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Oklahoma Audit Reports

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Issue Date: June 3, 2010
Audit Memorandum No.: 2010-FW-1804
File Size: 55KB

Title: The City of Oklahoma City Had the Capacity to Manage Recovery Acts Funding

As part of the Office of Inspector General's commitment to ensure the proper use of America Recovery and Reinvestment Act and Housing and Economic Recovery Act funds, we assessed the City of Oklahoma City's capacity and risks in three areas: internal controls, financial operations, and procurement. Our review did not disclose any reportable conditions or control deficiencies.


Issue Date: May 13, 2010
Audit Report No.: 2010-FW-1003
File Size: 193KB

Title: The Housing Authority of the Sac and Fox Nation of Oklahoma, Shawnee, OK, Did Not Demonstrate the Administrative Capacity To Appropriately Expend Its Recovery Act Funding

We audited the Housing Authority of the Sac and Fox Nation of Oklahoma's (Authority) American Recovery and Reinvestment Act of 2009 (Recovery Act) funds. The objective was to determine whether the Authority had the capacity to use its Recovery Act funds in accordance with U. S. Department of Housing and Urban Development requirements. We reviewed the Authority because of concerns identified in a previous audit of the Authority. The Authority did not always administer its procurement contracts or acquire property for planned Recovery Act activities in accordance with requirements. Specifically, it did not prepare a cost estimate or technical evaluation factors for its architectural services contract or acquire two low-rent homes in accordance with HUD regulations. Further, it charged Recovery Act expenditures to other grants, which resulted in an inaccurate Recovery Act report. Until the Authority implements the necessary controls, it lacks the administrative capacity to expend its Recovery Act funding in accordance with requirements. We recommend that the Administrator for the Southern Plains Office of Native American Programs initiate enforcement actions to require the Authority to follow procurement and acquisition requirements; ensure that staff understands and complies with procurement and environmental review requirements; and properly report Recovery Act activities. Further, the Administrator should increase monitoring and oversight of the Authority's Recovery Act planned activities and/or provide technical assistance and enter into a performance agreement with the Authority.


Issue Date: January 20, 2010
Audit Report No.: 2010-FW-1002
File Size: 935.32KB

Title: The Housing Authority of the Sac and Fox Nation of Oklahoma, Shawnee, Oklahoma, Improperly Spent More Than $800,000 in Contracts and Did Not Always Operate in Accordance with HUD Rules and Regulations or Its Own Policies

We audited the Housing Authority of the Sac and Fox Nation of Oklahoma (Authority) due to a U. S. Department of Housing and Urban Development (HUD) request. Our objective was to determine whether the Authority expended its Indian Housing Block Grant (grant) program funds in accordance with HUD rules and regulations.

While the Authority has improved since HUD's fiscal year 2006 monitoring review, it still needs additional improvement. Because the Authority did not always follow HUD requirements or its own policies, it did not perform the required environmental reviews or independent cost estimates or acquire appropriate bonding documents for procurement contracts. This deficiency resulted in the misspending of more than $800,000 and could lead to additional misspending of more than $250,000 for a contract still in progress. Also, the Authority did not: (1) maintain its low-rent housing inventory in a decent, safe, and sanitary manner or enforce its unit condition policies and procedures for mutual help housing; (2) follow up on previously failed inspections; or (3) expend grant funds within the year requested. In addition, the Authority did not receive all of its funding back from the Sac and Fox Nation of Oklahoma (Nation) after the Nation reestablished the Authority. The Authority was working with its accounting firm to determine the amount of funding the Nation needs to return to the Authority.

We recommended that the Administrator, Southern Plains Office of Native American Programs, initiate enforcement actions to require the Authority to (1) support or reimburse $809,547 and put to better use $269,604 for the contracts without appropriate environmental reviews and for the ineligible hotel expenditure; (2) correct both the deficiencies identified during our inspections and the inaccurate record keeping of funding requested for specific grant years; (3) implement policies and procedures to ensure that it maintains units, follows up on inspections, and turns around units within established timeframes; and (4) continue to work with its accounting firm to determine the correct amount of funding the Nation needs to return to the Authority.


Issue Date: July 23, 2009
Audit Report No.: 2009-FW-1014
File Size: 310.58KB

Title: Cypress Ridge Apartments, Oklahoma City, Oklahoma, Owner’s Agent Received and Paid More Than $742,000 Contrary to HUD and Regulatory Requirements

In response to a request from the U. S. Department of Housing and Urban Development (HUD), we audited Cypress Ridge Apartments' use of HUD-insured mortgage loan proceeds and property operating funds governed by a regulatory agreement. William Commercial Property Management (agent) was the management agent and general contractor for the multifamily rehabilitation project under taken with funding insured under Section 221 (d)(4) of the National Housing Act.

The audit objective was to determine whether the agent used project and operating funds consistent with the regulatory agreement and HUD regulations. Specifically, we wanted to determine whether the agent (1) used loan proceeds for other than reasonable project expenses, (2) used operating funds to pay other than reasonable operating expenses and necessary repairs, and (3) paid distributions from other than surplus cash.

The agent obtained and used funds contrary to the regulatory agreement. It received loan proceeds totaling $356,400 without construction cost documentation to support the release of proceeds. From the operating account, it paid related entities and others $386,007 without required justification for payments. As a result, the agent drew and paid out amounts without assurances that it used the funds for legitimate expenditures. This condition put HUD at a greater risk of loss on the mortgage loan insured by the Federal Housing Administration (FHA). The owner did default on the loan with a resulting loss of $3.75 million to FHA .

We recommended that the Acting Director of the Office of Multifamily Housing, Kansas City hub, require the owner to either support or repay HUD more than $356,000 for loan proceeds it received and support or repay HUD more than $386,000 paid out of the operating account. We also recommended that HUD's Acting Director of the Departmental Enforcement Center take appropriate actions against the ownership and management agent for violating the project's regulatory agreement.


Issue Date: June 26, 2009
Audit Report No.: 2009-FW-1010
File Size: 480.06KB

Title: Harry Mortgage Company, Oklahoma City, Oklahoma, Overstated the Financial Wherewithal of the Owner and General Contractor and Overestimated the Qualifications of the General Contractor When Underwriting the Cypress Ridge Apartments’ $5.87 Million Loan under the Multifamily Accelerated Processing Program

In response to requests from the U. S. Department of Housing and Urban Development (HUD) and Senator James Inhofe, we audited the property owner's application and the loan processing and underwriting of the HUD-insured mortgage loan to Greystone Apartments, Inc., for Cypress Ridge Apartments. Harry Mortgage Company, the lender, processed and recommended loan approval under the multifamily accelerated processing (MAP) program.

The audit objective was to determine whether the lender satisfied HUD requirements for processing and underwriting the $5.87 million mortgage loan to rehabilitate Cypress Ridge Apartments.

The MAP lender's underwriting analysis did not assess, as required, the financial wherewithal of the owner and general contractor, which are related entities, or the construction capabilities of the general contractor. As a result, the MAP lender did not identify risk and take necessary corrective action before recommending the loan for approval. Based on the lender's recommendation, HUD approved the project and general contractor. The project failed, resulting in a $3.7 million loss on the mortgage loan insured by the Federal Housing Administration (FHA).

We recommended that the Acting Director of HUD's Kansas City multifamily hub request that the Mortgagee Review Board take action against Harry Mortgage Company for negligence that resulted in a default and a resulting FHA insurance claim on Cypress Ridge Apartments.


Issue Date: August 4, 2008
Audit Report No.: 2008-FW-1012
File Size: 854.48KB

Title: The City of Tulsa, Oklahoma Allowed Its Largest Subrecipient to Expend $1.5 Million in Unsupported CDBG Funding

We audited the City of Tulsa's (City) Community Development Block Grant (CDBG) program due to a departmental request. Our initial objective was to determine whether the City expended CDBG funds in accordance with U. S. Department of Housing and Urban Development (HUD) rules and regulations. Based upon the initial results, we modified the objective to determine whether the City ensured that its largest subrecipient, the Tulsa Development Authority (Authority), expended CDBG funds within HUD rules and regulations for its acquisition, clearance, relocation, and disposition activities.

While the City generally monitored other subrecipients, it did not monitor or supervise its largest subrecipient, the Authority. From October 1, 2005, through September 30, 2007, the Authority inappropriately expended $1.5 million for its CDBG acquisition, clearance, and relocation activities. However, it did not have specific disposition plans for its CDBG-acquired properties and only benefited the low- to moderate-income community "whenever possible." In addition, the Authority's acquisition and clearance projects did not have the HUD-required environmental reviews.

We recommended that the Director, Oklahoma City Office of Community Planning and Development require the City to adopt written policies and procedures for its CDBG program for day-to-day operations that include procedures to ensure that it monitors all of its subrecipients in accordance with HUD and local requirements; require the Authority to develop and implement specific plans for its future CDBG acquisitions and currently owned CDBG properties that will benefit the low- to moderate-income community as a whole and individually, which would put more than $8.9 million to better use; support or repay more than $1.5 million for funds that the Authority could not support in performing its acquisition, clearance, relocation, and disposition activities; and perform the necessary environmental reviews when acquiring or clearing land.



Issue Date: October 26, 2007
Audit Report No.: 2008-FW-1001
File Size: 2.68MB

Title: The Housing Authorities of the City of Konawa, City of Langston, City of Pauls Valley, City of Wynnewood, Town of Cheyenne, and Caddo Electric Cooperative Improperly Awarded Their Management Contracts and Did Not Manage Certain Operations or Administer Funds Properly

At the request of HUD, we audited Green River Management, Inc., (Green River) which managed the Housing Authorities of the City of Konawa, City of Langston, City of Pauls Valley, City of Wynnewood, Town of Cheyenne, and Caddo Electric Cooperative. Our objective was to determine whether the housing authorities appropriately procured Green River as their management agent, maintained properties, and carried out their financial responsibilities in accordance with HUD rules and regulations and their policies and procedures.

Our audit disclosed that the housing authorities did not procure its management agent contracts. Also, the housing authorities did not use more than $199,000 in accordance with requirements and unnecessarily paid a commissioner of Konawa $5,858 as an insurance agent when they could have purchased the insurance directly from the company. Further, Langston did not maintain its units in good condition or manage certain aspects of its operations in accordance with requirements. As a result, between January 2005 and March 2007, the housing authorities misspent $205,174. In addition, the housing authorities can put $84,332 to better use by reprocuring the management agent contracts.

We recommended that the Oklahoma City public housing program center coordinator to require: (1) the housing authorities to reprocure its management agent contracts; (2) Langston to correct is physical conditions and implement procedures to ensure its units are maintained in a decent, safe, and sanitary conditions; (3) the housing authorities to support or repay a total of $205,174; and (4) the housing authorities to comply with HUD and state requirements.


Archived Audit Reports

Audit Reports issued between 1995 and September 30, 2007 are available on our Archives website.

 
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