Nebraska Audit Reports
Issue Date: March 13, 2007
Title: The State of Nebraska Did Not Close HOME Projects in a Timely Manner
HUD-OIG reviewed the HOME Investment Partnerships Program (HOME), administered by the State of Nebraska's Department of Economic Development (State), in Lincoln, Nebraska. We audited the State because a recent U.S. Department of Housing and Urban Development (HUD) HOME risk assessment ranked the State as a high-risk recipient in HUD's Region VII. Our objective was to determine whether the State was closing HOME-funded projects in accordance with HUD requirements.
The State did not close HOME projects in HUD's computer systems in a timely manner. It has made progress in properly closing several hundred past due projects, but many past due projects remain unresolved. We recommended that HUD verify that the State implements appropriate controls to ensure that it closes HOME projects in HUD's data systems within the required timeframes. We also recommended that HUD monitor the State's progress in closing projects currently exceeding HUD's required timeframes and ensure that the projects are closed properly and expeditiously.
Date: September 27, 2006
Title: The Columbus Housing Authority, Columbus, Nebraska, Improperly Spent and Encumbered Public Housing Funds for Its Non-HUD Development Activities
HUD's Office of Inspector General reviewed the development activities of the Columbus Housing Authority, Columbus, Nebraska (Authority), to determine whether the Authority complied with HUD rules and regulations when operating and managing Crown Villa, a non-HUD multifamily development.
The Authority inappropriately spent more than $62,000 in public housing funds to operate its non-HUD development, Crown Villa. It also inappropriately signed Crown Villa loan documents that contained setoff provisions allowing the bank to take Authority deposits in the event of default. The Authority defaulted, and the bank seized more than $88,000 in public housing funds to satisfy the defaulted loans. The Authority still owes nearly $112,000 on a remaining loan. It is now at significant risk of being unable to continue administering HUD housing programs.
We recommended that HUD require the Authority to repay its public housing program from nonfederal sources, ensure that no additional HUD funds are used for nonfederal activities without prior HUD approval, terminate the bank agreement that is encumbering public housing funds, and implement controls to protect federal funds. We also recommended that HUD impose administrative sanctions against the Authority, its former executive director, and members of its board of commissioners for placing the Authority in its current position.
Issue Date: August 30, 2006
Title: The Columbus Housing Authority of Columbus, Nebraska, Improperly Expended and Encumbered Its Public Housing Funds
HUD's Office of Inspector General reviewed the development activities of the Columbus Housing Authority, Columbus, Nebraska (Authority), to determine whether the Authority spent or encumbered HUD assets for development activities without HUD approval.
The Authority inappropriately spent more than $204,000 of public housing funds to develop Crown Villa, a non-HUD multifamily housing development. The Authority also improperly encumbered its public housing assets when it signed Crown Villa loan documents containing set-off provisions that allowed the bank to take Authority bank account funds in the event of default on the loans. The Authority defaulted on the loans and the bank seized more than $88,000 in public housing funds.
We recommended that HUD require the Authority to repay its public housing program from nonfederal sources, continue to pursue recovery of the funds seized by the bank, and ensure that no additional HUD funds are used for nonfederal purposes without HUD approval.
Issue Date: May 30, 2006
Title: The Omaha Housing Authority Did Not Follow Required Procurement Procedures
HUD-OIG audited the Omaha Housing Authority (Authority) in Omaha, Nebraska, due to our risk assessment of the larger housing authorities in Region VII and in response to several citizen complaints. Our objectives were to determine whether the Authority followed the U.S. Department of Housing and Urban Development's (HUD) and its own procurement requirements.
We found the Authority did not follow required procurement procedures because its management was not effectively involved in the process. It used $5,419 in HUD funds to purchase ineligible goods and services, and it could have saved at least $970,000 when it purchased $1.9 million in other goods and services.
We recommend that HUD require the Authority to repay its low rent program for the ineligible purchases and improve controls over its procurement process.
Issue Date: April 24, 2006
Title: The Omaha Housing Authority Did Not Encumber Resources without HUD Approval
HUD-OIG audited the Omaha Housing Authority (Authority) and its nonprofit affiliates in Omaha, Nebraska to determine whether the Authority encumbered resources to benefit other entities' financing and/or development activities in violation of its annual contributions contract, other agreement, or regulation.
The Authority has two nonprofit affiliates, Housing In Omaha and the Omaha Housing Foundation. Housing in Omaha serves as a developer and co-owner of mixed-finance developments for the Authority. The U.S. Department of Housing and Urban Development (HUD) approved Housing In Omaha's role in the mixed-finance projects.
The Omaha Housing Foundation provides financial assistance and educational incentives to public housing residents. In addition, it supports youth athletic teams, youth recreational activities, and family events. Its primary funding sources are community donations and voluntary contributions from the Authority's staff.
Based on our testing of various partnership agreements, guaranty/development agreements, and loans, the Authority did not encumber resources without HUD approval. This report contains no findings.
Date: January 12, 2006
Title: The Omaha Housing Authority Does Not Have Adequate Controls Over Its Housing Quality Standards Process and Tenant Eligibility Verification Procedures
HUD-OIG audited the Omaha Housing Authority's (Authority) Section 8 Housing Choice Voucher program to determine whether the Authority's program complied with HUD requirements. We found the Authority needs to improve controls over its housing inspection process and procedures for verifying tenant eligibility.
The Authority's process for ensuring housing quality did not always comply with HUD requirements. The Authority did not emphasize the importance of the inspection process. As a result, the Authority provided $29,151 in rental assistance for homes that did not meet standards.
The Authority also did not consistently follow tenant eligibility verification procedures. The assistant director of the Section 8 program and quality control personnel did not perform effective quality control reviews because they did not ensure deficiencies were corrected. As a result, the Authority overpaid $29,360 in assistance.
We recommend that HUD require the Authority to: (1) Emphasize the importance of the inspection process by implementing sufficient controls to ensure it meets HUD requirements, (2) Repay $29,151 in assistance payments on homes that did not meet standards, (3) Ensure that it sufficiently monitors and oversees the quality control process for verifying tenant eligibility, and (4) Repay $29,360 for overpaid housing assistance.
Issue Date: April 21, 2005
Title: Mortgage Express's Quality Control Process Did Not Comply with HUD Requirements
HUD-OIG audited Mortgage Express, Inc. (Mortgage Express), a Federal Housing Administration-approved loan correspondent located in La Vista, Nebraska, because its default rate has been significantly higher than the U.S. Department of Housing and Urban Development (HUD) Des Moines field office's average over the past two years. Our audit objectives were to determine whether Mortgage Express properly developed and implemented a quality control plan and properly originated Federal Housing Administration mortgages.
Mortgage Express's quality control process did not comply with HUD requirements. Mortgage Express's written quality control plan lacked many required elements. In addition, Mortgage Express did not conduct all required quality control reviews, nor did its management review completed quality control reports and take prompt corrective action when the reports identified deficiencies.
Mortgage Express also did not follow HUD requirements when originating 18 of 41 Federal Housing Administration mortgages reviewed. Because Mortgage Express's Federal Housing Administration sponsors are ultimately responsible to HUD for these deficiencies, we will address these deficiencies to the appropriate sponsors in separate reports.
Mortgage Express generally agreed with our conclusions, and responded that it has updated its Quality Control Manual to conform to HUD requirements. Mortgage Express also plans to hire quality control staff and have its quality control function in compliance with HUD rules and regulations by the end of April 2005.
We recommended that the Assistant Secretary for Housing-Federal Housing Commissioner and Chairman, Mortgagee Review Board, require Mortgage Express to implement controls to ensure that it follows HUD's quality control requirements and verify that Mortgage Express has implemented proper controls. We also recommended that HUD take appropriate administrative action against Mortgage Express for continuing to operate without an adequate quality control process.
Issue Date: December 3, 1999
Title: Omaha HA, Housing Authority Operations, Omaha, NE
We completed an audit of the Omaha Housing Authority. The overall objective of our audit was to determine whether the Authority complied with applicable laws and regulations related to cash handling procedures, identity-of-interest non-profit entities, procurement and contracting, inventory procedures, management information systems, Special Purpose Grants, the Section 8 program, and accounting procedures. We also assessed the Authority�s staffing and organizational structure and the Authority�s compliance with the "Housing Opportunity Program Extension Act of 1996."
The Authority did not maintain an effective control environment, lacked adequate cash controls, used $1,082,992 in federal funds to pay unallowable expenses or expenses it could not support, did not follow federal or its own procurement regulations, conducted an inadequate year-end inventory for 1998, did not exercise adequate control over implementation of its management information system, did not follow federal regulations regarding a Special Purpose Grant, did not properly administer its Section 8 program, and did not properly account for cable television revenues. We also determined the Authority�s organizational structure and staffing were comparable to other housing authorities of similar size, and the Authority substantially complied with the "Housing Opportunity Program Extension Act of 1996."
Issue Date: January 16, 1996
Title: Omaha Tribal HA, Macy, NE
We found the Housing Authority's controls over cash receipts need to be strengthened. Between September 1, 1994 and August 22, 1995, bank deposits of $7,568.93 were made into the Authority's bank account without numbered receipts being issued. Further, $976.29 was receipted with non-numbered receipts which could not be traced into the Authority's bank account. Some Authority employees are conducting non-housing authority business by collecting funds for a private loan business at the office of the Authority during regular business hours. Additionally, the Authority did not adhere to its disposition policies and the Annual Contributions Contract by allowing a purchaser to take possession of two trucks prior to receipt of payment.
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