Memorandum No. 97-AT-248-1810
File Size: 16KB
Title: Our Common Welfare, Inc., Decatur, GA
We made the following observations: a. OCW did not have a proper
segregation of duties. b. OCW did not require workers who worked
on multiple programs to prepare time and attendance records to support
the salary amounts charged to the various programs. c. OCW had not
established and implemented a system to charge indirect costs.
Issue Date: May 12, 1997
Audit-Related
Memorandum 97-AT-207-1809
File Size: 57KB
Title: Mowa Choctaw HA, Mt. Vernon, AL
The series of Seattle Times articles on Indian Housing indicated
(1) HUD gave MCHA large development grants three consecutive years,
totaling $5.6 million, although MCHA had money and management problems
from inception; and (2) MCHA covered cost overruns on the first
project with money from the second, then covered that shortfall
with the third grant.
Issue Date: February 10, 1997
Audit-Related
Memorandum 97-AT-203-1805
File Size: 24KB
Title: Holiday Apts/Midland Mgmt Company
FINDING 1 - Management Agent Made Unauthorized Distributions The
management agent made distributions totaling $145,840 of project
funds which, in our opinion, were not evidenced as necessary for
reasonable operating and maintenance expenses of the same project.
Finding 2 - Project Continued To Need Physical Improvements While
improvements were being made, the physical condition of Holiday
Apartments remained below average due to many uncorrected maintenance
items.
Issue Date: November 4, 1996
Audit-Related
Memorandum No. 97-AT-248-1802
File Size: 18KB
Title: Atlanta Task Force for the Homeless, Atlanta, GA
We concluded that the Task Force has established organizational,
financial management, and program performance systems necessary
to satisfactorily accomplish its HUD sponsored Supportive Housing
Program.
Issue Date: September 24, 1996
Audit
Related Memorandum 96-AT-241-1826
File Size: 65KB
Title: Cobb County, Marietta, GA
We found that:
- The County did not (a) clearly describe whether its HUD program
administrator's contract was a fixed price or cost reimbursable
agreement, (b) adequately analyze the reasonableness of the contractor's
proposed rate for overhead/profit, (c) adequately solicit proposals,
and (d) prepare a price analysis.
- The County paid for CDBG administrative services ($112,832)
which we believe the contract administrator should have performed.
- The County paid for rehabilitation inspections and work-write-up
services ($80,340) which we believe the contract administrator should
have performed.
- The County did not adequately monitor the performance of the
contract administrator.
Issue Date: August 21, 1996
Audit
Related Memorandum 96-AT-241-1824
File Size: 49KB
Title: Gwinnett County, Lawrenceville, GA
We noted indications of deficiencies that warrant additional attention
by HUD and County staff. The County needs to improve its contracting
procedures for obtaining a professional consultant to administer
its HUD funded and related programs.
We found that:
- The County did not (a) clearly describe whether its HUD program
administrator's contract was a fixed price or cost reimbursable
agreement, (b) adequately analyze the reasonableness of the contractor's
proposed rate for overhead/profit, (c) adequately solicit proposals,
and (d) document its price analysis.
- The County paid for additional rehabilitation inspection and
work-write-up services ($51,416) which the contract administrator
should have performed.
- The County paid its contract administrator $159,459 for personnel
costs that were not supported by proper time and attendance records.
Issue Date: June 19, 1996
Audit
Related Memorandum No. 96-AT-202-1808
File Size: 20KB
Title: Sylvester HA, Sylvester, GA
The housing authority's management compromised its controls over
cash collections. Management allowed employees to issue handwritten
receipts in lieu of posting collections directly to its computerized
control system and did not perform the supervision necessary to
assure the subsequent posting of the handwritten receipts. Management
did not provide for a separation of duties which is basic to a good
internal control system. As a result, we confirmed that $55,782
was misappropriated, and the housing authority could lose additional
revenue because it cannot substantiate the accuracy of its tenant
accounts receivable.
Issue Date: May 20, 1996
Audit
Related Memorandum 96-AT-248-1818
File Size: 18KB
Title: Atlanta Furniture Bank, Atlanta, GA
During our review we made the following observations:
a. The Furniture Bank staff lacked the basic accounting knowledge
needed to maintain proper accounting records.
b. The Furniture Bank did not have a performance tracking system
that captured data on the number of homeless individuals served.
c. The Furniture Bank experienced recent financial problems.
d. The Furniture Bank incurred a tax liability for payroll and sales
taxes.
e. The Furniture Bank did not have a proper segregation of duties.
f. The Furniture Bank's procurement policy did not specify a dollar
limit for when bids, quotes or negotiations should be used.
Issue Date: May 16, 1996
Audit
Related Memorandum No. 96-AT-202-1816
File Size: 34KB
Title: Statesboro HA, Statesboro, GA
The Statesboro Housing Authority (SHA) did not properly safeguard
cash assets against fraud and abuse. The Executive Director (ED)
made personal use of SHA assets, had poor controls over cash collections,
and engaged in questionable procurement and disposition transactions
that included identity-of-interest entities. The ED charged personal
purchases to the authority accounts and had a maintenance employee
work at his home on authority time. The ED knowingly concealed cash
shortages in the rent collections by: representing unreceipted sources
of revenue as rent collections; cashing an unclaimed security deposit
refund to deposit as rent, and consistently moving rent collections
to prior periods to cover cash shortages. Also, the ED procured
services from his wife's business, and sold authority equipment
to his father and a Board member. The ED continued these practices
after being cautioned by the Board not to commingle his personal
business with SHA business.
Issue Date: April 26, 1996
Audit
Report Number 96-AT-203/255-1003
File Size: 90KB
Title: Georgia Housing and Finance Authority, Atlanta, GA
Generally, GHFA's programs were operating effectively and in compliance
with applicable regulations except as noted in this report.
Issue Date: March 8, 1996
Audit
Report Number 96-DE-221-1003
File Size: 118KB
Title: City Wide Mortgage, Inc., Smyrna, GA
We found that City Wide Mortgage did not accurately disclose to
mortgagors the actual costs associated with refinancing home mortgages.
In addition, the review found that City Wide Mortgage was, in effect,
obtaining an unearned fee by inflating the title insurance charge
on the HUD-1 settlement statement. The overcharge was used to cover
the cost of a third party to conduct a file review and disburse
the loan proceeds.
We also determined that City Wide Mortgage charged more than the
HUD authorized amount and did not follow prudent business practices
in the disclosure of the disbursement of loan proceeds.