Louisiana Audit Reports

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Issue Date: September 23, 2009
Audit Report No.: 2009-AO-1003
File Size: 378.34KB

Title: Louisiana Land Trust, As the State of Louisiana’s Subrecipient, Did Not Always Ensure That Properties Were Properly Maintained

We audited the Louisiana Land Trust (LLT), a $29 million Community Development Block Grant (CDBG) disaster recovery subrecipient of the State of Louisiana, Office of Community Development (State). We initiated the audit as part of the Office of Inspector General (OIG) Gulf Coast Region's audit plan and examination of relief efforts provided by the federal government in the aftermath of Hurricanes Katrina and Rita. Our audit objective was to determine whether LLT, as the State's subrecipient, properly maintained properties received from the State.

Although LLT ensured that its maintenance contractor generally maintained the lawns of properties, it did not always ensure that the properties were properly maintained overall. Of 67 properties visited, 23 (34 percent) had maintenance deficiencies, mostly related to security and cleanliness, which violated contract requirements. This condition occurred because (1) the State did not clearly convey its expectations to LLT regarding property maintenance, (2) LLT did not ensure that its maintenance contractor complied with the terms of its contract, (3) the contract between LLT and its maintenance contractor did not specifically detail the responsibilities of the maintenance contractor, and (4) LLT's inspectors did not have written policies and procedures to follow during their inspections. Further, LLT did not take action on some properties, properly coordinate with other entities when making decisions, or document its decisions in its system. As a result, there were services that were not satisfactorily performed, and some properties presented safety risks to the general public, which could potentially cause LLT to incur financial liabilities.

We recommend that HUD's General Deputy Assistant Secretary for Community Planning and Development require the State to (1) specify its expectations of LLT as related to property maintenance, in its cooperative endeavor agreement; (2) continuously monitor LLT to ensure that its maintenance contractor complies with the terms of its contract; (3) ensure that LLT clearly conveys and documents the maintenance contractor's expectations; (4) ensure that LLT develops written policies and procedures for its inspectors to follow; (5) correct deficiencies identified at the 23 properties; and (6) ensure that LLT coordinates with the State when making decisions, document decisions made in its system, and create a written policy for prioritizing properties for demolition.

Issue Date: May 5, 2009
Audit Report No.: 2009-AO-1002
File Size: 338.22KB

Title: State of Louisiana, Baton Rouge, Louisiana, Road Home Program, Did Not Ensure That Multiple Disbursements to a Single Damaged Residence Address Were Eligible

Due to a citizen's complaint, we audited the State of Louisiana's (State) Road Home homeowner assistance program managed by the State's contractor, ICF Emergency Management Services, LLC. The complaint raised a potential issue with Road Home employees improperly obtaining grants. During our audit on employee eligibility for additional compensation grants, we identified possible program eligibility issues through a review of the electronic disbursement data. To address the extent of the issues, we developed an additional audit objective to determine eligibility for multiple disbursements made to a single damaged residence address.

We identified 69 property addresses that had two or more Road Home grants for a total of 139 grants. Of the 69 property addresses, 11 received total disbursements that exceeded the overall grant limit of $150,000. The 11 addresses received a total of 22 grants. Of the 22 grants, the State funded eight (36 percent) grants, totaling $735,087 that were either ineligible or unsupported. This condition occurred because the State did not ensure that its contractor had system controls to identify multiple disbursements to a single property address and that its policies and procedures were followed when processing grants and determining eligibility for multiple disbursements. As a result, the State must repay funds disbursed for ineligible grants and support or repay funds disbursed for unsupported grants. Further, although disbursements did not exceed the overall grant limit of $150,000 for the other 58 property addresses, the State must review those 117 grants since a portion of the disbursements may be questionable.

We recommend that HUD's General Deputy Assistant Secretary for Community Planning and Development require the State to repay amounts disbursed for ineligible grants to its Road Home program, support or repay amounts disbursed for unsupported grants, and review all of the 117 grants related to multiple disbursements for 58 property addresses to determine eligibility.

Issue Date: May 5, 2009
Audit Report No.: 2009-AO-1001
File Size: 701.50KB

Title: State of Louisiana, Baton Rouge, Louisiana, Road Home Program, Did Not Ensure That Road Home Employees Were Eligible to Receive Additional Compensation Grants

Due to a citizen's complaint, we audited the State of Louisiana's (State) additional compensation grant (grant) component of the Road Home homeowner assistance program, managed by the State's contractor, ICF Emergency Management Services, LLC. The complaint raised a potential issue with Road Home employees improperly obtaining grants. Our audit objective was to determine whether the State ensured that Road Home employees were eligible to receive the grant.

The State did not ensure that all Road Home employees were eligible to receive their additional compensation grant. Of 34 grants, the State funded five (15 percent) that were ineligible. This condition occurred because the State did not ensure that its contractor's controls were sufficient to identify errors and that its policies and procedures were followed when determining eligibility. As a result, the State misspent $228,930 in federal funds for five ineligible grants.

We recommend that The U.S. Department of Housing and Urban Development's (HUD) General Deputy Assistant Secretary for Community Planning and Development require the State to repay amounts disbursed for ineligible grants to its Road Home program, conduct monitoring to ensure that its contractor has implemented adequate controls, and report the recapture/recovery for all grants deemed ineligible.

Issue Date: August 7, 2008
Audit Report No.: 2008-AO-1005
File Size: 1.41MB

Title: State of Louisiana, Baton Rouge, Louisiana, Road Home Program, Did Not Ensure All Additional Compensation Grant Applicants Were Eligible

We audited the State of Louisiana’s (State) additional compensation grant (grant) component of the Road Home homeowner assistance program, managed by the State’s contractor, ICF Emergency Management Services, LLC (ICF), in conjunction with the Office of Inspector General (OIG) Gulf Coast Region’s audit plan and examination of relief efforts provided by the federal government in the aftermath of Hurricanes Katrina and Rita. Our audit objectives were to determine whether (1) applicants were eligible to receive the grant; and (2) the State ensured that grant income policies and procedures were in accordance with HUD rules and regulations and ensured that its contractor followed them.

The State did implement grant income policies and procedures as required by HUD rules and regulations. However, those policies and procedures were not sufficient to ensure that all applicants were eligible to receive their grant. Of 45 grants sampled, the State funded nine (20 percent) grants, totaling $263,959 that were either ineligible or unsupported. In addition, the State did not ensure that its contractor followed its policies and procedures for another 24 grants (53 percent), but the errors did not impact the grants’ eligibility. These conditions occurred because the State did not ensure that its contractor’s controls were sufficient to catch errors and that its policies and procedures were followed when determining eligibility. Further, although the State’s contractor performed a review of all 45 grants sampled, issues remained undetected. As a result, based on a statistical projection, our best estimate is that the State spent $70 million on ineligible grants, and $57.4 million on unsupported grants, disbursed between June 12, 2006, and October 13, 2007.

We recommend that HUD’s General Deputy Assistant Secretary for Community Planning and Development require the State to repay amounts disbursed for ineligible grants to its Road Home program, either support or repay amounts disbursed for unsupported grants, ensure that its contractor follows the established policies and procedures, ensure that its contractor’s postclosing reviews detect and correct errors, and review the remaining 21,672 grants disbursed between June 12, 2006, and October 13, 2007, to ensure that grants were eligible and supported. By reviewing these grants, we estimate that the value of questioned costs will total more than $70 million for grant disbursements to ineligible participants and more than $57.4 million for grant disbursements to participants whose eligibility was not adequately supported.

Issue Date: May 8, 2008
Audit Report No.: 2008-FW-1009
File Size: 2.34MB

Title: The Shreveport Housing Authority, Shreveport, Louisiana, Made Excessive Housing Assistance Payments in Its Section 8 Housing Choice Voucher Program Shreveport, LA

As part of the Office of Inspector General's strategic plan, we audited the Shreveport Housing Authority's (Authority) Section 8 Housing Choice Voucher program (Section 8 program). Our objective was to determine whether the Authority ensured that it made housing assistance payments in accordance with the U. S. Department of Housing and Urban Development's (HUD) Section 8 program requirements. The Authority's contracted Section 8 program administrator, Pendleton Development Corporation (Pendleton), made errors in 96 of 107 (90 percent) statistically selected sample tenant files out of 3,717 files. The errors included, incorrectly calculating family income, paying assistance after families vacated units, using incorrect payment standards, miscalculating utility allowances, and making other errors that resulted in incorrect assistance payments. Pendleton also made errors that did not affect assistance payments but need corrective action. This condition occurred because neither the Authority nor Pendleton had adequate management controls to ensure compliance with requirements. As a result, the Authority paid $18,517 in excess assistance and overcharged families $1,767. Further, we estimate that from September 1, 2005, to September 30, 2007, the Authority made excess assistance payments of more than $320,000. Additionally, the Authority's Section Eight Management Assessment Program (SEMAP) scores for fiscal year 2006 were inaccurate.

We recommend that the Director of the Office of Public Housing, New Orleans, Louisiana, require the Authority to recertify, within the next six months, all families receiving assistance and at the time of the recertifications, review their files for any errors occurring within the previous 12 months. The Authority should repay its Section 8 program or the families as appropriate for any assistance payment errors for the 12 months. The Director should also require the Authority to repay, from nonfederal funds, its Section 8 program $18,517 for overpayments and reimburse families $1,767 for underpayments identified in the audit, and implement adequate procedures and controls over its Section 8 program to ensure that tenant eligibility and assistance payments are supported and determined in accordance with HUD requirements to avoid paying more than $153,000 in excess assistance during the next 12 months. We also recommend that the Director increase oversight of the Authority by entering into a memorandum of agreement with the Authority, reduce the Authority's fiscal year 2006 SEMAP scores, and ensure that the Authority submits accurate SEMAP scores in the future.

Issue Date: January 30, 2008
Audit Report No.: 2008-AO-1002
File Size: 735.75KB

Title: State of Louisiana, Baton Rouge, Louisiana, Road Home Program, Funded 418 Grants Coded Ineligible or Lacking an Eligibility Determination

We audited the State of Louisiana's (State) additional compensation grant (grant) component of the Road Home homeowner assistance program, managed by the State's contractor, ICF Emergency Management Services, LLC (ICF). We initiated the audit in conjunction with the Office of Inspector General (OIG) Gulf Coast Region's audit plan and examination of relief efforts provided by the federal government in the aftermath of Hurricanes Katrina and Rita. During our audit to determine grant eligibility, we identified possible eligibility issues through a review of the electronic data. To immediately address the issues, we developed an additional objective to determine eligibility for those grants coded ineligible or lacking an eligibility determination.

Out of 22,135 grants, the State funded 418 (2%) grants coded ineligible or lacking an eligibility determination, totaling $15.8 million. This occurred because the State's contractor, ICF, did not have system controls in place to prevent these improper disbursements. File reviews of 26 (6%) of the 418 grants, determined, as of October 13, 2007, the State had misspent federal funds for 17 ineligible and for two unsupported grants. The remaining seven grants were eligible or had input or coding errors. As a result, the State will need to review the remaining 392 grants, which total over $14.6 million, as the disbursements are questionable.

We recommend the U.S. Department of Housing and Urban Development's (HUD) General Deputy Assistant Secretary for Community Planning and Development require the State to repay amounts disbursed for ineligible grants to its Road Home program; either support or repay amounts disbursed for unsupported grants; review all of the remaining 392 grants coded ineligible or lacking an eligibility determination and either support or repay the $14.6 million disbursed for them; and implement system controls to prevent future improper disbursements.

Issue Date: December 19, 2007
Audit Report No.: 2008-AO-1001
File Size: 461.29KB

Title:The State of Louisiana, Baton Rouge, Louisiana, Road Home Program, ICF, Did Not Always Provide Contract Deliverables as Required

The U.S. Department of Housing and Urban Development’s Office of Inspector General audited the State of Louisiana’s (State) Road Home program (Road Home) housing manager’s performance under a contract worth more than $750 million. The State is a Community Development Block Grant (CDBG) disaster recovery grantee under the Department of Defense Appropriations Act of 2006. We initiated the audit in conjunction with the Office of Inspector General (OIG) Gulf Coast Region’s audit plan and examination of relief efforts provided by the federal government in the aftermath of Hurricanes Katrina and Rita. Our objective was to determine whether the Road Home housing manager, ICF Emergency Management Services (ICF), provided contract deliverables in accordance with the terms and conditions of its contract with the State.

The State’s Road Home housing manager, ICF, did not always provide contract deliverables in accordance with the terms and conditions of its contract with the State, thereby causing the State to reject the deliverables. Specifically, the State rejected 6 of 80 deliverables provided by ICF. Of the six rejected deliverables, the homeowner management information system deliverable was most critical, since it was the core processing mechanism needed for the progress of the homeowner assistance program. This condition occurred because of many State-imposed program changes, ICF’s incapacity to adopt those changes by delivery dates defined by contract, and the State’s lack of an adequate monitoring system to ensure that ICF provided contract deliverables by their due dates. Collectively, the management information system, in conjunction with the State’s perpetual modification requirements to the system, and inadequate monitoring of system modification requirements during phase 1, contributed to delaying the distribution of grants to eligible homeowners.

We recommend that the U.S. Department of Housing and Urban Development’s General Deputy Assistant Secretary for Community Planning and Development require the State to set realistic goals for ICF, taking timely appropriate action against ICF when performance problems arise as stipulated by the contract; and verify whether the State adequately implemented its new monitoring policies and procedures.

Issue Date: November 28, 2007
Audit Report No.: 2008-FW-1002
File Size: 945.46KB

Title: The Shreveport Housing Authority, Shreveport, Louisiana, Did Not Ensure That Section 8 Units Met Housing Quality Standards

We audited the Shreveport Housing Authority's (Authority) Section 8 Housing Choice Voucher (Section 8) program as part of our strategic plan. Our objective was to determine whether the Authority's Section 8 units met housing quality standards and if not, determine the extent, cause, and impact of its noncompliance on its Section 8 program.

The Authority did not have adequate management controls to ensure that it complied with U. S. Department of Housing and Urban Development (HUD) requirements. Of the 66 statistically selected sample units we inspected, 62 (94 percent) did not meet minimum housing quality standards, and 47 (71 percent) were materially noncompliant with housing quality standards. As a result, tenants lived in units that were not decent, safe, and sanitary. If the Authority does not establish effective management controls, we estimate that it will pay more than $6.1 million in the next 12 months for units that are materially noncompliant with HUD's housing quality standards.

We recommend that the Director of the Office of Public Housing require the Authority to inspect the 62 units that did not meet minimum housing quality standards to verify that the owners took appropriate corrective action to make the units decent, safe, and sanitary. Further, the Director should require the Authority to reinspect all of its Section 8 units, including those units that it owns, and ensure that they meet housing quality standards. If any of the units cannot be made decent, safe, and sanitary, the Authority must either abate the housing assistance payments or terminate the tenant's voucher as appropriate. Further, we recommend that the Director require the Authority to implement procedures and controls to ensure that its Section 8 units and inspections meet HUD requirements to prevent $6.1 million in future assistance payments from being spent on units that do not meet standards

Issue Date: August 31, 2006
Audit Report No.: 2006-AO-1002
File Size:

Title: Cityside Management Corporation, Hammond, Louisiana, Did Not Enforce The Lease Terms Over Payment of Property Utilities

The U.S. Department of Housing and Urban Development's Office of Inspector General audited Cityside Management Corporation (Cityside), a management and marketing contractor for the United States Department of Housing and Urban Development’s (HUD) real estate-owned properties held off market for disaster victims. The audit was initiated in conjunction with the President’s Council on Integrity and Efficiency, as part of its examination of relief efforts provided by the Federal government in the aftermath of hurricanes Katrina and Rita. Our objective was to determine whether Cityside complied with HUD’s regulations, procedures, and instructions in the management of HUD’s real estate-owned properties held off market for disaster victims.

Cityside complied with HUD’s regulations, procedures, and instructions in the management of HUD’s real estate-owned properties held off market to house disaster victims, with one exception. It did not ensure that all disaster victims transferred the billing of property utility services into their names and paid charges for utility services in full, as required by the lease agreements. This occurred because Cityside did not take timely and proactive measures to enforce full tenant compliance with the lease terms over payment of property utilities, when staff became aware of the issue. Instead, Cityside used $17,744 in HUD funds to pay the monthly billings on 133 leased properties during the period October 13, 2005 through March 31, 2006.

We recommend that the Director of the Denver Office of Single Family Homeownership Center instruct Cityside Management Corporation to take appropriate action against the tenants who do not comply with the instruction and requirements regarding utility payments, and require Cityside Management Corporation to initiate collection actions against tenants to recover the $17,744 that HUD paid for utility costs and any additional costs HUD had incurred after March 31, 2006.

Issue Date: March 28, 2006
Audit Report No.: 2006-FW-1006
File Size: 5.86MB

Title: America’s Mortgage Resource, Inc., Metairie, Louisiana: Branch Manager Formed an Identity-of-Interest Entity That Provided Gift Funds; and Did Not Always Meet HUD Loan Origination and Quality Control Plan Requirements

America’s Mortgage’s LaPlace branch manager formed an identity-of-interest company, Imagine Foundation that provided prohibited quid pro quo gifts to borrowers. Imagine Foundation provided $404,997 in gift funds to 73 America’s Mortgage borrowers. The Internal Revenue Service denied Imagine Foundation nonprofit status because it did not meet nonprofit requirements. According to the Internal Revenue Service, America’s Mortgage’s owner served on the board of Imagine Foundation. Under the HUD requirements, the gifts should be considered as “inducements to purchase,” and HUD regulations require the sales price to be reduced dollar for dollar for gifts in determining the maximum mortgage amount. Therefore, HUD unnecessarily over insured 73 Federal Housing Administration loans totaling more than $7.6 million.

Additionally, America’s Mortgage did not originate and process loans in accordance with HUD’s regulations, nor did its quality control plan meet HUD’s regulations, further putting Federal Housing Administration-insured loans at risk.

We recommended that HUD require America’s Mortgage to write down the loans for the $404,997 in inappropriate gifts by Imagine Foundation, indemnify 73 loans totaling $6,904,509 and reimburse HUD $303,261 for claims paid on four loans. Further, HUD should take administrative action as appropriate, including debarment and civil monetary penalties, against the president and board of Imagine Foundation. America’s Mortgage should develop and implement a quality control plan that complies with HUD’s requirements before it is allowed to underwrite additional loans.

Issue Date: April 8, 2005
Audit Report No.: 2005-FW-1008
File Size: 499.66KB

Title: The City of New Orleans, Louisiana, Did Not Contribute Approximately $3.6 Million in HOME Funds

We reviewed the City of New Orleans' (City) matching contribution to its HOME Investment Partnerships program (HOME) funds to determine whether the City documented and matched its disbursed HOME funds in accordance with U.S. Department of Housing and Urban Development (HUD) regulations. Between fiscal years 2000 and 2003, the City did not provide $3.6 million in matching HOME funds as required by HUD. In addition, the City failed to maintain a system that identified the type and amount of each matching contribution. We recommended the Director of Community Planning and Development require the City to: (1) submit matching contributions in the amount of $3.6 million; (2) update its policies, ensuring that the policies are in compliance with HUD and other federal rules and regulations; and (3) provide documentation of its matching contributions as it draws funds until it has a plan to ensure continued compliance with HUD requirements. Further, HUD should review and monitor the City's plan to ensure the matching deficiency is corrected. The City agreed with the finding and provided a plan to correct the matching deficiency.

Issue Date: February 25, 2005
Audit Report No.: 2005-FW-1005
File Size: 1.14MB

Title: The New Orleans African-American Museum, New Orleans, LA, Mismanaged Its Community Block Development Grants and Did Not Comply with Its Grant Agreements

We audited the City's subrecipient, the New Orleans African American Museum (Museum), as a part of our audit of the City of New Orleans (City) Community Development Block Grant (Block Grant) programs. The City suggested that we audit the Museum due to its concerns about the Museum's activities.

The objective of our audit was to determine whether the Museum administered its Block Grant program funds in an economical and efficient manner and in accordance with the terms of the grant agreements with the City and applicable U.S. Department of Housing and Urban Development (HUD) regulations and federal laws. In addition, we determined whether the City properly monitored the Museum and its use of HUD funds.

Of five City awarded grants, two grants, totaling $745,000, failed to meet HUD requirements. For the remaining three grants, totaling $1,030,000, the Museum failed to document that it met one of HUD's national objectives. Further, the Museum did not exercise financial oversight or management of the $1,073,044 in Block Grant funds received through its five grants. The Museum commingled funds, did not have adequate controls over procurement, and failed to comply with federal and state income tax requirements, resulting in $50,609 in ineligible and $181,474 in unsupported disbursements.

We recommended that the New Orleans Community Planning Development Director require the City to repay its Block Grant programs $774,610 for ineligible and $298,434 for unsupported disbursements, and recover any remaining assets provided to the Museum. Further, the City should ensure agencies possess the ability to administer HUD and other programs effectively and efficiently and seek appropriate administrative sanctions against parties involved in the deficiencies described in the report.

Issue Date: November 5, 2004
Audit Report No.: 2005-FW-1001
File Size: 251.1KB

Title: City of New Orleans Section 108 Program Louisiana ArtWorks,
New Orleans, LA

As part of our audit of the City of New Orleans, we audited the City of New Orleans' (City) Section 108 loan to the Louisiana Artists Guild to construct Louisiana Artworks. With respect to Louisiana Artworks, our audit objectives were to determine whether Louisiana ArtWorks will create enough low- and moderate-income jobs to justify the loan, expended funds for eligible purposes, and adequately documented its expenditures.

Both the City and the Louisiana Artists Guild stated systems were in place to ensure that Louisiana Artworks would create sufficient jobs for the $7.1 million Section 108 loan. However, we suggested the City monitor Louisiana Artworks to ensure it creates the promised jobs. While Louisiana Artworks expended the vast majority of the funds reviewed properly, it overpaid the City's attorney by $1,659 and could not support an additional $17,723 paid to the attorney. Both the City and Louisiana Artworks agreed to support or recover the amounts. Further, Louisiana Artworks needs to strengthen controls over its procurement and administration of contracts. In one instance, Louisiana Artworks did not have a contract with a financial analyst and the expenditure appears to be duplicative. Louisiana ArtWorks should repay the $3,000 that it paid the financial analyst.

We recommended that Louisiana ArtWorks repay the $1,659 in excess charges for legal fees; repay the $17,723 of unsupported funds paid to the attorney or provide adequate support; establish necessary management controls to ensure compliance with procurement requirements, including maintaining a contract log, filing system, and procurement history; and repay $3,000 paid to the financial analyst for duplicative services.

Issue Date: June 22, 2004
Audit Report No.: 2004-FW-1007
File Size: 1.38MB

Title: Audit of City of New Orleans
Desire Community Housing Corporation New Orleans, Louisiana

We completed a review of the Desire Community Housing Corporation (Desire) as part of our audit of the City of New Orleans (City) housing and economic development programs. As a subrecipient of the City, Desire received HUD funding through the City's Division of Housing and Neighborhood Development.

The objective of our review was to determine whether Desire administered its HOME Program funds in an economical and efficient manner and in accordance with the terms of the grant agreements with the City and applicable HUD regulations and federal laws. Through the audit, we also determined whether the City properly monitored Desire and its use of HUD funds.

We concluded Desire did not effectively and efficiently administer its programs in accordance with the terms of the grant agreements with the City and applicable HUD regulations and federal laws. Desire did not develop and implement a sound internal control environment to administer its programs. This resulted in Desire not providing adequate oversight and management of its HUD funded projects. Further, Desire mismanaged $1.1 million of HOME funds on its Bayou Apartments rehabilitation project and $2,039,150 of program income from Liberty Terrace. In addition, Desire made unsupported disbursements totaling $91,885, and violated HUD procurement regulations. The City should have provided sufficient monitoring of Desire to detect the problems sooner and possibly mitigated Desire's mismanagement of limited HOME funds.

We recommended HUD and the City ensure Desire has the necessary controls before awarding any additional grants to Desire. Further, Desire should repay the City the $1.1 million and either, support or repay the $322,352 of unpaid loans from program income and $91,885 in unsupported disbursements. We also recommend HUD aid the City in establishing the appropriate controls, reprogram funds, and take appropriate administrative actions.

Issue Date: March 15, 2004
Audit Report No.: 2004- FW-1003
File Size: 1.22MB

Title: Audit of the City of New Orleans, Section 108 Loan Program, Jazzland Theme Park, New Orleans, Louisiana

We are performing an audit of the City of New Orleans (City). One objective of the audit is to determine whether the City administered its Section 108 Loan Program in an economic, effective, and efficient manner and in accordance with program requirements. To accomplish this objective, we will review the award, implementation, and monitoring of the City’s Section 108 projects. This memorandum provides our conclusions on the City’s Section 108 loan to Jazzland Theme Park (Jazzland). To accomplish our objective we audited the $25.3 million Section 108 loan to assist in the construction of Jazzland Theme Park project (Jazzland). For Jazzland, our audit objective was to determine whether the City complied with the requirements regarding applicant eligibility and requirements; loan requirements; grant administration; and performance reviews.

The City did not comply with section 108 requirement regarding applicant eligibility, loan requirements, grant administration, and performance reviews.

The audit concluded the City paid $7,685,703 in ineligible and unsupported expenditures. The City distributed $1,298,943 ineligible funds because the funds did not have an underlying loan or grant agreement. Of the $6,386,760 in unsupported costs, $2,447,191 related to the last drawdown that the City had no documentation to support the release of the funds. The remaining $3,939,569 related to miscalculations of fees, payments to vendors, and possible duplication of invoices. Further, the City had inadequate controls and management over Jazzland, and did not manage the development of Jazzland.

As a result of poor management, lax oversight, and a failure to follow requirements, the City mismanaged HUD funds. Also, because Jazzland defaulted on the City’s loan, the City will be required to repay HUD from rents it receives from the new owners of the amusement park and from its general fund.

To correct the deficiencies cited in the report, we recommended HUD require the City to repay the $1,298,943 in ineligible expenditures and either support or repay the $6,386,760 of unsupported expenditures. The City should also seek recovery from vendors who inappropriately gained from the disbursements. The City needs to implement policies and procedures to ensure compliance with program requirements. Also, HUD should assist the City in the development and implementation of the policies and procedures prior to approving any additional Section 108 loans. By doing this, the City could potentially use $52 million in available Section 108 funds more effectively. Additionally, HUD should evaluate if actions by officials, contractors, and others warrant administrative sanctions. The City generally agreed with the findings and indicated a willingness to correct the issues cited.

Issue Date: January 30, 2004
Audit Memorandum No.: 2004-FW-1801
File Size: 4.54MB

Title: Logansport Housing Authority, Louisiana Legislative Auditor's Report

The Louisiana Legislative Auditor State Auditor issued a report to the Logansport Authority Board of Commissioners on December 17, 2003. Because the report details that the Executive Director mismanaged and possibly misappropriated $156,434, we have decided to control several recommendations in the report. In addition, we have recommended the Authority pursue civil remedies against the former Executive Director and for HUD to seek administrative sanctions.

Issue Date: February 21, 2003
Audit Report No.: 2003-FW-1001
File Size: 1.79MB

Title: Limited Review of Low Rent Program The Housing Authority of the City of Morgan City, Morgan City, Louisiana

We performed an audit of the Housing Authority of the City of Morgan City's (Authority) Low rent program. The purpose of the audit was to determine the validity of allegations against the Authority. Specifically, we determined: (1) whether the Authority followed federal and Authority procurement requirements; (2) whether the Authority complied with applicable federal requirements and its adopted policies and regarding use of its credit cards and the performance of travel; and (3) the reason for the 1999 Operating Deficit of $168,958. We also reviewed specific allegations regarding an employee’s work for a contractor; and the Executive Director’s employment of Authority personnel for his business.

The audit concluded the Authority did not follow either procurement requirements or policies regarding the use of its credit cards and the performance of travel. Specifically, the Authority: (1) Inappropriately procured $916,205 in contracts; (2) Paid $22,008 in ineligible and unsupported procurement expenditures; (3) Paid $3,850 in ineligible and unsupported travel expenditures; (4) Paid $32,652 to an Authority contractor in violation of conflict-of-interest requirements; and (5) Did not monitor its budget. Further, the Authority did not have procedures that adequately addressed outside employment and businesses. As a result of poor management, lax oversight, and a failure to follow requirements, the Authority discouraged procurement competition, and mismanaged HUD funds. Further, the Authority created conflicts of interest.

We recommend the Authority either support or repay the unsupported expenditures discussed in the findings. The Authority should repay the ineligible amounts. Further, we recommend the Authority follow regulations and procedures to ensure it properly expends funds and that HUD take administrative actions against the parties involved in the conflict of interest. Generally, the Authority agreed to implement our recommendations. The Authority and its Board have been reorganized and its former Executive Director has been terminated.

Issue Date: September 18, 2002
Audit Report No.: 2002-FW-1002
File Size: 1,717KB

Title: Low Rent Housing Program, Cash and Procurement Controls Housing Authority of the City of Houma Houma, Louisiana

We performed an audit of the Housing Authority of the City of Houma (Authority). The purpose of the audit was to determine whether the Authority maintained adequate controls over cash and procurement. Specifically, we determined whether the Authority: (1) expended funds for eligible activities; (2) accounted for collections and deposits; and (3) complied with federal and Authority procurement requirements.

The audit concluded the Authority had inadequate controls and management over cash and procurement. Specifically, the Authority improperly procured $1.1 million in contracts; paid $240,077 in ineligible and unsupported expenditures; did not deposit tenant receipts totaling at least $48,201; and allowed employees to abuse their positions.

We are recommending HUD take action to ensure the current management has the necessary policies and procedures in place to limit future mismanagement; the Authority support or repay the unsupported or ineligible expenditures discussed in the findings; and that HUD should take any warranted administrative sanctions.

Issue Date: June 17, 2002
Audit Memorandum No.: 2002-FW-1804
File Size: 174KB

Title: Morgan City Housing Authority Drug Elimination Grant Program Morgan City, Louisiana

Based upon a request from management, we performed a limited review of the 1999 and 2000 drug elimination grants awarded to the Morgan City Housing Authority (Authority). Our objectives were to determine if: (1) the City used police cars as stated in the grant and (2) the Authority charged accounting services to the grant while they are included in the grant administrator's duties. Our review concluded the City provided the services as stated in the grant and the Authority did not charge HUD accounting fees for this grant. However, we did note the Authority charged $8,710 in ineligible and unsupported costs to the grant and the grant administrator did not perform all the duties as listed in his contract. The Authority agreed to offset future disbursements by $5,710 and to review the grant administrator's services. We recommended the Authority either support or repay the grant the $8,710 and review the grant administrator's contract to ensure the services are needed and provided.

Issue Date: April 5, 2002
Audit Memorandum No.: 2002-FW-1802
File Size: 192KB

Title: Hillcrest Apartments – Upfront Grant Lafourche Parish Housing Authority Lafourche Parish, Louisiana

In response to a complaint, we reviewed a $7.7 Million Upfront Grant HUD provided to the Lafourche Parish Housing Authority (Authority). The purpose of the review was to determine if the Authority properly used HUD funds in the development of City Place I & II.

In developing the new properties, the Authority effectively sole-sourced the developer, who in turn sole-sourced the contractor. HUD provided information on the reasonableness of the cost of the new developments and is confident that the amount paid was reasonable. However, due to financial difficulties, one of the new developments has already reverted to the Authority and it appears the other development might also revert to the Authority. We are recommending HUD continue to monitor the status of these developments to ensure HUD does not incur any unnecessary expenses resulting from default or foreclosure on the loan.

Issue Date: September 25, 2001
Audit Memorandum No.: 2001-FW-1809
File Size: 267KB

Title: Jefferson Parish Housing Authority Limited Procurement Review Jefferson Parish, Louisiana

We performed a limited procurement review of the Jefferson Parish Housing Authority (Authority). As a result of a request for assistance, we reviewed six procurements made by the Authority between1996 and 2000. The contracts reviewed included: (1) SAT Development; (2) Paragon Accounting; (3) Robert Wallbillich, CPA; (4) IWG, L.L.C; (5) Louisiana Housing Development Corporation; and (6) Nova Financial.

Our review objectives were to determine whether the Authority: (1) followed procurement policies; and (2) received all contracted services.

Issue Date: May 10, 2000
Audit Report No.: 00-FW-202-1803
File Size: 53KB

Title: Leesville Housing Authority, Citizen Complaint, Leesville, Louisiana

Our office reviewed a complaint concerning the Leesville Housing Authority (Authority) relating to its use of Comprehensive Improvement Assistance Program (CIAP) funds. The complainant alleged that the Executive Director improperly used Authority funds to roof his personal residence. Also, the complainant alleged that the Authority prematurely replaced the roofs on its buildings and did not follow applicable procurement requirements in using CIAP funds.

We recommend that the Authority either supports its need to replace the roofs or repay the funds that it spent ineffectively. The Authority needs to develop and implement a procurement policy that is consistent with HUD requirements and State law. The Authority also needs to ensure that it documents the need for its CIAP projects, and that it does not repeatedly request funding for projects that it cancels or reduces. Further, the Authority needs to strengthen its internal controls relative to the order, receipt, and payment of goods.

Issue Date: April 26, 2000
Audit Report No.: 00-FW-202-1802
File Size: 849KB

Title: Alexandria Housing Authority - Agreed upon Procedures

On June 7, 1999, the HUD New Orleans Field Office recommended that the Alexandria Housing Authority (Authority) retain an Independent Public Accountant to perform an Agreed Upon Procedures audit of the Authority’s administration/management and operations.

The Authority retained a CPA to perform the agreed upon procedures. The CPA issued his final report on December 6, 1999. The report addresses serious problems at the Authority. Furthermore, the New Orleans Field Office sent the Authority a memorandum, dated March 1, 2000, detailing the required actions needed to correct deficiencies noted in the report. The New Orleans Field Office has been in the process of clearing these findings.

Issue Date: January 19, 2000
Audit Report No.: 00-FW-201-1001
File Size: 848KB

Title: HA of the City of New Orleans, Executive Monitor Contract with Moten & Associates, New Orleans, LA

We performed an audit of the Executive Monitor’s contract with Moten & Associates. The Executive Monitor contracted with Moten & Associates to perform various technical services to improve the Housing Authority of New Orleans (HANO) operations. Our audit objectives included determining whether: (1) the Executive Monitor properly procured the Moten & Associates contract; (2) Moten & Associates charged only eligible and supportable costs; and (3) the contract provided measurable benefits to HANO.

The review disclosed both Andersen Consulting and the Executive Monitor violated federal regulations in obtaining the services of Moten & Associates. Further, Tulane paid $427,074 in ineligible and unsupported costs, including $421,760 for unsupported labor and $5,314 in ineligible travel costs. Neither HANO, the Executive Monitor, nor Moten & Associates could provide satisfactory evidence that Moten & Associates completed the tasks it was paid to perform. Consequently, we could not determine whether HANO derived a measurable benefit from the Moten & Associates contract.

Issue Date: November 6, 1998
Audit Case Number 99-FW-202-1002
File Size: 72KB

Title: HA of St. James Parish Public Housing Drug Elimination Program, Lutcher, LA

We conducted an audit of the Public Housing Drug Elimination Program administered by the St. James Parish Housing Authority, Lutcher, Louisiana (Authority). Our review was to determine whether the Authority, for grant years 1994 through 1996: (1) implemented its drug elimination program awards with satisfactory outcomes and benefits and (2) expended program funds only for eligible activities and in accordance with program requirements.

The Authority did not maintain data or have a system to measure the satisfactory outcomes and benefits of its programs. Without this data, neither the Authority nor HUD can determine whether the Drug Elimination Grant Program has provided satisfactory outcomes and benefits.

Further, the Authority did not properly administer the Drug Elimination Grant Program. The Authority generally relied on the Sheriff's Department to prepare the grant applications and prepare periodic reports to HUD. Also the Authority did not maintain appropriate accounting records and source documents to support its drawdown and use of grant funds. As a result, the Authority: (1) did not have documentation to show how it used about $4,000 it drew down from the 1994 and 1995 grants; (2) used $10,400 to reimburse the Sheriff's Department for purchase of ineligible police equipment; and (3) did not have invoices to support payments of about $1,300 for cameras and travel.

HUD designated the Authority as "troubled" based on its Public Housing Management Assessment Program scores for the year ended September 30, 1993. Subsequently, after the Authority hired several different Executive Directors, HUD contracted with a consultant to manage the day-to-day operations of the Authority and assist in the search for a new qualified Executive Director. In March 1998, the Authority hired an experienced person for this position. HUD's Troubled Agency Recovery Center staff were working with the new Director and her staff to increase the Authority's capacity to effectively and properly manage the Authority's programs and operations.

Date Issued: July 24, 1998
Audit Report No. 98-FW-201-1813
File Size: 65KB

Title: St. Thomas HOPE VI Grant, New Orleans, LA

In response to a private citizen’s confidential complaint, we reviewed the Housing Authority of New Orleans’ (Authority) selection of Creative Choice Homes (CCH) as the developer for the St. Thomas HOPE VI Grant. The complainant said one of the members of the selection committee may have received a house and a job in return for selecting the developer. We could not substantiate the exchange. However, we did find sufficient cause for HUD to reject the selected developer. The problems with the developer resulted from the Authority’s proactive interpretation of resident participation. The Authority lost control over the selection because it allowed five individuals on the eight-member selection panel who were not Authority employees. Further, Creative Choice Homes’ interaction with certain members of the selection panel and St. Thomas residents constitutes both a perceived and actual conflict of interest.

Issue Date: June 15, 1998
Audit Report No.: 98-FW-201-1004
File Size: 244KB

Title: HA of New Orleans, New Orleans, LA

As part of a nationwide audit of the HOPE VI Program, we performed an audit of the Housing Authority of New Orleans' (Authority) Desire and Fischer HOPE VI grants to determine if the Authority: (1) properly procured contracts under its HOPE VI grants; (2) only expended amounts for eligible activities; (3) met the objectives of its Revitalization Plan; and (4) implemented its community and supportive services components effectively, efficiently, and in a manner that will allow the activities to be sustained beyond the grant term. The audit found that the Authority has not satisfactorily administered and monitored its HOPE VI grant activities.

Issue Date: March 3, 1998
Audit Report Number 98-FW-201-1808
File Size: 32KB

Title: HA of New Orleans, LA

The review found the Authority is receiving adequate information from law enforcement for it to identify residents for eviction. Law enforcement reporting showed improvement because of regular meetings and discussions with Authority officials. The review also showed the Authority is improving on its drug and criminal evictions. The Authority has made drug and criminal evictions a high priority. The Authority does need to make improvements to its incident report database. It also needs to solve the important problem of obtaining timely crime lab results. The Authority realizes it can do better and agreed to do so in the future.

Issue Date: October 24, 1997
Audit Case Number 98-FW-201-1002/1997-00877-01
File Size: 102KB

Title: HA of New Orleans

The audit found that the Authority's poor procurement practices resulted in questionable contract costs and not all work being performed. The questionable costs included $43,282 in unsupported charges, $43,619 in unreasonable general and administrative expenses, and $4,466 in excessive charges related to a change order. In addition, neither TAI nor the Authority reduced the contract amount for work required by the contract that was not performed.

Issue Date: April 4, 1997
Audit-Related Memorandum No. 97-FW-201-1806
File Size: 62KB

Title: HA of New Orleans

The review results did not conclusively establish payroll fraud. However, the review disclosed serious deficiencies, including poor workmanship, excessive and overlapping time charges, payroll posting discrepancies, work orders not entered into the system, ordinary work performed using overtime, loose controls over vacant unit work, and other matters needing attention.

Issue Date: March 20, 1997
Audit Related Memorandum No. 97-FW-201-1804
File Size: 22KB

Title: HA of New Orleans

We have performed a limited review of the Housing Authority of New Orleans' (Authority) eviction process. Our review objective was to determine whether the Authority has an effective process for evicting tenants for drugs and criminal activity. The review did not include evaluating the Authority's ability to screen prospective tenants or ensure compliance with other lease provisions. During our examination, we obtained pertinent information regarding evictions and arrests and interviewed applicable Authority staff. We reported the results to you and Authority officials in a December 4, 1996 draft memorandum. The Authority provided verbal comments at a January 17, 1997 exit conference and written comments in a February 5, 1997 letter (see attachment). The Authority generally agreed with our recommendations. The review found that the Authority's eviction policy for drugs and criminal activity needs strengthening in order to be effective.

Issue Date: January 28, 1997
Audit Memorandum No. 97-FW-206-1803
File Size: 21KB

Title: St. Charles Parish Housing Authority

Four allegations claimed: 1) the Program Manager II, in charge of administering the Section 8 department, is incapable of performing his job; 2) the Board Chairman is collecting Section 8 rents on the unit where his daughter resides; 3) HUD is paying rent on an abandoned unit; and 4) a Section 8 owner is living with the tenant. The probe results found substance to the first three allegations. There was insufficient evidence to determine the validity of the fourth allegation.

Issue Date: October 11, 1996
Memorandum No. 97-FW-249-1801
File Size: 25KB

Title: CDBG, Bossier City, LA

Our interviews with your staff, City staff, and a review of records and documents did not reveal any major violations of HUD requirements. Although not considered sufficiently significant to warrant further audit work, we did identify some issues that the City should correct. We also believe the City should give consideration making a policy change on the filing of liens when the City uses Grant funds for demolition of substandard structures.

Issue Date: September 30, 1996
Memorandum No. 96-FW-201-1806
File Size: 12KB

Title: HA of New Orleans

The Authority has not yet implemented the Fleet Management Policy. Authority staff are reviewing the policy to determine how it should be implemented. Meanwhile, the Authority, and consequently its affected employees, are in violation of IRS requirements.

Issue Date: September 23, 1996
Audit Case Number 96-FW-219-1003
File Size: 112KB

Title: Little Flower Estates, Ponchatoula, LA

While the project was in a non-surplus cash position, the owner/management agent improperly spent $284,786 of project funds. Further, HUD did not take appropriate action to detect and prevent the improperly spent funds.

Issue Date: July 17, 1996
Memorandum Number 96-FW-201-1803
File Size: 16KB

Title: HA of New Orleans

We recommend the Authority:

1A. Perform a thorough analysis, with complete and supported estimates, of the cost for garbage collection including: (1) performing the service in-house, including potential liability; (2) formally soliciting bids from outside contractors; and (3) negotiating a fee with the City for garbage collection at its sites.

1B. Not purchase additional refuse collection vehicles or equipment unless it determines that in-house trash collection is the best option based on the analysis per recommendation 1A.

1C. Ensure that purchase follows HUD procurement requirements for non-competitive contracts.

Issue Date: July 5, 1996
Memorandum Number 96-FW-202-1802
File Size: 35KB

Title: HA of New Orleans

During our current review of the Housing Authority of New Orleans (Authority), it has come to our attention that the Department may approve the "outsourcing" of the Authority's resident initiatives. Given the (1) history and present status of the Authority, (2) need for HUD to portray itself as a wise and impartial overseer of scarce resources, and (3) rationale underlying federal procurement regulations, we do not believe this procurement is in the best interest of the Authority or HUD. We strongly recommend that HUD not approve this contract. Further, we recommend the Department reassess its position on another similar procurement.