Chelmsford Housing Authority

This is a Massachusetts State Auditor review of selected Chelmsford Housing Authority operations covering January 1, 2008 through June 30, 2010.

“In accordance with Chapter 11, Section 12, of the Massachusetts General Laws, we have conducted an audit of certain activities of the Chelmsford Housing Authority for the period January 1, 2008 through June 30, 2010.”

Auditors checked whether the housing authority followed laws and rules, whether its internal management controls were adequate, and whether it had fixed issues from a prior audit.

“The objectives of our audit were to determine the Authority’s compliance with applicable laws, rules, and regulations and to review and analyze its management controls and practices over the following areas and functions for the purpose of determining their adequacy: (1) tenant selection; (2) preparation and reoccupation of vacant units; (3) rent determinations; (4) collectability of accounts receivables; (5) site inspections; (6) payroll, travel, and fringe benefits; (7) disbursements; (8) inventory controls over property and equipment; (9) contract procurement; (10) cash management and investment practices; (11) Department of Housing and Community Development (DHCD)-approved budgets versus actual expenditures; (12) level of need for operating subsidies and operating reserves; (13) administration of development and modernization funds to determine, among other items, the existence of excess funds; and (14) the Massachusetts Rental Voucher Program.”

Public housing authorities manage homes, public funds, payroll, repairs, and equipment, so weak accounting or recordkeeping can affect both residents and taxpayers.

“Authority expenditures to determine whether they were reasonable, allowable, and applicable to the Authority’s operations and were adequately documented and properly authorized in accordance with established criteria.”

If you live in Chelmsford, pay taxes, or rely on public housing programs, this report tells you whether local housing funds and property were being managed properly and where corrections were needed.

“Property and equipment inventory-control procedures to determine whether the Authority properly protected and maintained its resources in compliance with DHCD requirements.”

The housing authority was generally compliant in the areas tested, but auditors identified four main issues: prior problems only partly fixed, incorrect Medicare withholding, depreciation errors, and incomplete inventory controls.

“Based on our review, we have concluded that, except for the issues addressed in the Audit Results section of this report, for the period January 1, 2008 through June 30, 2010, the Authority maintained adequate management controls and complied with applicable laws, rules, and regulations for the areas tested.”

The housing authority was expected to finish repairs where appropriate, keep working with DHCD on condominium sales, correct tax filings and reimbursements, fix accounting records, and keep inventory updated each year.

“The Authority should continue to review all of its assets and update its inventory list annually to ensure that all assets are adequately accounted for in accordance with DHCD’s inventory policy.”

The largest dollar issue was an accounting error that overstated accumulated depreciation by $909,476, meaning the financial statements did not show the correct asset value as of June 30, 2010.

“Our review revealed that errors were made in the Authority’s calculation of the accumulated depreciation of its assets, which resulted in an overstatement of $909,476 in the Authority’s accumulated depreciation financial statement balance for its 400-1 project.”

“Depreciation” means spreading the cost of a building or piece of equipment over the years it is expected to be useful, instead of treating the whole cost as used up right away.

“The systematic allocation of the depreciable amount of an asset over its useful life.”