Washington State Audit Reports

Date issued: September 30, 2007
Audit Report No.: 2007-SE-1004
File Size:4.2MB

Title: The Tacoma Consortium, Tacoma, Washington, Did Not Properly Administered Its HOME Investment Partnerships Program Grants

We audited the Tacoma Consortium HOME Investment Partnerships Program as a result of a risk assessment performed by HUD-OIG Region IX. Our objective was to determine whether the Consortium complied with HOME requirements, laws, and regulations with respect to the homeowner rehabilitation program and HUD procurement regulations. The Consortium generally administered HOME in accordance with HUD requirements but violated HOME regulations when it drew down funds for a homeowner who was not low income, for a homeowner whose income was not adequately documented, for projects that were not completed to code, for luxury improvements, and for rehabilitation activities that were not compliant with HUD requirements or its own written rehabilitation standards. In addition, contrary to HUD procurement regulations, the Consortium did not perform an independent estimate or cost analysis to determine whether contract change orders were reasonable. We recommended that HUD require the Consortium to repay HOME from nonfederal funds $187,399 in ineligible costs, provide supporting documentation or repay from nonfederal funds the $248,214 in unsupported costs, and require the Consortium to implement policies and procedures so that its grant activities are carried out in accordance with applicable laws, regulations, and Consortium rehabilitation standards to put $263,458 in homeowner rehabilitation funds to better use over the next year.

Date Issued: September 5, 2007
Audit Report No.: 2007-SE-1003
File Size: 226.19KB

Title: The Vancover Housing, Vancover, Washington, Lacks Quality Control Processing in It Housing Choice Voucher Program

We audited the Vancouver Housing Authority to determine whether it procured goods and services in accordance with U.S. Department of Housing and Urban Development (HUD) requirements and whether it had pledged HUD assets as security. We also audited the Authority's Housing Choice Voucher program (program) to determine whether it operated in accordance with HUD requirements.

The Authority generally procured goods and services in accordance with HUD regulations, had not pledged HUD assets as security for its recent development projects, and generally operated its program in accordance with HUD requirements. However, the Authority did not perform quality control inspections of its housing quality standards inspections to ensure the assisted units met housing quality standards as directed by HUD. In addition, the Authority did not perform promised tenant file reviews to ensure the files were complete and the housing assistance payments were correctly calculated. We recommend that six months after the issuance of this report, the director of the Region X Office of Public Housing review the Authority's housing quality standards quality control inspection program and tenant file review program to confirm that these programs meet HUD requirements.

Date Issued: April 11, 2007
Audit Report No.: 2007-SE-1002
File Size: 240.1KB

Title: The Renton, Washington, Branch of Countrywide Home Loans, Inc. Did Not Comply with HUD Guidelines in Underwriting Five Federal Housing Administration-Insured Loans

We audited single-family loan origination at the Renton, Washington, branch of Countrywide Home Loans Inc. (Renton branch) to determine if they originated Federal Housing Administration-insured loans in accordance with U.S. Department of Housing and Urban Development (HUD) requirements. We found that the Renton branch did not comply with HUD requirements in originating five of 22 Federal Housing Administration-insured loans. By not establishing that the borrowers had the ability and willingness to repay the mortgage debt and that the insured property was sufficient collateral for the loan, the Renton branch exposed the Federal Housing Administration insurance fund to an unnecessary risk totaling $740,007, the total insured amount for the five loans.

We recommended that the Assistant Secretary for Housing - Federal Housing Commissioner require Countrywide to correct the deficiencies or indemnify HUD for $207,947 for the five loans. This represents the average loss should the Federal Housing Administration sell the foreclosed properties.

Date Issued: January 12, 2007
Audit Report No.: 2007-SE-1001
File Size: 465.03KB

Title: The YWCA of Seattle - King County - Snohomish County, Seattle, Washington, Did Not Properly Administer Its Supportive Housing Program Grants

As part of the Inspector General's annual audit plan, we audited the YWCA of Seattle - King and Snohomish Counties (YWCA). Our audit objective was to determine whether the YWCA administered its Supportive Housing Program grants in accordance with HUD requirements, Office of Management and Budget requirements, and the grant agreements. The YWCA generally administered its Supportive Housing Program grants in accordance with HUD requirements. However, it received $118,207 in excess funds because it did not provide a sufficient cash match for one of its grants. It was also unable to support $68,783 in labor costs charged to its grants. We recommend that HUD require the YWCA to (1) repay $118,207 in grant funds expended without the required cash match, (2) reimburse the grant and/or repay HUD from nonfederal funds for the $68,783 in unsupported labor costs unless it can provide adequate supporting documentation, and (3) implement policies and procedures so that its grants are carried out in accordance with applicable laws and regulations.

Date Issued: September 18, 2006
Audit Report No.: 2006-SE-1005
File Size: 72.95KB

Title: King County Housing Authority, Tukwila, Washington, Section 8 Program Meets HUD Requirements

As part of the inspector general's annual audit plan, we audited the King County Housing Authority's (authority) Section 8 program to determine whether it met U.S. Department of Housing and Urban Development (HUD) requirements. The authority generally administered its Section 8 program in accordance with HUD requirements. The authority fairly selected families from the waiting list, ensured only eligible families received assistance, generally calculated and paid the correct housing assistance payments, properly managed its portability program, and ensured that assisted units met housing quality standards.

Date Issued: June 21, 2006
Audit Report No.: 2006-SE-1004
File Size: 265.91KB

Title: The Housing Authority of the City of Bremerton, Washington, Inaccurately Reported Its 2005 Section 8 Management Assessment Program Results

We audited the Housing Choice Voucher program of the Housing Authority of the City of Bremerton (Authority) to determine if it complied with U.S. Department of Housing and Urban Development (HUD) requirements. While generally complying with HUD requirements, we found the Authority incorrectly evaluated its Section 8 Management Assessment Program quality control samples for waiting list selection and housing quality standards enforcement. As a result, HUD, Authority management, and the Authority's board of commissioners did not have the information needed to identify and correct program weaknesses in the Authority's Section 8 waiting list selection and enforcement of housing quality standards. Further, the Authority's incorrect evaluation resulted in HUD designating the Authority as a high performer when it should have only qualified as a standard performer. We recommended that HUD require the Authority to implement a formal process for its Section 8 Management Assessment Progra

Date Issued: May 31, 2006
Audit Report No.: 2006-SE-1003
File Size: 369.41KB

Title: Snohomish County's Office of Housing and Community Development, Everett, Washington, Charged Ineligible Administrative Expenses to its Community Development Block Grant

We audited the Snohomish County (County) Office of Housing and Community Development to determine whether the County administered its Community Development Block Grant and HOME Investment Partnership Program in accordance with HUD requirements. We found that Snohomish County generally administers its Community Development Block Grant and HOME Investment Partnership Program grants in accordance with HUD requirements. However, the County charged $67,339 of ineligible administrative expenses to its Community Development Block Grant. The County also extended the pay-off date for two Community Development Block Grant float-funded activities without properly identifying the loan extensions as a new activity, as required. We recommend that HUD require the County to (1) reimburse its Community Development Block Grant and/or repay HUD from nonfederal funds for the $67,339 in expenses related to ineligible administrative activities; (2) establish and implement adequate procedures for charging administrative costs that meet federal requirements; and (3) establish and implement adequate procedures for its float loan program.

Date Issued February 27, 2006
Audit Report No.: 2006-SE-1002
File Size: 332.22KB

Title: Northeast Washington Housing Solutions, Spokane, Washington, Improperly Administered Housing Choice Vouchers

We audited the Housing Choice Voucher program of Northeast Washington Housing Solutions (authority) to determine if it complied with U. S. Department of Housing and Urban Development (HUD) requirements. While generally complying with HUD requirements, we found they made housing assistance payments of almost $450,000 for vouchers for 154 families whose eligibility was unknown. HUD paid the authority more than $58,000 to administer these vouchers. In addition, we found the authority did not correctly report its fiscal year 2005 Section 8 Management Assessment Program score, and that it does not have an adequate plan for allocating indirect salary costs. We recommended that the Region X Office of Public Housing require the authority to determine the eligibility of the 154 families and return any ineligible housing assistance payments. We also recommended that HUD recoup the appropriate amount of administrative fees. In addition, we recommended that HUD perform an on site verification of the authority's 2006 Section 8 Management Assistance Program score, and require the authority to submit a plan for allocating indirect salaries.

Date Issued: September 30, 2005
Audit Report No.: 2005-KC-1009
File Size: 272.55KB

Title: Washington Mutual Bank Did Not Follow HUD Regulations When Underwriting Six Loans

We recommended that the assistant secretary for housing - federal housing commissioner take appropriate administrative action against Washington Mutual for not complying with HUD underwriting requirements. This action, at a minimum, should include requiring indemnification for three actively insured loans with original mortgage amounts totaling $223,476, two loans on which HUD has incurred losses of $87,639, and one loan that is overinsured by $1,425.

Washington Mutual agreed with our conclusions and to indemnify HUD for potential losses on loans currently insured, and losses already incurred.

Date Issued: September 16, 2005
Audit Report No.: 2005-SE-1007
File Size: 613.45KB

Title: City Bank - Puyallup, Washington, Branch Did Not Comply with HUD Requirements in the Origination of Insured Loans

We audited City Bank's Puyallup, Washington branch office because it had one of the highest defaults to claim percentages for the Department of Housing and Urban Development (HUD) approved lenders located within the state of Washington. Our objectives were to determine whether City Bank's Puyallup branch originated HUD-insured loans in accordance with HUD requirements and prudent lending practices. Our audit disclosed that City Bank did not originate 10 of the 24 loans in our sample in accordance with HUD requirements or prudent lending practices. Specifically, the 10 loans contained deficiencies that should have precluded their approval. These deficiencies included loans with excessive debt-to-income ratios and no valid compensating factors; lack of borrower income stability; improper source of funds verification, unacceptable borrower credit histories, and deficient appraisal reviews by the underwriter.

We attributed these deficiencies to City Bank's failure to use due care when originating the loans compounded by its failure to develop and implement an acceptable quality control plan. As a result, City Bank placed HUD's Single Family Insurance Fund at risk for 10 unacceptable loans with original mortgages totaling $1,525,007. Currently, HUD remains at risk or has incurred losses totaling $1,418,056 relating to these 10 loans.

We recommend that HUD take appropriate administrative action against City Bank, as available under the Mortgage Review Board, and/or other authority. At a minimum, this action should include seeking appropriate reimbursement and/or indemnification totaling $1,418,056 for the 10 loans that were improperly originated and underwritten, including $625 in loss mitigation costs related to one of the 10 loans.

Date Issued: July 05, 2005
Audit Report No.: 2005-SE-1006
File Size: 1036KB

Title: Washington Mutual Bank, Seattle, WA, Washington Mutual Bank Submitted 609 Late Endorsement Loans with Unacceptable Payment Histories

We audited late endorsement payment histories at Washington Mutual Bank (Washington Mutual), Seattle, Washington. We selected Washington Mutual because of its high number of late single-family loan submissions for Federal Housing Administration insurance during calendar years 2002 and 2003. Our objective was to determine whether Washington Mutual's late requests for endorsement complied with the U.S. Department of Housing and Urban Development's (HUD) payment history requirements. From March 2002 to October 2004, Washington Mutual improperly submitted 609 loans to HUD, totaling more than $69 million, for insurance endorsement when the borrowers had delinquent payments within six months before the submission date. This occurred because Washington Mutual did not have adequate controls to ensure that its employees followed HUD's requirements regarding late requests for insurance endorsement. We recommend that HUD take appropriate administrative action up to and including recovery of losses on $1,091,214 in paid claims and indemnification of loans with a total mortgage value of $18,695,819 against future losses that were not current when submitted for endorsement. We also recommend that HUD take appropriate administrative action against Washington Mutual for violating the requirements in effect at the time when it submitted loans without proper six month payment histories.

Date Issued: May 24, 2005
Audit Report No.: 2005-SE-1005
File Size: 410KB

Title: The Housing Authority of the City of Tacoma Could Improve Its Section 8 Program

We audited the Housing Choice Voucher program of the Housing Authority of the City of Tacoma to determine whether the Authority has adequate internal controls to operate its Section 8 program, in accordance with HUD requirements. While the Authority generally has adequate internal controls, we found that they did not adequately address more than $30,000 of excess housing assistance payments to landlords, and did not properly document their fiscal year Section 8 Management Assessment Program quality control reviews. We recommended that HUD require the Authority to institute processes to correct these deficiencies, and to recoup any of the excess housing assistance payments that are ineligible.

Title: Wells Fargo Bank NA, Fife Branch, Fife, WA, Supervised Mortgagee - Loan Underwriting

We audited Wells Fargo Bank NA's Fife Branch Office because of the high rate of claims on defaulting Federal Housing Administration-insured single-family loans approved by this branch. Our audit objective was to determine whether Wells Fargo-Fife acted in a prudent manner and complied with HUD regulations, procedures, and instructions in its approval of the Federal Housing Administration-insured single-family mortgages selected for review and whether the mortgagee's quality control plan, in relation to the loans reviewed, met HUD requirements.

Date Issued: December 16, 2004
Audit Report No.: 2005-SE-1002
File Size: 338KB

Title: National City Mortgage Company, Federal Way Branch Nonsupervised Single-Family Mortgagee - Loan Origination

We audited National City Mortgage's Federal Way Branch Office because there had been no prior reviews by HUD's Quality Assurance Division or the OIG, and because the Federal Way Branch had 25 defaults in the last 2 years.

The audit objectives were to determine whether the Federal Way Branch acted in a prudent manner and complied with HUD requirements in originating FHA single-family mortgages, and whether the Branch's quality control plan met HUD requirements.

Date Issued: October 21, 2004
Audit Report No.: 2005-SE-1001
File Size: 1003KB

Title: Tulalip Tribes Housing Authority Cannot Account for Grant Funds

To address Office of Inspector General concerns regarding regulatory and administrative violations in the Tulalip Tribes Housing Authority's accounting records, we audited the Authority's Indian Housing Block Grant program.

The audit objectives were to determine whether the Authority established and operated its program in accordance with HUD requirements for financial management systems.

Title: Apreva, Inc., Non-Supervised Mortgagee, Bellevue, Washington

We completed an audit of Apreva, Inc. in Bellevue, Washington. Apreva is a non-supervised mortgagee approved by HUD to originate and approve FHA-insured loans under HUD's Single Family Direct Endorsement Program. The audit objectives were to determine if (1) Apreva complied with HUD regulations, procedures, and instructions in the origination and approval of Federal Housing Administration (FHA) loans, and (2) Apreva's Quality Control Plan, as implemented, met HUD requirements.

Title: Seattle Housing Authority, Moving To Work Demonstration Program
Seattle, Washington

We completed an audit of the Seattle Housing Authority's (Authority) Moving To Work Demonstration Program (MTW Program). The audit objectives were to determine if the Authority's MTW Program activities furthered the purpose of the Program and were carried out in compliance with Program agreements. The Authority's Program included 17 activities, 8 of which the Authority actually implemented.

Title: Complaint regarding the Seattle Housing Authority's procurement for Section 8 project-based vouchers, and conduct issues regarding conflict of interest and lobbying Seattle, Washington

In response to a citizen's complaint, we conducted an audit of the Seattle Housing Authority's procurement process to determine if the Authority (1) followed applicable federal program procurement requirements and its own procurement policy when it awarded a Section 8 project-based contract to YWCA, (2) Request for Proposals evaluators were coerced into changing scores so that the Authority could commit to project-based Section 8 vouchers through YWCA, and (3) PorchLight Housing Director complied with federal and local conflict of interest rules and lobbying restrictions.

Our audit results indicated that the complaint was not valid. The evidence did not indicate proposal evaluators were coerced into changing scores, nor did the Authority PorchLight Housing Director violate federal conflict of interest rules or lobbying restrictions. However, during the review we found that the Authority improperly waived part of its published contracting requirements when it awarded Section 8 project-based vouchers to the YWCA. Because the Authority did not provide other potential applicants with the opportunity to submit proposals based on the waived requirements, the procurement process was neither open nor fair to all possible proposers. This occurred because the Authority did not have clear and specific controls to ensure that the requirements of the Request for Proposals were followed when determining eligibility of proposals. We are recommending that HUD determine if the Authority has implemented policies and procedures to ensure that procurements are performed fairly, in an open and equitable manner, and require the Authority to implement controls, if appropriate.

We provided the Authority Board and management officials with a discussion draft report on August 7, 2003, and discussed the finding with them at an August 18, 2003 exit conference. On August 22, 2003 we issued a formal draft report to the Authority, and they provided a written response on September 10, 2003. In their verbal and written comments, Authority officials expressed disagreement with the audit results. They indicated that the Authority actions regarding the processing of the voucher applications were appropriate and in the best interest of the Authority and its clients. The finding section of this report summarizes and evaluates the Authority's comments. A copy of the Authority's full response is included in Appendix A.

Date Issued: May 29, 2003
Audit Report No.: 2003-SE-1003
File Size: 600KB

Title: Seattle Housing Authority's Administration of the Welfare-to-Work Section 8 Tenant-Based Assistance (WtW) Program
Seattle, Washington

In response to a citizen's complaint, we conducted an audit of the Seattle Housing Authority's administration of its HUD-subsidized Welfare-to-Work Section 8 Tenant-Based Assistance (WtW) Program. The complaint alleged that the Seattle Housing Authority (Authority) is not properly administering its WtW program when selecting program voucher recipients, and procuring the services of nonprofit organizations to assist and recruit prospective WtW program applicants. We found that the complaint was generally valid. We believe that in its haste to get its Welfare to Work program vouchers leased up by the deadline, the Authority disregarded program requirements, and did not provide adequate management oversight over program implementation. As a result, the Authority did not achieve the objective of the WtW program to assist eligible families in transitioning from welfare to work. In addition, the Authority denied many long-time Section 8 Waiting List applicants the opportunity to participate in a program that would help them transition from welfare to work. Also, although the Authority followed its procurement requirements, it spent $130,391 of WtW funds on ineligible costs. We are recommending that HUD require the Authority to take corrective action to comply with WtW program requirements and reimburse the program for ineligible costs. Also, we are recommending that HUD review the Authority's performance as a designated Moving to Work (high performer) authority.

Date Issued: March 11, 2003
Audit Memorandum No.: 2003-SE-0801
File Size: 78.8KB

Title: Survey of the Housing Authority of the City of Bremerton's Performance as Contract Administrator for HUD's Section 8 Project-Based Assistance Program for the State of Washington

We completed a review of the Housing Authority of the City of Bremerton's (Authority) performance as the Contract Administrator for HUD's Section 8 Project-Based Assistance Program. The survey objective was to determine if the Authority is effectively administering HUD's Project-Based Section 8 contracts in accordance with the Annual Contributions Contract (ACC). We found that the Authority had effectively administered Section 8 project-based assistance, generally complied with the ACC, and had processes and controls in place to administer HUD's Section 8 project-based assistance program. During our review, we found three minor deficiencies that we discussed with Authority and HUD officials.

Date Issued: January 31, 2003
Audit Memorandum No.: 2003-SE-1801
File Size: 84KB

Title: HOME Program and CDBG Funds Provided to the Community Resource Center in Bremerton, Washington

At the request of the Office of Investigation, we reviewed the flow of HUD funds to the Community Resource Center (CRC), a Community Housing Development Organization (CHDO) to determine the amount and disposition of HUD funding provided to the CRC. We found that HUD provided the CRC $317,823 in HOME Program and CDBG funds through Kitsap County and the City of Bremerton between January 1999 and September 2001. However, available supporting CRC records were inadequate and incomplete, so that we could not determine the amount of eligible expenditures. In general, the CRC's records show its financial management system does not meet federal requirements.

Date Issued: December 2, 2002
Audit Memorandum No.: 2003-SE-1002
File Size: 895KB

Title: Congressionally Requested Audit of the Outreach and Training Assistance Grants (numbers FFOT98030WA and FFOT00040WA) and Intermediary Technical Assistance Grant (numbers MTMWAPEG00017 and MTMWAPEG01015) awarded to the Tenants Union, Seattle, Washington

We completed an audit of the Tenants Union and Washington Low Income Housing Network's Outreach and Training Assistance Grants (OTAG). The Tenants Union and Washington Low Income Housing Network (Network) jointly submitted the grant applications. The HUD grant agreements identify the Tenants Union as the grantee. The Washington Low Income Housing Network performed OTAG work as a sub-grantee to the Tenants Union. We also audited the Tenants Union's two Public Entity Grants received through an intermediary as part of HUD's Intermediary Technical Assistance Grant (ITAG) program. The audit determined that the Tenants Union participated in lobbying activities, contrary to the enabling legislation and Office of Management and Budget (OMB) Circular A-122. Further, neither grantee fully complied with HUD and OMB Circular A-122 cost allocation requirements, resulting in $127,804 of ineligible and questionable labor costs charged to the OTAG grants. The grantees also charged $36,394 of other ineligible and questionable expenses to the grants. Our report contains seven recommendations to address the issues identified in the report and other recommendations to strengthen management controls over the grantees.

Date Issued: August 15, 2001
Audit Report No.: 2001-SE-251-1001
File Size: 527KB

Title: Supportive Housing Program Grants Administered by the City of Seattle as Part of the Seattle-King County Continuum of Care Strategy

As part of a nationwide review of HUD's Continuum of Care Program, we audited two Supportive Housing Program grants awarded to the City of Seattle as part of the Seattle-King County Continuum of Care Strategy. We performed the audit to determine if the City has adequate management controls and is properly administering the program.

Generally, we found that the Seattle Continuum of Care programs are properly administered, program funds are expended in a timely fashion, and administrative costs did not exceed HUD's limits. However, we found that the City had management control deficiencies and did not always comply with HUD requirements. Specifically, the City (1) did not adequately monitor subgrantees, (2) assisted ineligible participants, (3) charged questionable administrative costs, and (4) did not provide adequate evidence of measurable results.

Date Issued: September 29, 2000
Audit Report No.: 2000-SE-207-1001
File Size: 1126KB

Title: Housing Activities Administered by Lummi Indian Business Council, Bellingham, WA

In response to complaints from Lummi tribal members, we performed an audit of the Lummi Nation's housing program operation in which we addressed some of the many tribal members' allegations of program mismanagement, misuse and abuse at the Lummi Indian Business Council (LIBC).

LIBC is the management organization of the Lummi Nation. The overall objective of the audit was to determine if LIBC has the administrative capacity to carry out eligible housing activities in accordance with the requirements and objectives of the Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA) and other applicable laws. LIBC has not demonstrated the managerial expertise, knowledge of program requirements, or administrative capacity to properly administer affordable housing activities effectively, making LIBC vulnerable to waste, fraud, and mismanagement. LIBC does not have an adequate internal control system to provide reasonable assurance regarding (a) the reliability of financial reporting, (b) the effectiveness and efficiency of operations, and (c) compliance with applicable laws and regulations. Therefore, LIBC must take immediate and effective measures to become administratively capable as defined in NAHASDA regulations, including implementing an adequate system of internal control.

Additionally, although a Lummi Nation resolution indicates the tribe will operate its housing program as a separate Tribally Designated Housing Entity (TDHE), in practice the tribe operates the housing program as a division of LIBC and not as a TDHE. The Lummi Nation should decide whether to operate its housing program as a TDHE or as a division of LIBC, and fully implement its decision. (See Finding 1)

As a result of its lack of administrative capacity Lummi Indian Business Council:

did not ensure that low-income Lummi families live in safe and healthy housing conditions. LIBC needs to maintain its housing stock, including abandoned houses, in a safe and healthy environment. (See Finding 2)

overstated its housing stock, resulting in overfunding of its NAHASDA grants. HUD should require LIBC to remove 95 units from its formula current assisted stock and repay $1,279,768 of HUD overfunding. (See Finding 3)

misspent, mischarged, and wasted federal funds when it:

improperly charged other federal programs $14,606 for use of equipment purchased with HUD funds. LIBC should repay from non federal sources $4,669 to the Bureau of Indian Affairs and $9,937 to Health and Human Services for fees it inappropriately charged for rental of equipment purchased with HUD funds. (See Finding 4)

did not properly account for program income generated by equipment purchased with HUD funds. LIBC should reimburse its housing program, from non-federal sources, $5,964 for program income generated by renting equipment purchased with HUD funds. (See Finding 4)

did not maintain adequate documentation to support expenses charged to its grants. LIBC needs to provide adequate documentation or repay, from non-federal sources, $25,382 for unsupported costs charged to the Indian Community Development Block Grant. (See Finding 5) and

did not accurately record, adequately support or correctly charge labor costs to federal grants. We recommend HUD require LIBC to immediately implement an adequate time keeping system that ensures accurate labor charging and repay $18,814 for labor unrelated to its HOPE I grant. (See Finding 7)

did not adequately safeguard assets by not tracking materials inventory. LIBC must immediately implement an inventory system that accounts for materials received, used, and stored and provides for periodic monitoring and reconciliation. (See Finding 6)

did not maintain adequate procurement records. LIBC should implement procedures and a system of internal controls that ensures that procurements are made in accordance with federal regulations. (See Finding 8)

may have admitted ineligible families into its housing program because it does not always verify family income. LIBC needs to implement an adequate system of internal control ensuring that it verifies all sources of an applicant's family income. (See Finding 9)

excluded eligible applicants when it combined its waiting lists. LIBC should review all open applications and ensure the waiting list is complete and appropriately ranks all applicants. It should also implement controls and procedures to ensure that the application process is complete and accurate. (See Finding 10)

thwarted the purpose of the Mutual Help Homeownership program by allowing improper subleases. LIBC should terminate two improperly approved subleases, review the three unapproved subleases, and recertify and begin receiving payments from the homebuyers for all existing subleases. (see Finding 11)

We discussed the findings with Lummi Indian Business Council officials during the course of our audit and at an exit conference on September 11, 2000. On September 1, 2000, we provided LIBC with draft findings, and received LIBC's written response to the draft findings on September 22, 2000. The Findings section of this report summarizes and evaluates LIBC's comments. LIBC agreed with several of the findings, but disagreed with our overall conclusion that it lacks the administrative capacity to manage federal grants. A copy of LIBC's full response, without attachments, is included in Appendix B. The attachments included with the written comments are available upon request. In addition, the HUD Northwest Office of Native American Programs (NwONAP) also provided written comments on the draft findings. NwONAP generally agreed with the findings (see Appendix C).

Date Issued: January 19, 2000
Audit Report No.: 2000-SE-209-1801
File Size: 353KB

Title: Seattle Housing Authority, Holly Park Hope VI Revitalization, Complaint Alleging Conflict of Interest

In response to a citizen's complaint, we conducted a limited review of the Holly Park HOPE VI project. The complaint alleged that the Seattle Housing Authority (Authority) violated HUD conflict of interest requirements when it awarded contracts for the Holly Park implementation. Our review found that the Authority did not comply with HUD conflict of interest requirements in awarding two of these contracts, and another contract not included in the complaint. Specifically, the Authority awarded these three contracts to firms whose principals had inside knowledge of the project. This occurred because the Authority either ignored or was unaware of the conflict of interest provisions included in the HOPE VI planning and implementation Grant Agreements. These provisions prohibited the Authority from awarding contracts to individuals in a position to gain inside information. Conflicts of interest may jeopardize public trust in government and affect the impartiality of contract awards. Attachment A discusses in detail the results of our review.

Date Issued: March 31, 1999
Audit Report No.: 99-SE-207-1002
File Size: 223Kb

Title: Citizen Complaint, Cascade Inter-Tribal Housing Authority, Sedro Woolley, WA

We performed an audit at the Cascade Inter-Tribal Housing Authority to evaluate allegations in a complaint received from a citizen. The complainant alleged waste and mismanagement when awarding a construction contract, and using a consultant.

The allegation relating to the award of a construction contract was not valid. However, we did find that the allegation relating to use of a consultant had merit.

Issue Date: November 20, 1998
Audit Report No.: 99-SE-155-1001
File Size: 373KB

Title: City of Seattle HOME Program

The City did not have controls to ensure that subrecipients under its HOME rental development program continued to provide decent, safe, sanitary, and affordable housing. Specifically, the City did not have controls that required annual reviews of subrecipients' performance. As a result, subrecipients did not consistently maintain rental units in accordance with the City's minimum housing standards. Our inspections of 45 units at 8 completed projects identified 22 units which were not decent, safe and sanitary. However, our review of the rents and resident files for these eight projects showed that rents were affordable and units were provided to eligible families. The City has not developed controls that require review of subrecipient performance because it has focused on development, not ongoing performance.

Date Issued: July 2, 1998
Audit Memorandum No.: 98-SE-204-1003
File Size: 151KB

Title: King County HA,Public Housing Drug Elimination Program, Seattle, WA

As part of a multi-district review of the Public Housing Drug Elimination Program (Drug Elimination Program), we conducted an audit of the King County Housing Authority's (Housing Authority) Drug Elimination Program for Fiscal Years 1994 through 1996. We were to select two public housing authorities - one designated as "troubled", the other "non-troubled" - for the review. However, there were no "troubled" public housing authorities in the Northwest/Alaska Office's jurisdiction, so we did not include a "troubled" public housing authority in our review. We selected King County Housing Authority, "non-troubled", because HUD had given this entity the highest rating in the Northwest/Alaska Office jurisdiction for its capacity to carry out the program. In addition, the Housing Authority received the second highest amount of program funding in the jurisdiction. The purpose of our review was to determine whether the Housing Authority:

1. Implemented its Drug Elimination Program awards for Fiscal Years 1994 through 1996 with satisfactory outcomes/benefits in accordance with its plans;

2. Submitted required Drug Elimination Program reports in a timely manner; and

3. Expended Drug Elimination Program funds for only eligible activities in accordance with applicable Notices of Funding Availability (NOFA) for Fiscal Years 1995 and 1996.

We found that the Housing Authority implemented Drug Elimination Program awards for Fiscal Years 1994 through 1996 with satisfactory outcomes/benefits in accordance with its plans. Specifically, the Housing Authority identified and analyzed drug-related crime problems at its targeted developments (Attachment II); planned activities to address identified problems; implemented planned activities; and developed a process to measure performance and demonstrate program outcomes in accordance with its plans. Although we found that crime statistics were inconclusive, residents told us that they feel safer in their communities as a result of drug elimination efforts. In addition, the Housing Authority submitted required semi-annual and final performance and financial reports in a timely manner, and only expended funds on eligible activities. Accordingly, we are not making any recommendations.

Date Issued: May 29, 1998
Audit Report No.: 98-SE-202-1002
File Size: 83KB

Title: Request for Assistance Nampa Housing Authority Indian Creek Child Care Center Use of Operating Funds to Pay for Child Care Expenses Nampa, Idaho

The Nampa Housing Authority (Housing Authority) completed construction of the Indian Creek Child Care Center (Center) through the use of 1993 Comprehensive Improvement Assistance Program funds (CIAP) in 1994. After taking over the Center's operations in August 1997, the Housing Authority used operating funds to pay for child care expenses, the majority of which were ineligible. The Housing Authority took over the Center without a plan, procedures, or adequate controls to properly operate the Center. As a result,

• the Housing Authority used over $70,000 of its operating funds for child care expenses, primarily for nonresident children,
• payments from parents were unaccounted for, and
• some parents stopped using the facility due to its poor management and record keeping.

Date Issued: January 30, 1998
Audit Report No.: 98-SE-207-1001
File Size: 403KB

Title: Congressional Request, Cascade Inter-Tribal Housing Authority Sedro Woolley, WA

We performed an audit at the Cascade Inter-Tribal Housing Authority (Housing Authority) to evaluate allegations in a complaint received through the office of Congressman Jack Metcalf of the United States House of Representatives. The complainant alleged fraud, waste, and mismanagement at the Housing Authority in the areas of:

* procurement,

* use of Comprehensive Improvement Assistance Program (CIAP) grant funds,

* travel,

* the award of Section 8 Vouchers and Mutual Help homes,

* calculation of payments for Mutual Help homes, and

* maintenance of Mutual Help homes.

We did not substantiate the allegations in the complaint relating to procurement, use of CIAP grant funds, and travel. However, we determined that the allegations relating to the award of a Section 8 Voucher and a Mutual Help home, calculation of payments for Mutual Help homes, and maintenance of Mutual Help homes were valid.

Issue Date: January 15, 1998
Audit Memorandum No.: 98-SE-207-1004
File Size: 74KB

Title: Yakama Nation HA, Review of Certain Complaints, Wapato, WA

We conducted a review to determine the validity of allegations that we received from several sources concerning the management of the Yakama Nation Housing Authority (Housing Authority). The allegations covered various management areas such as tenant admissions and charges, maintenance, contracting, modernization, and executive director compensation. In all we identified 12 individual complaints for review. (See Attachment I.) Those complaints and what we found concerning each of them are discussed in the Results of Review section of this memorandum. Of the 12 complaints, we concluded that six were valid, at least in part, and that this was indicative of some broader management problems at the Housing Authority. We have made various recommendations to correct these problems in the Recommendations section of this memorandum.

The Executive Director of the Housing Authority, in response to our draft memorandum, generally agreed with the results of our review and noted that the Housing Authority has implemented or is in the process of implementing corrective action. We are recommending that you ensure that the Housing Authority has implemented corrective action on all of our recommendations before approving its next operating plan under the Native American Housing and Self-Determination Act of 1996 (NAHASDA).

Issue Date: December 19, 1997
Audit Case No.: 98-DE-207-1001
File Size: 143KB

Title: Muckleshoot HA, Auburn, WA

The Housing Authority initiated the development of two HUD-funded housing projects and implemented its own independent housing programs. However, at least $575,549 of funding for its independent housing programs were made with HUD program monies, which was contrary to the provisions of the HUD Annual Contributions Contracts and regulations. Accordingly, the Authority reduced monies available to administer its HUD-funded development projects. In addition, the Authority had limited controls over its administrative and operating expenditures. As a result, excessive, unsupported, and questionable costs were incurred by the HUD projects.

Issue Date: October 31, 1995
Audit Case No.: 96-SE-207-1001
File Size: 82KB

Title: Chehalis Tribal HA, Oakville, WA

Our report contains one finding. This finding discloses that the Housing Authority changed the use of the emergency funds and is pursuing a permanent sewage treatment solution that involves the surrounding community. However, the Housing Authority could not obtain ONAP agreement in changing the use of funds, so problems occurred. The Housing Authority mismanaged the procurement of its modernization contract and the administration of this contract.