U. S. Department of Housing and Urban DevelopmentRegional Administrator

Region IV

Ms. Viola Davis909 Rays RoadStone Mountain, GA 30083

Dear Ms. Davis:

SUBJECT: Freedom of Information Act RequestFOIA Control Number: 20ll-FI-R04-0276l

This is in response to your Freedom of Information Act (FOIA) request dated September27, 2011. In this request, you asked for one copy of an independent forensic audit of theHousing Choice Voucher (HCV) Program the Housing Authority of DeKalb County (HADC)agreed to under Audit Report Number 2010-AT-10lO, and one copy of the settlement agreementbetween HUD and the HADC for the repayment of $2,591,854 misspent funding identified insaid audit.

We are releasing the information that you requested in accordance with the Freedom ofInformation Act, 5 U.S.C 552. There will be no charge for this release of these documents becausethe cost ofthe search did not exceed $25.00

If you consider this a denial of your request, you may request a review of this decisionwithin thirty days of the issuance of this letter. The filing of the request for review may beaccomplished by mailing to the attention of Carole Wilson, Special Counsel, U.S. Department ofHousing and Urban Development, 1250 Maryland Avenue, SW, Suite 200, Washington, DC20024, a copy of the request, a copy of the written denial, and a statement of the circumstances,reasons, or arguments advanced in support of disclosure of the original request for the record.The envelope containing the request and the letter should both clearly indicate that the subject isa Freedom of Information Act request for review.

Your FOIA request, including your identity and any information made available, isreleasable to the public under subsequent FOIA requests. In responding to these requests, theDepartment does not release personal information, such as home address, telephone number, orsocial security number, all of which are protected from disclosure under FOIA Exemption 6.

If you need further, please contact Gloria Simmons, Public Housing RevitalizationSpecialist, at (678) 732-2513 or by email at gloria.simmons@hud.gov.

Enclosures

Create strong, sustainable, inclusive communities and quality, affordable homes for all.Five Points Plaza • 40 Marietta Street • Atlanta, GA 30303-2806 • www.hud.gov e espanol.hud.gov

CorrespondenceCode

Concurrence4APHP

Originator4APHP

Name

Date

Simmons

ConcurrenceConcurrence4APHP

Concurrence

Crittendon

Housing Authority of Dekalb CountyForensic Audit Repayment Schedule

PaymentDue Date Amount Balance

2,591,854.00

9/1/2011 (103,674.16) 2,488,179.84

9/1/2012 (103,67416) 2,384,505.68

9/1/2013 (103,674.16) 2,280,831.52

9/1/2014 (103,574.16) 2,177,157,36

9/1/2015 (103,674.16) 2,073,483,20

9/1/2016 (103,57416; 1,969,809,04

9/1/2017 (103,674.16; 1,866,134.88

9/1/2018 (103,67416) 1,762,460.72

9/1/2019 (103,674.16) 1,658,786.56

9/1/2020 (103,67416) 1,555,112.40

9/1/2021 (103,674,16) 1,451,438.24

9/1/2022 (103,67416) 1,347,764.08

9/1/2023 (103,67416) 1,244,089.92

9/1/2024 (103,674.16) 1,140,415.76

9/1/2025 (103,574 16) 1,036,741.60

9/1/2026 {103,674.16) 933,067.44

9/1/2027 .(103,674,16) 829,393.28

9/1/2028 (103,674.16) 725,719.12

9/1/2029 (103,674.16} 622,044.96

9/1/2030 (103,674.16) 518,370.80

9/1/2031 (103,674.16) 414,696.64

9/1/2032 (103,674.16) 311,022.48

9/1/2033 (103,674.16) 207,348.32

9/1/2034 (103,674.16) 103,674.16

9/1/2035 (103,674.16) (0.00)

May 31,2011

VIA EMAIL TO ADA.H.HOLLOWAY@HUD.GOV AND HAND DELIVERY

Ada Holloway, DirectorOffice of Public Housing, AtlantaFive Points Plaza40 Marietta StreetAtlanta, GA 30303-3388

Re: Response to Address the HADC Improper Use of Net Restricted Assets

Dear Ms. Holloway:

The Housing Authority of DeKalb County (HADC) is writing thiscorrespondence in response to the Field Office request to address the HADCImproper Use of Net Restricted Assets. As stated, in the Audit Report fromthe Office of the Inspector General (OIG) dated August 23, 2010 the HADCwas found to have used more than $2.5 million of its net restricted assets topay ineligible program and administrative expenses for other assisted housingprograms. The Audit Report stated that this condition occurred because theAuthority did not (1) maintain separate bank accounts, (2) properly track itsnet restricted assets funds, and (3) have proper policies and controls in place.As a result, the HADC misused net restricted asset funds that could haveprovided assistance to eligible families in its Housing Choice Voucher (HCV)Program.

The recommendations from the OIG were that the Director of Public andIndian Housing require the HADC to (1) reconcile its books and records todetermine the amount of net restricted asset funds used to pay program andadministrative expenses for various housing programs, (2) reimburse the netrestricted assets fund account from non-Federal funds the $2.5 million or thecurrent amount owed from various housing programs, and (3) implement itsestablished policy for the use of net restricted assets to ensure that netrestricted assets are properly used and bank accounts remain separated forvarious programs.

In response to the recommendations, the HADe performed variousprogrammatic activities to include hiring an outside Auditing Firm (RezniCk) inJuly 2010 to conduct an audit of the Agency in an effort to classify andreconcile the books and records to determine the amount of net restrictedasset funds used to pay program and administrative expenses for varioushousing programs. The audit was completed by Reznick in November 2010.

On November 4, 2011, HUD notified HADC that the HUD Quality AssuranceDivision (QAD) had scheduled the Housing Authority of DeKalb County forparticipation in a Net Restricted Assets (NRA) review of its Housing ChoiceVoucher program. The entrance conference was scheduled for November 30,2011. The primary objectives of the NRA review were to be:

750 Commerce DriveSuite 201Decatur, GA 30030ra, 404-270-25IlOFAX404-27o-2556www.dekalbhouslng.oi-g

Board of Commissioners

Dr. Glenwood RossGIaIrMs. Dorothy WiliamsVIce OI8irMr. George MaddoxCiJmm/sslanerMs. Carleen Cumberbatch~Ms. Pamela McCork/lH3unOJmCiJmm/sslonerMr. Charles YiCOmmi5:>IonerMr. Gregory Worthy, Esq.Generdl Counsel

Mr. Eugene P. Walker, Jr.Executfve DirectDr

• Determine the true NRA balance as of December 31, for 2005 through 2009in support of the Financial Management Center (FMC) prior remotereconciliation.

• Confirm the availability of cash and/or investments sufficient to support thebalance calculated.

The entrance conference was conducted on November 30, 2011. The QAO reviewteam included:

II Nicole Jackson, Atlanta Quality Assurance Specialist• Terry Gratz, Supervisory program Analyst• Lynn Ambrosiano, Louisville Quality Assurance Specialist• Joe Brown, Jackson Quality Assurance Specialist

Prior to completing the NRA audit, the QAD reviewed the Forensic Audit completedby Reznick and concluded that the audit results were insufficient to meet the goalsof their audit to determine the true NRA balance as of December 31, for 2005through 2009 as the Reznick audit only provided data as of December 31, 2009.

The Reznick results were subsequently rejected by HUD and the HADC wasrequested to have an independent audit firm conduct another forensic audit todetermine the NRA balance as of December 31, for 2005 through 2009. Based onthe expense and time involved in contracting a second independent firm, the HADewas granted permission by Ada Holloway, Atlanta Field Office, to conduct aninternal forensic audit.

This task was completed in May 2011 and the HADC is responding with thefollowing comments.

SCOPE AND METHODOLOGY OF INTERNAL FORENSIC AUDIT

The objective of the internal forensic audit performed by the Housing Authority ofDeKalb County was to determine how the Authority expended its net restrictedassets during the specified time frame, July 1, 2005 through June 30, 2009, as citedin the OIG Audit Report. The focus of the audit was on the deficit in Housing ChoiceVoucher programs and the identification of how the government funds were beingused by the programs.

HUD defines the net restricted assets balance as the difference between housingassistance payment funding provided to the Authority and the Authority's validatedhousing assistance payment expenses reported in HUO's Voucher ManagementSystem (VMS) each month. The Housing Choice Voucher (HCV) Program statesthat authorities may only use housing assistance payment funding for housingassistance payments for current calendar year and future calendar year housingassistance payment needs. Authorities may not use housing assistance paymentsfunds or housing assistance payment net restricted assets for Section 8administrative expenses, public housing expenses or development costs, or anyother costs of the authOrity.

The scope of the internal forensic audit performed by the HADC included reviewingthe Authority accounting records, policies and procedures, financial audits andrelated documents.

To ensure the audit was thorough in scope the general ledger and supportingdocumentation were reviewed for the following programs:

1. DHCV - Disaster Housing Choice Voucher Program2. TPV - Tenant Protection Voucher Program3. FSS - Family Self Sufficiency Program4. HOV - Home Ownership Program5. PORT - Portabte Vouchers Program6. DVP - Disaster Voucher Program7. HCV - Housing choice Voucher8. RVP - Relocation Voucher Program9. KHAP - Katrina Homebuyer Assistance Program10. DHAP - Disaster Housing Assistance Program11. VASH - Veterans Affairs Supportive Housing Program

For each program, the HADC performed the following forensic work:

• Prepared the Statement of Net Assets and Statement of Activities for eachprogram;

• Verified the amounts due and to each program;• Investigated the transactions that established the intercompany balances for

each program;• Verified the surplus or deficit for each program;• Verified the reason for the surplus or the deficit for each program;• Identified how the government funds were spent for each program;• Verified that each program is now maintaining separate bank accounts;{II' Verified how HADC tracks the net restricted assets/unearned revenue for

each program; and., Verified that policies and procedures currently in place ensure restricted

assets/unearned revenue are expended as required.

RESULTS OF INTERNAL FORENSIC AUDIT

The findings of the Audit concluded the following Variance to Expense Allocation perHUD guidelines: (Provided with this response is supporting documentation to eachof the items listed. See Attachment A)

1. IT Management Fees - ($1,308,122) additional section 8 expenses wereallocated to this program based on an arbitrary overhead allocationpercentage determined by the Authority's management in place, at that time.HUD allows a $7.50 per unit, per month overhead allocation. The Authoritybegan following HUD guidelines as of 0712008. The work papers reflect thecorrected allocation for the prior periods.

'. c

2. Administrative Salaries - ($114,777) additional expenses over budgeteddollars. The Authority did not adhere to the budget that should have beenlaid out for the cost associated with administrating the program.

3. Administrative Salaries - Temp - ($692,669) additional expense overbudgeted dollars. The Authority used several different Temporary LaborCompanies (Officeteam, Robert Half, Resource Direct) to review, amend andfile information relating to the Housing Choice Voucher Program. OnlyTemporary Services vendors were charged to this account. No salaries orwages were expensed and all temporary labor was discontinued as of07/2009. Upon review, the department was not organized correctly andlacked any oversight from HADC Management, as to the progress of theirwork. Therefore, the Authority incurred substantial expenses without anyverifiable results. As a result, the current administration has had to hiretemporary employees to review, amend and file all of the remaininginformation. The HADC is working diligently to complete this filing andreconciliation project.

4. General Expenses - FICA - ($134,377) additional expense over budgeteddollars. Inadequate budget coupled with additional costs resulted in thenegative variance.

5. Bank Service Charges - ($127,865) additional expense over budgeteddollars. An audit adjusting journal entry was made on 06/30/2008 for$111,925 as a write off from the Portable Vouchers Program. The entryshould have been reclassified to uncollectible accounts.

6. Compensated Absences - ($85,644) additional expense over budgeteddollars. An audit adjustment was made on 07/3112008 to accrue theoutstanding vacation payable liability. The accrual will be reviewed andadjusted to actual liability each year during the annual financial audit.

7. General Expense - Bad Debt Other - ($73.538) additional expense overbudgeted dollars. Audit entries to write off uncollectible accounts. Therewas no allowance made in the operational budget for this expense.

Based on the findings, we concur with the DIG Audit finding that the HousingAuthority of DeKalb County improperly used more than $2.5 million of its netrestricted assets to pay ineligible program and administrative expenses for otherassisted housing programs.

CORRECTIVE ACTION TAKEN

The OIG Audit determined that the Housing AuthOrity of DeKalb County did not haveadequate controls in place to ensure that net restricted asset funds were expendedas required.

The internal controls relevant to their audit o,pjective and assessed were:

1. Compliance with laws and regulations - Policies and procedures thatmanagement has implemented to reasonably ensure that resource use isconsistent with laws and regulations; and

2. Effectiveness and effiCiency of operations - Policies and procedures that theAuthority has implemented to provide reasonable assurance that a programmeets its objective, while considering cost effectiveness and efficiency.

In response, the Housing Authority of DeKalb County has taken the followingcorrective measures to eliminate the above referenced significant weakness in ourinternal controls:

• In October 2009, the AuthOrity moved its housing assistance payments andadministrative fees into separate accounts and transferred its VeteransAffairs Supportive Housing program and Portability funds to a separateaccount. In January 2010, the Authority established a separate bankaccount for its net restricted asset funds.

• Implementation of relevant internal controls to include policies andprocedures to comply with laws and regulations including, but not limited to:

o Internal Control PoliCies and Procedures are being updated inSection 2 of the Standard Operating Procedures and Polices forAccounting Practices Manual for Board approval. A draft InternalControl Policy has been completed and is attached to thisdocument.

o Management has implemented a monthly review process and adeadline to have monthly reconciliations compfeted. We willcontinuously monitor our closing procedures to ensure aconsistent and reconciled closing process. Accountants willfollow a monthly checklist documenting each process as they arecompleted. Accountants I'1ae access to their daily accountactivities through online banking, which will ensure a timelyreconciliation. In addition, the Finance Department maintains abinder with their monthly financials, bank statements, and allsupporting documentations.

o We have updated our procedures to ensure that inter-companyactivities are reconciled on a monthly basis. Currently,accountants reconcile inter-company activities on a monthly basis,which are reviewed by the Accounting Manager. Going forward,the Director of Finance will monitor and ensure inter-companybalances are reconciled timely.

o Management has a schedule in place for booking eliminatingentries for inter-company activities.

o Deferred revenue was recorded for VASH and DHVC programs.

o Each accountant is required to monthly reconcile their general

ledger information with the applicable subsidiary ledgers.Reconciliations will be reviewed by management to ensurecompleteness.

o We are currently working to make certain that payments are appliedcorrectly in order to track receivables and payables. All correctionsare being made in our accounting software.

o Accountants currently have access to their daily bankingactivities which allows us to monitor and reconcile generalledgers and trial balances on a daily basis. Bankreconciliations are reviewed by the Accounting Manager at monthend closing. Going forward, general ledgers and bankreconciliations will be reviewed and monitored on a consistent basisby the Finance Director.

o For fiscal year 2011, a schedule of federal awards is beingprepared based on the HUD guidelines and funding.

o The Finance Department has structured monthly meetings witheach department. Monthly meetings have been established withHousing Choice Voucher and Asset Management Departments todiscuss departmental issues, concerns and operationalimprovements.

o The aged payables are monitored and reconciled on a monthlybasis, and are reviewed by the Accounting Manager.

o As it relates to portability, we are reconciling the historical balancesin the Yardi system to reflect the correct charges and receivablesbalances. These accounts are being required to be reconciled withthe appropriate ledgers on a monthly basis.

The recommendations from the OIG have been addressed as follows:

1. Require the AuthOrity to reconcile its books and records to determine theamount of net restricted asset funds that was used to pay program andadministrative expenses for various housing programs {Housing ChoiceVoucher, Disaster Housing Assistance, Family Self-Sufficiency, Portability,Veterans Affairs Supportive Housing, and Homeownership.

• The Housing Authority of DeKalb County has performed an internalforensic audit and has reconciled its books and records as verified inthe documentation attached. Audit results indicate and substantletea Net Restricted Asset deficit of $2,591,854.

2. Require the Authority to reimburse the net restricted assets fund accountfrom non-federal funds the $2,583,244 or the current amount owed.

• The Housing AuthOrity of DeKalb County proposes the following planto repay the net restricted asset deficit amount of $2,591 ,854 as

identified in the internal forensic audit: HADe will enter into arepayment agreement with HUD and will utilize non-federal funds torepay the deficit balance owed at a rate of $103,674.16 per year for aperiod of 25 years.

3. Require the Authority to implement its established policy for the use of netrestricted assets 10 ensure that the net restricted assets are properly usedand bank accounts remain separated for the various programs.

• The Housing Authority of DeKalb County has implemented itsestablished Net Restricted Assets Policy as attached to maintain arestricted asset account that is separate from its operating funds.These restricted asset funds shall be in separate bank accounts andon separate ledgers. The funds restricted for HAP shall be used forcurrent and future calendar year housing assistance payment needs.The fund shall not be used for any other costs, including payment ofSection 8 administrative fees, public housing expenses, ordevelopment costs. other than for the payment of housingassistance.

Please note that the following attachments substantiate and verify informationprovided in both the HADC Internal Forensic Audit and this correspondence:

Attachment A: Internal Forensic Audit Summary of Work PapersAttachment B: HADC Net Restricted Assets PolicyAttachment C: HADC Internal Controls Policy (Draft)

If you have any questions in reference to this report please do not hesitate tocontact me via email at epw@dekalbhousing.org or phone at 404-270-2503 orDjuana Wellington, Director of Finance via email at djw@dekalbhousing.org or at(404) 270-2509.

Thank you in advance for all of your support as we work to restore the Agency to astatus of high-performer.

Sincerely,

cc: Gloria Simmons, Atlanta HUB

Enclosure

ATTACHMENT A

INTERNAL FORENSIC AUDIT

SUMMARY OF WORK PAPERS

Property =- fiIs_037 hov_035 port_033 dvp_036 hcv_031 rvp_030 \chap_OJ8 dllap_835 vash_030 tpl/J)ort dhc''-640 Yas2.-0S0

Income statement (Summary)Period "" c:t Jan 200S-Dee 2009

Book = Accrual-Total

Accouat Number InlXNlle llatement 2005 2006 2007 2008 2009 Totals11Sa..30).Q4S Interprooram - Dua from-Dek Admin 0 0 0 0 0 033Q0.001.ooo Income - Portability AdmIn Fee 472,752 632,680 732,497 801,942 1.021,518 ~.661,3B933()().()02-ooo Section 8 Fraud Recovery funds Retained 23,763 24,308 24,410 D- O 12,481341~100.000 Section 8 Income Admin Fee-- HCV 2,187.968 2,180,471 2,305,678 2,388.984 5,226,669 14,289,"0341~1DO-OOO Sectlon 8 lname AdmIn Faa • other 0 461,604 1,830,881 (1,030,636) 51,860 1,313,70900ס-ס345000 Fraud r1ICXWery 0 0 0 0 0

Totll Incarn~Reve"ua 2,684,483 3,299,063 4,893,466 2,160,290 6.300,047 19,337,349

_acpen ••4110-000-000 AdmlnlstrBtlve Slilaries - Temp 0 0 (44,D58) 571 0 (43,487)00ס-ס4111-00 AdmlnlBtnltive Salaries 1,632,390 1,730,986 1,738,010 1,854,405 1,906,864- 8,862,6554111-001-000 AclmlnistreUve SalarIeS - Temp 151,129 129,682 327,005 433,594 149,995 1,191,40S4120-000-000 Compensabld absences 18,084 18,935 21,061 94,213 11,36B 163,6614140-000-000 Local TrainInG 0 0 0 11,327 5,997 17,324415O-«JO.OOO Local Trawl - Mileage (Bl) 0 0 11,373 4,089 15,38141JO..ooO.OOo Aalounting Fees 29,233 (19,~30) 46,383 (15,536) 0 40,7504171-000.000 Auditing fees 45,163 18,942 59,446 1,640 22,263 147,4544196-001·000 Office rent 121,723 115,910 114,621 135,450 127,214 614,9184196-002-000 Telephone Expanse 12,154 3,755 9,447 3,085 1,634 30.0754196-003-000 omce Supplies 40,378 32,647 35,628 50,006 42,187 200,846419~ SUndry 26,888 31,169 (15,632) 19,765 16,736 78,9264196-ClOS.ooo Aclverti5lng 7,678 6,290 10,294 6,776 6,286 37,3244196-Q06..COO pagers/Cell Phone 1,170 4,213 3,523 4,218 2,595 16,3194196-001-000 Subsa1pt1onll & Dues 1,595 261 352 352 4,923 7.4834196-008-000 Printing and Binding 4,421 4,535 2,457 4,266 2,538 18,2174196-009-000 Publications 3,335 659 0 726 0 4,72000ס.ס4196-01 Legal Services 11,801 0 0 18,894 8,627 39,32241~l1-O00 Auto AlIow8nC8 19,355 16,197 6,496 6,405 945 49,3984196-()12-OOO Trelnlng and Travel 36,089 29,974 29,827 8,971 190 105,051

4196-013-000 RepaIrs/MaintEnance - Office EquIpment 12,921 17,135 3,729 1,754 602 36,1414196-014-000 Gas PLlrmall88 8,279 13,118 25,085 36,738 14,337 91,5574196-015-000 Postage I Shipping 0 0 264 137 19,288 19,6894196«~ Equipment R.ent21I/Repeirv/l..eases 3,234 11,481 50,076 42,354 45,773 152,9184196-045-000 Background Cilecial/Ctadit/Crhnlnal Reports 20,820 28,418 27,929 21,756 26,086 125,0094196-046-000 Reference Mablnals 0 0 475 0 214 6894196.()47-o00 CoMUlting 829 829 2,065 0 11.446 15,169419f).()S().()OO Computer Expenses 19,045 10,540 5,448 5,320 3,767 44,120419SOS1-OOO NonRoutine Offlce Equipment 10,620 4,945 1,315 13,881 111 30,932419&-052-000 OffIce Storage 6,090 4,734 5,815 8,013 12.837 37,4894196-053-000 PaVroll ServIces 3,346 3,418 2,115 2,402 2,513 13,7944196-055-000 BlInking Services Charges 16,891 21,161 13,574 140,202 33,037 224,8654196-058-000 Scholarshfp Fund Q 0 ° 0 1,000 1,0004197..001-000 Property Management Fee D 0 ° 0 (t,736) (1,736)4197{1()2-000 Asset Management Fees D 0 0 401,328 806,657 1,207,9854197-003-000 IT Management Fees 0 221,156 1,656,505 843,718 246,833 2,968,2124197~ Ac:ctg Management Fee - Bookkeeping Q 0 0 0 259,098 259,098423[).(]()3-000 Tenant Sarvlc:es - Food 0 0 0 2 0 24231-008-000 Relocation Costs 0 0 0 3S 0 354430-008-000 M&lntlen8noe - Auto Repair 8,023 14,405 30,535 52,766 47,182 152,9114430-01&-000 MalntanallClB - Inspections 10,480 13,463 11,270 15,613 3,294 54,nO4430-022-000 MalntanallCB - Renovatlon 2,288 2,288 2,250 0 0 6,8264510-000-000 General Expenses - Workers Camp Ins 26,l!iO 19,795 30,364 50,066 7,593 lU,9684S1D-002-GOO General J:xpen5eS- Property Insurance (124) 3 0 0 0 (121)4510-003-000 General Expenses - General liability 9,275 6,008 20,141 17,070 11,010 69,5644510.(]O4-000 General EllpenHS - Auto Insurance 3,946 2,867 1,611 1,013 1,545 10,9824510-005-000 Genenlll ExpanleS - Dao Insruanoe 1,576 907 83 0 0 2,5664.S10.00a-OQo General Expenses - Uabllltv Insuf1lnc:e 10,476 11,013 11,949 11,970 11,949 57,3574540-000-000 General expenses - Emp. Benefit Cont. 0 0 a 0 (296) (296)4.540-001-000 General ecpenses - FICA 126,333 133,9S9 132,973 138,511 U9,554 611,3604540-002-000 General ElIpenses • Health 204,887 191,989 204,150 259,019 287,732 1,148,3714540-0Q3.()00 Gennl Expenses - ReUnamant 155,687 164,015 153,057 161,409 212,878 847,0464540-004-000 General EJq)enses - Ufe 1,881 1,448 2,528 2,922 3,198 11,9774540-005-000 Genal'lll Expenses - Dental 0 3,495 13,587 8,837 16,548 42,467454().OQ~ GenBt'lilI Expanses - Disability 2,820 2,892 3,255 2,462 4,336 15,765

4540-007-000 Ganeral Expenses· GA Ilnemploment Taxes 4,846 2,087 15,970 2,331 8,752 33,9924571..QQO-OOO Genel'lll Expenses - Bad Debt Other 21,780 0 0 52,288 21,250 95,3184S90-7()(H)OO OveriJead Fee • Salary I Benllflt 585,113 418,625 0 0 0 1,003,73845~701-OOO Overhead Fee - Other Admin 293,420 196,214 0 0 0 489.6344591...QOO.OO() Other General Elcpense • Admin Fee 24,302 16,422 0 191,567 ° 232.2914S9~O-OOO Utility 08pos1t AssIstance Payment (DVP) 0 0 0 0 0 04594-002~O Program R.eflInd Pavments 0 0 0 0 0 °4595-001-000 Consulting Services 18,651 0 0 a 0 18,651

~ __ '.-:""~~_"tl..."Totalbpaneu 3.776~990 ..~,66~.68S 4,773,638 5,135,991 4,578,899 21,929,:W3

Nit Income I (IAI•• ) (1,092,507) (364,622) 119,828 (2,975,7011 ~721,148 (2,591,854.

HOusinl Authority at De/ailb CountyExpense Summary - Overqe

IIManqement Fees 2fJlJ7 (942.025)2008 1366.os7) j1.308.122)

Administration salaries 2007 UO,8662008 (33,866)200J . (191.777) (U.1,777)

Admlnfstratlon salaries - Temporary "1JXJ7 (217.945)2008 (iS5.699)2009 (109,025) (692.669)

General Expenses - FICA 2DD7 (57,511)2008 {56,863)2009 (lG,D03) (134,377)

Bank ServIce Chlraes 2007 11U7S2008 (125,234)2009 (12,8061 (127,865)

EquIpment RentaVRl!!pain Lease 2007 {22.U7}2008 ,3.043)2009 847 (24.!23)

Compensated AlRrx:ts 2007 4,9372008 (79.213)2D09 (U,368) (85.644)

General Expense - Bad Debt Other 2fXI12008 (52.288)2009 (2l.2SO) £73.538)

GasPurcl8se5 2007 (11,&25)2008 (11.932)2009 5,a6Z (13,195)

General Expense - General Uabllity 2007 (13,518)2008 (7.219)2009 (3,434) (24,171)

All other reatnc:lled account$ 11.827

Total excess expendItUres (2,591,854)

ATTACHMENT B

HADC NET RESTRICTED ASSETS POLICY

Housing Authority of DeKalb County--------Stanclard-Opera"tingi:iiOceciii;es-iiiid PcjjicliSTo,-Accoiiiiiinii PractIces----------

.---~---------------'""'""':'--..----~~--'---------r-------.-.-.--.-.------..- .;-- -----.. --..- ---- --- . -- .-.----_._.--. -- "'--' - _-- _ ..-.--.._--'--.---- -".- -_- ----..- --..-- -..-- ---.-.-Sec. 16.1.0 ; NET RESTRICTED ASSETS: POLICY .~~•. ~~..• '"' ...•.,_."c._ .,.: _.", ... ,..•.•..... _._ " .... ,~.•..•....•... _ ..._ .... _••...... _ ........•.. '~.'~ _ .. _.__ .. _. ,_'. .•. .__ "._,_ ¥ •.•••• I

I •

I 1Policy: (as approved by Board Resolution No. , MMlDDIYYYY)

1II

16.1.1 I

I16.1.2 jI

Ii

16.1.3

POLICYIt is the policy of the Housing Authority to DeKalb County to maintain arestricted asset account, separate and apart from its operating funds.

Restricted asset funds shall be maintained in separate bank accounts, and onseparate ledgers.

Net restricted assets shall only be used for its intended purpose as restricted byIillD, other governments or by law.

Funds restricted for Housing Assistance Payment shall only be used for currentand future calendar year housing assistance payment needs. Funds shall not beused for any other costs, including payment of Section 8 administrative fees,public housing expenses, or development costs, other than for the payment ofhousing assistance.

Definition

Net restricted asset is defined, per HOD, as the difference between housingassistance payment funding provided to the Authority and the Authority'svalidated housing assistance payment expenses reported in HUD's VoucherManagement System each month.

PROCEDURES

Net restricted assets shall be accounted for separate and apart from OperatingFunds.

Use of net restricted asset is limited only to Housing Assistance Payment.

Reconciliation of NRA

On a monthly basis, Accountant shall reconcile the HAP funding received withthe validated HAP expenses, and the difference between the two shall be

Updated 2010

Housing Authority of DeKalb County-"-"-"-"-siiiiiiiiiitfoperaifiiii'proceiTiiiiS-anii-poiiiiiiiS-;o,.'Accouniiiig--prai:iices----------,.

transferred to the NRA account,

Treatment of overpaid subsidy due to fraud:

16.1.4 The Housing Authority shall retain amounts defined under 24 CFR Section792.202(a) that will flow to Administrative Fees Net Restricted Assets. Theremaining balance of the recovery proceeds that the Authority is not authorizedto retain shall flow to HAP Net Restricted Assets in accordance with 24 CFRSection 792.203(b).

I

16.1.5 I

I

If the Authority takes no action in collecting overpaid assistance, all amountsthat constitute an overpayment of HAP subsidy in excess of $2,500 per reviewmust be reimbursed to HAP Net Restricted Assets from Administrative Fees NetRestricted Assets or other non-federal funds.

Treatment of overpaid subsidy due to PHA error:

16.1.6 If the Authority overpaid HAP due to calculation or other errors in excess of$2,500 per review, 100 percent of that amount shall be reimbursed to HAP NetRestricted Assets from the Administrative Fees Net Restricted Assets or other

j non-federal funds.

!I Use of Administrative FeesII

16.1.71' The HCV program regulations at 24 CFR 982.152 provide that PHAI administrative fees may only be used to cover costs incurred to perform PHA; administrative responsibilities for the program in accordance with HUD

regulations and requirements. During the PHA's current fiscal year, anyadministrative fees received in that PHA fiscal year may only be used for thispurpose. When the PHA fiscal year ends, the amount by which the programadministrative fees paid by JIpD for the PHA fiscal year exceed the PHAprogram administrative expenses for the fiscal year become administrative feereserves.

------------------_ ..__ . -- ..-

Updated 2010

ATTACHMENT C

HADC INTERNAL CONTROLS POLICY

(DRAFT)

Housing Authority of DeKalb CountyStandard Operating Procedures and Policies for Accounting Practices

[i~~..'..i~JJ~_~rr:-!i~~~n!~j_~~y~~~_.__.._._.__._._Iir:.._- --"-'--' -- ----------

Sec. 1.2.1 : Purpose :I •....,. '"u ••,-. ~." ...••.._ ••..' .. ·1 •• ·.= < ,'. _, ••.•.•••••.••••• _ ••• _ •• ••••.••••• - __ ,_~ ••• •• " •• __ •• __ ._, ._ •• .~_._ ~ _ •• _._._.-_ •• " • __ • •

24 CFR 85.20 directs PHAs to develop and maintain a system of internalcontrols, comprising methods and procedures that will safeguard itsassets, check the accuracy and reliability of its accounting data, promoteoperational efficiency, and encourage adherence to prescribedmanagerial policies for accounting and financial controls.

Sec. 1.2.2

1.2.2.8 Internal control system comprises the plan ofthe Authority, and allmethods and procedures adopted to safeguard its assets, check theaccuracy and reliability of its accounting data, promote operationalefficiency, and encourage adherence to prescribed policies. Internalcontrol systems include both internal accounting and administrativecontrols. These two elements of internal control often overlap; however, itis not the intent of this policy to specifically address internaladministrative controls.

Internal accounting controls encompass the plan of organization and allprocedures and records that are designed to provide reasonableassurance that:-----'..---.--

1.2.2.b Obligations and costs are in compliance with applicable laws,regUlations, and policies;

----~--------.-.~-.--1.2.2.c Funds, property, and other assets are safeguarded against waste, loss,

unauthorized use, or misappropriation; and

10f2 Drafted 01/2010

Housing Authority of DeKalb CountyStandard Operating Procedures and Policies for Accounting Practices

r-- ...•••. -•.•• -.. --- .•••.-.-.- •. ~ •• ~. '.- .•- ..-. - •. -._-.".- ••.••-,. -.-- ----.-- ••.. ----.- ••.• - .•. -.- •• : ....•..• -. -..... - ••. - ••• -.., •.•• -••. ~-....•. ~..• -.- •.•- •. -- ••. - .•-

transactions are properly authorized, recorded, and accounted for topermit the preparation of accurate accounts and reliable financial andstatistical reports and to maintain accountability over assets.

~IIj--" .

I..~!.~:.,,~~~~~.-L B.~s.'.c..F.'.~i.!1~.ip.I.t!s..____.'" __. . ..._Ii

--------------------------------------------

1.2.3.a Internal controls are to be established following basic internal controlconcepts, and are to aid in the assurance that the accounting records areaccurate and in conformity with generally accepted accounting principles.The following basic concepts are to be followed:

---~-----._.,.-.,-_ ..__ ._._._. ._ ..,-

1.2.3.b Separation of Duties - Whenever possible, no individual is to havecomplete control over any type of asset in any entity, department, ordivision of HADe. The work of employees handling public assets shouldbe complementary to or checked by other employees. This will not onlydecrease the chance of loss by means of fraud or dishonesty, but willalso provide a means to detect errors.

---.---.- •. ._---,---_ ..-1.2.3.c Sound Policies and Procedures - Every effort is to be made to ensure

that the assets of the Authority are properly handled. By supplyingemployees with strict control procedures and ensuring that they arefollowed through the use of checks and audits; the chance of losses willbe greatly decreased.

1.2.3.d Authorization and Record Procedures - A system of authorization andrecord procedures is to be provided in order to assure reasonableaccounting control over assets, liabilities, revenues, and expenses. Thisincludes the use of such forms as invoices, vouchers, and writtenreceipts.

20f2 Drafted 01/2010