Pennsylvania Audit Reports
Issue Date: September 27, 2007
Audit
Report No.: 2007-PH-1013
File Size: 1.49MB
Title: Harrisburg Housing Authority, Harrisburg, Pennsylvania,
Did Not Properly Administer Its Low-Rent Public Housing Program
We audited the Harrisburg Housing Authority (Authority) Harrisburg,
Pennsylvania. Our objective was to determine whether the Authority
administered its low-rent public housing program in accordance with
U.S. Department of Housing and Urban Development (HUD) regulations.
The Authority did not administer its low-rent public housing program
in accordance with HUD regulations. It improperly disbursed $834,969
in operating funds from its low-rent public housing program to open
and support the Greater Harrisburg Community Credit Union (credit
union) and allowed a related conflict-of-interest situation to exist.
The Authority's noncompliance occurred because it believed its use
of its operating funds and its consulting contract arrangements
for the credit union was proper. We recommend that HUD review the
issues in this report and if appropriate, initiate action to declare
the Authority in substantial default of its consolidated annual
contributions contract and take appropriate administrative action
as detailed in section 17 (Notices, Defaults, and Remedies) of the
contract.
We recommend that HUD direct the Authority to repay its low-rent
public housing program $834,969 from nonfederal funds for the ineligible
disbursements related to the credit union; develop and implement
controls to ensure that disbursements of operating funds are eligible
and supported; and develop and implement controls to detect, prevent,
and resolve future conflict-of-interest situations.
Issue Date: July 26, 2007
Audit
Report No.: 2007-PH-1010
File Size: 293.70KB
Title: Countrywide Home Loans, Plymouth Meeting, Pennsylvania,
Generally Complied with HUD Requirements in Originating FHA-Insured
Single-Family Loans
We audited of the Plymouth Meeting, Pennsylvania, branch of Countrywide
Home Loans. We selected the Plymouth Meeting, Pennsylvania, branch
of Countrywide Home Loans because its default rate was above the
state's default rate. Our objective was to determine whether the
branch office complied with U.S. Department of Housing and Urban
Development (HUD) regulations, procedures, and instructions in the
origination and quality control review of FHA loans.
The branch office generally complied with HUD regulations, procedures,
and instructions in the origination and quality control review of
FHA-insured single-family loans. However, two of 10 loans we selected
for review were not originated in accordance with HUD requirements.
The branch office did not properly verify the borrowers' assets
for the two loans originally valued at more than $254,000. The deficiencies
occurred because the branch office did not exercise due diligence
in the underwriting of the loans, causing an unnecessary increased
risk to the FHA insurance fund.
We recommend HUD's assistant secretary for housing - federal housing
commissioner require Countrywide Home Loans to indemnify $256,534
for two loans, which it issued contrary to HUD's loan origination
requirements; and develop internal procedures to more closely monitor
its underwriting process.
Issue Date: April 19, 2007
Audit
Report No.: 2007-PH-1006
File Size: 230.27KB
Title: Elders Place II, Incorporated, Philadelphia, Pennsylvania,
Did Not Properly Administer HUD Funds in Accordance with HUD Requirements
We audited Elders Place II, Incorporated (Elders Place II, Inc.),
Philadelphia, Pennsylvania. Our audit objective was to determine
whether Elders Place II, Inc., administered HUD funds in accordance
with HUD requirements.
Elders Place II, Inc., did not administer HUD funds in accordance
with HUD requirements. It did not maintain complete and accurate
books and records to support the receipt and disbursement of HUD
funds, deposit all HUD funds intended for the construction of the
project into the project's construction account, maintain adequate
control over the disbursement of project funds, establish an escrow
account to cover additional construction costs, and submit an acceptable
cost certification to bring the project to final closing. This noncompliance
occurred because Elders Place II, Inc., lacked standard operating
procedures and sufficient oversight from a functioning board of
directors. As a result, it made ineligible disbursements of $87,866,
unsupported disbursements totaling $605,166, and drastically delayed
the process of bringing the project to final closing.
We recommend that HUD direct Elders Place II, Inc., to repay the
project $87,866 from nonfederal funds for the ineligible costs identified
by the audit. Additionally, we recommend that HUD direct Elders
Place II, Inc., to provide documentation to support the $605,166
in questioned costs or reimburse the project for any unsupported
costs from nonfederal funds. We further recommend that HUD direct
Elders Place II, Inc., to deposit $95,382 into an escrow account
to cover the additional construction costs and to develop and implement
written procedures to ensure that disbursements of HUD funds are
eligible and consistent with applicable HUD and federal regulations,
thereby preventing $45,843 from being disbursed improperly over
the next year.
Issue Date: December 13, 2006
Audit
Report No.: 2007-PH-1002
File Size: 1.06MB
Title: The Montgomery County Housing Authority, Norristown, Pennsylvania,
Improperly Used HUD Funds to Purchase, Renovate, and Maintain Its
Main Office
We audited the Montgomery County Housing Authority (Authority).
Our audit objective was to evaluate whether the Authority properly
used U.S. Department of Housing and Urban Development (HUD) funds
to purchase, renovate, and maintain its main administrative office.
We also reviewed the adequacy of the Authority's administration
of its Section 8 Housing Choice Voucher program.
The Authority complied with HUD regulations and adequately administered
its Section 8 Housing Choice Voucher program. However, it violated
its consolidated annual contributions contract by improperly acquiring
a $1.2 million loan using HUD assets as collateral. Also, the Authority
improperly used HUD funds to pay the interest and principal on the
$1.2 million loan which it used to renovate its main office building.
The Authority also violated its annual contributions contract by
improperly using HUD funds to purchase, renovate, and maintain its
main office. It improperly used $975,900 in Public Housing Homeownership
(Homeownership) program proceeds and $609,363 in capital funds to
purchase, renovate, and maintain its main office building, much
of which is vacant, or which the Authority has been attempting to
lease commercially for several years, or has leased to the Redevelopment
Authority of Montgomery County (Redevelopment Authority). The Authority
improperly used another $9,257 in Homeownership program proceeds
to pay the utilities of the Redevelopment Authority, which is a
tenant in its building. The Authority's improper use of HUD funds
contributed to a significant increase in its operating expenses
and caused it to delay and cancel needed repairs at public housing
units in Montgomery County. This occurred because the Authority
erroneously believed that its main administrative office was not
a project asset covered by its consolidated annual contributions
contract; misinterpreted applicable requirements; and failed to
develop and implement adequate internal controls to ensure that
HUD funds were used in accordance with its consolidated annual contributions
contract and with the applicable requirements.
We recommended that the director of the Philadelphia Office of
Public Housing notify the Authority that it has improperly encumbered
annual contributions contract assets and direct it to provide evidence
that the financial instruments encumbering the assets have been
changed to exclude the assets and, thereby, put $1.1 million to
better use. We further recommended that if the Authority does not
withdraw its encumbrances of annual contributions contract assets,
the director should advise HUD Headquarters Office of Field Operations
that the Authority is potentially in substantial default of its
annual contributions contract because it has improperly encumbered
contract assets and provide all the relevant information. Further,
the Philadelphia Office of Public Housing should request to be advised
on Headquarters' disposition of the �Notice of Default� to the Authority.
We also recommended that the Department's Enforcement Center initiate
appropriate sanctions against Authority officials responsible for
encumbering annual contributions contract assets to secure a loan.
In addition, we recommended that HUD require the Authority to properly
support its use of $975,900 in Homeownership program proceeds or
repay the program unsupported amounts from nonfederal funds. The
Authority should also repay from nonfederal funds $609,363 in ineligible
capital funds spent to be returned to the United States Treasury.
We further recommended that the Authority reimburse the Homeownership
program $9,257 for improperly paying its tenant's utility bills.
Lastly, we recommended that the Authority begin paying future debt
service on the $1.2 million loan attributable to activities unrelated
to its consolidated annual contributions contract from nonfederal
funds and provide adequate support for $119,139 in interest payments
it made on the loan or repay HUD any unsupported amounts.
Issue Date: October 31, 2006
Audit
Report No.: 2007-PH-1001
File Size: 265.58KB
Title: The Housing Authority of the County of Beaver, Beaver,
Pennsylvania, Needed to Improve Controls over HUD Assets
We
audited the Housing Authority of the County of Beaver's (Authority's)
controls over HUD assets. Our audit objective was to determine whether
the Authority properly used and maintained control of U.S. Department
of Housing and Urban Development (HUD) assets.
For
the most part, the Authority used and maintained control of HUD
assets properly. It properly supported its drawdowns of HUD funds
through the Line of Credit Control System, made purchases of goods
and services in accordance with HUD and federal requirements, and
appropriately used excess funds from an Authority-owned Section
8 new construction project for its nonfederal projects and other
accounts. However, it did not properly support allocations of salary
and benefit costs to its HUD-funded programs and did not properly
monitor disbursements. As a result, the Authority made unsupported
expenditures for salary and employee benefit costs of $292,576 and
made ineligible disbursements totaling $46,917. This occurred because
the Authority did not have adequate internal controls in place to
ensure that it properly supported allocations of salary and benefit
costs to its HUD programs, require all employees to complete personnel
activity reports or equivalent documentation to account for their
time, and properly monitor disbursements to ensure that the costs
were consistent with contractual requirements and federal regulations.
We recommended
that HUD direct the Authority to provide documentation to support
the $292,576 in questioned costs or reimburse that amount from nonfederal
funds. Additionally, we recommended that HUD direct the Authority
to repay $46,917 for the ineligible costs identified during the
audit. We further recommended that HUD direct the Authority to develop
and implement procedures to ensure that salary and benefit allocations
are properly supported, thereby putting $146,288 to better use over
a one-year period, and disbursements of HUD funds are consistent
with the terms of its annual contributions contracts and other federal
regulations, thereby putting $15,639 to better use over a one-year
period.
Issue Date: September 25, 2006
Audit
Report No.: 2006-PH-1014
File Size: 3.39MB
Title: The Housing Authority of the City of McKeesport, McKeesport,
Pennsylvania, Needed to Improve Its Low-Rent Housing Maintenance
Program
We audited the Housing Authority of the City of McKeesport's (Authority's)
management of its low-rent maintenance program. Our audit objective
was to determine whether the Authority properly managed the maintenance
of its low-rent housing program in accordance with U.S. Department
of Housing and Urban Development (HUD) rules and regulations.
The Authority did not properly manage the maintenance of its low-rent
housing program in accordance with HUD rules and regulations and
its annual contributions contract with HUD. The Authority's maintenance
operations needed improvement; it received operating subsidies for
ineligible units; and it did not prevent conflict-of-interest situations
with its vendors. Additionally, the Authority did not provide adequate
management oversight and control and did not implement adequate
policies and procedures to ensure its maintenance employees completed
vacant unit work orders as required.
We recommended that the Authority: repay the program $90,119 from
nonfederal funds for the ineligible expenditures resulting from
the prohibited conflict-of-interest situations with its vendors;
implement controls and procedures to prevent and resolve conflict-of-interest
situations with its vendors, thereby putting $51,497 in vendor payments
to better use; provide adequate management oversight and control
to ensure that maintenance employees document and complete vacant
unit work orders in a timely manner as required, thereby putting
$439,327 to better use; bring its maintenance staffing levels in
line with HUD guidelines or properly justify why the additional
maintenance personnel are needed, thereby putting $437,346 to better
use; implement policies and procedures to justify hiring maintenance
contractors to provide services that should be performed by the
Authority's maintenance personnel, thereby putting $215,067 to better
use; repay HUD ineligible amounts from nonfederal funds after HUD
recalculates the Authority's operating subsidy to exclude ineligible
units from April 1, 2003, to December 31, 2004; and discontinue
requesting subsidies for housing units that are not eligible, thereby
putting $743,135 to better use.
Issue
Date: July 19, 2006
Audit
Report No.: 2006-PH-1012
File Size: 594.10KB
Title:
Trident Mortgage Company, Devon, Pennsylvania, Issued and Submitted
for Endorsement Loans wth an Increased Risk of Defaults and Claims
We audited
the Devon, Pennsylvania, branch of Trident Mortgage Company (Trident),
a nonsupervised direct endorsement lender approved to originate
Federal Housing Administration single-family mortgage loans, because
its default rate was above the state's default rate. Our objective
was to determine whether Trident complied with the U.S. Department
of Housing and Urban Development's (HUD) regulations, procedures,
and instructions in the origination of Federal Housing Administration
loans.
Trident's
Devon office did not originate all Federal Housing Administration
loans in accordance with HUD's loan origination requirements. Of
the 26 loans selected for review, the Devon office did not fully
comply with Federal Housing Administration requirements for 15 of
the loans valued at just under $2 million. Trident did not exercise
due diligence in the review of assets and liabilities, did not properly
verify income, did not ensure that all borrowers met the minimum
required 3 percent investment in the property, did not properly
document the qualifying ratios, and did not verify rental history.
These deficiencies were caused by a lack of due professional care
and contributed to an increased risk to the Federal Housing Administration
insurance fund.
In addition,
Trident overcharged for credit reports contrary to HUD regulations.
For five of the cases reviewed, fees totaling $146 were charged
to the borrowers. As a result, the borrowers incurred unnecessary
costs.
Further,
Trident's quality control plan did not follow HUD requirements.
Trident did not perform the required number of quality control reviews
of its Federal Housing Administration loans and did not ensure that
all Federal Housing Administration loans that went into early default
were flagged for review. As a result, HUD-required elements were
not addressed when the quality control reviews were performed.
We recommend
that the assistant secretary for housing - federal housing commissioner
Request from Trident an indemnification of $487,075 on 13 loans,
which it issued contrary to HUD's loan origination procedures.
Request from Trident an indemnification of $79,525 on two loans
that went into default, causing HUD to pay a claim.
Require Trident to develop internal procedures to more closely monitor
its underwriting procedures.
Require Trident to reimburse borrowers $146 in overcharges.
Require Trident to revise and implement its quality control plan
to comply with HUD requirements.
Issue Date: April 20, 2006
Audit
Report No.: 2006-PH-1010
File Size: 286.38KB
Title: The Housing Authority of the County of Butler, Butler,
PA, Needed to Improve Administration of Its Section 8 Housing Choice
Voucher Program
We completed an audit on the Housing Authority of the County of
Butler's (Authority's) administration of its Section 8 Housing Choice
Voucher Program, Audit Report Number 2006-PH-1010, dated April 20,
2006. Our audit objective was to determine whether the Authority
was properly administering its Section 8 program.
The Authority generally administered its Section 8 Housing Choice
Voucher program properly, but some improvements were needed. The
Authority did not allocate administrative salary and employee benefit
costs to the Section 8 program on a reasonable and fair basis. As
a result, it could not support $229,460 in expenditures for administrative
salaries and associated employee benefits over a three-year period.
This occurred because the Authority did not have a formal cost allocation
plan, nor did it use personnel activity reports or equivalent documentation
to allocate salary and benefit costs for its senior management and
accounting staff for years 2002 to 2004. In addition, the Authority
did not always calculate housing assistance payments correctly or
maintain adequate documentation in its client files to demonstrate
compliance with U.S. Department of Housing and Urban Development
(HUD) requirements. Generally, this occurred because of administrative
errors by the Authority's staff. However, the Authority did not
have written procedures for Section 8 employees to calculate housing
assistance payments correctly and maintain client files adequately.
The Authority also did not have written procedures for conducting
quality control reviews of the client files that would have alerted
the Authority to the deficiencies. As a result, it made housing
assistance overpayments of $501 and underpayments of $1,100 in the
21 client files reviewed and did not have adequate assurance that
the housing assistance payments it made to landlords were reasonable.
We recommended that the Authority provide documentation to support
the $229,460 in questioned employee salary and benefit costs or
reimburse the Section 8 program from the programs that benefited
from the erroneous cost allocations. Additionally, we recommended
that the Authority develop and implement a reasonable method for
allocating costs to the Section 8 program, thereby putting $76,487
to better use over a one-year period. We further recommended that
the Authority repay its Section 8 program $501 and reimburse clients
$1,100 from its earned Section 8 administrative fees, for housing
assistance overpayments and underpayments. Lastly, we recommended
that the Authority develop and implement procedures for calculating
rents correctly, maintaining client files adequately, performing
quality control reviews of its client files, and performing adequate
rent reasonableness determinations.
Issue
Date: February 8, 2006
Audit Report No.: 2006-PH-1006
File Size: 634KB
Title:
Allied Mortgage Group, Bala Cynwyd, Pennsylvania, Issued and Submitted
for Endorsement Loans with an Increased Risk of Defaults and Claims
We
audited Allied Mortgage Group (Allied), a non-supervised direct
endorsement lender approved to originate Federal Housing Administration
single-family mortgage loans because its default rate was above
the national average default rate. Our audit objective was to determine
whether Allied complied with the U.S. Department of Housing and
Urban Development's (HUD) regulations, procedures, and instructions
in the origination of Federal Housing Administration loans.
Allied
did not originate all Federal Housing Administration loans in accordance
with HUD's loan origination requirements. Of the 28 loans we selected
for review, Allied did not fully comply with Federal Housing Administration
requirements for 10 of the loans valued at $799,571. Allied did
not exercise due diligence in the review of assets and liabilities,
did not ensure all borrowers met the minimum required three percent
investment in the property, and did not verify rental history. These
deficiencies were caused by a lack of due professional care and
contributed to an increased risk to the Federal Housing Administration
insurance fund.
In
addition, Allied charged ineligible commitment fees and overcharged
for credit reports contrary to HUD regulations. For 11 of the 28
cases reviewed, fees and expenses totaling $1,207 were charged to
borrowers. As a result, borrowers incurred unnecessary costs.
Further,
Allied did not establish and implement a quality control plan in
accordance with HUD regulations. Allied's plan does not include
all elements required by HUD. In addition, the reviews performed
by the contractor hired by Allied did not address all items identified
in Allied's quality control plan. As a result, some HUD-required
elements were not addressed when the quality control reviews were
performed by the contractor.
We
recommend that the assistant secretary for housing - federal housing
commissioner
�
Request from Allied an indemnification of $595,418 on seven loans,
which it issued contrary to HUD's loan origination procedures, and
reimburse HUD $204,153 on three loans that went into default, causing
HUD to pay a claim.
�
Require Allied to develop internal procedures to more closely monitor
its underwriting procedures.
�
Require Allied to reimburse borrowers the balance of $1,011 (of
the $1,207 in overcharges, $196 has already been reimbursed by Allied)
that Allied erroneously charged them.
�
Require Allied to revise and implement its quality control plan
to comply with HUD requirements.
Issue
Date: January 10, 2006
Audit
Report No.: 2006-PH-1005
File Size: 354KB
Title:
The Housing Authority of the County of Butler, Butler, Pennsylvania,
Used HUD Assets Improperly to Develop and Support Its Nonfederal
Entities
We
completed an audit of the Housing Authority of the County of Butler
(Authority) as part of our fiscal year 2005 audit plan. Our audit
objective was to determine whether the Authority properly used HUD
funds to develop and support its affiliated nonfederal entities.
The Authority used HUD assets improperly to develop and support
its affiliated nonfederal entities. It violated its annual contributions
contract with HUD by improperly using HUD assets as collateral to
obtain two lines of credit totaling $1.1 million. As of August 2005,
the Authority owed $888,792 on the lines of credit, placing significant
HUD assets at risk. The Authority also did not properly record these
loans in its financial records. These problems occurred because
the Authority erroneously believed it could use HUD assets to support
and develop its affiliated nonfederal entities.
The
Authority also failed to properly allocate all applicable salary
costs to its nonfederal entities, contrary to its annual contributions
contract. As a result, from January 2002 to May 2004, the Authority
improperly paid salaries estimated at $205,875 from federal funds
for work its employees performed for its nonfederal entities. This
occurred because the Authority did not have adequate internal controls
in place to ensure it properly identified the source and allocation
of its funds.
We recommend that the director, Office of Public Housing, Pittsburgh
field office, notify the Authority that it improperly encumbered
annual contributions contract assets and direct it to modify the
financial instruments to exclude the assets and thereby, put $888,792
to better use. We also recommend that HUD require the Authority
to accurately and completely record its loans in its financial records.
Additionally, we recommend that HUD require the Authority to recover
$205,875 from its nonfederal entities for employee expenses not
properly allocated to its nonfederal entities and to develop a reasonable
method for allocating future salaries and expenses.
Issue
Date: December 2, 2005
Audit
Report No.: 2006-PH-1004
File Size: 224KB
Title:
Homestead Funding Corp., Allentown, Pennsylvania, Issued and Submitted
for Endorsement Loans with an Increased Risk of Defaults and Claims
We
audited the Allentown, Pennsylvania, branch of Homestead Funding
Corp. (Homestead), a nonsupervised direct endorsement lender approved
to originate Federal Housing Administration single-family mortgage
loans, because its default rate was above the state's default rate
and it was recommended by the U.S. Department of Housing and Urban
Development's (HUD) Quality Assurance Division. Our audit objective
was to determine whether Homestead complied with HUD's regulations,
procedures, and instructions in the origination of Federal Housing
Administration loans.
Homestead's Allentown branch office did not originate all Federal
Housing Administration loans in accordance with HUD's loan origination
requirements. Of the 11 loans we selected for review, the branch
office did not fully comply with Federal Housing Administration
requirements for 4 of the loans valued at $270,701. Homestead did
not exercise due diligence in the review of assets and accepted
faxed documents from realtors. These deficiencies were caused by
a lack of due professional care and contributed to an increased
risk to the Federal Housing Administration insurance fund. In addition,
required quality control reviews were not done in a timely manner.
This occurred because Homestead did not have adequate internal controls
in place to ensure the reviews were completed timely. As a result,
Homestead did not identify or correct problems with the accuracy,
validity, and completeness of its loan origination in a timely manner.
We
recommend that the assistant secretary for housing - federal housing
commissioner request from Homestead an indemnification of $95,107
on two loans which it issued contrary to HUD's loan origination
procedures, and $175,594 on two loans that went into default causing
HUD to pay a claim. Further, we recommend that Homestead develop
internal procedures to more closely monitor its underwriting procedures.
In addition, we recommend that Homestead strengthen its internal
controls to ensure that required quality control reviews are completed
within HUD's required timeframe.
Issue Date: July 29, 2005
Audit
Report No.: 2005-PH-1014
File Size: 429.89KB
Title: Review of the McKeesport Housing Authority 's Section 8
and Public Housing Programs, McKeesport, Pennsylvania
We reviewed the McKeesport Housing Authority's (Authority) Section
8 and public housing programs. Our objective was to determine whether
the Authority operates its Section 8 and public housing programs
according to U.S. Department of Housing and Urban Development (HUD)
requirements.
We found no significant deficiencies with the Authority's administration
of its Section 8 program. However, the Authority's current physical
inspection process is not effective in ensuring its low rent units
are always properly maintained in good operable condition. Specifically,
the Authority's 1) method of scheduling its low rent inspections
is causing a backlog in the maintenance division, 2) low rent inspectors
are not completing thorough inspections or adequately documenting
the inspection results, and 3) procedures to ensure deficiencies
identified during its inspections are completed in a timely manner
are not effective. As a result, the Authority's low rent housing
units are not always maintained in an efficient and effective manner.
This was demonstrated when five of the Authority's eight low rent
properties received individual failing scores ranging from 45 to
59 points on its fiscal year 2004 Real Estate Assessment Center
inspection for its Public Housing Assessment System review.
We recommend that the Authority implement a number of policies
and procedures that will improve its low rent inspection process.
These policies should ensure that low rent inspections are scheduled
throughout the year, the inspections are thoroughly completed and
properly documented, and a follow-up inspection procedure is implemented
to ensure previous deficiencies are corrected in a timely manner.
Issue Date: July 29, 2005
Audit
Report No.: 2005-PH-1013
File Size: 1.25MB
Title: Review of the Commonwealth of Pennsylvania 's HOME Investment
Partnership Program, Harrisburg , Pennsylvania
In response to a request from the former assistant United States
attorney of the Commonwealth of Pennsylvania, we audited Pennsylvania's
Department of Community and Economic Development's (Commonwealth)
administration of the HOME Investment Partnership Program (HOME).
Our audit objectives were to determine whether the Commonwealth
is 1) adequately monitoring localities to ensure HOME funds are
expended on allowable HOME activities, and 2) properly allocating
its staff's time for the administration of the HOME program in accordance
with applicable U.S. Department of Housing and Urban Development
(HUD) and other federal regulations.
We found the Commonwealth is not adequately monitoring its localities
to ensure HOME funds are expended on eligible HOME activities. Three
of the four localities we reviewed had spent a portion of their
HOME funds on ineligible expenses/activities, which totaled $79,070.
This occurred because the Commonwealth did not develop or implement
an adequate monitoring program to oversee its localities. We also
noted the Commonwealth had accumulated more than $6.9 million in
administrative fees from the program by obligating more funds than
it spent to administer its HOME program. These excess funds should
have been used to strengthen the Commonwealth's monitoring program
and to fund additional eligible HOME projects. Doing so would have
enabled the Commonwealth's HOME program to better meet its main
goal of providing affordable housing for low-income households.
In addition, we found the Commonwealth is improperly allocating
its staff's time for the administration of the HOME program. Instead
of maintaining accurate timesheets, the Commonwealth follows an
unwritten policy that requires staff time to be split equally between
the HOME and Community Development Block Grant (Block Grant) programs.
As a result, the Commonwealth is unable to ensure HOME funds are
only being used to pay for the administration of the HOME program.
We recommend that the director of Community Planning and Development,
Philadelphia Regional Office, require the Commonwealth to recover
$79,070 in ineligible fees from the localities we reviewed. In addition,
the Commonwealth should use the accumulated $6,930,916 in administrative
fees to improve its monitoring program and recommit the funds to
eligible HOME projects. We also recommend that the director of Community
Planning and Development, Philadelphia Regional Office, require
the Commonwealth to establish proper time allocations that meet
the requirements of Office of Management and Budget Circular A-87.
Issue Date: June 6, 2005
Audit
Report No.: 2005-PH-1012
File Size: 360.43KB
Title: The Lycoming County Housing Authority, Williamsport, Pennsylvania,
Risked HUD Assets for the Benefit of Its Affiliated Nonfederal Entity
We completed this audit in response to a referral from the U.S.
Department of Housing and Urban Development's (HUD) Pennsylvania
State Office, Office of Public Housing. Our audit objective was
to determine whether the Authority properly used HUD funds to develop
and support its affiliated nonfederal entity.
The Authority properly allocated direct and indirect costs to its
nonfederal entity. However, the Authority violated its annual contributions
contract with HUD by guaranteeing a $3.5 million line of credit
with HUD assets to help support the nonfederal entity. As of March
2005, the Authority owed $2.9 million on this line of credit, placing
significant HUD assets at risk. This occurred because the Authority
erroneously believed that a disposition agreement approved by HUD
granted it permission to use HUD funds to support its affiliated
nonfederal entity.
We recommend that the Director, Office of Public Housing, Pennsylvania
State Office, notify the Authority that it has improperly encumbered
annual contributions contract assets and direct it to provide evidence
within the next 30 days that the financial instruments encumbering
the assets have been changed to exclude the assets and, thereby,
put $2.9 million to better use.
In its response the Authority agreed to review the financial instruments
the audit determined encumbered HUD assets and stated it would make
changes required to ensure that HUD assets are not at risk.
Issue Date: April 13, 2005
Audit
Report No.: 2005-PH-1010
File Size: 248.38KB
Title: Rudolphy/Mercy-Douglass Home for the Blind, Philadelphia,
PA, Did Not Charge a Cosponsor $19,582 in Commercial Rent
We audited the Rudolphy/Mercy-Douglass Home for the Blind (Owner/Project),
an independent living facility for low-income persons with blindness
and other disabilities, in response to a citizen complaint. The
complainant alleged Project development funds and Project facilities
were improperly used, payments to two payees were improper, and
Project management deficiencies existed. Our objectives were to
determine whether the Owner used Project development funds and Project
facilities properly and whether the payments to the two payees were
proper.
We found the owner properly used project development funds to pay
for expenditures and payments related to the project. However, contrary
to U.S. Department of Housing and Urban Development (HUD) regulations,
one cosponsor of the Project, Mercy-Douglass Human Services Affiliate,
the Management Agent, is using Project facilities to perform work
not exclusively related to the administration of the Project. The
Project lost commercial rent of $19,582 and future rental income
will equal $18,076 per year. The additional revenue would enable
the Project to make the required deposits to the Reserve for Replacement
account, which are not being made, and have funds available for
other Project needs.
We recommend that the Pennsylvania Multifamily HUB require the
Owner to ensure the cosponsor, Mercy-Douglass Human Services Affiliate,
pay past rent of $19,582 and future rent of $18,076 per year for
the extra space it occupies in the Project.
Issue Date: March 24, 2005
Audit
Report No.: 2005-PH-1008
File Size: 2.81MB
Title: The Housing Authority of the City of Pittsburgh, PA, Did
Not Effectively Implement Its Moving to Work Demonstration Program
We audited the Housing Authority of the City of Pittsburgh's implementation
of its Moving to Work demonstration program. Our audit objective
was to evaluate the effectiveness of the Authority's implementation
of the Moving to Work program.
We found the Authority was not able to develop and implement an
effective strategy to fully use the freedom and flexibility of the
Moving to Work program. Since entering the program in November 2000,
the Authority accumulated more than $81.4 million of HUD funds during
the first 4 years of its 5-year Moving to Work agreement. In addition,
we estimated the Authority will accumulate an additional $21.2 million
in the fifth and final year of its agreement. In large part this
occurred because the Authority changed its program strategy several
times during its first 4 years under the program. Also, the Authority
lacked the capacity to simultaneously implement all components of
its Moving to Work plan.
In October 2004, the Authority requested HUD extend its Moving
to Work agreement to allow it to complete implementation of its
revised Moving to Work plans. However, based on the Authority's
lack of progress in implementing a workable strategy under its first
5-year agreement, we recommended HUD not extend the Authority's
current agreement after it expires on December 31, 2005. As an alternative,
we recommended the Authority work collaboratively with HUD to develop
and implement a workable strategy to transition out of the program.
This process will ensure that accumulated and future reserve funds
will be used prudently and expediently to improve the condition
of the Authority's more than 6,700 low-rent housing units and provide
suitable housing to nearly 3,000 households on its Section 8 and
low-rent waiting lists.
Issue Date: March 9, 2005
Audit
Report No.: 2005-PH-1007
File Size: 1.06MB
Title: Lehigh County Housing Authority, Emmaus, PA, Could Not
Support All Costs and Used HUD Funds to Support Its Nonfederal Entities
This is the second of two audit reports on this audit, which we
performed in response to a complaint. Our audit objectives were
to determine whether the Authority could adequately support its
use of HUD funds and if it used HUD funds to develop and support
its affiliated nonfederal entities.
Contrary to its Annual Contributions Contract, the Authority could
not always support expenditures made with HUD funds and used HUD
funds to develop and support its affiliated nonfederal entities.
Specifically, the Authority could not provide adequate documentation
to support $4 million in expenditures it made from January 2001
to December 2003 using HUD Public Housing and Section 8 Program
funds. During the same period, the Authority also used an estimated
$726,625 in HUD funds to pay salary and administrative costs of
its affiliated nonfederal entities.
We recommend that HUD require the Authority to provide adequate
documentation to fully support its disbursement of $4 million of
HUD funds that it could not properly support, or reimburse HUD from
nonfederal sources. We also recommend HUD require the Authority
to implement an equitable method of allocating administrative expenses
to its nonfederal entities and to reimburse the Public Housing Program
$726,625 for ineligible salaries and administrative costs it provided
to its nonfederal entities. The Authority acknowledged that it could
not adequately support costs during the audit and did not have a
certified cost allocation plan. It also agreed to pass Board resolutions
approving new procedures needed to ensure it properly supports and
allocates costs.
Issue Date: January 20, 2005
Audit
Report No.: 2005-PH-1005
File Size: 1.19MB
Title: Fleet National Bank, Philadelphia, PA - Mortgagee Review.
Fleet National Bank Issued and Submitted for Endorsement Loans With
an Increased Risk of Defaults and Claims
We audited the Philadelphia branch of Fleet National Bank (Fleet),
a supervised direct endorsement lender approved to originate Federal
Housing Administration (FHA) single family mortgage loans. Our objectives
were to determine whether Fleet complied with the U.S. Department
of Housing and Urban Development's (HUD) regulations, procedures,
and instructions in the origination of Federal Housing Administration
loans and whether Fleet's quality control plan, as implemented,
met HUD requirements.
Fleet's Philadelphia branch office did not originate all Federal
Housing Administration loans in accordance with HUD's loan origination
requirements. Of the 20 loans we selected for review, the branch
office violated HUD requirements for 5 of the loans valued at $224,245.
Fleet did not exercise due diligence in the review of assets and
income, did not verify rental history, and approved loans with excessive
debt to income ratios.
Fleet also submitted loans for late endorsement when the payment
histories of the buyer were not current. We found seven loans totaling
$434,804 were from borrowers who had delinquent mortgage payments.
In addition, Fleet's Philadelphia branch office, contrary to HUD
requirements, did not provide an accessible business environment
for its clients during normal business hours and did not employ
a branch manager to supervise operations. Finally, the quality control
plan provided by Fleet does not meet all the requirements of HUD.
We recommend that the Assistant Secretary for Housing - Federal
Housing Commissioner require Fleet to take immediate action to determine
whether deficiencies in Fleet's loan origination process warrant
administrative action and if appropriate, request that the Mortgagee
Review Board impose civil monetary penalties for Fleet's failure
to provide an adequate quality control plan. We also recommend that
HUD request indemnification from Fleet on Federal Housing Administration
loans valued at $619,614, which it issued contrary to HUD's loan
origination procedures, and repayment of $39,435 on one loan that
went into default, causing HUD to pay a claim. Further, since we
have been informed by Fleet that the Philadelphia branch office
has been closed, we recommend HUD ensure the branch is removed from
its systems as an approved direct endorsement lender.
Issue Date: October 15, 2004
Audit
Report No.: 2004-PH-1001
File Size: 1.94MB
Title: The Lehigh County Housing Authority, Emmaus, PA, Risked
HUD Assets for the Benefit of Nonfederal Entities
We performed this audit in response to a complaint. This is the
first of two audit reports we will issue from the audit. Our audit
objective was to determine if the Authority improperly used U.S.
Department of Housing and Urban Development (HUD) funds to develop
and support these entities.
The Authority improperly used HUD funds to develop and support
its affiliated nonfederal entities. It violated its Consolidated
Annual Contributions Contract with HUD by guaranteeing tax credits
and debt, estimated at $4.4 million for its affiliated nonfederal
entities, and by improperly providing its affiliated entities $95,634.
We found that $3.0 million of the $4.4 million in HUD assets the
Authority pledged since 1988 remained at risk, and the entities
still owed the Authority $93,834. Further, an apparent conflict
of interest existed regarding the Executive Director's relationship
with the Authority's affiliated nonfederal entities. These problems
occurred because the Authority's Board of Commissioners did not
provide adequate oversight over the Authority's management, nor
did it ensure adequate internal controls were in place to detect
and prevent these problems from occurring. The control deficiencies
created an environment that allowed the Authority to put HUD funds
at risk for the benefit of its affiliated nonfederal entities.
During and immediately after the audit, we recommended and the
Authority took action to remove all but $130,000 of its improper
pledges of HUD assets. The Authority also recovered all but $13,100
of the funds it improperly provided its affiliated entities. The
Authority also agreed to remove the remaining improper pledges of
HUD assets, and recover the remaining funds it improperly provided
its affiliated entities. Additionally, the Authority's Board of
Commissioners passed a Board resolution creating internal controls
to prevent, detect, and resolve improper pledging of HUD assets,
and apparent conflict of interest situations.
Issue Date: August 4, 2004
Audit
Report No.: 2004-PH-1010
File Size: 3.37MB
Title: Lambeth Apartments - Section 236/Section 8 Multifamily
Housing Review, Pittsburgh, Pennsylvania
In response to a request from the U.S. Department of Housing and
Urban Development (HUD), Multifamily Pittsburgh Field Office, we
performed an audit of the multifamily operations at Lambeth Apartments.
The property is owned by Episcopal Residences, Incorporated (ERI).
The primary objective of our audit was to assess HUD's concerns
over management and operational problems identified during a management
review at the property. Specifically, we wanted to determine if
the general management practices were in compliance with their Regulatory
Agreement, Housing Assistance Payments Contract and applicable HUD
rules and regulations.
We found Episcopal Residences, Incorporated did not manage the
property in accordance with the terms of the Regulatory Agreement,
Housing Assistance Payments (HAP) Contract and other applicable
HUD rules and regulations. Specifically, ERI distributed property
funds without HUD's approval; used project funds to pay for unauthorized
structural changes to the property and made payments for ineligible
and unsupported miscellaneous expenses. Further, Episcopal Residences,
Incorporated did not properly manage the property to maximize rental
income or maintain proper documentation to support the Housing Assistance
Payments it received from HUD. These violations occurred because
the owners and its Board of Directors did not have policies and
procedures in place to ensure the property was managed in accordance
with its Regulatory Agreement or HAP contract with HUD. As a result,
Episcopal Residences, Incorporated used project funds to pay for
$209,081 of ineligible and $258,819 of unsupported expenditures.
In addition, it received $284,470 of unsupported Housing Assistance
Payments from HUD. We also estimate the property lost $280,115 in
potential income due to the unauthorized changes in how the property
was used and managed. As such, Lambeth Apartments may have lost
$748,015 in project funds that could have been used to pay for reasonable
and necessary operating expenses and needed repairs. Further, these
actions have placed Lambeth Apartments in a non-surplus cash position,
and limited the availability to provide affordable units to eligible
low-income households.
We recommended the Director of the Pittsburgh Area Office of Multifamily
Housing take appropriate administrative action against Episcopal
Residences, Incorporated as allowed under Section 11 of the Regulatory
Agreement, for violating their Regulatory Agreement. We also recommend
that HUD recover $209,081 of ineligible and $543,689 of unsupported
payments from Lambeth Apartments.
Issue Date: May 28, 2004
Audit
Memorandum No.: 2004-PH-1007
File Size: 431.1KB
Title: Review of the Community Development Block Grant (CDBG)
Program for the City of McKeesport,
McKeesport, Pennsylvania
In response to a request from the U.S. Department of Housing and
Urban Development's (HUD's) Pittsburgh Office of Community Planning
and Development, we completed a review of the Community Development
Block Grant (CDBG) Program for the City of McKeesport. Specifically,
our review concentrated on the City's oversight of the Home Improvement
Loan Program by its sub-recipient, the McKeesport Housing Corporation,
for January 2000 through December 2002. The objective of our audit
was to determine if the City of McKeesport established adequate
management controls to ensure its sub-recipient administered its
Home Improvement Loan Program in compliance with HUD regulations
and requirements.
We found the City of McKeesport did not adequately monitor the
performance of its sub-recipient, the McKeesport Housing Corporation,
to ensure it administered its Home Improvement Loan Program in compliance
with HUD requirements. Specifically, the City of McKeesport did
not review quarterly status reports submitted by the McKeesport
Housing Corporation to ensure Program income it generated through
its Home Improvement Loan Program was used to fund eligible activities
in accordance with HUD and OMB requirements. As a result, the City
of McKeesport did not identify that the McKeesport Housing Corporation
violated federal procurement regulations and requirements when it
procured consultants for accounting, legal, computers, financial
audit and loan underwriting services; and rehabilitation contractors.We
also found the sub-recipient did not establish a cost allocation
plan to ensure indirect costs were equitably distributed to the
Home Improvement Loan Program and other CDBG Programs. Thus, the
McKeesport Housing Corporation could not support $694,573 in consultant
contract costs, rehabilitation contract costs and indirect costs.
We recommended that the City of McKeesport provide adequate support
or reimburse HUD for the any unsupported expenditures.
We also recommended the City establish and implement a comprehensive
system to monitor its sub-recipients to ensure they administer their
programs in accordance with HUD requirements.
Issue Date: March 25, 2004
Audit
Memorandum No.: 2004-PH-1004
File Size 245.1KB
Title: Carbondale Nursing Home,
Carbondale, Pennsylvania
In response to an audit request by the Philadelphia Multifamily
HUB Office, we completed an audit of Carbondale Nursing Home (Project),
a Section 232 Multifamily Insured Project owned by CNH, Incorporated
(Owner). The purpose of our audit was to assess the Owner's compliance
with the terms and conditions of the Regulatory Agreement, and all
other applicable HUD requirements.
We found the Owner did not comply with the Regulatory Agreement
and other HUD requirements in operating the Project. In total, the
Owner made $1,261,301 of ineligible and unsupported payments from
Project funds. Specifically, the Owner: received ineligible salary
payments of $374,790; collected ineligible distributions/repayment
of advances of $170,155; paid ineligible expenses for another company
of $485,997; disbursed ineligible extension fees of $132,728; and
paid unsupported loan payments of $97,631. Several staff persons
at the Project, including the Controller and Administrator, stated
the Owner was not aware of the HUD requirements prohibiting these
expenditures. If the Owner had complied with HUD requirements and
used Project funds for only necessary operating expenses of the
Project, the Owner could have used these funds to pay the mortgage
costs (principal and interest) for over two years and possibly avoided
bankruptcy and default on the HUD-insured loan.
We recommended HUD require the Owner to repay the $1,163,670 in
ineligible expenditures and either support or repay the $97,631
of unsupported expenditures. Also, we recommended HUD take appropriate
administrative action against the Owner.
Issue Date: January 16, 2004
Audit
Report No.: 2004-PH-1002
File Size: 1.2MB
(Due to the file size a separate link is provided for the detailed
auditee reponse.)
Auditee
Reponse
Title: Allegheny County Housing Authority Public Housing Drug
Elimination Grant Program, Pittsburgh, Pennsylvania
In response to an anonymous complaint, we performed a review of
the Allegheny County Housing Authority (Authority)'s Public Housing
Drug Elimination Program (Grant Program). Specifically, the complaint
alleged the Authority was misspending Grant Program funds on various
ineligible expenditures. The objective of the audit was to determine
if the Authority spent its Grant Program funds in accordance with
the applicable HUD rules and regulations. To accomplish our objective
we reviewed how the Authority used the Grant Program funds it received
for Fiscal Years 1996 through 2000.
We found the Authority did not administer its Drug Elimination
Program according to its grant agreements with HUD and the applicable
HUD rules and regulations. Specifically, the Authority did not always
ensure program expenditures were eligible and properly supported
and it did not properly follow Federal procurement requirements
when it awarded a number of service contracts. These problems occurred
because the Authority did not have the proper controls in place
to enable management to detect and prevent these weaknesses from
occurring within the administration of its Grant Program. As a result,
the Authority spent $615,636 on ineligible expenditures and drew
down another $761,950 of grant funds for expenditures that were
not properly supported.
We recommended the Authority reimburse HUD for the ineligible expenditures
and for all expenditures it cannot provide adequate support for.
We also made a number of recommendations to assist the Authority
in improving the management of its Grant Program.
Issue Date: January 7, 2004
Audit
Memorandum No.: 2004-PH-1801
File Size: 125.8KB
Title: Review of Philadelphia Housing Authority's Executive Director's
Sick Leave and Annual Leave Conversion, Philadelphia, Pennsylvania
We conducted a review of the Philadelphia Housing Authority's (Authority)
sick leave and annual leave conversion policy in response to a credible
anonymous complaint. Our objective was to determine whether the
Authority made cash payments to its Executive Director, for converted
sick leave to annual leave and annual leave to cash, in accordance
with HUD regulations and Authority policies and procedures.
We reviewed the Authority's conversion of sick leave to annual
leave and annual leave to cash during calendar years 2002 and 2003
and found that policies in effect at the time permitted these conversions.
We noted that HUD regulations do not address Housing Authority employee
leave conversions or require leave conversion policies to be in
the Administrative Plan. However, the Authority's Human Resources
Manual of Policies and Procedures, dated December 2, 1999, and approved
by the Authority's Board of Commissioners on October 18, 2001, allows
Executive level personnel to convert sick leave to annual leave
on a one for one basis. Further, the Manual also allows Executives
to receive lump sum payments for unused annual leave. As a result,
the regulations, in effect at the time, allowed the leave conversions
and the complaint was unsubstantiated.
Issue Date: November 13, 2004
Audit
Memorandum No.: 2004-PH-1001
File Size: 559.3KB
Title: Bucks County Housing Authority, Utilization of Section
8 Funds
Doylestown, Pennsylvania
We audited the Bucks County Housing Authority's Tenant-Based Section
8 Program to determine if the Authority adequately administered
its Section 8 Program to ensure available funds were fully utilized
to assist the maximum number of eligible families under the Program.
We found that the Authority is generally administering its Section
8 Program in an efficient manner. The drop in the Authority's Section
8 utilization rate from 95 percent in 1988 to 83 percent by the
end of 2002, for the most part, occurred because it was unable to
use all the additional 1,284 vouchers HUD provided it for two apartment
complexes that choose to drop the Section 236 Program. In large
part, we attributed the Authority's difficulty in leasing-up the
vouchers to Bucks County's very tight housing market, high rents,
and a lack of available housing.
However, during our review we did identify a number of areas where
the Authority could improve its operations. These areas include:
re-evaluating staffing levels to determine if they are adequate;
developing a landlord outreach program to keep current landlords
informed of changes to the Program and to encourage new landlords
to enter the Program; creating and providing desk manuals to its
Section 8 employees to aid in performing their specific tasks; and
developing a formal training plan. We made a number of recommendations
to improve operations in these areas, which the Authority agreed
to take action on.
Issue Date: September 25, 2003
Audit
Report No.: 2003-PH-1006
File Size: 1.52MB
Title: Scranton Housing Authority Audit of Low-Income Housing
and Section 8 Programs, Scranton, PA
We audited selected aspects of the Scranton Housing Authority's
(SHA) Low-Income Housing and Section 8 Programs. The purpose of
our review was to determine if the SHA was managing the areas selected
for audit of its Low-Income Housing and Section 8 Programs in an
efficient, effective and economical manner and complying with the
terms and conditions of its ACC, applicable laws, HUD regulations,
and other applicable directives.
We found the SHA's public housing developments were well maintained
and in excellent repair. However, we identified a number of weaknesses
in the SHA's operations where the SHA needed to improve its operations
or take appropriate administrative action to resolve the issue.
Specifically, we found the SHA: (1) improperly charged the conventional
program $206,563 in salaries and operating costs; (2) improperly
received $9,187 in rental subsidy payments; (3) failed to properly
record $81,741 in laundry machine income; (4) kept units off the
rental market for an unreasonable period; (5) did not properly establish
waiting lists and process tenant applications; (6) did not perform
adequate outreach to locate qualified applicants for its vacant
units; (7) violated the conflict of interest provisions of its Annual
Contributions Contract with HUD; (8) did not ensure Section 8 units
met housing quality standards; (9) did not ensure deposits at financial
institutions in excess of FDIC coverage limits were collateralized;
(10) discontinued using purchase orders to make small purchases;
and (11) paid travelers an excessive allowance for meals, gratuities
and incidentals.
During the course of the audit, we presented the SHA's Executive
Director with our findings and recommendations. In all cases the
Executive Director took immediate action to correct the weaknesses
by modifying the SHA's operating procedures and practices. Further,
the SHA repaid the Conventional Program $297,491 for the ineligible
costs
Issue Date: September 24, 2003
Audit
Memorandum Report No.: 2003-PH-1803
File Size: 806.8KB
Title: Philadelphia Housing Authority,
Utilization of Tenant-Based Section 8 Funds, Philadelphia, PA
We completed an audit of the Philadelphia Housing Authority's (Authority)
Tenant-Based Section 8 Program. The objective of the audit was to
determine why the Authority was not fully utilizing its tenant-based
Section 8 funding to assist the maximum number of families under
the Program.
Although the Authority steadily increased the number of vouchers
it issued since March 2000, it consistently and significantly underutilized
its available Section 8 funding from HUD. For example, for its fiscal
year ending March 2000, the Authority did not use $24.7 million
of its available budget authority of $96.6 million, and $23.9 million
of its available budget authority of $107.6 million for its fiscal
year ending March 2001. Since the Authority was not able to fully
utilize its available funding, HUD recaptured $47.9 million of Section
8 funds from the Authority in August 2001. Yet, about 18,000 families
remained on the Authority's Section 8 waiting list as of January
2002, of which, we estimate the Authority could have assisted an
additional 3,200 families.
In our audit, we identified a number of weaknesses in the Authority's
Section 8 administration that adversely impacted its ability to
fully utilize its Section 8 funding. Specifically, we found the
Authority needed to more effectively: implement required procedures
to improve utilization; supervise employees; collect, maintain,
and analyze key Program data; follow-up on its landlord and voucher
holder outreach efforts; and address external factors it believed
contributed to low utilization. Further, we noted the Authority
requested and received more than 3,700 additional vouchers, from
April 1999 through April 2001, that it could not reasonably accommodate,
and this only exacerbated its utilization problem.
In February 2002, HUD signed an agreement with the Authority accepting
it into a new flexible housing demonstration program known as Moving
to Work. Although the Authority's Moving to Work agreement included
a Section 8 component, it marked the end of the Authority's traditional
Section 8 Program until April 2008. Under Moving to Work, HUD exempted
the Authority from many public housing and Section 8 Program rules,
and the Authority now has the flexibility to allocate Section 8
funds not used on vouchers for other housing activities, including
capital programs. Even though the Authority is now under the demonstration
program, the operational issues identified in this report are still
pertinent and need to be addressed to improve operations. The Authority
recognized this and took corrective action to address a number of
the issues during the audit; however further actions need to be
taken to address the remaining issues.
Issue
Date: January 27, 2003
Audit
Report No.: 2003-PH-1002
File Size: 339KB
Title: Philadelphia Housing Authority Contracting and Purchasing
Activity Philadelphia, Pennsylvania
We
audited the Philadelphia Housing Authority's contracting and purchasing
activities. The purpose of the audit was to determine if the Authority
properly procured goods and services and disbursed funds in accordance
with Federal purchasing requirements and its own procurement policies.
The contracts, contract modifications, and small purchase requisitions
reviewed were mostly awarded between April 1998 and December 2000.
When appropriate, we extended the review to include other periods.
To accomplish our audit objectives, we reviewed:
- 61 contracts awarded to 54 vendors valued at $53.5 million (Appendix
B).
- 87 modifications to 26 contracts valued at $8 million (Appendix
C).
- Small non-contract purchases with 28 vendors valued at $20.1 million.
- 464 payments to 53 vendors valued at $32.4 million.
Our
audit showed for the most part the Authority was soliciting, awarding,
and administering construction contracts in accordance with Federal
procurement requirements. We reviewed 22 construction contracts
valued at $15.3 million and found that the Authority generally followed
proper procedures and ensured expenditures were reasonable and necessary.
In addition, during our audit the Authority initiated a number of
actions to correct problems we identified in making overpayments
to a number of its vendors.
However,
aside from these successes, our audit showed the Authority did not
always comply with Federal procurement requirements or its own procurement
policy when awarding service contracts, processing and approving
contract modifications, approving contract payments, and determining
which purchases should be under contract. In addition, the Authority's
split purchases to avoid competing contracts under the competitive
award process and we questioned the reasonableness of some other
costs. In part, these problems occurred because the Authority did
not adequately plan for its contracting needs and in an effort to
keep operations running smoothly it sometimes ignored established
procurement regulations.
Issue Date: September 30, 2002
Audit
Memorandum No.: 2002-PH-1005
File Size: 339KB
Title: Congressionally Requested Audit of the Outreach and Training
Assistance Grant and Intermediary Technical Assistance Grant awarded
to the Philadelphia Regional Alliance of HUD Tenants, Grants Numbers
FFOT00033PA and FF1T98005NT Philadelphia, Pennsylvania
Pursuant to Section 1303 of the 2002 Defense Appropriations Act
(Public Law 107-117), we completed an audit of the Tenants' Action
Group of Philadelphia's (Grantee) Outreach and Technical Assistance
Grant (OTAG). 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 agreement 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 $97,928 in disbursements
it made for salaries and fringe benefits; and did not properly support
$35,341 in direct and indirect costs. In addition, the grantee charged
an additional $13,719 in ineligible expenditures to the grant. We
also noted the grantee did not comply with other requirements of
the Office of Management and Budget's (OMB) Circular A-122, Cost
Principles for Non-Profit Organizations, which included using grant
funds to participate in lobbying activities. Accordingly, we made
recommendations that will correct the above deficiencies and will
improve the Grantee's controls over administering OTAG funds.
Issue Date: September 30, 2002
Audit Memorandum No.: 2002-PH-1004
File Size: 509KB
Title: Congressionally Requested Audit of the Outreach and Training
Assistance Grant awarded to the Tenants' Action Group of Philadelphia,
Grant Number FFOT98025PA Philadelphia, Pennsylvania
Pursuant to Section 1303 of the 2002 Defense Appropriations Act
(Public Law 107-117), we completed an audit of the Tenants' Action
Group of Philadelphia's (Grantee) Outreach and Technical Assistance
Grant (OTAG). 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 agreement 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 $97,928 in disbursements
it made for salaries and fringe benefits; and did not properly support
$35,341 in direct and indirect costs. In addition, the grantee charged
an additional $13,719 in ineligible expenditures to the grant. We
also noted the grantee did not comply with other requirements of
the Office of Management and Budget's (OMB) Circular A-122, Cost
Principles for Non-Profit Organizations, which included using grant
funds to participate in lobbying activities. Accordingly, we made
recommendations that will correct the above deficiencies and will
improve the Grantee's controls over administering OTAG funds.
Issue Date: March 26, 2002
Audit
Report No.: 2002-PH-1803
File Size: 2.49MB
Title: Philadelphia Housing Authority Limited Personnel Review
In response to an anonymous complaint, we performed a review at
the Philadelphia Housing Authority (Authority). The complaint alleged
the Executive Director of the Authority was unfairly recruiting
and promoting individuals he was affiliated with, rather than allow
for open and fair competition. Also, the complaint alleged the Executive
Director's management style was causing many executive level personnel
to leave the Authority.
We found the allegation relating to the Executive Director's unfair
hiring practices at the Authority had merit. However, as for the
second allegation, although there was a general consensus the Executive
Director was a demanding supervisor and a number of executive personnel
left for this reason, we did not find his management style violated
any Federal or State laws.
In addition, we noted the Authority violated the conflict of interest
provision of its Consolidated Annual Contributions Contract (ACC)
with HUD when it hired the daughter of a member of the Authority's
Board of Commissioners for a senior management position for which
she was not qualified. Further, we questioned the circumstances
relating to the Authority obtaining the services of the human resource
consultant, who drafted the Authority's personnel policy that exempted
the Executive Director from following the Authority's prescribed
personnel policies and procedures.
Issue Date: March 19, 2002
Audit Report No.: 2002-PH-1001
File Size: 2050KB
Title: City of Williamsport, Community Development Block Grant
and HOME Investment Partnership Programs, Williamsport, Pennsylvania
We completed an audit of the City of Williamsport's Community
Development Block Grant (CDBG) and Home Investment Partnership (HOME)
Program operations. HUD's Pennsylvania State Office of Community
Planning and Development (CPD) requested the Office of Inspector
General (OIG) perform an audit of the City's Programs after it identified
numerous deficiencies in the City's administration of the Programs
during a routine monitoring review in June 2000. The primary objectives
of our audit were to determine whether the City was administering
its CDBG and HOME Programs in an economical and efficient manner
and in accordance with the terms of its grant agreements with HUD
and applicable Federal laws and HUD regulations.
We found the City was not efficiently or effectively administering
its CDBG and HOME Programs in accordance with the terms of its grant
agreements with HUD and applicable Federal laws and HUD regulations.
For the six activities reviewed, we found the City violated 22 specific
program regulations of which several had multiple violations. Also,
the City violated many of the provisions of the Office of Management
and Budget Circular A-87, Cost Principles for State, Local, and
Indian Tribal Governments. This occurred because the City did not
have a sound internal control environment (management controls)
in which to execute the programs in accordance with the regulations.
As a result, the City funded ineligible activities totaling $2,062,180,
made unsupported payments and drawdowns totaling $576,190, and ultimately
executed activities that may not have fully benefited the low and
moderate-income persons whom Congress intended to benefit.
Issue Date: August 31, 2001
Audit
Memorandum No.: 2001-PH-1803
File Size: 60KB
Title: Assessment of Problems at the Housing Authority of the
County of Chester (HACC), West Chester, PA
We completed a limited review of the Office of Public Housing,
Pennsylvania State Office, and TARC assessments of HACC operations.
We also reviewed KPMG Consulting Draft Assessment of HACC's private
developments problems. In brief, we found the HACC is in substantial
default of its Consolidated Annual Contribution Contracts (Low Rent
and Section 8). Specifically, contrary to Section 7 of the Annual
Contribution Contract (Low Rent), HACC pledged assets covered under
its Annual Contribution Contract as collateral for loans for its
private developments. HACC defaulted on a $500,000 loan and a local
bank seized a $400,000 Certificate of Deposit. It appears other
collateralized loans may be in jeopardy. Also, in violation of Section
11 of its Section 8 Annual Contribution Contract, HACC used Section
8 funds to pay interest and principal on a $4 million bond issue
in June 2001. Furthermore, under its present structure, it appears
the HACC no longer has the financial resources to meet its immediate
and long-term debt obligations. Consequently, in accordance with
Section 17 of the Annual Contribution Contract (low rent) and Section
15 of the Section 8 Annual Contribution Contract, we recommend HUD
take immediate action in declaring the HACC in substantial default
of its contracts, and take appropriate actions it deems necessary
to cure the substantial default.
Issue Date: August 24, 2001
Audit
Memorandum No.: 2001-PH-1802
File Size: 82KB
Title: City of Philadelphia, Shelter Plus Care Grant, PA26C960002,
Philadelphia, Pennsylvania
We found that the City did not ensure TRAC implemented its Shelter
Plus Care IV Grant according to its grant agreement and applicable
Federal regulations. This occurred because the City did not provide
adequate guidance and oversight in monitoring TRAC's administration
and implementation of the grant. Further, the City/TRAC has not
been able to provide adequate documentation to support its claimed
level of supportive services (match) that it provided to its participants
as is required by Federal regulations.
Also, we noted that the management controls used by both the City
and TRAC may not adequately protect grant funds from fraud, waste,
or abuse. These management control weaknesses expose grant funds
to a greater risk of fraud, waste, or abuse.
Issue Date: August 1, 2001
Audit Report No.: 2001-PH-1006
File Size: 534KB
Title: Audit of the Philadelphia Department of Commerce's Loan
Assistance to the Urban Education Development Research and Retreat
Center (UEDRARC) Rehabilitation Project
We completed an audit of the City of Philadelphia's Community
Development Block Grant (CDBG) and Section 108 funding of the Urban
Education Development Research and Retreat Center (UEDRARC) Rehabilitation
Project, administered through its delegate agency, the Philadelphia
Industrial Development Corporation (PIDC). The objectives of the
audit were to determine whether PIDC:
Ensured HUD funds for the UEDRARC Project met a national objective;
Awarded the CDBG and Section 108 funds to UEDRARC in accordance
with HUD's requirements, as well as its own loan policies and procedures;
and Effectively administered the CDBG and Section 108 loans provided
to UEDRARC.
Although we determined the UEDRARC Project did meet a national
objective consistent with HUD's CDBG criteria, the project was never
financially viable. PIDC disregarded its own loan policies and procedures,
as well as HUD's requirements, in funding this high-risk project.
In addition, the City of Philadelphia and PIDC neither provided
the necessary oversight to ensure performance goals were achieved,
nor monitored UEDRARC's use of funds for compliance with loan requirements.
Since UEDRARC began operations in 1993, it has not been able to
generate sufficient rental income to cover its long-term debt and
operating expenses. In fact, all loans PIDC provided to UEDRARC
quickly became delinquent and two of the loans were used to repay
several delinquent loans. At the end of our review, UEDRARC's three
outstanding loans totaling $4,650,000 were either delinquent or
defaulted. Under its present financial structure, it is doubtful
UEDRARC will be able to repay these loans and sustain its operations
for the long-term. Further, PIDC (1) did not apply approximately
$1.5 million in credits to the CDBG Program for State reimbursements
of contractor invoices, originally paid with HUD funds, and (2)
used a Section 108 loan of $800,000 for ineligible purposes. Finally,
we found UEDRARC used $604,235 of its funds to pay for questionable
expenses rather than pay its contractors $526,514 of eligible construction
expenses. The primary issue areas are detailed in the Findings section
of this report.
Issue Date: May 3, 2001
Audit
Report No.: 2001-PH-1005
File Size: 1,318KB
Title: Housing Authority of the City of Pittsburgh, Comprehensive
Audit of Various Activities, Pittsburgh, Pennsylvania
We completed an audit of various aspects of the operations of
the Housing Authority of the City of Pittsburgh (Authority). The
purpose of the audit was to determine if the Authority properly
procured goods and services with HUD funds and made disbursements
using HUD funds according to the applicable program requirements.
The audit generally covered the period January 1, 1998 through December
31, 1999, but was expanded when necessary to include other periods.
The Authority is not complying with key provisions of its Consolidated
Annual Contributions Contract (ACC) with HUD. Specifically, we found
the Authority is not properly procuring goods and services according
to Federal procurement requirements, nor is the Authority adequately
accounting for HUD funds it draws down and disburses according to
the applicable program requirements. These conditions occurred because
the Authority's management does not ensure staff perform and comply
with all applicable provisions of its ACC and applicable statutes
and regulations issued by HUD. As a result of these deficiencies,
we identified $8.1 million of questioned costs ($1,382,874 of ineligible
and $6,758,294 unsupported) in our review. Immediate improvements
are needed in the areas of procurement, drawing funds from Line
of Credit Control System (LOCCS), and controls over cash disbursements.
Issue Date: April 20, 2001
Audit Report No.: 2001-PH-1004
File Size: 101KB
Title: Resources for Human Development, Supportive Housing Grants,
PA26B8941402 (Renewal) and PA26B970105 (Renewal), Philadelphia,
PA
As part of a nationwide review of HUD's Continuum of Care Program,
we audited two Resources for Human Development's (RHD) 1997 Supportive
Housing renewal grants.
Our audit concluded RHD implemented the grants in accordance with
its applications, maintained evidence of measurable results, ensured
a sustainable program, and expended funds timely. However, RHD needs
to improve administration of the program to ensure compliance with
federal regulations. Specifically, RHD did not: (1) include only
eligible costs in its grant draw downs; (2) base draw downs on cash
requirements of the program; (3) classify transactions by type of
eligible activity; and (4) file accurate Annual Progress Reports
(APR).
Issue Date: February 15, 2001
Audit
Report No.: 2001-PH-1002
File Size: 1116KB
Title: Chester Housing Authority, Chester, PA
On January 7, 2000 we began an audit to assess the Receiver's
and the CHA's progress in:
analyzing existing policies and procedures; updating or revising
procedures where warranted;
training staff on and monitoring the effectiveness of the new policies
and procedures;
improving procurement and administration of its legal service
contracts;
developing procedures to govern the use of the CHA credit cards
and stipulate the documentation required to obtain payment for credit
card and out-of-pocket expenses; and
reducing tenant rent receivables and improving rent collections.
The CHA needs to establish procedures, and train and monitor its
staff in the areas of applicant screening, rent collections, and
evictions. We discussed the results of our review during the audit
and provided the Court, the Receiver, and the CHA with a draft report
for comment. We discussed the draft report at an exit conference
on December 19, 2000. The CHA provided a written response, which
we included as Appendix B without exhibits, and where appropriate
their comments are summarized in this report. CHA generally agreed
with our recommendations, but disagreed with some of the reported
facts.
Issue Date: November 2, 2000
Audit
Report No.: 01-PH-241-1001
File Size: 337KB
Title: Urban Education Development Research and Retreat Center
(UEDRARC), Philadelphia, PA
We completed an audit of the Philadelphia Commercial Development
Corporation's (PCDC) funding of the Urban Education Development
Research and Retreat Center (UEDRARC) rehabilitation project. The
objectives of the audit were to determine whether: Community Development
Block Grant (CDBG) funds were used to accomplish a national objective;
the UEDRARC Project met its objectives; and PCDC effectively administered
the CDBG funds provided to UEDRARC.
We noted positive effects from the UEDRARC Project. UEDRARC met
a CDBG national objective by eliminating a slum and blighted condition,
and accomplished its mission to provide an institutional environment
encompassing programs designed to promote education, research, employment
training, and human development to serve the needs of Philadelphia's
African American community. PCDC had designed good management systems
and controls to provide project oversight and to account for all
the loan funds disbursed to the project. Despite having these good
controls, PCDC did not follow its own and HUD's requirements, and
did not use prudent financial judgment in evaluating, approving,
and administering its $550,000 loan to UEDRARC - a high risk borrower.
PCDC did not observe existing loan approval policies and procedures;
enforce its loan monitoring policy and procedures when administering
the loan; and take full advantage of available recourses when UEDRARC
defaulted on its loan. As a result of PCDC's loan decision, it is
likely PCDC will need to write off the loan to UEDRARC, depriving
other applicants of needed funds.
PCDC's Board of Directors overruled their Vice President for Lending's
recommendation to reject the loan and bypassed their Loan Committee
in providing the loan to UEDRARC. Based on the Office of Housing
and Community Development's (OHCD) assurances of UEDRARC's financial
viability and a Pennsylvania State Senator's encouragement, PCDC's
Board authorized the loan. The State Senator, who was a member of
both PCDC's and UEDRARC's Boards of Directors, used his influence
in PCDC's loan decision making process. Despite individual Board
members' concerns, the Board authorized the loan, featuring unusually
favorable terms including: a loan amount exceeding the $100,000
maximum amount, an interest rate of only 3� percent, and a 96 month
moratorium on principal payments. Finally, PCDC used a for-profit
loan vehicle to provide the loan to UEDRARC, a non-profit organization.
PCDC did not enforce its loan monitoring policy and procedures,
and removed its loan officer from the loan monitoring process. PCDC
relied on the Philadelphia Industrial Development Corporation (PIDC)
to monitor the loan because PCDC lacked the resources to monitor
the project and the PCDC loan was subordinate to the PIDC loan.
We evaluated PIDC's monitoring process and found it to be ineffective.
Also, PCDC did not pursue UEDRARC for annual financial statements
required by the loan agreement or a final audit of the project.
UEDRARC defaulted on the loan within a month of receiving loan proceeds.
As of March 13, 2000, UEDRARC had been delinquent 50 of the 53 months
of the loan term and was $22,496.01 in arrears. PCDC never required
UEDRARC to prove it lacked the capability to make its loan payments.
PCDC did not take more forceful default action because of outside
pressure and the desire to see the project succeed.
The UEDRARC Project met a CDBG national objective by eliminating
a slum and blighted condition and met its goal by creating an educational
facility at its project location. However, its ability to sustain
this success is questionable. UEDRARC currently lacks the resources
to complete facility renovations needed to increase revenue. Furthermore,
current operations do not generate sufficient revenue to cover long
term debt and operating expenses. During the 17 months ending May
31, 2000, UEDRARC experienced an average monthly shortfall of $24,672.86
or a total of $419,438.62 over the period. Due to its current financial
condition, it is unlikely that UEDRARC will be able to obtain the
funding for the remaining renovations. Without this funding and
the resulting increased revenue, it is doubtful that UEDRARC will
be able to repay its debt and continue operations.
We recommended to HUD that PCDC comply with loan approval and administration
policies and procedures and loan agreements; document the reasons
for circumventing existing policies and procedures when approving
and administering loans; and require UEDRARC to obtain an audit
of the construction project.
We also recommended that, if PCDC writes off the loan, HUD direct
the City of Philadelphia to repay, to the City's CDBG Program, with
non-Federal funds, the loan portion written off as uncollectable.
We discussed the results of our review with PCDC during the audit
and at an exit conference on September 22, 2000. By letter, dated
October 4, 2000, the President/CEO of PCDC provided a detailed response
to the conditions and recommendations discussed in the draft report.
We have included PCDC's pertinent comments in the Finding Section
of this report. PCDC's full response is included in Appendix A.
Issue Date: September 21, 2000
Audit
Report No.: 00-NY-229-1006
File Size: 941KB
Title: First Preston Foreclosure Specialists, Marketing and Management
Contract, Blue Bell, Pennsylvania
We completed an audit of First Preston Foreclosure Specialists
(First Preston) a Management and Marketing (M&M) contractor. This
report presents the results of our audit of First Preston's ability
to manage and market the U.S. Department of Housing and Urban Development
(HUD) single family properties. The report includes three findings
with recommendations for corrective action.
Issue Date: August 21, 2000
Audit
Report No.: 00-PH-255-1802
File Size: 174KB
Title: Westmoreland County Consortium HOME Program Westmoreland,
Pennsylvania
Our office completed a review of the Westmoreland County Consortium's
(County) HOME Program. We performed the review to determine whether
the County is administering its HOME program in compliance with
HUD requirements.
Generally, we found the County is administering it's HOME Program
in compliance with HUD requirements. However, the County needs to
improve its administration by implementing a quality control process
over rehabilitation property inspections to ensure the inspections
are completed, accurate, and properties meet HOME rehabilitation
standards. Details of our review can be found under the "Results
of Review" section of this memorandum.
Issue Date: November 15, 1999
Audit
Report No.: 00-PH-201-1002
File Size: 2,285KB
Title: Review of the Philadelphia HA's Police Department, Philadelphia,
Pennsylvania
We conducted a review of the Philadelphia Housing Authority's
police department. The review was undertaken to evaluate the propriety
of the overtime payments that were made to its staff. As part of
our review we also looked into the level of baseline police services
being provided to the Housing Authority by the City of Philadelphia
and attempted to relate those services to what should be provided
under the terms of their Cooperation Agreement.
Police services need to be provided to the residents of the Philadelphia
Housing Authority in a more organized, coordinated, and controlled
fashion. While our review was conducted primarily to look into various
complaints regarding the administration of overtime at the Authority's
police department, it is apparent that there are some very fundamental
matters affecting the management and operation of the police department
that need to be addressed by the Housing Authority and the City
of Philadelphia. In addition to the use of Drug Elimination Program
funds, this includes the baseline police services that should be
provided by the City under the terms of its Cooperation Agreement
with the Authority.
Issue Date: November 1, 1999
Audit
Related Memorandum No.: 00-PH-259-1801
File Size: 101KB
Title: County of Allegheny Supportive Housing Grants, Pittsburgh,
Pennsylvania
Based on a request from your staff we reviewed the Supportive
Housing Grants administered by the County of Allegheny (County)
to determine whether the grants were properly administered and whether
the costs that were incurred by the County and its subrecipients
were necessary, eligible, and properly supported. Our audit period
covered April 1, 1996 through July 31,1998.
The County needs to more closely adhere to the terms of its grant
agreements with HUD and to provide better oversight and guidance
to its subrecipients. We found that the County has not implemented
a process by which it routinely monitors its subrecipients and,
on occasion, has given its subrecipients improper advice concerning
the requisitioning of funds under its letter of credit. As a result,
the County drew down funds prior to actual needs, and the County
and its subrecipients incurred $52,575 and $82,185 of ineligible
and unsupported costs.
Issue Date: October 20, 1999
Audit
Report No.: 00-PH-201-1001
File Size: 655KB
Title: Public Housing Drug Elimination Program Housing Authority,
Pittsburgh, Pennsylvania
We determined that the Authority spent PHDEP funds for a variety
of purposes, some of which were included in the PHDEP applications,
were properly supported, and were otherwise eligible expenditures.
Other expenditures totaling $500,912 were ineligible project charges
because they were used for other Authority activities which were
not PHDEP related. Still other expenditures of $387,002 were inadequately
supported and an assessment of their eligibility could not be made.
These problems occurred because no one had the overall responsibility
for administering the Authority's PHDEP.
We recommend that you: (1) require the Authority to obtain your
office's approval before drawing down additional funds for its existing
PHDEP; (2) have the Authority repay PHDEP the $500,912 that was
spent on ineligible expenditures and, if proper support cannot be
provided, the $387,002 in unsupported costs; and (3) consider the
Authority for future PHDEP grants only after it has demonstrated
the ability to properly administer a PHDEP.
Issue Date: September 30, 1998
Audit
Report No.: 98-CH-259-1006
File Size: 452KB
Title: City of Philadelphia Empowerment Zone Program Philadelphia,
PA
Based on our review of 12 of the 109 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 used
$83,998 of Empowerment Zone funds that did not benefit Zone residents;
did not have documentation to show that another $32,934 of Zone
funds paid and $4,367 billed to the City benefited Zone residents
or were reasonable and necessary expenses; and spent $30,280 of
Zone funds above the amount approved. The City also inaccurately
reported the accomplishments of its Empowerment Zone activities
and reported one project as an Empowerment Zone activity to HUD
when it was not. As a result, Empowerment Zone funds were not used
efficiently and effectively, and the impression exists that the
benefits of the City's Empowerment Zone Program were greater than
actually achieved.
Issue Date: August 14, 1998
Audit
Related Memorandum No.: 98-PH-201-1804
File Size: 30KB
Title: Northside Tenants Reorganization (NTR) - Security Funding
Pittsburgh, PA
Based on a request from the Office of Inspector General for Investigations,
we reviewed the security funding received by NTR to determine whether
the expenditures were necessary, eligible, and properly supported.
We found NTR did not maintain records evidencing project security
was provided and at least $360,00 of security funds were misspent.
The owners of Northside Properties and the Housing Authority of
the City of Pittsburgh (Authority) each suggested security funds
were misspent, indicating it was each other's responsibility to
monitor the funding. Your attention is required to ensure scarce
Section-8 funding is not abused while responsible parties argue
over monitoring responsibility.
Issue Date: April 13, 1998
Audit
Related Memorandum No.: 98-PH-241-1803
File Size: 26KB
Title: City of Sharon, Sharon, PA
Based on a citizen complaint we surveyed the operation of the
City of Sharon's CDBG Program. The purpose of the survey was to
review the City's administration of the CDBG Program, pursue the
complainant's allegations, and determine whether further audit work
was necessary.
Our review identified that the City's rehabilitation loan application
required additional pertinent information, and should be amended
to include the applicant's signature, social security number, and
date. Our recommendation was brought to the attention of the Assistant
Program Director for implementation.
Based on our review, we have concluded that the complainant's
allegations were not justified, and no additional audit work is
currently necessary.
Issue Date: October 29, 1997
Audit
Related Memorandum No.: 98-PH-241-1801
File Size: 18KB
Title: City of Altoona, Altoona, PA
Our survey disclosed the following:
- The City monitored only 2 of its 11 subrecipients since January,
1997. The City monitored its largest subrecipients, both of which
received more than $200,000 each during 1995. Inadequate subrecipient
monitoring was noted as a finding in the City's 1995 single IPA
audit. The City's Community Development Director planned on establishing
a threshold for on-site monitoring of subrecipients. The Director
stated the City continually monitors the subrecipients because supporting
documentation is required before any CDBG funds are released. Resolution
of this situation is currently being handled by your staff.
- No significant deficiencies were disclosed in the other; areas
surveyed.
Issue Date: August 21, 1997
Audit
Related Memorandum No.: 97-PH-212-1811
File Size: 235KB
Title: Elmira Jeffries Nursing Home, Philadelphia, PA
TUH/GPHSC could not provide sufficient documentation to support
various payments to the previous owner, Mt Sinai Holy Church. TUH/GPHSC
stated that the payments were made to the previous owner for:
(1) money due to the previous owner;
(2) consultant services rendered to the project; and,
(3) legal fees.
However, TUH/GPHSC was unable to produce documentation to evidence
these expenditures were for reasonable operating expenses or necessary
repairs.; As a result, TUH/GPHSC has agreed to credit the project
$671,478.18 for all payments from project funds to repay funds advanced
by TUH.
Issue Date: June 27, 1997
Audit
Related Memorandum No.: 97-PH-241-1809
File Size: 19KB
Title: O'Connor Square Townhouses, Pittsburgh, PA
Our review of GHCA's procurement activities disclosed:
- The contract for the construction of O'Connor Square was awarded
without competition.
- The contractor was not bonded.
- An identity of interest existed between a member of GHCA's Board
and a sub-contractor.
Issue Date: May 8, 1997
Audit
Related Memorandum No.: 97-PH-211-1807
File Size: 16KB
Title: Fairview & Fairmount Apts., Meadville, PA
Our HQS inspections disclosed the need for Ground Fault Interrupt
(GFI) electrical outlets in the bathroom medicine cabinets of both
projects. No reportable deficiencies were found in the other areas
reviewed.
Survey results were discussed with project management. They stated
that the GFI outlet condition will be corrected. Based on survey
results, we have concluded that no additional audit work is necessary.
However, your staff should confirm the resolution of the GFI condition
during their next physical inspection of both projects.
Issue Date: April 25, 1997
Audit
Related Memorandum No.: 97-PH-241-1806
File Size: 17KB
Title: City of Erie, Erie, PA
Our survey disclosed the following:
The City was not performing the required annual monitoring review
of the Redevelopment Authority of the City of Erie (RACE). The last
review was done in December 1994. The RACE's staff policies and
procedures manual for housing rehabilitation programs was not current.
City of Erie inspectors were not present during the RACE's progress
and final housing rehabilitation inspections, as required by RACE's
policy.
The RACE was not performing 60 day follow-up inspections of rehabilitated
homes, as required by its policy. Various minor deficiencies were
identified during OIG inspection of homes rehabilitated under the
RACE's rehabilitation programs. No significant deficiencies were
disclosed in the other areas surveyed.
Issue Date: February 21, 1997
Audit
Related Memorandum No.: 97-PH-241-1803
File Size: 15KB
Title: City of Pittsburgh, Pittsburgh, PA
Our survey disclosed no reportable deficiencies, and no additional
audit work is currently necessary.
Issue Date: January 30, 1997
Audit
Case No.: 97-PH-202-1006
File Size: 100KB
Title: Luzerne County HA, Kingston, PA
Our audit found the LCHA needs to improve operational controls
in the following areas:
- Public Housing Drug Elimination Program
- Administrative costs
- Internal controls
- Public Housing Management Assessment Program
Issue Date: January 14, 1997
Audit
Report No.: 97-PH-201-1004
File Size: 137KB
Title: Philadelphia HA, Philadelphia, PA.
This report details the problems confronting the Authority today,
steps they have taken to address the problems, and the progress
made to date. We have also provided recommendations to assist HUD
staff and Authority management in continuing to improve operations
and the quality of living conditions for the residents.
Issue Date: December 27, 1996
Audit
Related Memorandum No.: 97-PH-203-1801
File Size: 29KB
Title: Pittsburgh HA, Pittsburgh, PA
Based on an anonymous citizen complaint we performed a limited
review of the Pittsburgh Housing Authority's Section 8 Program.
1. HQS Inspections
Nine of fourteen properties inspected failed HQS.; Three property
failures could be attributed to inspector oversight.; The property
addresses and deficiencies were provided to your staff.; The Authority
took immediate action to affect repairs.
2. Exception Rents
We were unable to confirm comparability data used to qualify units
for exception rent.; For the five units sampled the Authority prepared
a comparability analysis worksheet for all units receiving exception
rent.; However, the Authority was unable to locate supporting documentation
for comparable units listed on the analysis worksheets for four
units.; Supporting documentation for two units was inconsistent
with the data recorded on the analysis worksheet.; Independent confirmations
with rental agents and owners of comparable units was inconsistent
with Authority recorded data.
The Authority maintained data sheets on comparable units for each
geographic area.; However these data sheets were used for processing
both exception rents and annual adjustment factor rent increases.;
The Authority indicated that when comparability data is used for
annual adjustment rent increases the original data sheet is transferred
to unit folders and therefore would be difficult to locate.; Source
documentation for the comparability analysis worksheets is not retained
in the exception rent unit folders. As a result the Authority would
be unable to locate exception rent comparability data without 100%
unit folder review. The Section 8 coordinator was not aware that
original comparability data was not being retained in a control
file. Changes are planned to make the process more efficient.
3. Total Tenant Payment Calculations
The Authority did not properly calculate Total Tenant Payment
(TTP) for two of 14 tenant files reviewed. As a result, the Authority
owes two tenants a total of $392. For one tenant, the Authority
did not properly verify income for the recertifications effective
February 1, 1994 and 1995. The Authority used income verifications
from prior years. The Authority also included an income source twice
when calculating the TTP for the recertification period effective
February 1, 1994. As a result, the tenant is owed $72.
For another tenant the Authority did not consider an elderly allowance
in the recertifications computation effective April 1, 1994 through
November 13, 1996. As a result, the tenant is owed $320 for the
period April 1, 1994 through November 13, 1996.
Issue Date: December 23, 1996
Audit
Case No.: 97-PH-202-1003
File Size: 62KB
Title: Washington City HA, Washington, PA
Our audit found the Authority needs to improve operational controls
covering the Drug Elimination Program, Section 8 Program, and Public
Housing Program occupancy.
Issue Date: August 8, 1996
Audit
Related Memorandum No.: 96-PH-250-1820
File Size: 36KB
Title: CDBG Program, City of Reading, PA
Based on our testing we determined that the Grantee adhered to
HUD guidelines for performing financial feasibility analyses, documented
eligibility and national objectives determinations and performed
follow-up monitoring to assure that the loans achieved the intended
public benefits in terms of jobs created or retained. The Grantee's
controls were also adequate to achieve program objectives for economic
development activities and safeguard related assets, except for
two specific weaknesses involving loan underwriting and servicing.
The internal control weaknesses involve the underwriting of loans
to borrowers who are or were delinquent on previous loans and the
handling of loan payments mailed to the Grantee's office, for which
we recommended that the Grantee revise its procedures in order to
strengthen controls in these areas.
Issue Date: July 16, 1996
Audit
Report No.: 96-PH-202-1018
File Size: 97KB
Title: HA of the County of Chester, West Chester, PA
The Authority did not operate in an efficient, effective and economical
manner. Improvements are needed in the overall management of the
Authority's operations and in the maintenance of the Authority's
projects.
Issue Date: May 20, 1996
Audit
Report No.: 96-PH-241-1016
File Size: 149KB
Title: Dept. of Housing Services, Norristown, PA
The audit disclosed that the Grantee needs to revise and strengthen
procedures regarding inspections of completed rehabilitation work,
conflicts of interest, rehabilitation costs, procurement of supplies
and services, rents and occupancy, annual inspections, and contractors'
liability insurance coverage.
Issue Date: April 29, 1996
Audit
Related Memorandum No.: 96-PH-249-1815
File Size: 40KB
Title: Delaware City Penza Tract Fund, Media, PA
The Grantee sold land in 1979 and 1981 that had previously been
acquired with CDBG funds, but did not credit the net sales proceeds
of $1,262,990 to program income, as required; and, earned a minimum
of $516,309 in interest on the land sales proceeds since April 1988,
but did not credit these earnings to CDBG program income, as required.
Part of these interest earnings were transferred to the Grantee's
general fund and subsequently spent on general governmental activities,
contrary to regulations.
Issue Date: April 9, 1996
Audit
Related Memorandum No.: 96-PH-209-1814
File Size: 24KB
Title: Schuylkill County HA, Pottsville, PA
Our survey disclosed that:
- The Authority purchased the Female Grammar School Building for
the purpose of consolidating and relocating their administrative
offices, maintenance warehouse, and Section 8 offices to a central
downtown location.
- Appraisal reports and property records support the Authority's
purchase price of $100,000. No evidence was found to indicate that
the purchase was other than an arm's length transaction. - The former
Executive Director acted independently in the purchase and planned
rehabilitation of the property.
- A professional estimate of rehabilitation costs, necessary to
prepare the building for occupancy, was not performed prior to purchase.
Rehabilitation costs were estimated by the former Executive Director.
There was no documentation to support his rehabilitation estimate
of the building.
- Oversight by the Board of Commissioners was minimal. The Commissioners
accepted the former Executive Director's proposal and estimate of
rehabilitation costs without challenge.
- Contractor bids for rehabilitation work disclosed that rehabilitation
and occupancy of the building was prohibitive.
- Attempts to dispose of the property, to date, have failed to
realize the Authority's original purchase price.
Action on the disposition of the property has been suspended pending
direction from your office. Based on our review we have concluded
that the former Executive Director did not act in the best interest
of the Authority. Purchasing the building without first obtaining
a professional estimate of rehabilitation costs to determine the
feasibility to convert the building to office space, within the
comprehensive grant budget, represents significant mismanagement.
The absence of oversight by the Board of Commissioners in our opinion
contributed to, rather than prevented, mismanagement. As a result,
the Authority is now in a position to incur a substantial loss in
the disposition of the property.
Issue Date: February 29, 1996
Audit
Related Memorandum No.: 96-PH-201-1014
File Size: 61KB
Title: Philadelphia HA, Philadelphia, PA
The ART program was a costly demonstration program. The program,
which was designed to have union workers and Authority residents
working together to renovate units and to provide training to residents,
resulted in total costs of $28.3 million to renovate only 221 units.
Over $2 million was spent on units which were determined to be not
viable and not structurally sound, and on units that were never
completed. Authority residents who participated in the job training
program received $347,211, but union workers were paid over $19
million for renovation labor.
Issue Date: January 17, 1996
Audit
Report No.: 96-PH-214-1005
File Size: 101KB
Title: Allegheny Housing Rehab. Corp., Pittsburgh, PA
The report's five findings identifies that AHRCO: improperly paid
employees from project funds; incurred ineligible and unsupported
costs; mismanaged various aspects of the Flexable Subsidy Program;
did not allocate computer costs to all entities managed and requires
improvement in administering Section 8 occupany requirements.
Issue Date: December 5, 1995
Audit
Related Memorandum No.: 96-PH-212-1004
File Size: 15KB
Title: Wilkins House, Wilkinsburg, PA
Our survey disclosed that: 1. The Owner of Wilkins House had received
$57,000 in salary from Wilkins House payroll from January through
September, 1995. The Assistant Director of Wilkins House stated
that HUD Area Office staff had verbally approved the Owner's salary
since the Owner was considered an employee of Wilkins House. Your
office contends that prior written HUD approval was necessary before
the Owner could collect a salary. The Assistant Director concurred
that written approval was not obtained from HUD before the Owner
collected the salary. The status of this issue remains vested with
your office for a decision.
2. Your office stated in a July 25, 1995 memo it appeared the Notes
Payable to the Owner decreased $204,300 during 1994. The decrease
in the Notes Payable actually occurred in 1993; $195,000 was paid
to a former investor and the remaining $9,300 was paid to the Owner.
On February 24, 1995 your office advised the former owner that $206,000
was an unauthorized distribution and reimbursement was required
to the project's operating account. This issue was disclosed in
the Audit Related Memorandum issued to your office on July 11, 1995.
The $195,000 addressed above is not included in the unauthorized
distribution.
Issue Date: November 28, 1995
Audit
Related Memorandum No.: 96-PH-214-1003
File Size: 17KB
Title: Supportive Housing Management Services, Clairton, PA
Our survey disclosed the following: Laurel Wood Apartments:
- The Security Deposit Account was underfunded by $280 due to
clerical errors.
- The Reserve for Replacement Account was underfunded $10,577
due to cash deficits during initial operations. Wesley Commons:
- One tenant was selected for housing who had not been on the
waiting list.
- Items cited on the latest physical inspection report dated June
26, 1995 have not been corrected to date.
- For two tenants, court ordered support payments were not included
as income. - A tenant's rent was overstated by $75 monthly due to
clerical oversight.
- The manager allowed tenants to hand carry statements from public
assistance to expedite the recertification process. Versailles Archer:
- A tenant overpaid rent by $42 monthly because the manager overlooked
the medical deduction for Medicare B payments.
Issue Date: November 27, 1995
Audit
Report No.: 96-PH-212-1002
File Size: 41KB
Title: Pine Hill Farms Apts., York, PA
We determined that the Owner did not comply with Regulatory Agreement
provisions pertaining to cash distributions and tenant security
deposits.
Issue Date: October 24, 1995
Audit
Related Memorandum No.: 96-PH-214-1802
File Size: 24KB
Title: NDC Asset Management, Inc., Pittsburgh, PA
Our survey disclosed the following:
- There were 21 overhoused and four underhoused tenants at Shenango
Park Apartments. The overhoused tenants reside in two bedroom units
but require transfers to one bedroom units. The underhoused tenants
reside in two bedroom units but require three bedroom units. The
Resident Manager stated that some of the overhoused tenants had
lived in the same units for the past 15 to 20 years and refused
to move. The Resident Manager stated transfers for the overhoused
tenants will be done as soon as one bedroom units become available.
The Resident Manager plans to transfer the underhoused tenants between
September and October 1995.
- The laundry and boiler rooms of one of the buildings at Belvedere
Acres was still suffering the effects of building subsidence. Your
office has been aware of the situation since it originally occurred
in 1986. According to your staff, the subsidence has been adequately
monitored by HUD and does not pose a threat to the safety of the
building's occupants. Since HUD was aware of the subsidence and
has been monitoring the situation, it was not pursued as an issue.
- One of seven Section 8 units at Shenango Park Apartments failed
HQS. The unit failed due to violations including peeling and chipping
paint, a deteriorating window sill, and an unattached baseboard.
Several other items noted during inspection of the same unit also
failed but were repaired the same day and thus were not listed as
failed items. The Maintenance Supervisor stated the remaining HQS
deficiencies would be repaired immediately.
- No reportable deficiencies were noted regarding tenant eligibility
and management activities.
Issue Date: October 12, 1995
Memorandum
Report No.: 96-AO-209-1804
File Size: 16KB
Title: Allegheny County HA, Pittsburgh, PA
We concluded that the abatement of lead-based paint, for which
the contractor was paid more than $822,000, was not performed in
accordance with the terms of the contract.