CAMBIOS EN LA DOCTRINA

At the request of two United States Senators, HUD OIG initiated an audit of HUD's administration of HANO, New Orleans, LA. OIG's audit objective was to determine whether HUD's receiver provided adequate management oversight to ensure that HANO complied with HUD's requirements. OIG found that HUD's receiver did not provide adequate management oversight to ensure that HANO complied with HUD's requirements when operating its voucher program and public housing operations. Specifically, HUD's receiver did not ensure that eight of ten sample voucher program units complied with HUD's housing quality standards and six of nine sample public housing units were in good repair. Additionally, the receiver did not ensure that HANO used a rent reasonableness system to avoid excessive payments to landlords, properly calculated or paid voucher program tenant rents, and maintained a proper waiting list for its Section 8 program.

OIG recommended that HUD require the receiver to ensure that HANO (1) conducts annual inspections of all of its voucher program units and supervisory quality control inspections, as required by its (HANO's) administrative plan; (2) implements a process to routinely review the performance of its public housing managers and the physical condition of its public housing units to ensure compliance with HUD's requirements; and (3) develops and implements a method for assessing rent reasonableness to owners, properly calculates and pays rental assistance, and maintains a proper waiting list that complies with HUD's requirements for its Section 8 applicants. (Audit Report: 2009-AO-0001)

ˆˆˆ

HUD OIG audited HUD's administration of HANO, New Orleans, LA, to determine the effect of HUD's receivership on HANO's performance in its contracting activities and financial functions. Specifically, OIG wanted to determine whether HUD's receivership ensured that HANO properly (1) accounted for its fungibility funds, (2) monitored and paid its contractors, and (3) disbursed its accounts payable. OIG found that HUD's receiver did not ensure that HANO (1) correctly supported, expensed, or reported its expensed fungible funds in accordance with HUD requirements, resulting in at least $4.9 million in unsupported and $2.3 million in ineligible expenses (2) monitored and/or paid two of its contractors in accordance with contract terms and HANO's procurement policy, resulting in $97,193 in ineligible and $1,153 in unsupported costs; and (3) supported 10 of 20 accounts payable disbursements in accordance with HANO's financial policy, resulting in at least $15,000 in unsupported costs.

OIG recommended that HUD require the receiver to ensure that HANO provides support or repays the ineligible and unsupported costs. OIG further recommended that HANO provide an accurate

annual progress report, including all eligible fungibility funds expensed in its 2006 annual report, and develop and implement the appropriate controls to ensure that it (1) maintains adequate financial records for the accounts payable disbursements and (2) properly authorizes its accounts payable disbursements to safeguard the accounts payable funding. (Audit Report: 2009-AO-0002)

ˆˆˆ

HUD OIG audited the HUD CDBG Supplemental I Disaster Recovery program, administered by the Texas Department of Housing and Community Affairs (Department), as part of OIG's commitment to HUD to implement oversight of the Disaster Recovery Assistance funds to prevent fraud, waste, abuse, and duplication of benefits. OIG's objective was to determine whether the Department administered Supplemental I Disaster Recovery funds (funds) in compliance with the supplemental appropriation's Federal Register requirements, HUD's policies, and the State of Texas' (State) disaster recovery action plan.

The Department administered the funds in compliance with requirements. The funds were accounted for and were used for eligible program applicants and projects that met national program objectives. (Audit Report: 2009-FW-1004)

ˆˆˆ

The eleventh in HUD OIG's series of ongoing audits of LMDC's administration of the $2.783 billion in CDBG Disaster Recovery Assistance funds, provided to the State of New York following the September 11, 2001, terrorist attacks on the World Trade Center in New York City, concluded that the auditee administered the grant funds reviewed in accordance with HUD regulations and continued to maintain a financial management system that adequately safeguarded funds and prevented misuse. However, two concerns were raised for HUD's attention: the auditee (1) charged legal costs to the World Trade Center Memorial and Cultural program as activity delivery costs instead of administrative and planning costs and (2) had not corrected drawdowns inadvertently charged to the wrong program budgets in HUD's Line of Credit Control System. As a result, the auditee has fewer funds than would otherwise be available for the World Trade Center Memorial and Cultural Program, and HUD's Line of Credit Control System is reporting incorrect amounts for individual budget line items.

OIG recommended that HUD direct the auditee to (1) provide documentation for the rationale to classify legal costs as direct program activity delivery costs instead of as administrative and planning costs so that HUD can make an eligibility determination and (2) enhance its procedures to allow for correction of misclassifications within HUD's Line of Credit Control System as funds are drawn down. (Audit Report: 2009-NY-1003)

ˆˆˆ

As part of the tenth of HUD OIG's ongoing audits of LMDC's administration of CDBG Disaster Recovery Assistance funds, we reviewed the nature of costs incurred under the activity entitled "World Trade Center Memorial and Cultural" program related to the deconstruction of the Deutsche Bank building in New York City. The review raised concern about funding of the deconstruction activity; specifically, that escalating costs since July 2007 have resulted in LMDC reallocating $67.5 million in HUD funds from other previously approved activities and LMDC officials maintaining that, as of September 30, 2007, LMDC had disbursed $27.1 million more than its share of applicable costs. In addition, other costs which LMDC had paid may qualify for cost sharing. As a result, other programs

previously approved by HUD have been impacted, and more HUD funds than may have been necessary were used to pay for deconstruction activity.

OIG recommended that HUD instruct LMDC to (1) provide an updated accounting of deconstruction costs, both aggregate and nonaggregate, and an estimate of anticipated additional expenditures in each of these categories so that HUD may assess the extent to which additional funds may need to be reprogrammed for deconstruction activity; (2) periodically provide HUD a report on the status of efforts to resolve the escrow account underfunding; and (3) provide documentation to support why funds disbursed for the initial building characterization study and air monitoring should not be classified as aggregate deconstruction costs. In addition, OIG recommends that HUD closely monitor the remaining disbursement of HUD funds under this activity. (Audit Report: 2009-NY-0801)

Investigations