Idaho Audit Reports
Issue Date: January 26, 2006
Title: Idaho Housing and Finance Association, Bosise, Idaho, Did Not Monitor Subsidized Multifamily Projects in Accordance with Regulations or its Annual Contributions Contract with HUD
At the request of the Region X Multifamily Hub, we audited Idaho Housing and Finance Association (Idaho Housing). Our audit objective was to determine if Idaho Housing monitors projects in accordance with its Annual Contributions Contract with HUD to ensure that project funds are expended appropriately.
We found that Idaho Housing inappropriately allowed (a) excessive owner distributions, (b) one duplicate, and other unsupported reimbursements from replacement reserves, (c) a conflict of interest to exist between itself and The Housing Company, a nonprofit owner of subsidized multifamily projects, and (d) increases in management fees resulting in excessive fees paid. This resulted in questioned costs of $3,867,821 and unsupported costs of $182,264. This occurred because Idaho Housing did not properly implement federal guidelines and regulations, did not always follow its own policies and procedures, and lacked sufficient management controls to ensure that it complied with federal requirements.
We recommended that HUD require Idaho Housing to (1) reimburse the affected projects' residual receipts accounts from nonfederal funds for the excessive distributions, duplicate reimbursement, and excessive management fees, (2) provide supporting documentation or reimburse the affected projects' replacement reserve accounts from nonfederal funds for unsupported reimbursements, and (3) take corrective action to dissolve the conflict of interest relationship or make a determination of default in accordance with paragraph 2.16(b)(2) of its annual contributions contract with Idaho Housing. We also recommended that the Region X Multifamily Hub obtain a formal legal opinion to determine if the 1988 housing assistance payments amendments subject the owners of the projects to limitations on distributions, in accordance with 24 CFR 883.702(e) and to determine if HUD Handbook 4381.5 applies to the reported projects.
Issue Date: September 16, 2005
Title: Idaho Housing and Finance Association, Boise, Idaho, Made Improper Section 8 Subsidy Payments and Improperly Distributed $7.2 Million of Bond Refund Proceeds Under its Non-insured, Subsidized Multifamily Projects Program
At the request of the Region X Multifamily Hub, we audited Idaho Housing and Finance Association (Idaho Housing). Our audit objectives were to determine whether Idaho Housing followed federal regulations and HUD guidelines when it (1) allowed project owners to prepay project mortgages and (2) refunded bonds in 1994.
Idaho Housing did not properly follow federal regulations and HUD guidelines when it allowed 10 project owners to prepay project mortgages. This occurred because Idaho Housing misinterpreted the language in the contracts. As a result, HUD paid more than $8.5 million in subsidies in excess of fair market rents for these projects. Further, Idaho Housing did not properly follow federal regulations and HUD guidelines when it did not return HUD's 50 percent share of the savings of $6,195,107 generated from the 1994 bond refunding for 30 McKinney Act projects, and did not use $997,523 of its 50 percent of the McKinney Act savings appropriately. This occurred because Idaho Housing believed that HUD's approval of the loan-restructuring plan allowed the agency to distribute the proceeds to the owners without regard to the McKinney Act provisions. As a result, the McKinney Act savings were not available for HUD programs including those administered by Idaho Housing.
We recommended that HUD require Idaho Housing to (1) reimburse HUD, its federal programs, and the affected project's residual receipts account from nonfederal funds for excessive subsidy payments on the terminated contracts and for inappropriately distributed bond proceeds, (2) keep HUD apprised whenever a project owner prepays the mortgage on a project subject to the old regulations and renegotiate the HAP contract with HUD, and (3) implement procedures to ensure the proper identification of old regulation and new regulation projects with respect to the applicable regulations and guidance.
Issue Date: January 10, 2002
Title: Housing Program Administration and Operations of the Nampa Housing Authority, Nampa, Idaho
We performed an audit of the Nampa Housing Authority's housing program administration and operations in which we addressed certain allegations of mismanagement, misuse and abuse. We found that most of the allegations had validity; specifically the Board of Commissioners: (1) substantially increased the Executive Director's salary without properly evaluating his performance or the reasonableness of the increases; (2) advised the Executive Director not to track his time, resulting in HUD grants paying for work on non-HUD activities; (3) did not always ensure that the Executive Director's travel was approved and claims were proper; (4) allowed the Executive Director to sell items to the Authority, resulting in conflicts of interest and questionable purchases; and (5) did not ensure the Authority had controls to safeguard tenant rent and security deposits, resulting in misappropriated funds.
We are recommending that HUD determine the proper administrative actions to take against the Board and the Executive Director. Also, HUD needs to ensure the Authority is run efficiently, has proper Board oversight, and complies with HUD requirements, and require the Authority to provide support for questionable costs or reimburse the grant program.
Issue Date: May 29, 1998
Title: Nampa Housing Authority Indian Creek Child Care Center Use of Operating Funds to Pay for Child Care Expenses, Nampa, ID
The Nampa Housing Authority (Housing Authority) completed construction of the Indian Creek Child Care Center (Center) through the use of 1993 Comprehensive Improvement Assistance Program funds (CIAP) in 1994. After taking over the Center's operations in August 1997, the Housing Authority used operating funds to pay for child care expenses, the majority of which were ineligible. The Housing Authority took over the Center without a plan, procedures, or adequate controls to properly operate the Center. As a result,
* the Housing Authority used over $70,000 of its operating funds for child care expenses, primarily for nonresident children,
* payments from parents were unaccounted for, and
* some parents stopped using the facility due to its poor management and record keeping.
Prior to taking over the Center, the Housing Authority leased the Center to Head Start at no cost. The takeover occurred because the former Executive Director convinced the Board that the Housing Authority would make money and better serve its residents. Convinced the takeover was in the Housing Authority's best interests, the Board relied on the former Executive Director's overly optimistic financial projections and assumed she had adequate plans to properly manage and operate the Center.
In addition, the Housing Authority did not fully justify and document its need for a 7,700 square foot child care center and HUD's Portland Office did not do a thorough enough review to find this out before approving 1993 CIAP funds for its construction. As a result, CIAP funds totaling over $552,000 were used to construct a child care facility which may have been in excess of resident needs and is currently underutilized by Housing Authority residents. HUD officials approved CIAP funds to construct the facility because they relied on the Housing Authority's assertions and Head Start's commitment to use the facility without determining what the residents' child care needs were, relative to the size of the facility proposed.
Issue Date: September 11, 1996
Title: Boise City HA, Boise, ID
At the U.S. Attorney's request for assistance, we reviewed the Boise City/Ada County Housing Authority's (Housing Authority) records pertaining to the former Executive Director's travel vouchers and use of the Housing Authority's credit card. While performing our work, we identified weaknesses in the Housing Authority controls over the former Executive Director's travel and credit card usage. The control weaknesses that we identified were:
1. Lack of effective Board of Commissioner (Board) oversight in authorizing the former Executive Director's travel; and diligent review and approval of the related travel vouchers.
2. Not complying with the Board adopted travel policy.
3. Not consistently following a policy and process when authorizing the former Executive Director's travel.
4. Not completing travel vouchers within the prescribed time frame; and the former Executive Director did not fill out her own travel vouchers.
5. Lack of a written policy and specific procedures regarding use of the Housing Authority's credit card.
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