Mississippi Audit Reports

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Issue Date: July 31, 2009
Audit Report No.: 2009-AO-1802
File Size: 94.42KB

Title: The State of Mississippi Generally Ensured That Applicants Were Eligible under Phase II of Its Homeowner Assistance Program

We audited the State of Mississippi's (State) administration of the $5.058 billion in Community Development Block Grant (CDBG) disaster recovery funds provided to the State in the aftermath of Hurricane Katrina. The State allocated $2.2 billion to help homeowners in southern Mississippi recover from Hurricane Katrina. Our audit objective was to determine whether the State ensured that applicants were eligible to receive disbursements under Phase II of its Homeowner Assistance Program (Program). Except for a few minor issues related to documentation, the State generally ensured that applicants were eligible to receive disbursements under Phase II of the Program. Therefore, we did not have any findings or recommendations.

Issue Date: April 25, 2008
Audit Report No.: 2008-AO-1003
File Size: 1.77MB

Title: The State of Mississippi's Homeowners Assistance Program Contract Included Ineligible Provisions

We audited the State of Mississippi’s Development Authority’s (Authority) Homeowners Assistance Program (Program), implemented by Reznick Group and Reznick Mississippi, LLC (contractor). 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 audit objective was to determine whether the Authority ensured that the contingency amounts were eligible and supported.

We found that the Authority executed a contract, which included an ineligible provision that allowed its contractor to bill and receive payment for ineligible and unsupported contingency amounts. The Authority paid these amounts to its contractor because it was unaware of federal prohibitions. As a result, the Authority paid its contractor more than $3.9 million for ineligible and unsupported contingency amounts during the period May 10, 2006, to August 29, 2007. In addition, $243,210 in contingency amounts in the contract remained unpaid and could be put to better use.

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 Authority to repay the Program from nonfederal funds more than $3.9 million, which it disbursed for ineligible and unsupported contingency amounts; cease from making further contract payments for $243,210 in contingency amounts, which could be put to better use; and develop and implement a process to ensure that all future contracts and amendments involving State of Mississippi Community Development Block Grant disaster recovery funds do not include such ineligible provisions and amounts.

Issue Date: March 6, 2008
Audit Report No.: 2008-AO-1801
File Size: 431.05KB

Issue Date: May 7, 2007
Audit Report No.: 2007-AO-1001
File Size: 373.29KB

Title: The State of Mississippi’s Homeowner’s Assistance Grant Program, Jackson, Mississippi, Did Not Appropriately Calculate Grants and Monitor the Program

The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General audited the State of Mississippi’s (State) calculation of homeowners’ grant amounts and monitoring of the implementation of its Homeowner’s Assistance Grant Program. Our audit was part of the activities in our annual audit plan. Our objectives were to determine whether the State appropriately calculated the homeowners’ grant amounts and monitored the implementation of its Homeowner’s Assistance Grant Program.

The State did not appropriately calculate the homeowners’ grant amounts when it allowed its contractor, Reznick Group, to deduct unnecessary costs such as unpaid state income taxes, state unemployment taxes, and local ad valorem or property taxes from the homeowners’ grant amounts. These problems occurred because Reznick Group relied on the delinquent taxes shown on the title reports provided by its subcontractor and failed to confirm with state and local tax agencies the total delinquent taxes owed by the homeowners. As a result, the homeowners did not receive the maximum benefits from the program, which was designed to assist them in rebuilding or repairing their damaged homes. In addition, the homeowners with underpaid delinquent taxes still do not have clear titles to their properties.

The State also did not monitor Reznick Group’s implementation of its Homeowner’s Assistance Grant Program. This deficiency occurred because the Mississippi Development Authority (Authority) did not have adequate staff to perform the monitoring and had not established its monitoring processes as required. The lack of monitoring may potentially result in noncompliance with federal requirements such as ineligible and/or unsupported program expenses being charged against the 2006 Community Development Block Grant disaster recovery funds.

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 Authority to immediately (1) cease withholding or deducting unnecessary tax debts from homeowners’ grant amounts, (2) recalculate the grant amounts for those homeowners who have already received assistance and refund such homeowners a total of $159,172 in state and/or local taxes inappropriately withheld or deducted from their grants, and (3) confirm with state and local tax agencies the delinquent taxes the homeowners owed such agencies.

We also recommend that the general deputy assistant secretary require the Authority to immediately establish and implement monitoring procedures and controls for the Homeowner’s Assistance Grant Program to ensure that program requirements are met.

Issue Date: September 12, 2005
Audit Report No.: 2005-FW-1014
File Size: 559.48KB

Title: Realty Mortgage Corporation, Nonsupervised Lender, Flowood, Mississippi

We reviewed a Federal Housing Administration loan sponsored by Realty Mortgage Corporation (Realty) of Flowood, Mississippi, that was identified during our audit of a Federal Housing Administration-approved loan correspondent as not being properly originated according to U.S. Department of Housing and Urban Development (HUD) regulations. Because the sponsor of the loan is ultimately responsible for loan processing deficiencies, we addressed these deficiencies toRealty to determine whether it complied with HUD requirements.

Realty did not comply with HUD regulations, procedures, and instructions in the processing of a Federal Housing Administration-insured single-family mortgage. Realty did not ensure the appraisal included an analysis of the subject sales contract or list price. It also allowed the loan correspondent to charge $1,277 in ineligible fees: a $400 processing fee and $877 in unearned discount points. As a result, the risk to HUD's insurance fund was increased, and the borrower incurred excessive costs for the loan.

We recommend that the Assistant Secretary for Housing - Federal Housing Commissioner take appropriate administrative action against Realty, including, at a minimum, requiring reimbursement of the $1,277 in ineligible fees to the appropriate parties.

Issue Date: March 5, 2004
Audit Memorandum No.: 2004-AT-1802
File Size: 5.15MB

Subject: Saraland Manor Apartments
Gulfport, Mississippi

This memorandum report presents the results of an Office of Inspector General (OIG) inspection of the Saraland Manor Apartments, 8010 Highway 49, Gulfport, Mississippi. Saraland is a multifamily apartment project consisting of two 3-story buildings with 101 apartment units. Saraland serves elderly and handicapped residents, and 100 percent of the apartments are Section 8 subsidized. The OIG conducted a physical inspection of the project in response to a complaint of declining and substandard living conditions that was forwarded to OIG by Senator Trent Lott.

Our inspection identified numerous deficiencies in building exteriors, common areas, and in 32 apartments. Most of the deficiencies were the result of the project's age and inadequate maintenance and repairs. Numerous health (sanitation) and safety deficiencies identified in the apartment units were not cited in the last Real Estate Assessment Center (REAC) inspection. We concluded that the last REAC inspection did not identify all significant health and safety deficiencies and that the owner/management agent did not operate an adequate maintenance program.

OIG concurred with the management decisions taken or planned by the HUD Jackson field office and the REAC in response to the report recommendations.

Issue Date: February 18, 2004
Audit Report No.: 2004-AT-1002
File Size: 1.5MB

Subjec t: Jackson State University Historically Black Colleges and Universities Grant, Jackson, Mississippi

An OIG audit disclosed that Jackson State University's Historically Black Colleges and Universities grants did not achieve the goal of its Homeownership Program to increase homeownership opportunities for low-and-moderate-income individuals in the area surrounding the University. The University spent over $1.36 million or 60 percent of its $2.26 million grants. Only 4 of the 30 houses proposed were completely rehabilitated. The University did not perform adequate analytical reviews to determine the feasibility to acquire and rehabilitate the properties or the financial viability of proposed projects. The University did not consider cost estimates or select the most cost effective projects for acquisition and rehabilitation. As a result, grant funds totaling $10,300 were ineligible and $129,683 were unsupported. HUD needs to recapture the fund balance of $898,235. Further, The University's procurement practices did not comply with Federal procurement and contracting requirements, or State requirements. The University improperly procured $765,084 of goods and services without adequately documenting the procurements, or having a contract administration system.

We recommend that HUD suspend disbursements and disallow the use of grant funds until the University can demonstrate accountability and compliance with the grant agreements. In addition, HUD should require the University to reimburse ineligible costs of $10,300, determine the eligibility of $894,767 in unsupported costs, and recapture the remaining grant balance of $898,235.

Issue Date: July 3, 2002
Audit Report No.: 2002-AT-1002
File Size: 1163 KB

Subject: Housing Authority of the City of Tupelo, Mississippi

In response to a request from the HUD Mississippi State Office of Public Housing, we completed an audit of the Housing Authority of the City of Tupelo's operations. We determined the Authority: (1) improperly advanced over $1.4 million of public housing program funds for non-Federal development activities; (2) did not maintain its conventional low-income housing in good repair and condition; (3) did not spend $293,544 of Comprehensive Grant Program funds, as approved; (4) inappropriately pledged its assets as collateral for loans totaling $1,148,029; and (5) did not adequately control its appliance inventory. We recommended that Authority reimburse the Comprehensive Grant Program for the ineligible and unsupported costs; discontinue further advances; complete inspections and correct all housing quality standard violations; pursue removal of the guaranty for all loans; and reinstate its fixed assets inventory system. We also recommend that HUD debar the former Executive Director.

Issue Date: August 27, 2001
Audit Report No.: 2001-AT-1006
File Size: 919KB

Title: City of Hattiesburg, Mississippi, Community Planning and Development Programs, Hattiesburg, Mississippi

An OIG audit of the City of Hattiesburg’s Community Planning and Development Programs, which included the Community Development Block Grant (CDBG) and Home Investment Partnership Programs, disclosed that the City did not: (1) ensure funded activities met CDBG national objectives; (2) properly administer its rehabilitation program; (3) follow proper procurement and contracting procedures; (4) follow proper payroll administration procedures; and (5) establish and maintain basic operating systems for proper management of its CDBG and Home Programs.

The audit recommended that HUD require the City to reimburse the CDBG Program for all ineligible and unsupported costs, and develop and implement controls and procedures to ensure to ensure proper administration of its programs. Also, the City should correct all deficiencies and Housing Quality Standard violations and submit a corrective action plan to correct the deficiencies identified by HUD during its reviews.

Issue Date: January 3, 2000
Audit Report No.: 00-AT-204-1002
File Size: 1,385KB

Title: the HA of the City of Meridian, Audit of the Grant Programs, Meridian, MS

We completed an audit of the Housing Authority of the City of Meridian. Our audit objective was to determine whether the Authority administered its grants in accordance with the Department of Housing and Urban Development (HUD) requirements.

We focused our audit to evaluate the Authority’s controls and procedures over its administration of its grants awarded for fiscal years 1994 through 1997. We also performed a limited review of the Authority’s procurement activities. This report presents three findings that detail the Authority’s need to improve in these areas. Also, the findings show the Authority has taken proactive steps toward correcting the cited deficiencies.

Issue Date: January 26, 1999
Audit Report No. 99-AT-211-1003
File Size: 1,320KB

Title: Eastover Apartments, Multifamily Mortgagor Operations Indianola, MS

We completed an audit of Eastover Apartments multifamily mortgagor operations. We conducted the audit at the request of the Multifamily Housing Division, Mississippi State Office. Our objectives were to determine whether Eastover Apartments, Ltd. used project funds in accordance with the Regulatory Agreement and in compliance with the Department of Housing and Urban Development (HUD) requirements.

Eastover did not adequately manage the project's maintenance and finances. Due to the mismanagement of the project's operations, the project had deferred maintenance and needed improvements exceeding $900,000. As a result, tenants were deprived of decent, safe, and sanitary housing, and the value of the project used to secure the mortgage has depreciated at an accelerated rate. In addition, excessive Section 8 subsidies were paid by HUD. Therefore, tenants paid less rent than required, while HUD paid increased subsidies.

Issue Date: June 1, 1998
Audit Report No. 98-AT-211-1804
File Size: 68KB

Title: Willow Park, Ltd., Clarksdale, MS

The review disclosed excessive subsidy payments and a need for the Mortgagor to address deferred maintenance.

The Mortgagor and its identity-of-interest management agent did not exercise proper oversight of the certification and recertification of Section 8 tenants. As a result, they failed to timely detect noncompliances by their project manager with program requirements for calculating HUD subsidy. We computed $40,817 in excessive subsidy for a sample of five tenants. The excessive subsidy payments occurred because tenant incomes used to calculate subsidies were understated. Verifications of Employment (VOEs) contained incorrect employment or income data or, in some cases, did not exist. The Mortgagor needs to compute and refund to HUD overpaid subsidy, and implement controls over project personnel.

The Mortgagor also needs to address deferred project maintenance in order to provide tenants the quality housing intended by the Section 8 Program and to protect HUD's interest in the insured mortgage.

Issue Date: September 17, 1997
Audit-Related Memorandum No. 97-AT-255-1818
File Size: 32KB

Title: State of MS HOME Prog., Jackson, MS

Two DECD managers responsible for awarding HOME funds purchased vehicles from an automobile dealership which has an identity-of-interest with a HOME developer. Although DECD had no direct dealings with the developer, and we found no evidence of actual wrongdoing, questions of favoritism and gratuities were raised after the vehicle purchases. The State of Mississippi requires employees to avoid conduct which creates public suspicion or mistrust. DECD needs to develop guidelines and policies to help prevent such allegations in the future.

DECD does not perform adequate analytical reviews of the financial viability of proposed HOME projects. As a result, it cannot conclude with reasonable certainty that the proposed project will be financially sound and thus able to provide affordable housing for the required period of time. DECD recognized the weakness and sought to add an underwriter to its staff; however, budget restraints hindered those efforts.

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

Title: Holiday Apartments/Midland Management CO.

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.

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: January 27, 1997
Audit Case Number 97-AT-241-1002
File Size: 126KB

Title: City of Gulfport, MS

As you requested, we completed an audit of the City of Gulfport, Mississippi's CDBG Program. The report presents the focus of our review along with findings that detail significant program deficiencies and recommended corrective actions.

Issue Date: June 21, 1996
Audit-Related Memorandum 96-AT-211-1820
File Size: 38KB

Title: Broadmeadow Apts, Jackson, MS

Our survey showed that the owners had taken unauthorized distributions in 1994 while the property was experiencing significant maintenance deficiencies. By the close of our on-site survey in March 1996, the owners had repaid the $69,475 in distributions made. The units, however, continued to show evidence of poor maintenance. Consequently, vacant units were not being promptly rented, and housing assistance payments were being withheld by the Mississippi Regional Housing Authority adding to the financial strain on the complex. If this MA cannot be compelled to repair and properly maintain this project, we are recommending that you take action to replace it.