Winchester Housing Authority
March 18, 2013 · Read the full official report (PDF) ↗
Published March 18, 2013 Audit covers January 1, 2010 – December 31, 2011 Under Suzanne M. Bump · 2011–2023
source
“Based on our audit, we have concluded that, for the period January 1, 2010 through December 31, 2011, the Authority maintained adequate management controls and complied with applicable laws, rules, and regulations for the areas tested except for the following areas.”
Read the plain-English breakdown
This is a Massachusetts State Auditor review of the Winchester Housing Authority, covering January 1, 2010 through December 31, 2011.
“In accordance with Chapter 11, Section 12, of the Massachusetts General Laws, we have conducted an audit of the Winchester Housing Authority for the period January 1, 2010 through December 31, 2011.”
Auditors checked whether the Authority followed laws and rules, and whether its internal management controls were adequate in selected areas.
“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 certain activities and functions for the purpose of determining their adequacy.”
The report matters because housing authorities are supposed to provide safe, sanitary public housing and manage public money properly.
“Low operating reserves may hinder the Authority in its mission to properly provide its tenants with safe and sanitary housing.”
If you are a tenant or taxpayer, the main practical issue is whether the Authority keeps housing safe, tracks its property, follows purchasing rules, and uses funds responsibly.
“Our inspection of eight of the Authority’s rental units identified 10 instances of noncompliance with the State Sanitary Code (105 Code of Massachusetts Regulations 410.00) at three of these units, such as peeling paint, ceiling water stains, roof deterioration, exterior siding falling off, a walkway in disrepair, a collapsing fence, rubbish and debris in a yard, and disintegrated caulking in a kitchen sink.”
The auditors found problems, but the Authority reported or showed progress on several fixes, including repairs, updated inventory records, and tax reporting for the tenant payment.
“The Authority prepared an updated electronic based inventory of its fixed assets with the required information.”
The report recommends tighter executive director contracts, continued work to build reserves, completing repairs, better inventory tracking, and following purchasing and IRS reporting rules.
“All purchases of goods and services over $2,000 annually need to follow the Authority’s purchasing policy and be placed out to bid as required.”
The most serious concern was that the former executive director may have been paid by the Housing Authority while also billing another state agency for legal work at overlapping times.
“A comparison of Authority and CPCS records also showed 18 occasions where the Executive Director charged CPCS for court time that appeared to overlap with the hours he said he was also working at the Authority.”
“Operating reserves” means backup money the Authority keeps on hand; DHCD guidelines set a minimum level for that reserve.
“The Department of Housing and Community Development (DHCD) Budget Guidelines indicate that the minimum operating reserve level must be no less than 20% of the allowed maximum operating reserve.”
7 figure(s) pending source verification - not shown
What the Auditor checked
- Partially Determine the Authority’s compliance with applicable laws, rules, and regulations and review and analyze its management controls and practices over certain activities and functions for the purpose of determining their adequacy.
What the Auditor found
Why it matters: The Executive Director may have been paid by two public entities for overlapping work time, and weak timekeeping controls reduced assurance over payroll integrity.
Standard: DHCD’s Executive Director Salary & Qualification Schedule requires executive directors to work during normal business hours, with limited substitutions for night or weekend meetings subject to approval. ( Chapter 268A of the Massachusetts General Laws; DHCD’s Executive Director Salary & Qualification Schedule (Public Housing Notice 2007-6) )
2 recommendations
- Prepare Executive Director contracts that specify the days and hours required to be worked, mostly during normal business hours at the Authority’s place of business.agency: partially agreed
- Require the Executive Director to formally disclose all outside employment to the Board of Commissioners.
Agency response & Auditor reply
Agency: "After the WHA completes its investigation, the payroll records will be adjusted if there are discrepancies found and there are hours/money owed to the WHA by the former ED."
Auditor: "As noted in our report, the payroll data for the 18 instances in question suggest that it would be difficult for the Executive Director to appear in court given the hours he indicated he was working for the Authority."
Why it matters: Low reserves may hinder the Authority’s ability to provide tenants with safe and sanitary housing.
Standard: DHCD Budget Guidelines require the minimum operating reserve level to be no less than 20% of the allowed maximum operating reserve. ( Department of Housing and Community Development Budget Guidelines )
1 recommendation
- Continue to solicit DHCD for increased funding to raise operating reserves to DHCD’s recommended minimum amounts.agency: agreed
Agency response & Auditor reply
Agency: "The new Executive Director will work with the new Fee Accountant to solicit funds from DHCD to insure that the operating subsidy received will help to improve the WHA’s operating reserve balance and will work toward having the recommended minimum reserve balance."
Auditor: "Our review of the Authority’s unaudited financial statements for the year ended June 30, 2012 showed that the Authority’s operating reserve had increased to 25% of the maximum reserve level, which is above DHCD’s minimum acceptable level."
Why it matters: Tenants may not have been provided safe and sanitary housing.
Standard: Chapter II of the State Sanitary Code and DHCD’s Property Maintenance Guide require annual and vacancy inspections to ensure safe, decent, and sanitary housing. ( DHCD Property Maintenance Guide, Chapter 3(F) )
1 recommendation
- Complete roof and exterior siding replacement and prevent or repair State Sanitary Code violations.agency: agreed
Agency response & Auditor reply
Agency: "The WHA continues to work to correct deficiencies that are a result of delayed maintenance due to DHCD’s funding shortfalls and the WHA will correct items as funded through DHCD’s formula funding Capital Planning System."
Auditor: "Based on this, we commend the Authority for making the repairs to the units cited above."
Why it matters: Failure to maintain an inventory ledger could lead to lost, misappropriated, or stolen assets.
Standard: DHCD’s Accounting Manual for State-Aided Housing Programs requires local housing authorities to maintain records for furniture and nonexpendable equipment and annually prepare a physical inventory list. ( DHCD's “Accounting Manual for State-Aided Housing Programs” )
1 recommendation
- Create an accessible inventory ledger with asset and control numbers, historical costs, and physical locations, and tag inventory items with traceable control numbers.agency: already implemented
Agency response & Auditor reply
Agency: "The recommendation [of] a new and accessible ledger with all furniture, equipment, asset and control number, historical costs and the physical location of the items was completed during the on-site visit by the auditors and was reviewed with them."
Auditor: "Contrary to what the Authority states in its response, the only items related to the Authority’s inventory that were provided to the Office of the State Auditor (OSA) during our field work were an inaccessible (corrupted) computer floppy disk and a one-page sheet showing recent purchases."
Why it matters: The Authority could not ensure it obtained services at the lowest possible price and could be subject to unnecessary penalties and interest.
Standard: The Authority’s purchasing policy requires purchases of goods or services over $2,000 to be made by contract after advertised bids or invitations to at least five eligible vendors; IRS instructions require Form 1099-MISC for service payments of at least $600. ( Authority purchasing policy; Internal Revenue Service Form 1099-MISC requirements )
2 recommendations
- Make purchases of goods and services above $2,000 in accordance with the Authority’s purchasing policy and place them out to bid.
- File 1099-MISC income information forms for service payments over $600.agency: already implemented
Agency response & Auditor reply
Agency: "In response to the lack of a 1099-Miscellaneous form issued to each person who earned more than $600 in rents or services . . . the WHA has corrected the error and has issued a 1099-Misc form as required and will continue to do so in the future."
Auditor: "Therefore, because the Authority promulgated the rule described in its purchasing policy, it is bound by this policy and should take measures to ensure that all procurements are conducted in a manner consistent with this policy."