Financial Mismanagement Uncovered in Audit of the Easton Housing Authority
BOSTON - An audit of the Easton Housing Authority issued today by State Auditor Suzanne Bump revealed numerous poor financial management practices.
“When taken together, the many faults we uncovered at the Easton Housing Authority call into question the previous administration’s ability to properly manage resources to benefit the lives of the residents they serve,” said Auditor Bump. “The current administration of the Authority has been cooperative with our audit process and is using our findings to improve its operations.”
Areas of criticism included board oversight, credit card use, expense reimbursement, tenant selection, vacancy turnover and more. For example:
- As an internal control measure, the Authority’s Board of Commissioners is supposed to approve all expenditures to ensure money is spent properly and accurately, but under the Authority’s prior Executive Director, the board was provided with only partial listings of expenditures. In addition, there was no signature page for board members to approve the expenditures. These policies give little assurance that board members actually approved all payments and therefore whether the Authority’s resources were used efficiently.
- The Authority lacks a policy to regulate credit card use. Of the 268 sampled credit card transactions, representing $30,444, 175 lacked documentation justifying their business nature, totaling $29,964 in unsupported purchases. Of the 175 transactions, 84 totaling $19,662 lacked supporting documentation (e.g. store receipts, invoices).
- The Authority lacks a policy to regulate employee reimbursement, and among sampled reimbursements the audit uncovered several deficiencies. Of the 27 sampled reimbursements forms, totaling $3,991, four had calculation errors, 23 were not signed by the reimbursed employee, none of the forms submitted by the prior Executive Director included board member approval, none of the travel mileage reimbursements included starting or ending addresses, meal reimbursements were not supported with receipts, and none of the reimbursements forms identified a business purpose to the expenditure.
- The integrity of the Authority’s tenant selection process was flawed. In a move of apparent preferential treatment, a tenant related to Authority staff was transferred outside of operating procedure from a second-floor apartment to a first-floor apartment. The audit also noted that the Authority had not followed its own procedures for calculating rent for its Elderly Housing and Family Housing tenants.
- A prior audit from 2008 criticized the Authority’s vacancy turnover and rent collection procedures. For example, the Authority took, on average, 114 days to re-rent units. State guidelines call for a maximum 21-day turnover rate. Today’s audit showed that the Authority took an average of 127 days to prepare vacant units for occupancy, resulting in a lost opportunity to earn $94,940 in potential rental income.
Other findings included in today’s audit of the Easton Housing Authority included:
- Procurement of goods without soliciting competitive bids
- Noncompliance with the state sanitary code
- Inadequate policies for collecting laundry revenue and pet deposits
- Improper management of modernization contracts
- Inadequate security procedures for tenant personal information
- Failure to maintain an inventory of furniture and equipment
- Failure to issue certain IRS forms to vendors in 2009
- Unsatisfactory performance of hired fee accountant
- An inaccurate record of issued checks
- A backlog of over 700 maintenance work orders
- Incomplete employee personnel folders
- Employees accruing vacation and sick time beyond what Authority procedures allow
Auditor Bump has called on the Easton Housing Authority to update its policies and procedures to comply with state regulations and thereby enable it to better provide affordable, decent, safe and healthy housing to citizens of Easton. The Authority has responded positively to all findings and is pursuing implementation of all of Auditor Bump’s recommendations.