Easton Housing Authority
July 30, 2015 · Read the full official report (PDF) ↗
Published July 30, 2015 Audit covers April 1, 2012 – March 31, 2014 Under Suzanne M. Bump · 2011–2023
source
“The Authority incorrectly allocated a net amount of $3,746 to its state programs.”
Read the plain-English breakdown
This is a Massachusetts State Auditor performance audit of the Easton Housing Authority covering April 1, 2012 through March 31, 2014.
“I am pleased to provide this performance audit of the Easton Housing Authority.”
The audit checked whether the housing authority had proper internal controls, followed applicable rules, and made progress fixing problems from a prior audit.
“The objectives of our audit were to review and analyze the adequacy of the Authority’s internal controls and to evaluate its compliance with laws, rules, and regulations applicable to state-aided housing programs in the areas reviewed.”
The housing authority manages public housing and public money, so weak controls can mean lost rent, inaccurate records, or mishandled cash.
“The absence of documented internal controls over cash receipts could result in the mishandling of deposits, including theft, fraud, and improper use.”
If you live in or are waiting for public housing, this matters because vacant apartments should be filled quickly and housing records should be accurate.
“As a result, the Authority may have lost as much as $6,074 in potential rental income, and eligible applicants in need of state-aided housing may have not been placed in housing on a timely basis.”
The authority improved in many areas from the last audit, but several problems were still unresolved and needed formal policies, better records, or corrected accounting.
“The Authority resolved issues identified in our previous audit, including issues related to maintenance, board governance, and recordkeeping.”
Auditors recommended that the authority correct its records, document policies, improve vacancy handling, update inventory controls, and keep issuing required tax forms.
“The Authority should correct its financial records for the fiscal years in question to reflect the proper allocation of these costs.”
This audit is significant because it shows both progress and remaining weaknesses in how Easton’s public housing agency managed public funds, vacant units, assets, and records.
“The Authority had begun performing an annual inventory of some assets, but not all.”
DHCD is the state housing agency that sets rules for housing authorities; a 1099-MISC is a tax form used to report certain vendor payments.
“LIST OF ABBREVIATIONS CAO chief administrative officer DHCD Department of Housing and Community Development IRS Internal Revenue Service OSC Office of the State Comptroller”
5 figure(s) pending source verification - not shown
What the Auditor checked
- Complied Did the Authority have adequate controls over its financial operations, including reasonableness of administrative expenses, credit-card expenditures, employee reimbursements, payroll and benefits, and cash controls?
- Complied Did the Authority have adequate controls over eligibility determinations, tenant selection, rent determinations, and annual rent redeterminations?
- Complied Did the Authority have adequate controls over procurement of goods and services, contracting, and leasing?
- Did not comply Did the Authority have adequate controls over fixed assets, depreciation, and inventory controls over supplies, furniture, and equipment?
- Complied Did the Authority have adequate controls over site inspections to ensure that all units were inspected at least annually to ensure safe and sanitary living conditions as required by the State Sanitary Code?
- Complied Did the Authority comply with the Department of Housing and Community Development’s (DHCD’s) financial reporting and data collection requirements?
- Did not comply Did the Authority have adequate controls over the turnaround of vacant units to ensure that vacant units were refurbished and reoccupied within 21 working days in accordance with DHCD’s Property Maintenance Guide?
- Did not comply Did the Authority have adequate controls over the collection of rent and other revenue and the management of accounts receivable?
- Complied Did the Authority have adequate controls over the expenditure of Community Preservation Act funds to ensure compliance with applicable laws?
- Did not comply Was the allocation of applicable costs between state programs (under DHCD) and federal programs (under the Department of Housing and Urban Development) accurately prorated?
What the Auditor found
Why it matters: State programs were overcharged and financial records did not accurately reflect the proper allocation of management-service costs.
Standard: DHCD’s approval letter required 66% of the contract costs to be charged to state programs. ( DHCD’s approval letter for this contract )
2 recommendations
- The Authority’s management should take the measures necessary to ensure that its fee accountant is provided with all DHCD approval letters for these contracts.agency: disagreed
- The Authority should correct its financial records for the fiscal years in question to reflect the proper allocation of these costs.agency: disagreed
Agency response & Auditor reply
Agency: "The Easton Housing Authority disputes this finding as the changes we have detailed were approved by DHCD and the charges to the State Program were correct as approved by DHCD."
Auditor: "The Authority’s method of allocating the cost of its management fees to its state programs during fiscal year 2014 was not consistent with the requirements of its contract with DHCD."
Why it matters: The Authority may have lost rental income and eligible applicants may not have been housed timely.
Standard: DHCD’s Property Maintenance Guide set a 21-working-day target for turning around vacancies, and DHCD policy required waivers for units vacant more than 60 days. ( Chapter 1 of DHCD’s Property Maintenance Guide; DHCD’s Public Housing Notice 2013-07 )
3 recommendations
- The Authority should take whatever measures it can to continue to reduce the turnaround time of its vacant units.
- The Authority should document the reasons for delays in filling vacant units in its quarterly reporting to DHCD.
- The Authority should request waivers for units vacant more than 60 days in accordance with DHCD’s vacancy policy effective January 1, 2013.
Why it matters: The Authority could not ensure its inventory list was accurate, properly valued, complete, and reconciled to financial records.
Standard: DHCD’s Accounting Manual requires annual physical inventories and comparison of inventory results to equipment records. ( Section 15(D) of DHCD’s Accounting Manual for State-Aided Housing Programs )
3 recommendations
- The Authority should develop and implement written inventory-control policies and procedures, based on the requirements outlined in the DHCD Accounting Manual, to control its inventory adequately.agency: agreed
- The Authority should review and update the inventory asset list to ensure that it is accurate, properly valued, and complete.agency: agreed
- The Authority should perform an annual physical inventory of all fixed assets, reconcile it to the amount on the balance sheet and the inventory list, and update the list as required.agency: agreed
Agency response & Auditor reply
Agency: "The Authority will review and update the inventory list to ensure it is accurate and perform annual physical inventory of all fixed assets."
Why it matters: The Authority could report inaccurate information in its financial statements.
Standard: DHCD’s Accounting Manual requires accounts-receivable subsidiary ledgers to reconcile to accounts receivable on the balance sheet and tenant control account on the general ledger. ( Section 6 of the DHCD Accounting Manual )
1 recommendation
- The Authority should establish formal written policies and procedures to ensure that its accounts-receivable balances are current and that all accounts it deems uncollectible are written off, subject to the approval of the Authority’s board.agency: agreed
Agency response & Auditor reply
Agency: "The Authority will be establishing formal written policies and procedures to ensure that its account receivable balances are current and that all accounts it deems uncollectible are written off, subject to the approval of the Authority’s Board of Commissioners."
Why it matters: Cash receipts could be mishandled, stolen, used improperly, or exposed to fraud.
Standard: DHCD’s Accounting Manual requires internal controls to safeguard assets and documented procedures that facilitate control and approval. ( DHCD Accounting Manual; Massachusetts Office of the State Comptroller Internal Control Guide )
1 recommendation
- The Authority should formally document, and obtain board approval of, policies and procedures for managing laundry receipts and then put controls in place to ensure that they are implemented.agency: agreed
Agency response & Auditor reply
Agency: "The Authority will formally document and obtain Board approval of policies and procedures for managing laundry receipts and then put controls in place to ensure that they are implemented."
Why it matters: Errors in reimbursements to employees could occur.
Standard: DHCD’s Accounting Manual requires management to develop and implement internal controls, including forms, documents, and procedures that facilitate control and approval. ( Section 8 of the DHCD Accounting Manual; OSC’s Internal Control Guide )
1 recommendation
- The Authority should establish written policies and procedures for employee reimbursement.agency: agreed
Agency response & Auditor reply
Agency: "The Authority will establish written policies and procedures for employee reimbursements."
Why it matters: The Authority could be subject to penalties and interest.
Standard: 26 United States Code 6041(a) requires entities to prepare Form 1099-MISC for each contractor paid more than $600 during a calendar year.
2 recommendations
- The Authority should again review its records to determine whether it can obtain the necessary financial information to issue the required IRS 1099-MISC forms for the contractors in question for calendar year 2009.agency: partially agreed
- The Authority should continue to issue the required IRS 1099-MISC forms each year.agency: agreed
Agency response & Auditor reply
Agency: "There were not accurate financial records left from the prior administration to accurately report calendar year 2009 1099-MISC forms to the IRS."
Auditor: "We reiterate our recommendation that the Authority make every reasonable effort to obtain the necessary financial information to issue the required IRS 1099-MISC forms for the contractors in question for calendar year 2009."
Prior findings revisited
"Prior Audit Results Unresolved"
"Prior Audit Results Resolved"
"Septic-system repairs are in progress."
More audits of this entity
Other Office of the State Auditor reports on Easton Housing Authority , including the prior audits referenced above.
- Easton Housing AuthorityHousing Authority · June 15, 2012