Title: The Housing Authority of Lawrence County, Kentucky, Spent More Than $71,000 for Questionable Purchases

We audited the Housing Authority of Lawrence County, Kentucky (Authority), to determine whether the Authority managed its procurement and financial management systems in accordance with U.S. Department of Housing and Urban Development (HUD) requirements. We conducted the review pursuant to a request by the director of the Office of Public Housing, Louisville, Kentucky.

The Authority spent more than $71,000 for questionable purchases and travel expenses. This occurred because it did not follow Office of Management and Budget requirements that expenses be reasonable and necessary, did not have sufficient management controls to ensure adequate segregation of duties or adequate board oversight, and did not follow its procurement policies or federal procurement requirements. The Authority and HUD's Office of Public Housing, Louisville, Kentucky, entered into an improvement plan and memorandum of agreement on April 18, 2006, to address deficiencies in the Authority's operations, but additional actions are needed.

We recommend that the director of the Office of Public Housing

1. Require the Authority to provide support for $71,741 in questionable costs or repay any ineligible or unsupported amounts from nonfederal funds.

2. Revise the improvement plan and memorandum of agreement with the Authority to include actions that ensure that the Authority

• Adequately segregates its accounts payable processes,

• Provides adequate supervisory oversight over credit card purchases and travel advances to include review of supporting documents by a board member before signing checks, and

•Complies with its procurement policies and federal procurement regulations.

3. Reevaluate the corrective actions at a later date to determine whether the actions were appropriate.

Issue Date: September 20, 2002
Audit Report No. 2002-AT-1808
File Size: 339KB

Title: Congressionally Requested Audit of the Outreach and Technical Assistance Grants Awarded to the Homeless and Housing Coalition of Kentucky, Inc. Frankfort, Kentucky

In response to a Congressional request, we reviewed the eligibility of costs of Homeless and Housing Coalition of Kentucky, Inc.'s Outreach and Technical Assistance Grant (OTAG), with particular emphasis on identifying ineligible lobbying activities. The audit concluded the Grantee failed to maintain adequate records to support charges to the grants, and charged the grants for ineligible activities. The ineligible activities included unreasonable consulting fees, lobbying activities that are prohibited by OMB Circular A-122, and unrelated travel and training costs. The Grantee's failure to comply with requirements under OMB Circulars A-122 and A-110 resulted in overcharges to the grants of at least $16,287 for ineligible activities. The Grantee also failed to use a cost allocation method or plan that complied with guidance in OMB Circular A-122 to allocate indirect costs to the grants. Consequently, the Grantee could not support $54,625 of indirect costs charged to the grants. Also, the Grantee failed to submit required supporting data for some payment vouchers.

Issue Date: September 3, 1998
Audit Report No. 98-AT-245/255-1811
File Size: 839KB

Title: City of Covington Hotline Complaints Covington, Kentucky

During our review period, Johnson or related entities received Investor Rehabilitation Loans totaling about $1.1 million, or 32 percent of the loans awarded. We were unable to prove or disprove favoritism; however, Johnson benefited from the loan program to a greater extent than any other investor. As a result, there is the appearance of favoritism, and the absence of either written procedures or documentation made it difficult to refute. The City attributed the high number of Johnson loans to her willingness to undertake projects no one else would do.

Issue Date: July 7, 1998
Audit Report No. 98-AT-206-1808
File Size: 747KB

Title: Hazard HA, Hazard, KY

During our review the prior ED and Assistant ED were indicted by a Federal grand jury for controlled substance violations. The HUD Kentucky State Office immediately issued a Limited Denial of Participation in HUD programs for both. HHA's Board then placed the Assistant ED on administrative leave, and appointed the Interim ED and Assistant ED. The prior ED remained on sick leave. The Manchester Housing Authority's Board also obtained new management. In January 1998, the prior ED and Assistant ED were convicted of multiple Federal controlled substance violations. On April 6, 1998, in Federal Court in Pikeville, Kentucky, they were each sentenced to 3 years probation and assessed criminal penalties totaling $3,900.

Prior HHA management did not administer HHA's programs economically, effectively, or efficiently, and was not meeting its mission of providing decent, safe and sanitary housing. Attachment A has three findings:

Management of HHA under the prior administration was ineffective, inefficient and uneconomical resulting in wasted public funds. The prior ED and Assistant ED appeared to lack either the ability or desire to properly manage HHA, and lack of adequate Board oversight allowed conditions to deteriorate. The following deficiencies evidenced failure to fulfill responsibilities required of officials in public trust positions:

Records in disorder or missing
Questionable/unsupported salary payments
Unnecessary payment of taxes and tax penalties
Purchase of luxury vehicles
Excessive number of vehicles
Inadequate inventory controls and records Required audits not submitted Inaccurate information reported to HUD

Nepotism

Units not timely prepared for occupancy
Inadequate rent collection
Inefficient cash management
Untimely physical improvements

HHA must improve the quality of its housing. Ninety-seven percent of the family units we inspected did not meet HUD's Housing Quality Standards (HQS). As a consequence, HHA was providing substandard housing and residents were living in indecent, unsafe, and unsanitary conditions. The excessive HQS failure rate and overwhelming evidence of deferred maintenance are indicative of poor management. HQS inspections were superficial, there was no preventative maintenance program, and in some cases indicated repairs had not been made or were of poor quality.

HHA management did not follow required Federal procurement procedures and, in some instances, attempted to conceal known deviations from required procedures. Management procured materials and services, in some cases from relatives, without obtaining required price quotes or following bid procedures. As a result, there is no assurance costs were reasonable, and certain individuals/firms were accorded preferential treatment over others.

Issue Date: January 24, 1996
Audit-Related Memorandum 96-AT-204-1807
File Size: 30KB

Title: HA of Bowling Green, Bowling Green, KY

Based on a review of approximately 60 percent of the former ED's travel claims of $4,100, we concluded he falsified documents and made bogus claims for about $665, or 27 percent of the cost reviewed.