Friday, July 19, 2013

The OIG's HHA Audit Report


HHA Executive Director Carmelo Garcia has been disseminating misinformation about the blogs- that we spread "lies" and "insult HHA residents"; he's done this publicly at the City Council and at HHA meetings. That is a false accusation. Were it true, political operatives would not have to doctor pages on this web site to find offensive or erroneous material.

There is none.

ED Garcia was thrilled announce the results of a January audit report of the Hoboken Housing Authority, touting on his web site that the HHA "administered it's funds correctly".  In the spirit of fairness, GA is posting the audit results and close-out letter link.

On January 4, 2013, the Office of the Inspector General with the Department of Housing and Urban Development issued an audit report of Hoboken's Housing Authority.  Then on May 13, 2013  a close-out letter was issued for open audit items.

Below are the results of the HHA audit copied from pages 4-5, linked to the report.  
RESULTS OF AUDIT

Finding: Authority Officials Generally Administered the Recovery Act Capital Fund Program in Accordance With Regulations 

Authority officials generally administered the Recovery Act Capital Fund program in accordance with regulations. Specifically, they established and implemented adequate controls to ensure that their Recovery Act capital funds were obligat ed and expended as required. However, we observed there was inadequate support that $8,903 was obligated in a timely manner, $9,000 was expended for an eligible cost, and $83,642 in costs was misclassified. As a result, Authority officials lacked assurance that the questioned amounts were disbursed for eligible costs.

Unsupported Obligation Amount

Authority officials reported in HUD’s Li ne of Credit Control System (LOCCS) 1 that they had obligated the more than $2.7 million in Recovery Act capital funds awarded to the Authority by March 8, 2010, prior to the Recovery Act deadline of March 17, 2010. However, support was lacking that $8,903 had been obligated as required. Section 1201 of the Recovery Act required public housing authorities to obligate 100 percent of funds awarded within 1 year of the date on which the funds became available to the authority f or obligation, and Office of Public and Indian Housing Notice PIH-2009-12 required that authorities obligate 100 percent of the grant within 1 year of the effective date of the annual contributions contract amendment that awarded the funds. Authority records listed 21 contracts totaling more than $2.7 million to support the reported obligation. However, Authority officials acknowledged that a $9,800 contract listed was used to obligate fiscal year 2008 capital funds, and the contract(s) to obligate the questioned $8,903 2 could not be located. This condition   occurred because of a weakness in the Authority’s tracking for obligation of Recovery Act funds. Consequently, Authority officials lacked assurance that they complied with the Recovery Act obligation requirement.

Unsupported Expense

Authority officials drewdown $9,000 for painting expenses, for which there was no contract. In addition, without a contract with a detailed scope of work a determination cannot be made as to whether the cost was properly classified as routine maintenance or a capital expe nse. Regulations at 24 CFR 968.112 provide that routine maintenance or replacement costs are ineligible Capital Fund Program expenses. Further, services should be proc ured via an executed contract so that it is clear what service is expected and HUD Handbook 7485.1 paragraph 10-8(a), states that a valid contract requires execution both by the contractor and the public housing agency. Consequently, the Authority lacked assurance that the $9,000 was expended for eligible and reasonable expenses. This condition occurred because of an error in maintaining adequate documentation.

Costs Were Misclassified

Authority officials erroneously charge d $74,642 in architect and engineering costs (budget line item 1430), referred to as soft costs, to dwelling structures (budget line item 1460), referred to as hard costs. Regulations at 24 CFR (Code of Federal Regulations) 968.105 define soft costs as nonphysical improvement and hard costs as physical improvement cost s classified in development accounts 1450 through 1475. As a result of the error, $74,642 was unavailable to be expended for dwelling and structure costs. This condition occurred, according to Authority officials, because they mistakenly interpreted these costs to be construction services and, thus, charged them to dwelling structures, which were related to a contract for an energy audit of water, electricity, and gas consumption.

Conclusion

Authority officials generally obligatedand expended RecoveryAct capital funds in accordance with regulations. However, errors in documentation lessened HUD’s assurance that $8,903 was obligated in a timely manner, $9,000 was expended for eligible activities, andcosts of $83,642 were properly reported.Authority officials had begun to take action to address these issues.

3 comments:

  1. Carmelo Garcia understands if you can't dispute what your critics are saying about you, attack the critics.

    It isn't working and he is getting more and more desperate.

    ReplyDelete
  2. You missed part...Page 7
    Selected a nonstatistical sample of 10 of the 21 contracts Authority officials reported as being used to obligate Recovery Act capital funds totaling $1.6 million, or 57 percent, of the more than $2.7 million in funds obligated to test whether the funds were obligated in a timely manner. The first eight contracts were selected based upon multiple contracts awarded to a contractor, and the ninth and tenth was selected as the lowest priced contract.

    Using a random number generator, selected a nonstatistical sample of $811,521 in Recovery Act capital fund drawdowns, representing 29 percent of the more than $2.7 million reported as expended, to test whether funds were properly drawn down for eligible costs in accordance with procurement regulations.

    In other words, this is just a part of the issues that should be found by a competent auditor.

    ReplyDelete