Lexington Housing Authority

This is a Massachusetts State Auditor performance audit of the Lexington Housing Authority covering July 1, 2011 through December 31, 2013.

“I am pleased to provide this performance audit of the Lexington Housing Authority.”

Auditors checked whether the housing authority followed rules for spending, rent, tenant eligibility, procurement, inspections, financial reporting, safeguards, and certain funding programs.

“The objective of our audit was to determine whether (1) the Authority’s expenditures were allowable and related to Authority operations; (2) the Authority had adequate controls over revenue; (3) the Authority determined tenant eligibility, placement, and monthly rental charges in accordance with Department of Housing and Community Development (DHCD) regulations; (4) the Authority procured goods and services in accordance with Chapter 30B of the General Laws; (5) site inspections were adequate to ensure that housing units met safety and sanitation requirements; (6) controls were in place and operating effectively to safeguard Authority assets; (7) the Authority allocated shared costs under a plan that reflected an equitable distribution between state and federal programs; (8) the Authority complied with DHCD’s financial reporting and data collection requirements; (9) modernization money, if any was awarded, was spent in accordance with DHCD regulations; and (10) money received under Chapter 44B of the General Laws (the Community Preservation Act), if any, had been spent according to that law and DHCD guidelines.”

Accurate records matter because they affect budgeting, oversight, and whether money is shown as available for other housing authority needs.

“These funds could have been budgeted and spent in other areas of the Authority’s operations.”

For a Lexington resident or tenant, the issue is about whether public housing money is tracked accurately and can be used where it is actually needed.

“Because the Authority over-accrued the PILOT expenses each year, its financial records and statements are inaccurate, showing a balance due for PILOT payments that exceeds the actual amount owed.”

Except for the over-accrued PILOT issue, auditors found the authority generally had adequate controls and followed the rules in the areas they tested.

“Based on our audit, we have determined that for the period July 1, 2011 through December 31, 2013, except for the issue addressed in the Detailed Audit Results and Findings section of this report, the Authority established adequate internal controls and complied with applicable laws, regulations, policies, and procedures in the areas tested.”

The auditor recommended changing the monthly estimates and correcting the accounts each year; the authority said it had implemented the recommendation.

“The Authority should adjust its monthly accrual rates for PILOT expenses so that they more closely approximate its actual anticipated costs.”

The finding was limited but still important: the accounting error made the authority’s books look like it owed more than it did, including $399 in one account and $3,391 in another as of June 30, 2013.

“As of June 30, 2013, the Authority had over-accrued PILOT expenses in the conventional-housing program account by $399 and in the special-needs program account by $3,391.”

PILOT means a payment made by a tax-exempt organization to help cover local services instead of paying regular property taxes.

“The PILOT program enables tax-exempt entities to submit a payment for municipal services that are normally funded by taxes.”