Montana Audit Reports

Information by State  Print version

Date Issued: April 28, 2008
Audit Report No.: 2008-SE-1003
File Size: 333.73KB

Title:Salish and Kootenai Housing Authority, Pablo, Montana, Did Not Properly Recognize and Account for Program Income from 1937 Act Housing Projects

We audited Salish and Kootenai Housing Authority (Authority) as part of our review of the Office of Native American Programs' guidance on calculating program income for the United States Housing Act of 1937 (1937 Act) housing projects assisted by the Native American Housing Assistance and Self Determination Act of 1996 (NAHASDA). The objective of the audit was to determine whether the Authority calculated program income for NAHASDA-assisted 1937 Act properties in accordance with applicable U.S. Department of Housing and Urban Development (HUD) guidance, regulations, and requirements and to observe uses of revenue from NAHASDA-assisted 1937 Act properties.

The Authority did not have adequate accounting policies and procedures for allocating income from 1937 Act properties receiving Indian Housing Block Grant (Block Grant) program assistance between its general fund and Block Grant programs. It failed to track Block Grant rehabilitation or capital expenses for each property and recognize program income from substantially rehabilitated properties. It also miscalculated the amount of NAHASDA revenue because it included units converted to non-NAHASDA tax credit units in its average expense level calculation. As a result, more than $184,000 in low-rent housing receipts were inappropriately excluded from Block Grant affordable housing funds during the period October 1, 2002, through December 31, 2006, and should be reclassified. These conditions occurred because management created policies and procedures for determining and administering program income that did not comply with applicable guidance and regulations.

We recommend that HUD require the Authority to (1) implement policies and procedures to determine program income in accordance with HUD requirements; (2) update its computation of program income, properly segregating the revenue and allowable expense level calculation for low income housing tax credit properties from other 1937 Act low rent units and reclassifying $174,054 as Block Grant funds, previously withdrawn from the 1937 Act low rent program as nonprogram income; (3) reduce the number of 1937 Act units capable of producing nonprogram income by the nine units that received substantial rehabilitation or capital expenses between 2002 and 2006 using Block Grant funds which exceeded 40 percent of the dwelling, construction and equipment costs and reclassify $10,172 as NAHASDA revenue; and (4) adjust the annual 2007 and forward 1937 Act program income calculations to include all revenue from substantially rehabilitated units as NAHASDA revenue.

Date Issued: January 16, 2004
Audit Memorandum No.: 2004-DE-1001
File Size: 692.5KB

Title: HUD Section 8 Project Based Multifamily Housing Last Star Homes, Section 8 Contract Number MT99-E000-002 Browning, Montana

We completed an audit of Last Star Homes, a Multifamily Housing project, and the compliance with its Section 8 Housing Assistance Payments Contract requirements. The objective of the audit was to determine if current conditions of the project’s unit maintenance, occupancy functions, and project management differ from the conditions identified in the August 2001 Management and Occupancy Review Report (Review Report). Our review concluded that the significant problems and weaknesses identified in the Review Report still exist, even though Blackfeet Housing promised corrective action in January 2003. Last Star Homes was not being operated as a Multifamily Housing project. The current management and the owner were not aware of or familiar with the project’s Use Agreement, Section 8 Housing Assistance Payments Contract, and other program requirements. Therefore, they were not ensuring that these requirements were being met. In addition, they had not requested a Housing Assistance Payment since June 2001. Consequently, adequate funding was not available to fully maintain the property. We also identified at least $9,581.09 of ineligible and questioned training costs. Moreover, the remaining Section 8 Housing Assistance Payments reserve of $2,874,826 was not being utilized as intended.

We recommend that the Denver Multifamily Hub refer the question of whether the Use Agreement can be rescinded to the Office of General Counsel and cancel the Section 8 Housing Assistance Payments Contract if the Use Agreement is rescinded. If the Use Agreement cannot be rescinded; provide technical assistance to the project management to bring the project into compliance; require the Blackfeet Tribe to repay the ineligible costs of $8,389.59; and determine the appropriateness of the $1,191.50 in questioned costs and require the Tribe to repay the amount determined to be ineligible.

Date Issued: July 26, 2002
Audit Memorandum No.: 2002-DE-1804
File Size: 361KB

Title: Tamarack Property Management Company, Billings, Montana, HUD-Insured Multifamily Properties Management Agent

We completed a limited scope review of Tamarack Property Management Company, Billings, Montana, Management Agent for HUD Multifamily properties. The objectives of the review were to determine if Tamarack Property Management Company (Tamarack) is:

* Properly preparing and submitting the Section 8 Housing Assistance Payment Voucher requests; and,

* For one property, properly administering the mandatory meals program and making timely deposits to the reserve account.

We determined that Tamarack has established effective management controls over the occupancy functions relating to the HUD-insured properties. They have developed a detailed Policies and Procedures Manual, which is being followed by the site managers of the properties for which we did site reviews. At the time of our site review, Tamarack was in the process of updating and expanding the Manual to incorporate recent HUD requirement changes.

We reviewed documentation maintained by Tamarack and at the site to determine if one property was properly administering the mandatory meals program and making the required reserve account payments. Effective management controls have been established for the mandatory meals program.

Date Issued: September 28, 2001
Audit Report No.: 2001-DE-1003
File Size: 135KB

Title: Review of Foster and Associates’ Management Activities for Clark Fork Manor and Whitefish Manor, Kalispell, Montana

Under HUD requirements, management agents for HUD insured projects are to execute Management Agent’s Certifications that specify primarily that a management agreement will be executed and that the management agent will administer or operate the project in conformity with HUD requirements. While the Management Agent, Foster and Associates, have executed the needed certifications and been collecting management agent fees, they have not fulfilled the terms of the certificates or administered the projects in full compliance with HUD requirements. The required written management agreements had not been executed at the time of our site work. A proposed "Management Plan/Agreement" was subsequently established for Clark Fork Manor; however, it did not contain required statements. Officials of the Management Agent also have been serving as full time employees of the projects and receiving salaries.

For Clark Fork Manor, the Management Agent received $153,866 in management agent fees for the thirty-month period ending June 30, 2001. During this same period, an official of the Management Agent, as the project administrator, received $141,516 in salaries. For Whitefish Manor, the Management Agent received $11,247 in management fees for the twenty-one month period ending January 31, 2001. An official of the Management Agent, as project manager, also received $51,238 in salaries for the same period. Receiving both management agent fees and full time administrative salaries is in violation of HUD requirements.

The Management Agent has not ensured that the required accounting records were properly established and used in the operations of the projects. In addition, the Management Agent has not ensured that the annual financial audits were appropriately performed for the projects. While the Management Agent did not fulfill the required responsibilities, the Boards of Directors for the two projects did not take adequate actions to meet their overall responsibilities to ensure that the projects were operated in conformity with HUD requirements. This included ensuring that the Management Agent was providing the required services for the projects.

Date Issued: September 21, 2000
Audit Report No.: 00-DE-207-1004
File Size: 538KB

Title: Review of Housing Activities and Related Management Controls, Chippewa Cree Housing Authority, Rocky Boy Reservation

We have completed a review of the Chippewa Cree Housing Authority’s (Authority) administration of its HUD funded housing programs. We performed the review based upon your staff’s concerns and related audit request. The objectives of the audit were to evaluate the:

1. Housing Authority’s expenditure of funds for two log homes and management’s involvement in developing these log homes;

2. Management controls related to the operations of the Housing Authority and identify any deficiencies or potential problem areas in the controls; and

3. Determine if there were questionable, unsupported, or inappropriate transactions.

Subsequent to the completion of our field work, the HUD Northern Plains Office of Native American Programs conducted a monitoring review of selected activities of the Authority and issued their February 20, 2000 Final Monitoring Review Report and High Risk Designation for the Indian Housing Block Grant.

Our review identified basically the same conditions that was identified and presented in HUD’s report. The Authority’s management control structure over its various housing operations is deficient and needs to be established and/or strengthened. Our audit report augments HUD’s review report.

Date Issued: April 16, 1999
Audit Memorandum No. 99-DE-202-1801
File Size: 41KB

Title: Review of Housing Activities and Related Controls Whitefish Housing Authority Whitefish, MT

We identified significant management control weaknesses in the operational functions of receipts, disbursements, and the administration of the Comprehensive Improvement Assistance Program grants. The deficiencies occurred because the prior Executive Director had full control over the operations of the Authority. The prior Executive Director set up written policies and procedures that were insufficient and incomplete. The Board of Commissioners did not provide effective oversight. Due to the weak controls and inadequate administration, the Authority had limited assurance that program monies were properly received and used for appropriate Authority activities.

Issue Date: May 30, 1997
Audit Related Memorandum No. 97-DE-301-1802
File Size: 34KB

Title: Council for Concerned Citizens, Great Falls, MT

We reviewed Council for Concerned Citizens' accounting books and records, as well as HUD's files. Our review also included interviews with Council for Concerned Citizens officials and personnel, and HUD officials. During our audit we did not find any misappropriation of federal funds, nor any violations of subcontractual agreements. However, we have addressed a $10,000 dispute between Council for Concerned Citizens and one of its subcontractors. At the conclusion of our audit, Council for Concerned Citizens was closing out their four HUD-funded Fair Housing Initiatives Program grants, and subsequent to our audit, Council for Concerned Citizens dissolved as a non-profit corporation. Because of these events, we have also included information related to the close-out of Council for Concerned Citizens' four HUD-funded grants.