LUMBERTON — For the second time in less than a year, the Lumberton Housing Authority has been cited for not administering its Public Housing Program in accordance with the requirements of the U.S. Department of Housing and Urban Development.
But according to the authority’s attorney, most of the problems in the recently released audit report from HUD’s Office of Inspector General have been corrected or are being corrected.
Kimberly Jones said Monday that concerns in the audit were brought to the authority’s attention early this year when HUD released its 2012 management review. In the spring, HUD had found the Lumberton Housing Authority to be in violation of conflict-of-interest requirements, to lack adequate controls over its disbursements, and that it failed to maintain an adequate inventory control system.
“We have reorganized to make operations more efficient,” Jones said.
The latest audit, which was conducted from March through July, covered the period from January 2010 through February 2013.
The audit was initiated at the request of HUD’s Office of Public Housing in Greensboro after procurement and internal control issues were found during the management review. During that review, the authority was found to have 13 serious programmatic findings and 15 observations indicating potential program non-compliance.
The authority manages 729 low-income public housing units and administers 596 housing choice vouchers. In 2012, it received $2.7 million in HUD money to administer its housing program and almost $990,000 for capital projects.
“The authority lacked adequate controls over its financial operations. Its management and board failed to create an internal control environment that included sufficient written policies and procedures and a knowledgeable, properly trained staff,” according to the Inspector General. “As a result, the authority did not always accurately account for its inter-fund program balances, improperly coded $16,368 in expenses to its revolving fund and asset management properties, and improperly drew down $9,706 in capital funds.
“The authority generally failed to follow HUD’s procurement regulations or its own procurement policy. This condition occurred because the authority’s management and board failed to implement sufficient internal controls over the procurement process,” the report said. “As a result, the authority could not assure HUD that it procured goods and services at the lowest cost using full and open competition. For the procurements we reviewed, the authority was unable to support more than $131,000 in spending and another $1,500 for ineligible expenses.”
The report goes on to criticize the authority for not maintaining an adequate inventory control system.
“Management did not implement written procedures for staff to follow, and the authority’s informal system was inadequate,” the report says. “As a result, it could not assure HUD that funds expended for equipment and supplies were properly used for authority activities or that the values reflected in its inventory records were accurate.”
The report credited the authority’s interim executive director, Lemark Harris, with starting to address lack of financial controls. According to the report, during the time the audit was being conducted, Harris hired an accountant to assist with day-to-day operations of the authority, began developing written financial policies and procedures, and began an effort to upgrade the computer system.
Recommendations in the report include that HUD’s director of housing require the authority to perform a five-year review of its accounting records to track all federal funds; policies and procedures be written for financial control, procurement and inventory; $1,500 for ineligible expenditures be repaid; and that support be found for the dispersal of $157,861 in eligible eligible expenditures.
“We working very hard and diligently to correct these problems …,” Jones said. “We want to make sure our residents are not affected. We are cooperating fully with HUD and will continue to do so. … We want the housing authority to serve the citizens of Robeson County and we are trying hard to restore citizen trust in the authority. That’s very important to us.”
Jones said that the agency is still being “closely monitored” by HUD’s Greensboro office.
“As has been the policy since February, we must still get approval from HUD before we can disperse any funds for purchases and expenditures, or approve contracts,” she said.
A letter from HUD informed the local authority in February that it is not to spend or obligate any federal money without HUD approval.
James Meacher, the authority’s executive director for 33 years,, retired shortly after the original HUD findings were released. In March, Harris, executive director of the Pembroke Housing Authority, was named as Lumberton’s interim executive director. Harris currently is overseeing the management of the housing authorities in both Pembroke and Lumberton.
The original 32-page HUD management review brought to light a number of deficiencies, including a finding that the authority entered into contracts that violated conflict-of-interest regulations that could force the return of almost $300,000 in federal money. The bulk of HUD’s findings related to the authority ’s failure to keep policies current as well as the lack of internal controls and “checks-and-balances” for different aspects of financial management and record-keeping.
Jones said in September that a repayment agreement has been reached with HUD for the $300,000 in federal money.
“This (repayment) won’t interfere with operations of the housing authority or negatively affect the residents of authority housing,” said Jones.
According to the original HUD report, the Lumberton authority violated regulations by entering into prep-vacancy contracts with employees and former employees of the authority. Prep-vacancy contracts involve work that must be done to prepare housing units for occupancy.
The two companies named in the report as including housing authority employees, family members of employees, and former authority employees are B&A and B&L.
The HUD report also said that the review found that the authority failed to follow policies requiring leases to be terminated for criminal activity or for non-payment of rent, and that no policy exists for providing for individuals to ever be removed from the authority ’s banned list.
Among other observations made by the original HUD study team were that the housing authority’s tenant and unit management software was difficult for the staff to use and did not produce the effective reports.