Georgia Audit Reports

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Issue Date: September 29, 2009
Audit Report No.: 2009-AT-1013
File Size: 794.93KB

Title: The City of Atlanta Entered Incorrect Commitments into HUD ’s Integrated Disbursement and Information System for its HOME Program, Atlanta, Georgia

We audited the City of Atlanta's (City) HOME Investment Partnerships Program (HOME) because it has received more than $17 million in HOME funding since 2005. Our objective was to determine whether the City accurately entered commitments into the U.S. Department of Housing and Urban Development's (HUD) Integrated Disbursement and Information System (information system) for HOME-funded activities.

The City did not comply with HUD requirements for committing HOME funds within the 24-month statutory deadline. The audit identified more than $6.8 million in incorrect commitment entries that the City made to HUD's information system. The incorrect entries masked a shortfall of more than $3.9 million that is subject to recapture by HUD. The recaptures, which resulted from a failure of City staff to implement adequate controls, will deprive City residents of services that the HOME program was intended to provide. The incorrect commitments also undermined the integrity of the information system and of reports HUD generated from the system to monitor the City's compliance with the 24-month statutory commitment requirement.

We recommend that the Director of HUD's Atlanta Office of Community Planning and Development recapture more than $3.9 million in funds not committed by the 24-month statutory deadline. We also recommend that the Director require the City to implement controls to ensure that future HOME funds are committed by the required deadline, monitor commitments entered into the information system, and take appropriate action to promptly correct detected violations.

Issue Date: July 20, 2009
Audit Report No.: 2009-AT-1009
File Size: 676.78KB

Title: The Housing Authority of the City of Newnan, Georgia, Inappropriately Encumbered Assets and Advanced Funds to Support Its Nonprofit Organization

HUD OIG performed an audit of the Housing Authority of the City of Newnan's activities with its related nonprofit organization, the Newnan Housing Development Corporation. The review was performed based on concerns that the Authority encumbered its assets, used its federal funds to support nonprofit development activities, and had a conflict-of-interest transaction. The purpose of the audit was to determine whether the Authority inappropriately used funds and assets restricted by its annual contributions contract with the U. S. Department of Housing and Urban Development (HUD) to support the operations of its nonprofit organization and incurred costs for insurance that involved a conflict of interest.

The Authority inappropriately encumbered $649,976 in HUD-restricted funds in violation of its contract with HUD and also violated an agreement it made with HUD concerning the sale and disposition of Authority property. The Authority inappropriately used $221,531 of its public housing program funds for nonfederal development activities in violation of its annual contributions contract with HUD. In addition, it inappropriately used HUD funds to make 31 monthly payments on a $150,000 loan on behalf of its nonprofit organization. HUD granted a waiver for conflict-of-interest provisions and permitted the Authority to purchase insurance from a company that employed a board member.

OIG recommended that the Director of HUD's Atlanta Office of Public Housing require the Authority to develop a plan to bring it into compliance with HUD's requirements and if necessary, ensure that the lender formally releases the $673,859 of HUD-related funds as collateral; propose a legal solution regarding the ownership structure of the nonprofit organization and if a legal solution is not possible, repay its public housing program $221,531; implement adequate controls and procedures to ensure that it does not encumber or spend HUD assets on nonfederal activities without HUD approval; and develop and implement a strategic, comprehensive marketing plan for the nonprofit organization to ensure that it becomes financially sound.

Issue Date: April 23, 2009
Audit Report No.: 2009-AT-1006
File Size: 410.84KB

Title: The Jonesboro Housing Authority Generally Complied with Housing Quality Standards Inspections Requirements Although Certain Weaknesses Existed, Jonesboro, Georgia

We audited the Jonesboro Housing Authority's (Authority) Section 8 Housing Choice Voucher program as part of the U.S. Department of Housing and Urban Development (HUD) Office of Inspector General's (OIG) annual audit plan. Our objective was to determine whether the Authority's Section 8 housing choice voucher units met HUD standards.

The Authority's Section 8 units generally met housing quality standards. Our inspection of 16 Section 8 units resulted in 11 that did not meet minimum housing quality standards, but only one unit was in material noncompliance. However, the Authority needed to improve it's; enforcement of certain housing quality standards requirements, tracking and timely performance of annual inspections, and abatement notification and timely follow-up inspections of units that fail their initial inspections. The violations resulted in the payment of more than $6,000 in ineligible housing assistance. The violations occurred because the Authority's oversight of the program and procedures for conducting, tracking, and following up on housing quality standards inspections had weaknesses.

We recommend that the director of the Office of Public Housing require the Authority to repay $6,663 from nonfederal funds for inappropriate housing assistance payments. We also recommend that the director require the Authority to establish and implement adequate controls and procedures for conducting, tracking, and following up on future housing quality standards inspections.

Issue Date: April 1, 2009
Audit Report No.: 2009-AT-1005
File Size: 314.88KB

Title: The City of Augusta, Georgia, Did Not Comply with HOME Monitoring Requirements

HUD OIG performed an audit of the City of Augusta's HOME Investment Partnerships program as part of the U.S. Department of Housing and Urban Development's annual audit plan. The purpose of the audit was to determine whether the City complied with HOME program requirements for monitoring (1) HOME community housing development organizations and subrecipients and (2) the use of CHDOs' proceeds. This is the second of two audit reports on the HOME program.

The City did not comply with the HOME requirements for performing its monitoring and follow-up reviews or have sufficient documentation to support that required reviews were conducted. In addition, it did not properly monitor the use of its community housing development organizations' proceeds. The City did not implement its procedures to ensure that the required monitoring and follow-up reviews were performed and documented. Also, City officials did not follow and enforce program monitoring requirements. HUD lacked assurance that HOME funds was spent for activities that were administered in compliance with program requirements, and community housing development organizations' proceeds and grant funds of $105,049 were used for eligible program costs.

OIG recommended that the Director of HUD's Atlanta Office of Community Planning and Development require the City to properly support or repay $105,049 in questioned costs because of program violations. We also recommend that the Director require the City to establish and implement proper controls and procedures to ensure compliance with all program requirements

Issue Date: February 10, 2009
Audit Report No.: 2009-AT-1002
File Size: 775.43KB

Title: The City of Augusta, Georgia Needs to Improve Controls Over its Community Development Block Grant Facade Program

HUD OIG performed an audit of the City of Augusta's Community Development Block Grant Façade Rehabilitation Grant program due to concerns of mismanagement and abuse regarding the City's program. The purpose of the audit was to determine whether the City's façade program complied with federal requirements and whether program activities met the national objectives of the CDBG program The City did not have adequate controls over its financial management of the façade program. A review of the City's program drawdown reports showed payments totaling $180,817 that were not recorded in the general ledgers. . In addition, HUD could not be assured that the remaining $270,175 in program funds would be accurately recorded or expended in a timely manner.

The City did not adequately monitor its façade program. It did not verify the program match requirements or complete facade grants in a timely manner. In addition, it did not ensure that program files were complete and contained all information required by its policies and procedures.

OIG recommended that the Director of HUD's Atlanta Office of Community Planning and Development require the City to (1) properly support or repay the façade program $180,817 from non-federal funds and establish controls to ensure that all program transactions are accurately recorded in the general ledgers and (2) establish controls to ensure that the remaining $270,175 in program funds is used for its intended purpose or reprogrammed to fund other eligible CDBG activities. OIG also recommend that the Director ensure that the City establishes controls to ensure that staff follows written policies and procedures for administering the façade program.

Issue Date: October 20, 2008
Audit Report No.: 2009-AT-1001
File Size: 305.36KB

Title: The Housing Authority of the City of Conyers, Georgia, Did Not Maintain Adequate Controls over its Federal Funds

HUD OIG performed an audit of the Housing Authority of the City of Conyers' administration of its disbursements and procurement procedures. The Georgia State Office of Public Housing requested the audit due to concerns regarding the use of its funds and violation of its procurement procedures The purpose of the audit was to determine whether the Authority used its federal funds in compliance with HUD regulations and other requirements.

The Authority used $891,468 in federal funds to pay ineligible and unsupported costs. It did not establish effective controls to protect its assets. The Authority's board did not ensure that the former executive director expended funds in accordance with Authority and HUD requirements, adequately documented expenditures, and followed procurement policies.

OIG recommended that the Director of HUD's Atlanta Office of Public Housing require the Authority to repay $185,764 to its public housing operating and capital improvement programs for ineligible payments made to or on behalf of the former board chairman, support $182,369 in payments made to or on the behalf of the former executive director and the former lease enforcement officer, provide documentation to support $523,335 in payments made for various purchases or repay its public housing program, review and implement internal controls for purchasing goods and services, and ensure that its board performs its oversight duties in a responsible manner. OIG also recommended that the Acting Director of the Departmental Enforcement Center, in coordination with the Director of the Office of Public Housing, take appropriate administrative action against the Authority officials responsible for the improper disbursements.

Issue Date: July 25, 2008
Audit Report No.: 2008-AT-1010
File Size: 198.56KB

Title: Meridian Lending, Inc., Monroe, Georgia, Did Not Follow HUD Requirements in Originating Two Insured Loans

HUD OIG audited Meridian Lending, Inc., a Federal Housing Administration (FHA)-approved direct endorsement lender. The objectives were to determine whether it followed the U.S. Department of Housing and Urban Development's (HUD) requirements for (1) borrower eligibility and creditworthiness and property eligibility when underwriting loans and (2) implementing a quality control program.

Meridian did not follow HUD requirements in originating two of the eight FHA-insured loans reviewed. As a result, Meridian placed HUD's insurance fund at risk for as much as $271,750. In addition, Meridian did not review its early defaulting loans in a timely manner and did not review all early defaulting loans. As a result, the lender adversely impacted the goals of HUD's quality control program, which is designed to protect the lender and HUD from unacceptable risk.

OIG recommended that the Assistant Secretary for Housing-Federal Housing Commissioner require Meridian to indemnify HUD for the potential loss on the loan with a significant deficiency and reimburse HUD for the claim loss on the other loan. Also require Meridian to conduct its quality control reviews in a timely manner and reviews all early defaulting loans as required by HUD regulations.

Issue Date: June 9, 2008|
Audit Report No.: 2008-AT-1009
File Size: 872.84KB

Title: The City of Augusta, Georgia, Controls Over Its HOME Program Were Inadequate

HUD OIG audited the City of Augusta's HOME Investment Partnerships program. The audit was part of the activities in the fiscal year 2007 annual audit plan. The objectives were to determine whether the City complied with HOME program requirements for commitments, production and completion of project activities, and eligibility and support of project costs.

The City's controls over its HOME program were inadequate. As a result, more than $1 million in HOME funds that involved questioned costs and funds that were subject to recapture. Specifically, the City did not (a) properly commit $755,284, (b) have proper documentation and analysis to support approvals and effectively address project performance delays, (c) ensure proper support of more than $196,657, (d) ensure the eligibility of $92,129 for affordable housing compliance, and (e) properly maintain and manage program staff.

OIG recommended that the Director of HUD's Atlanta Office of Community Planning and Development require the City to properly support or repay more than $566,697 in questioned costs and recapture more than $477,373 because of program violations. We also recommend HUD require the City to establish and implement proper controls and procedures to ensure compliance with program requirements.

Issue Date: March 7, 2008
Audit Report No.: 2008-AT-1006
File Size:741.60KB

Title: Fulton County HOME Investment Partnerships Program

As part of HUD OIG's strategic plan, we audited Fulton County's (County) HOME Investment Partnerships (HOME) program. Our audit objectives were to determine whether the County complied with HOME program requirements for review and approval of project activities, commitments, completion of project activities, eligibility and reasonableness of project costs, and matching funds.

The County did not properly manage its HOME program and consistently failed to follow requirements. Our review identified more than $6.4 million in HOME funds that involve questioned costs, funds that are subject to recapture, and a missing match contribution. Specifically, the County did not (a) properly commit more than $2.57 million and is in danger of losing another $828,008 that is approaching the commitment deadline, (b) prepare or maintain proper documentation to support project approvals, (c) ensure the eligibility of more than $1.26 million, (d) ensure proper support of more than $1.55 million, (e) effectively address project delays, (f) maintain records to support affordable housing compliance, (g) contribute more than $226,000 in HOME match funds, (h) maintain proper performance records, (i) conduct or document project monitoring, and (j) properly maintain and manage program staff. The violations occurred because County management and staff did not follow and enforce program requirements.

OIG recommended that the Acting Director of the Departmental Enforcement Center, in coordination with the Acting Director of HUD's Atlanta Office of Community Planning and Development, take appropriate administrative action against the County official responsible for most significant reported violations. Also that the Acting Director of HUD's Atlanta Office of Community Planning and Development require the County to properly support or repay more that $4.28 million in questioned costs, recapture more than $2.16 million because of program violations, and determine whether the County has the capacity to continue administering the HOME program. If the County does not have the capacity to continue administering the program, the Acting Director should terminate the program and reallocate the County's HOME funding to other properly performing participating jurisdictions. Further, if the County is allowed to continue administering the program, the Acting Director should require it to establish and implement proper controls and procedures to ensure compliance with program requirements. Lastly, the Acting Director should require the County to obtain periodic reviews of the program by its internal audit division to confirm compliance and provide copies of the reports to your office with actions taken to correct reported violations.

Issue Date: April 30, 2007
Audit Report No.: 2007-AT-1008
File Size: 92.38KB

Title: Housing Authority of DeKalb County, Decatur, Georgia, Section 8 Units Generally Met Housing Quality Standards

We reviewed the Housing Authority of DeKalb County's (Authority) Section 8 Housing Choice Voucher program as part of the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General's (OIG) strategic plan. Our objective was to determine whether the Authority carried out its Section 8 program housing quality standards inspections in accordance with federal requirements.

Based on our review of 15 inspections of Authority-administered Section 8 units, the Authority adequately performed housing quality standards inspections and required timely correction of inspection discrepancies. Our inspections identified minor deficiencies in 10 of the 15 units inspected. We identified two units that had insignificant preexisting violations not identified by the Authority's inspectors. We discontinued further inspections and provided our inspection reports to the Authority.

The Authority agreed with our inspection results, notified the owners of the conditions, and required them to correct the violations. The report contained no finding, and no further action is necessary.

Issue Date: April 10, 2007
Audit Report No.: 2007-AT-1006
File Size: 279.51KB

Title: The Housing Authority of DeKalb County, Decatur, Georgia, Did Not Adequately Monitor Contract Payments

As part of the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General's (OIG) strategic plan, we reviewed the Housing Authority of DeKalb County's (Authority) administration of its procurement and financial management systems. Our objective was to determine whether the Authority has complied with its low-income program contractual and regulatory requirements since being released from its memorandum of agreement (agreement) with HUD.

We found that the Authority did not adequately monitor contract payments and did not comply with federal requirements or its financial management policies. These deficiencies occurred because the Authority did not have proper internal controls over its procurement payment processes. Its staff did not ensure that its financial management policies were followed, nor did all staff follow the established procedures for processing contract payments. As a result, the Authority incurred $47,051 in ineligible costs and $36,404 in unsupported public housing funds.

We recommend that HUD require the Authority to repay $47,051 to its public housing program for ineligible contract payments from non-federal funds and either support $36,404 in unsupported contract payments or repay its public housing program from non-federal funds. HUD should also require the Authority to develop and implement internal controls to ensure that contract payments are complete, accurate, and in accordance with established procedures. In addition, HUD should ensure that the financial management policies are followed and that all Authority staff members follow the established procedures when processing contract payment requests.

Issue Date: January 31, 2007
Audit Report No.: 2007-AT-1003
File Size: 326.76KB

Title: Gwinnett County, Georgia, Subrecipients Did Not Provide Funds Required by Their Contracts

As part of the HUD OIG strategic plan, OIG audited the Gwinnett County's Community Development Block Grant and HOME programs.

The Block Grant and HOME projects reviewed were eligible and met HUD's national objectives, and the subrecipients were operating the projects in accordance with their contract with the grantee. However, the grantee's subrecipients did not provide their share of the project funding as required by their contracts. As of October 31, 2006, the subrecipients had not provided $278,418 toward the projects. If the subrecipients had provided the funds specified in their contracts, the grantee's contribution would have been less. The grantee would then have had additional funds to further its community development activities.

HUD OIG recommended that HUD require the grantee to either collect the funds due from the subrecipients, according to the contracts, or amend the contracts appropriately. In the future, if the grantee does not require the subrecipients to provide funding to the projects, the contracts should not contain this requirement. Also, the grantee should establish controls to assure that all contract requirements are enforced.

Issue Date: November 3, 2006
Audit Report No.: 2007-AT-1002
File Size: 5.99MB

Issue Date: April 25, 2006
Audit Report No.: 2006-AT-1008
File Size: 764.03KB

Title: The Housing Authority of the City of Macon, Georgia’s Controls for Expending Low-Income Housing and HOPE VI Program Funds and Safeguarding Low-Income Housing Assets Were Inadequate

We reviewed the Housing Authority of the City of Macon's (Authority) administration of its housing development activities as part of our audit of the U.S. Department of Housing and Urban Development's (HUD) oversight of public housing agency development activities with related nonprofit entities.

Our audit objectives were to determine whether the Authority inappropriately used low-income housing and HOPE VI Program funds for unauthorized purposes to benefit other entities without specific HUD approval and whether the Authority complied with applicable laws and regulations and properly safeguarded low-income resources when it conducted business with affiliated nonprofit entities and consultants.

The Authority violated its annual contributions contract (contract) with HUD by using funds from its low-income housing general fund account to pay expenses of its programs and affiliated entities. As of December 31, 2004, 11 programs or entities, including nonprofit firms and other programs, owed the general fund account $395,211. As a result, the Authority made ineligible disbursements with low-income housing funds totaling $395,211. Further, the Authority violated its contract with HUD by using low-income public housing assets as collateral to guarantee loans for two affiliated nonprofit entities totaling $2.2 million, thereby placing contract assets at risk. The original $2.2 million in loan balances guaranteed has been reduced to $125,000, which is the amount currently at risk.

Additionally, the Authority violated federal contracting requirements by entering into an open-ended contract with a consultant without a ceiling price. The Authority spent $227,684 on the contract, which has been in effect since November 2001. We recommend that the director of the Office of Public Housing require the Authority to collect the $395,211 or current balance owed to the general fund account and repay the low-income public housing reserve the amounts collected.

In addition, the director of the Office of Public Housing should require the Authority to pursue terminating the loan guarantees, so the contract collateral used to guarantee the unpaid loan balances of $125,000 will not be at risk.

Finally, the acting deputy assistant secretary for Public Housing Investments should require the Authority to justify the necessity and reasonableness of the payments made for the consultant's contract. Any amounts that cannot be supported should be reimbursed from nonfederal funds. The acting deputy assistant secretary should require the Authority to terminate or amend the consultant's contract in accordance with applicable federal requirements.

Issue Date: June 30, 2005
Audit Memorandum No.: 2005-AT-1801
File Size: 45KB

Issue Date: April 21, 2005
Audit Report No.: 2005-AT-1009
File Size: 722.21KB

Title: Housing Authority of Fulton County Atlanta, Georgia

We reviewed the Housing Authority of Fulton County's (Authority) administration of its housing development activities as part of our audit of HUD's oversight of Public Housing Agency development activities with related nonprofit entities.

The Authority inappropriately used Public Housing funds to pay for other programs' and related entities' expenses in excess of funds the programs or entities had on deposit. As of July 31, 2004, six programs or entities owed Public Housing $640,221. In addition, the Authority violated its Contract with HUD by inappropriately advancing Public Housing funds for some of its activities and activities of the nonprofit entities. These actions occurred because the Authority did not have adequate controls in place to limit the amount of funds disbursed by the amount of funds on deposit. As a result, $640,221 of Public Housing funds could be put to better use. The Authority did not support its allocation of salary and benefit costs with activity reports or equivalent documentation as required. As of September 30, 2004, the Authority had allocated $1,329,901 more to its federal programs than had comparable housing agencies. The Authority also did not maintain adequate records for Public Housing expenses totaling $770,651 that were incurred during fiscal years 2001 through 2004. The Authority (1) reclassified $552,700 in salary and benefit costs without support, (2) could not provide support for $181,012 in reclassified expenses, and (3) could not provide any documentation for $36,939 in expenses. This occurred because the Authority had not established internal controls to maintain adequate records. As a result, $770,651 in Public Housing expenses is unsupported.

We recommend that HUD require the Authority to repay the $640,221 or current balance owed to Public Housing and ensure future transactions comply with the Contract and other HUD requirements, provide documentation to justify allocating $1,329,901 more in salary and benefit costs than was allocated by comparable housing agencies, or reimburse its Public Housing program. Further, we recommend that HUD require the Authority to develop internal controls to ensure that $770,651 of Public Housing expenses are properly supported and that supporting documentation is made readily available upon request.

Issue Date: November 1, 2004
Audit Report No.: 2005-AT-1001
File Size: 211.3KB

Title: The Housing Authority of the City of Carrollton, Carrollton, GA

As part of our audit of HUD's oversight of public housing agency development activities with related parties entities, the OIG reviewed the Housing Authority of the City of Carrollton, GA. We found the Authority advanced more than $316,495 to its private housing program, Little River Management, without specific HUD approval. The advances were made because the private housing program did not have sufficient income to pay its obligations and reimburse the Authority. HUD required the Authority to repay the funds and discontinue the advances. The Authority repaid the HUD program $249,247, the amount owed at May 31, 2002, however; it continued to advance funds. As of May 31, 2004, the Authority had advanced an additional $43,309. The repayment included the cash payment and an adjustment of $120,993 the Authority did not support. As a result, $359,804 of ineligible advances reduced funds for its public housing program needed to serve its low-income residents. In addition, the Authority failed to realize approximately $15,116 of interest income because the funds were not available for investment. In addition, the Authority did not support its allocation of administrative and maintenance salary costs with activity reports or equivalent documentation as required. Thus, it did not have a record of the time spent on various activities and some activities may have paid a disproportionate share of the costs. As of June 30, 2003, the Authority had allocated $1,062,846 to its Federal programs. Further, the Authority executed five loan agreements for the purchase of private property that put $1,489,819 of its HUD funds at risk. The agreements included set-off provisions that allowed the lender to withdraw the HUD funds on deposit if the loan payments were not made.

We recommend requiring the Authority to repay from non-federal funds, the $43,309 balance and the $15,116 interest lost, ensure that no further advances are made without prior HUD approval, and provide documentation to support the $120,993 adjustment, or reimburse its public housing program. Also, ensure the Authority uses activity reports to support its allocation of costs and makes appropriate adjustments to the $1,062,846 allocation. Further, we recommend requiring the Authority to take immediate action to terminate the agreements that have the $1,489,819 of HUD funds at risk by either seeking a wavier of the set-off provisions, closing its accounts with the local lender, or refinancing the loans with another lender.

Issue Date: April 21, 2004
Audit Memorandum No. 2004-AT-1005
File Size: 336KB

Title: Cotton State Mortgage, Inc.
Non-Supervised Loan Correspondent
Atlanta, Georgia

An OIG audit disclosed that Cotton State Mortgage did not properly originate FHA-insured loans in accordance with HUD requirements and prudent lending practices. Cotton State Mortgage did not exercise due diligence in the verification of the borrower's liabilities, credit, assets, and income. Of the 26 loans reviewed, we identified loan origination deficiencies in 4 of the loans. The deficiencies included: (1) inadequate verification of employment, rent, and gift funds, (2) inadequate verification of funds used to pay off debts, and (3) inconsistencies in the credit reports and loan applications. The conditions existed because Cotton State's quality control review was ineffective in identifying the deficiencies. Cotton State's quality control process was not in compliance with HUD's requirements for reviewing defaulted and rejected loans and did not include monthly quality control reviews. As a result of the deficiencies, Cotton State Mortgage was originating loans for mortgagors who were not qualified for FHA-insured loans. In addition, the inappropriate loans contributed to high default rates and increased HUD's risk to the FHA insurance fund. Cotton State Mortgage needs to indemnify HUD for two FHA-insured loans with a total unpaid balance of $221,007.

Issue Date: January 15, 2004
Audit Memorandum No.: 2004-AT-1001
File Size: 465.5KB

Title: Housing Authority of the City of Cuthbert
Cuthbert, Georgia

We found the Authority violated its ACC with HUD by inappropriately advancing funds and pledging assets for non-Federal development activities. As of April 2002, management had advanced $792,802 of low-income housing (LIH) funds to SGHDC to pay its development expenses. As of June 2003, SGHDC had reimbursed the Authority all but $327,326. The advances reduced LIH funds available for Authority operating expenses. Management also inappropriately pledged assets when it guaranteed repayment of two SGHDC loans totaling $690,050. Further, the Authority's Executive Director, who was also the Secretary/Treasurer of SGHDC, violated conflict of interest restrictions, and the Authority did not allocate costs. These actions occurred because the Board of Commissioners did not establish sufficient controls to monitor the nonprofit and ensure transactions adhered to Federal regulations. Also, the Executive Director misunderstood provisions in the Quality Housing and Work Responsibility Act of 1998 (QHWRA).

Issue Date: July 31, 2003
Audit Memorandum No.: 2003-KC-1007
File Size: 725.2KB

Title: Management Solutions of America,
8010 Roswell Road, Suite 100
Atlanta, GA 30350

We have completed an audit of Management Solutions of America, Inc., a Philadelphia Home Ownership Center contractor performing insurance endorsement review procedures. Our objective was to determine if the contractor followed HUD's regulations and their contract terms for reviewing "Late Requests for Endorsement."

Management Solutions of America, Inc. endorsed mortgages when the loan files did not contain the documentation required to insure loans submitted for endorsement more than 60 days after closing. For 51 of the 155 files we tested, the files did not contain the information required for endorsement. We recommended the Assistant Secretary for Housing-Federal Housing Commissioner seek indemnification for any of the 51 improperly endorsed loans for which significant documentation cannot be produced or where documentation, when produced, indicates a deficiency according to Handbook procedures. We also recommended the Assistant Secretary ensure Management Solutions develops and implements procedures to properly endorse future loans, and that he take appropriate administration action.

Issue Date: June 6, 2003
Audit Report No. 2003-AT-1004
File Size: 1.95MB

Title: Historic Westside Village Project, Section 108 Loan and Economic Development Initiative Grant
Atlanta, Georgia

We audited the City of Atlanta's administration of a Section 108 loan and EDI grant totaling $7,208,000 for a project known as Historic Westside Village, in response to a request from HUD's Georgia State Office, Office of Community Planning and Development. The City and its sub-recipient, the Atlanta Development Authority (ADA) did not adequately manage and control the Project. The City allowed significant violations of HUD requirements to occur without early detection or prompt corrective action. The City did not adequately monitor the performance of sub-recipients to ensure compliance with HUD program requirements.

The City and ADA improperly allowed an ADA affiliate, Inner City Development Corporation (ICDC), to perform as a grant sub-recipient without executing a sub-recipient agreement. ICDC improperly paid $1.35 million of Section 108 funds for non-competitively selected service vendors and $163,279 for other ineligible and unsupported costs. The City and ADA did not competitively procure 22 service contractors and did not execute a contract with a "for-profit" company, Historic Westside Partners (HWP) to perform as the Project's exclusive development and management agent. The City and ADA allowed "for-profit" affiliates of HWP and ICDC to become exclusive developers with ownership interests in Project land and leases without competition, and without compensation to the City or the Section 108 Program. The opportunity to collect at least $1.7 million of program income from the sale of one land parcel was not pursued and Project related revenue totaling $403,603 was not properly recorded as Project revenue. The City and ADA did not comply with HUD requirements pertaining to Project budget approvals, and accounting.

We recommended that HUD initiate sanctions against City, ADA, and ICDC officials responsible for serious program violations. We also recommended HUD require the City to (1) provide evidence that its management control and accounting systems comply with HUD requirements before awarding any further funding (2) recover land or appropriate program income from those parcels, and (3) repay $1.65 million of non-competitively procured services, and ineligible and unsupported costs.

Issue Date: July 25, 2002
Audit Report No.: 2002-AT-1003
File Size: 488KB

Title: Audit of the Supportive Housing Program Grant to the National Scholarship Service and Veteran's Opportunity and Resource Center, Atlanta, Georgia

We audited NSS-VORCI's expenditures of a 3-year 1997 Supportive Housing Grant for $1,885,338 as requested by the Director, Office of Community Planning and Development, in Atlanta, Georgia. Our objectives were to determine whether grant and matching funds were properly accounted for and expended for eligible costs. We also assessed whether a subsequent 2000 renewal grant was properly accounted for.

NSS-VORCI's management did not responsibly manage grant accounting, expenditures, and compliance with SHP requirements. They did not establish (1) accounting system procedures and controls needed to comply with Federal requirements for grant fund accounting, (2) procedures to ensure only eligible and necessary expenditures were charged to SHP grant funds, and (3) procedures to monitor and compare SHP expenditures to the approved budget. Salaries and other costs that benefited multiple programs were not allocated to programs and fund sources in a documented and systematic manner. VORCI's accounting journals and general ledger were incomplete, inaccurate, and contained numerous misclassified costs. As a result, VORCI spent grant funds on ineligible and unnecessary costs, deviated significantly from its approved budget without HUD approval, and did not meet matching fund requirements. We attribute these conditions to NSS-VORCI's Executive Director and Board of Directors not ensuring responsible management practices and compliance with HUD requirements for grants management.

Issue Date: November 9, 2001
Audit Memorandum No.: 2002-AT-1802
File Size: 20KB

Title: Macon-Bibb County Economic Opportunity Council, Inc. Supportive Housing Program (SHP) Macon, Georgia

At the request of the Office of Community Planning and Development, we conducted a survey of the 1996 and 1998 Supportive Housing Grants awarded to the Macon Housing Authority and the Macon-Bibb Economic Opportunity Council (EOC) as the subrecipient and project sponsor. The objective of the survey was to access the validity of a complaint alleging that Macon-Bibb EOC officials mismanaged HUD funds including the possible theft of HUD funds, and altered reporting documents to show compliance with HUD regulations.

The survey found no evidence to support the allegations that HUD funds were mismanaged and annual reports on the use of HUD funds and SHP program results were improperly altered. However, we found that the EOC had claimed, and was reimbursed, $5,148 for ineligible costs and $185 for unsupported costs under its 1996 and 1998 SHP grants. We recommended that EOC repay the ineligible costs and provide adequate support for, or repay the unsupported cost.

Issue Date: September 25, 2001
Audit Memorandum No.: 2001-AT-1807
File Size: 554KB

Title: Family Home Providers, Inc., Cumming, Georgia, Nonprofit Participation in FHA Single Family Insurance Program

As part of a nationwide audit of the Federal Housing Administration’s (FHA) Single Family Insurance Program, we audited Family Home Providers (FHP) purchase of Real Estate Owned (REO) properties. Our objectives were to determine whether FHP was legitimate and independent (not under the influence, control, or direction of other parties) and passed on the benefits of discounts received on the purchase of Department of Housing and Urban Development (HUD) homes to low and moderate-income homebuyers.

FHP did not comply with requirements of HUD’s single-family property disposition program. For the 5 properties we reviewed, FHP passed along only $27,822 of the $64,860 in discounts it received from HUD thus depriving the low and moderate-income homebuyers of the program’s intended benefits. We also identified at least $147,023 in sales commissions FHP’s President paid to his own realty firm from September 1997 through November 2000 on 20 properties FHP purchased from HUD, and $20,061 in profits he paid to a business in which he and his wife were once officers. These transactions violated conflict of interest prohibitions. We observed poor quality workmanship on four houses FHP sold. In addition to its failure to meet HUD’s objectives of the program, we question FHP’s charitable intent. From 1998 - 2000, FHP’s President obtained personal benefit (aside from salary and realty commissions) from the non-profit’s operations. Those acts violated HUD’s eligibility criteria for participation in its programs.

We recommended HUD require FHP to pay $42,503 in excess profits to reduce the mortgage of three homebuyers and correct or pay for rehabilitation deficiencies identified by our audit.

Issue Date: June 5, 2001
Audit Memorandum No.: 2001-AT-1804
File Size: 92KB

Title: Hotline Complaint, DeKalb County Housing Authority and Decatur Housing Authority, Decatur, Georgia

We conducted a survey to assess the validity of a complaint alleging mismanagement of the DeKalb County Housing Authority and the Decatur Housing Authority (DDHA) in Decatur, Georgia. The complaint alleged that DDHA management altered Section 8 Management Assessment Program (SEMAP) certifications to improve its performance score, awarded units to applicants who were not first on the waiting lists, allowed a former employee to occupy office space and use DDHA equipment and supplies without cost to the former employee, and improperly executed contracts with a contractor whose brother is a DDHA Division Director with contract oversight responsibility.

Although DDHA was not selecting applicants from its Section 8 waiting lists as envisioned in the SEMAP performance indicators, we found the SEMAP Certifications DDHA submitted to HUD were prepared in accordance with HUD’s written and oral instructions. DDHA did not follow its established controls to assure the integrity of its Public Housing waiting list selection process, and DDHA did not follow its procurement policy, which created a conflict of interest in the handling of one contract. We found that the former employee maintained an office in DDHA’s administration building and had access to supplies and equipment. We determined, however, the services provided by the employee were beneficial to DDHA and there were no significant costs charged to the HUD programs.

Issue Date: April 23, 2001
Audit Memorandum No.: 2001-AT-1803
File Size: 35KB

Title: Accounting System Evaluation, Veterans Opportunity and Resource Center, Inc., Atlanta, Georgia

We conducted an evaluation to determine if the Veterans Opportunity and Resource Center, Inc. (VORCI) had implemented an adequate financial management system to account for the grant funds for which it has applied. This review was not an audit made in accordance with generally accepted auditing standards. Our evaluation included a review of the Supportive Housing Program grant proposal and budget, discussions with the Executive Director and Administrative Operations Manager, a "walk through" of the new accounting system, a review of various accounting forms, and VORCI’s Financial Management System Handbook that establishes, among other things, internal control and purchasing procedures.

Based on our review, we determined that VORCI has an adequate financial management system in place to account for Supportive Housing Program grant funds. We noted that although VORCI has developed new forms to keep track of the time an employee spends on each grant, they were currently not being used. The use of these forms applies primarily to administrative personnel, such as the Executive Director and Administrative Operations Manager, who perform administrative functions for the various grants. The budget for the proposed grant shows the Administrative Operations Manager charging 100 percent of her time to the grant. Discussions with the Manager, however, show she will also be spending time on other grants. We discussed this with the Executive Director and the Administrative Operations Manager. They agreed the forms would be used to track the employees’ time.

Issue Date: September 15, 2000
Audit Report No.: 00-AT-222-1009
File Size: 2,992KB

Title: Southeast Alliance of Foreclosure Specialists, LLC.

We completed an audit of Southeast Alliance of Foreclosure Specialists, LLC., a Management and Marketing (M&M) contractor. This report presents the results of our audit of Southeast Alliance’s ability to manage and market FHA’s single family properties.

Under Secretary Andrew Cuomo, HUD has undergone significant changes in response to the Secretary’s "HUD 2020 Reorganization Plan." One major change is the outsourcing of FHA’s management and marketing of its single family properties. In March 1999, FHA awarded 7 companies a total of 16 Management and Marketing (M&M) contracts to manage its single family property inventory.

The contractor demonstrated success in three key areas. The contractor reduced both the number of properties in inventory and the number of properties in inventory over 6 months. It also reduced the average losses from property sales. Despite these accomplishments, improvements are still needed. The contractor demonstrated the willingness to improve its operations.

Our audit confirmed what FHA repeatedly reported in its monthly performance assessment reports. As discussed in Finding 1, the contractor did not maintain properties as required. The contractor did not perform timely initial property inspections, did not always identify serious property defects, did not conduct routine inspections as required, and did not correct hazardous conditions within mandatory 24 hours. The poor property conditions decrease marketability; increase FHA’s holding costs; have negative effects on surrounding communities; reflect poorly on the Department’s image; and in some cases, threaten the health and safety of neighbors and potential buyers.

Also, as discussed in Finding 2, the contractor did not comply with other contract requirements. For example, the contractor did not review HUD-1 Settlement Statements, did not obtain timely property appraisals, and billed FHA for unauthorized expenses and ineligible expenses. The noncompliance could significantly increase the risk of loss to the insurance fund.

Issue Date: August 4, 2000
Audit Related Memorandum No.: 00-AT-201-1803
File Size: 42KB

Title: Design and Construction Management Department, Housing Authority of the City of Atlanta, Atlanta, Georgia

We conducted a survey of certain activities of the Housing Authority of the City of Atlanta (HACA) Design and Construction Management Division. The primary objective of the survey was to determine the validity of an anonymous complaint referred to us by your office. We also determined if HACA had resolved certain procurement and cash management issues reported in our prior audit of HACA’s operations.

Issue Date: April 26, 2000
Audit Related Memorandum No.: 00-AT-202-1802
File Size: 29KB

Title: Misuse of HUD Funds, Fort Valley Housing Authority, Fort Valley, Georgia

A limited review of the Fort Valley, Georgia Housing Authority was performed because of alleged misuse of Authority funds. Based on our combined review, we found at least $19,600 in receipted cash was missing, and over $198,000 in CIAP funds was drawn by the Authority prior to a documented need.

Issue Date: October 4, 1999
Audit Report No. 00-AT-225-1001
File Size: 2346KB

Title: Mego Mortgage Corporation Title I Approved Lender, Atlanta, Georgia

We completed a review of Mego Mortgage Corporation (Mego), an approved Title I Lender, generally for the period January 1, 1996, through August 31, 1998. We conducted the review because Mego had a default rate which exceeded the national average for Title I lenders. The audit objective was to determine if Mego originated HUD insured Title I loans according to HUD requirements for borrower income, liabilities, loan amount, and property inspections. We identified noncompliance with requirements for each area.

Mego did not properly process and underwrite Title I loans. Mego consistently approved excessive ($176,518) and inadequately supported ($126,930) loan amounts, and in six cases without a proper review of borrowers’ income and or liabilities. We also identified instances where Mego approved loans without adequately clarifying differences between work items listed in the application and the detailed cost estimates. The deviations from requirements increased HUD’s insurance risk on the loans approved for excessive amounts and whose eligibility Mego did not clearly establish. These matters provided the opportunity for fraud and abuse of the Title I program. We identified several instances where such abuses had occurred.

Mego also needed to improve certain practices and or procedures related to property inspections. We noted (a) two instances where Mego failed to notify HUD about program abuses that came to its attention; (b) one instance where Mego’s inspections did not document the borrower’s failure to complete repairs; and (c) one instance where Mego did not timely resolve issues raised by a borrower who filed a complaint concerning deficient work by a dealer. These deviations from requirements deprived HUD of information it could have used to protect the integrity of the Title I program. They also reduced assurance that borrowers used their Title I loans for allowable repairs that were reasonably priced and completed with acceptable workmanship.

The forgoing program violations occurred because Mego did not follow or consistently follow HUD requirements and prudent lending practices.

We recommend that the Atlanta Homeownership Center take appropriate administrative action against Mego.

We discussed the issues in this report with Mego representatives during the review and at an exit conference held at Mego’s office on August 30, 1999. Mego officials took exception to the report and recommendations. Mego’s comments are summarized at the end of each finding, and presented as Attachment B.

Issue Date: August 2, 1999
Audit Report No. 99-AT-201-1810
File Size: 77KB

Title: Tenant Opportunity Program Grantees of Atlanta Housing Authority Developments, Atlanta, Georgia

At the request of the Department of Housing and Urban Development (HUD) Office of Public Housing, we completed a review of four Tenant Opportunity Program (TOP) grantees in Atlanta, Georgia. The objective of the audit was to determine whether the four resident associations, (McDaniel Glenn Resident Association, Martin Luther King Senior Highrise Resident Association, and Jonesboro North and South Resident Associations) administered their programs and expended HUD funds in accordance with federal requirements.

The TOP grantees still lacked the capacity to administer their grants as reported in prior Office of Inspector General (OIG) reviews. The four grantees did not adequately administer their grants and account for grant funds in accordance with federal requirements. We also determined that the grantees did not follow proper procurement procedures and did not maintain adequate documentation to evidence the procurement procedures used in awarding contracts to consultants and trainers. Two of the grantees had made little progress towards accomplishing the tasks cited in their work plans. We attribute these conditions to HUD not properly monitoring the grantees and the ineffective monitoring and technical assistance performed by the Atlanta Housing Authority. As a result, the grantees incurred $37,945 of ineligible and unsupported costs and lacked the capacity to continue their grants. We recommend that you terminate all four grantees and recover the outstanding grant amounts.

Issue Date: December 4, 1998
Audit Report No. 99-AT-241/242/255-1002
File Size: 4,510KB

Title: Augusta-Richmond County Consolidated Government, Community Development Block Grant, HOME, and Urban Development Action Grant Programs, Augusta, Georgia

Our review disclosed no significant deficiencies regarding the city's award of HOME funds to CHDOs and its monitoring. However, we did find serious problems with the city's management of CBDG and UDAG funds. We identified about $1.6 million of ineligible and $.6 million of unsupported costs.

* The city's grant program to improve facades of commercial buildings in the downtown area did not meet national objectives of the CDBG Program. Our review of 27 of 46 construction projects funded by the city during calendar years 1992 through 1997 found 11 projects totaling about $443,000 that did not address slum and blight and did not comply with city program policy. The city did not maintain adequate documentation on the other 16 projects totaling about $588,000 to determine whether they met the objectives or complied with city policy. (See Appendices A and B) In addition, we identified inconsistency in the awards and requirements placed on some property owners by the city that had the appearance of favoritism. These deficiencies occurred, in part, because the city's administrative policy for awarding facade grants did not contain procedures for documenting files and monitoring and enforcing compliance. Also city program officials disregarded policy.

* From 1992 through 1996, the city made 10 special economic development loans to 9 for-profit entities totaling $559,250. Three of the loans totaling about $208,000 were forgiven by the city. At the time of our review in May 1998, seven of the entities (78 percent) had gone out of business owing the city about $193,000. Recovery is not likely. Only one entity was current with its payments. (See Appendix C) Our review revealed that the city did not maintain documentation to determine if the loans met program requirements and/or national objectives. We found little evidence that the city monitored and enforced loan requirements. We also identified inconsistency in how some loans were handled that had the appearance of favoritism. (See Finding 1) These deficiencies occurred, in part, because the city had no written policies and procedures for making economic development loans, documenting files, and monitoring and enforcing compliance. Because of the nature and extent of the deficiencies, we consider $559,250 ineligible.

* The city improperly charged the CDBG Program $548,100 spent for street lighting and sidewalk improvements in 1995 and 1996. The city reported to HUD that these expenditures benefited low and moderate income persons. However, we determined that the projects did not meet this program objective because they were in commercial areas of downtown Augusta; not residential areas. The city improperly classified the costs as benefiting low and moderate income persons.

* The city may have lost millions in potential revenue and significantly reduced program benefits when it approved the refinancing of a developer's first mortgage without assessing the impact the refinancing had on the city. The mortgage was part of an agreement that the city had with the developer in order for the developer to obtain a 30-year $7.5 million no-interest UDAG loan. The funds were needed to build a $45.6 million hotel/office/conference center complex on the downtown river front. In return for the loan, the developer agreed to: (1) pay the city a percentage of the project's excess net cash flow based on certified financial reports and (2) employ up to 600 persons including 75 percent low and moderate income persons. We found that in addition to not assessing the impact of refinancing, the city had not obtained timely certified financial reports from the developer, and was unaware of the number of low and moderate income persons employed by the complex. These deficiencies occurred because the city did not effectively monitor and enforce agreement provisions.

Issue Date: September 28, 1998
Audit Report No. 98-CH-259-1005
File Size: 317KB

Title: City of Atlanta Empowerment Zone Program Atlanta, Georgia

Based on our review of 16 of the 123 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: paid $739,178 for services from Empowerment Zone funds and was billed $53,979 for services that did not benefit Zone residents; used $429,241 of Zone funds to assist in the relocation of a business to the Zone, but the relocation of the business resulted in decreased employment and the closing of the business in its original location which is not an appropriate use of Zone funds; committed $400,000 of Zone funds to assist in the relocation of another business to the Zone which will result in the closing of the business and decreased employment in the original location; and provided $8,000 of Zone funds to assist in the purchase of a home located outside of the Zone. The City also did not competitively bid a contract awarded under the Empowerment Zone Program, inaccurately reported the accomplishments of its Zone activities, and incorrectly reported nine activities as Zone activities when they were not. As a result, Zone funds were not efficiently and effectively used, and HUD was provided with the impression that the benefits of the Program were greater than actually achieved.

Date Issued: September 3, 1998
Audit Report No. 98-AT-251-1009
File Size:145KB

Title: Metro Atlanta Task Force for the Homeless, Inc. Innovative and Supportive Housing Homeless Programs Atlanta, Georgia

The Task Force did not efficiently and effectively manage its programs to ensure compliance with regulations. As a result, MATFH spent $1,243,854 of IHP grant funds without proper support. Also, MATFH charged $6,607 of ineligible administrative costs to the IHP grant. In addition, the Task Force did not adequately maintain its accounting records or monitor the subrecipients under its SHP grant.

Issue Date: March 31, 1998
Audit Report No. 98-AT-206-1004
File Size: 191KB

Title: HA City of Atlanta, Atlanta, GA

We recommend HUD require the Authority to: repay HUD for all ineligible costs and unresolved unsupported costs; develop and implement controls and procedures to ensure compliance with procurement and contract administration requirements; develop and implement fiscal controls to ensure proper reporting; develop procedures to ensure private management fees are paid according to contracts; adopt policies restricting special considerations to Board members and for making recommendations to the Mayor for prospective Board members; provide training to resident Board members on their responsibilities and duties; and develop other avenues of assistance independent of the Authority's operations to address emergency requests for assistance from residents.

Issue Date: January 20, 1998
Audit Report No. 98-AT-201-1001
File Size: 125KB

Title: Alma HA, Alma, GA

AHA's prior Executive Director (ED), Board, and ARC mismanaged HUD programs. The mismanagement adversely affected program operations and resulted in wasted funds. Specifically, the ED, Board and ARC ignored program budgets, and did not implement several major components of the Comprehensive Grant, Drug Elimination Grant, and Tenant Opportunity Programs. As a result the programs did not meet their intended objectives. Also, tenants were not provided improved living conditions and/or services that AHA and ARC represented to HUD that they would provide. Instead, AHA spent the funds for other activities which were either not in the budgets or the amounts spent substantially exceeded the budgets. These issues are discussed in the findings along with other violations that include instances where AHA and/or ARC:

1. Incurred $119,929 for costs that are not allowable.

2. Incurred $592,732 in unsupported costs and diverted $28,198 in insurance proceeds from fire losses to pay other program costs.

3. Obtained or made $150,976 in unauthorized loans.

4. Failed to maintain proper accounting records for the Drug Elimination Grant and Tenant Opportunity Program. We recommend HUD require AHA and or ARC to seek recovery of wasted funds.

We also recommend AHA and ARC improve controls needed to safeguard program assets.

Issue Date: August 8, 1997
Audit Report #97-AT-201-1814
File Size: 157KB

Title: Atlanta HA, Atlanta, GA

Our assessment shows that the Authority is improving its operations in the areas we reviewed which included: housing management, security, vacancies and unit turnaround, admissions and continued occupancy, maintenance, modernization and redevelopment, and annual inspections. Although improvements are being made, the Authority should continue to work to assure its operational improvements are institutionalized.

Issue Date: May 29, 1997
Audit-Related Memorandum No. 97-AT-248-1810
File Size: 16KB

Title: Our Common Welfare, Inc., Decatur, GA

We made the following observations: a. OCW did not have a proper segregation of duties. b. OCW did not require workers who worked on multiple programs to prepare time and attendance records to support the salary amounts charged to the various programs. c. OCW had not established and implemented a system to charge indirect costs.

Issue Date: May 12, 1997
Audit-Related Memorandum 97-AT-207-1809
File Size: 57KB

Title: Mowa Choctaw HA, Mt. Vernon, AL

The series of Seattle Times articles on Indian Housing indicated (1) HUD gave MCHA large development grants three consecutive years, totaling $5.6 million, although MCHA had money and management problems from inception; and (2) MCHA covered cost overruns on the first project with money from the second, then covered that shortfall with the third grant.

Issue Date: February 10, 1997
Audit-Related Memorandum 97-AT-203-1805
File Size: 24KB

Title: Holiday Apts/Midland Mgmt Company

FINDING 1 - Management Agent Made Unauthorized Distributions The management agent made distributions totaling $145,840 of project funds which, in our opinion, were not evidenced as necessary for reasonable operating and maintenance expenses of the same project.

Finding 2 - Project Continued To Need Physical Improvements While improvements were being made, the physical condition of Holiday Apartments remained below average due to many uncorrected maintenance items.

Issue Date: November 4, 1996
Audit-Related Memorandum No. 97-AT-248-1802
File Size: 18KB

Title: Atlanta Task Force for the Homeless, Atlanta, GA

We concluded that the Task Force has established organizational, financial management, and program performance systems necessary to satisfactorily accomplish its HUD sponsored Supportive Housing Program.

Issue Date: September 24, 1996
Audit Related Memorandum 96-AT-241-1826
File Size: 65KB

Title: Cobb County, Marietta, GA

We found that:

- The County did not (a) clearly describe whether its HUD program administrator's contract was a fixed price or cost reimbursable agreement, (b) adequately analyze the reasonableness of the contractor's proposed rate for overhead/profit, (c) adequately solicit proposals, and (d) prepare a price analysis.

- The County paid for CDBG administrative services ($112,832) which we believe the contract administrator should have performed.

- The County paid for rehabilitation inspections and work-write-up services ($80,340) which we believe the contract administrator should have performed.

- The County did not adequately monitor the performance of the contract administrator.

Issue Date: August 21, 1996
Audit Related Memorandum 96-AT-241-1824
File Size: 49KB

Title: Gwinnett County, Lawrenceville, GA

We noted indications of deficiencies that warrant additional attention by HUD and County staff. The County needs to improve its contracting procedures for obtaining a professional consultant to administer its HUD funded and related programs.
We found that:

- The County did not (a) clearly describe whether its HUD program administrator's contract was a fixed price or cost reimbursable agreement, (b) adequately analyze the reasonableness of the contractor's proposed rate for overhead/profit, (c) adequately solicit proposals, and (d) document its price analysis.

- The County paid for additional rehabilitation inspection and work-write-up services ($51,416) which the contract administrator should have performed.

- The County paid its contract administrator $159,459 for personnel costs that were not supported by proper time and attendance records.

Issue Date: June 19, 1996
Audit Related Memorandum No. 96-AT-202-1808
File Size: 20KB

Title: Sylvester HA, Sylvester, GA

The housing authority's management compromised its controls over cash collections. Management allowed employees to issue handwritten receipts in lieu of posting collections directly to its computerized control system and did not perform the supervision necessary to assure the subsequent posting of the handwritten receipts. Management did not provide for a separation of duties which is basic to a good internal control system. As a result, we confirmed that $55,782 was misappropriated, and the housing authority could lose additional revenue because it cannot substantiate the accuracy of its tenant accounts receivable.

Issue Date: May 20, 1996
Audit Related Memorandum 96-AT-248-1818
File Size: 18KB

Title: Atlanta Furniture Bank, Atlanta, GA

During our review we made the following observations:
a. The Furniture Bank staff lacked the basic accounting knowledge needed to maintain proper accounting records.
b. The Furniture Bank did not have a performance tracking system that captured data on the number of homeless individuals served.
c. The Furniture Bank experienced recent financial problems.
d. The Furniture Bank incurred a tax liability for payroll and sales taxes.
e. The Furniture Bank did not have a proper segregation of duties.
f. The Furniture Bank's procurement policy did not specify a dollar limit for when bids, quotes or negotiations should be used.

Issue Date: May 16, 1996
Audit Related Memorandum No. 96-AT-202-1816
File Size: 34KB

Title: Statesboro HA, Statesboro, GA

The Statesboro Housing Authority (SHA) did not properly safeguard cash assets against fraud and abuse. The Executive Director (ED) made personal use of SHA assets, had poor controls over cash collections, and engaged in questionable procurement and disposition transactions that included identity-of-interest entities. The ED charged personal purchases to the authority accounts and had a maintenance employee work at his home on authority time. The ED knowingly concealed cash shortages in the rent collections by: representing unreceipted sources of revenue as rent collections; cashing an unclaimed security deposit refund to deposit as rent, and consistently moving rent collections to prior periods to cover cash shortages. Also, the ED procured services from his wife's business, and sold authority equipment to his father and a Board member. The ED continued these practices after being cautioned by the Board not to commingle his personal business with SHA business.

Issue Date: April 26, 1996
Audit Report Number 96-AT-203/255-1003
File Size: 90KB

Title: Georgia Housing and Finance Authority, Atlanta, GA

Generally, GHFA's programs were operating effectively and in compliance with applicable regulations except as noted in this report.

Issue Date: March 8, 1996
Audit Report Number 96-DE-221-1003
File Size: 118KB

Title: City Wide Mortgage, Inc., Smyrna, GA

We found that City Wide Mortgage did not accurately disclose to mortgagors the actual costs associated with refinancing home mortgages. In addition, the review found that City Wide Mortgage was, in effect, obtaining an unearned fee by inflating the title insurance charge on the HUD-1 settlement statement. The overcharge was used to cover the cost of a third party to conduct a file review and disburse the loan proceeds.

We also determined that City Wide Mortgage charged more than the HUD authorized amount and did not follow prudent business practices in the disclosure of the disbursement of loan proceeds.