( Source: Sarah Newell Williamson Hickory Daily Record, N.C. (MCT) — The Hickory Public Housing Authority may have to pay more than half-a-million dollars to the U.S. Department of Housing and Urban Development because it mismanaged money in several areas.
An external audit of the Hickory Public Housing Authority was conducted from August 2011 through January 2012 by the U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General in Washington, D.C., after it received a citizen’s complaint.
Former board member Larry Pope said he is the one who called the Washington, D.C., office about the Hickory Housing Authority. He said during his nine years serving on the board a lot of things concerned him.
According to the audit, the tipster reported questionable payments to individuals and vendors; payments to a person before they were hired; staff members using Housing Authority vehicles and credit cards for personal use; questionable fund transfers; nepotism; excessive maintenance purchases; and falsified work orders. Only a few of these were proven to be true by the audit.
HUD found that the local agency awarded contracts to family members, paid money to purchases that didn’t qualify, didn’t comply with the rules of a grant and didn’t have an inventory system. The audit said these problems are attributed to “management fail(ing) to maintain adequate internal controls.”
Awarding contracts to family members
One of the primary problems at the Hickory Public Housing Authority is contracts that were awarded to family members connected with the Authority. In 2008, three contracts were awarded to a maintenance company owned by the brother of one of the board members. Two contracts were for building maintenance, the other was to replace exterior doors.
The board member related to the person getting the contract was recused from the vote, but it was still a violation of the Housing Authority’s policy because it was a conflict of interest.
In 2009 and 2010, a contract for landscaping and maintenance services awarded to another family member, this time to the husband of the executive director. Like the previous contracts, this was also a conflict of interest.
With these four contracts, the Hickory Housing Authority spent $522,125money HUD wants back from a non-federal funding source. The audit said one of the possible fall-outs from the Housing Authority’s failure to follow policy is the “loss of public confidence in the integrity of its operations.”
Housing Authority Board of Commissioners Chairman Clement Geitner said he doesn’t think the Housing Authority will lose the public’s confidence.
“The Authority has bent over backward for years to provide a leg up for people to have a place to live,” he said. “We’re aimed to make miscues like other industries. HUD pointed out our miscues.”
Unlike Geitner, the Housing Authority’s executive director, Alanda Jackson, said she’s concerned about the public’s loss of trust.
“Of course we’re concerned, but we’re hoping going forward, any damage will be restored,” she said.
Jackson pointed out that most of the findings are at least a year old.
The Hickory Public Housing Authority has paid $575 of the charges back, using non-federal money. The executive director paid another $625 from her personal funds.
In comments submitted by the Housing Authority in response to the audit, it stated the contracts were given not because of, “any willful attempt to circumvent the requirements, but a misunderstanding of those requirements. It assumed that recusal by the affected board member would address the conflict of interest.” That having been said, the Housing Authority believes having to repay the $522,125 is excessive.
“Alternative actions would be more effective and financially prudent.” It goes on to state, “To require the HACH to repay the entire $522,125 under these circumstances services no practical benefit to either the federal government, the taxpayers or the HACH residents.”
HUD responded to the Housing Authority’s comments by saying the contracts were serious violations. Although there are other courses of action that could be taken, it believes repayment of the money is the appropriate measure for the Housing Authority to take.
Jackson said if the Housing Authority must repay HUD, the money would likely come from the budget item designated for the central office cost center.
“It would be anything not related to the tenants,” she said. “It would be office supplies, travel, things like that.”
No control over cash
The Hickory Public Housing Authority has spent $19,692 for costs that cannot be accounted for by HUD’s standards, according to the audit. These costs include $8,881 in summer camps, field trips, sports uniforms and back-to-school events being expensed in the Housing Authority’s capital fund program. If the Housing Authority was to use money for program services, it should have gone to programs like drug education, resident training or economic development.
There was also $364 in personal cell phone use. That money was repaid while the audit was being conducted.
Another $10,811 was spent from six purchases that could not be adequately documented. The Housing Authority is supposed to get multiple quotes for purchases over $2,000.
“We didn’t have the documentation for three quotes,” Jackson said. “According to a staff person we had it in a file, but we could not find it.”
The audit also revealed the Housing Authority didn’t have a system established for how employees used their fuel cards. Employees did not consistently document mileage and some employees shared fuel cards.
The Housing Authority staff attended procurement training at HUD’s Greensboro field office in March, and additional training in financial management in May.
Federal grant mismanaged
The Hickory Housing Authority received a federal Resident Opportunity and Self-Sufficiency (ROSS) grant, which was extended through 2011. The $250,000 grant was designed to help public housing residents achieve self-sufficiency through educational opportunities, job training and technology training and access.
The audit reviewed a portion of the money used from the grant and found that $69,823 out of $103,109 was not used for activities that qualified under the grant’s restrictions.
An account was not kept documenting the sources and use of the funds. In addition, money was paid in advance for costs, and receipts were not required for expenses stating how the money was used, the audit says.
“The executive director stated that she was not award that the Authority could draw down grant funds only for costs already incurred. Instead, she drew down funds to pay advances to the sub-recipients and did not require them to provide supporting receipts showing how they used the funds,” the audit says.
The audit recommends the Housing Authority provide documentation showing how the $69,823 was used for grant expenses. If the money was not used for grant expenses, it must be reimbursed using non-federal money. The audit also recommends the Greensboro field office review the remaining $142,272 in grant funds to determine where they were spent.
HUD took the remaining $4,618 of the grant that was not spent.
When Jackson was asked if she was concerned that the Housing Authority may not get grants in the near future because of this, she said, “That’s always a concern.”
Jackson said the Housing Authority is updating its cash management and disbursement policy to be in compliance, and will no longer give cash advances, except for travel.
Not maintaining an inventory list
HUD requires accountability for inventory and a detailed property record. When the audit was being conducted, Housing Authority staff were unable to locate which housing units six new refrigerators were purchased. When they did locate them, the work orders were incomplete and inaccurate. One showed that an old refrigerator was replaced with a used one.
In addition, storage areas were often unsecured. This was rectified during the audit by Jackson improving the security. The Housing Authority has also contracted with an agency to develop an inventory control system and will send a copy of its physical inventory to the Greensboro office.
It is still not definite that the Hickory Housing Authority will have to pay the more than $500,000, according to Mike Williams with HUD’s Greensboro field office.
“We’ll put together a management decision to decide what to do about the money owed,” he said. “The audit was just released to us. We have 60 days to come up with the decision.”
Williams was unable to say when that decision would be made.
The Greensboro office will do another audit of the Housing Authority, in addition to the one conducted by HUD’s Office of Inspector General. One is usually conducted every five years. Williams was unable to say when the last time the Greensboro office conducted an audit of the Housing Authority.
If the Housing Authority does have to pay the money, Hickory Mayor Rudy Wright said the city will not be responsible for paying it, even though city council members appoint the Housing Authority’s board of commissioners.
“The city has no funding obligation,” he said. “We don’t hire or fire personnel. We appoint the board, and I think we appointed a good board.”
Wright said he, city manager Mick Berry and Jackson were going to meet this week to assess the impact the audit might have on Housing Authority residents.
Geitner maintains the Housing Authority acted in the right way.
“Funds were never used unless we didn’t fully understand the parameters,” he said. “This (audit) means little compared to the good we do.”
©2012 the Hickory Daily Record (Hickory, N.C.)
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