Audit Case Number 97-CH-202-1008 TO: Forrest D. Jones ...

Issue Date

June 12, 1997

Audit Case Number

97-CH-202-1008

TO:

Forrest D. Jones, Director, Office of Public Housing, Indiana State Office

FROM:

Dale L. Chouteau, District Inspector General for Audit, Midwest

SUBJECT:

Indianapolis Public Housing Agency

Low-Income Housing Program

Indianapolis, Indiana

We completed an audit of the Indianapolis Public Housing Agency's Low-Income Housing program.

We selected the Housing Agency for audit at the request of HUD's Indiana State Office of Public

Housing. The Office was concerned about the deterioration in the performance of the Agency's

operations. Our audit objective was to determine the reasons why the performance has deteriorated.

We found the Agency's operations had deteriorated because there was frequent turnover of key

management personnel, and it did not have a plan to facilitate continuity of operations. The Agency

also did not: have a plan that addressed methods and procedures to reduce an excessive number of

vacant units; follow proper procurement procedures; have adequate control over its maintenance

operations; follow economical and efficient applicant screening procedures; and document the method

it used to allocate its indirect costs to the various HUD programs.

Within 60 days, please provide us, for each recommendation made in this report, a status report on:

(1) the corrective action taken; (2) the proposed corrective action and the date to be completed; or

(3) why corrective action is unnecessary. Also, please furnish us copies of any correspondence or

directives issued because of the audit.

Should you or your staff have any questions, please contact me at (312) 353-7832.

Management Memorandum

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97-CH-202-1008

Page ii

Executive Summary

We completed an audit of the Indianapolis Public Housing Agency's Low-Income Housing program.

We selected the Housing Agency for audit at the request of HUD's Indiana State Office of Public

Housing. The Office was concerned about the deterioration in the performance of the Agency's

operations. Our audit objective was to determine the reasons why the performance has deteriorated.

We found the Agency's operations had deteriorated because there was frequent turnover of key

management personnel, and it did not have a plan to facilitate continuity of operations. The Agency

also did not: have a plan that addressed methods and procedures to reduce an excessive number of

vacant units; follow proper procurement procedures; have adequate control over its maintenance

operations; follow economical and efficient applicant screening procedures; and document the method

it used to allocate its indirect costs to the various HUD programs.

Operations Were

Inconsistent And

Ineffective

A Plan Is Needed To

Reduce The Number Of

Vacant Units

Proper Procurement

Procedures Were Not

Followed

The Indianapolis Public Housing Agency did not operate

efficiently and effectively. This occurred because the Agency:

had frequent turnover of key management personnel and did

not have a plan to facilitate continuity of operations; did not

have or only recently developed written policies and

procedures for all functional areas; and did not have an

adequate personnel evaluation system. As a result, scarce

resources were not used to provide the maximum benefit to

low and moderate income persons.

Even though the Agency had a long waiting list for its units,

it had a vacancy rate of 23 percent. The Agency did not have

adequate resources to repair a backlog of vacant units and did

not have a plan to correct the problem. The Agency also

experienced long delays in its maintenance process and had a

lack of coordination between its Maintenance Department and

Admissions and Occupancy Department.

The Agency did not have a system to ensure the integrity of its

procurement process. It awarded contracts without using full

and open competition and awarded a contract when a known

conflict-of-interest existed. The Agency also did not: prepare

cost estimates; follow proper procedures when there was an

inadequate response to a solicitation; and adequately evaluate

bid proposals.

Page iii

97-CH-202-1008

Executive Summary

Maintenance Operations

Needed Better Controls

Screening Procedures

Were Not Efficient

Allocation Of Indirect

Costs Was Not Supported

Recommendations

The Agency did not have adequate control over its

maintenance staff time and performance. Additionally, work

order documentation was not properly completed and the

Agency did not have performance standards to adequately

evaluate maintenance employees.

The Indianapolis Public Housing Agency's procedures for

screening new tenants wasted valuable resources. The Agency

screened all applicants at the time of initial application

regardless of when they would be offered housing. The

Agency's waiting time for housing varied from one to three

years depending on the bedroom size. Since the results of

screening are only valid for 120 days, the Agency had to

screen all applicants a second time before they were admitted

to a unit.

The Indianapolis Public Housing Agency did not document the

method it used to allocate its indirect costs to the various

HUD programs it operated. The Agency did not have

documentation to support the amounts it allocated to each

program.

We recommend that the Director of the Public Housing

Division requires the Indianapolis Public Housing Agency to

develop an overall plan for the Agency's direction and that

HUD uses the plan to monitor the progress of the Agency to

improve its operations and to ensure its direction remains

consistent. We also recommend the Director of the Public

Housing Division assures the Agency implements corrective

actions to correct the weaknesses in its vacancy reduction

operation, procurement process, maintenance operations,

applicant screening process and its allocation of indirect costs.

We provided our draft findings to the Agency's Acting

Executive Director and HUD's staff during the audit. We held

an exit conference on May 8, 1997 with the Agency's and

HUD's staff. The Agency provided written comments to our

findings. We considered the comments in preparing our

report. The Agency's comments are included in their entirety

in Appendix B.

97-CH-202-1008

Page iv

Table of Contents

Management Memorandum

i

Executive Summary

iii

Introduction

1

Findings

1 The Operations Of The Agency Were Inconsistent

And Ineffective

3

2 The Agency Needs To Develop And Implement

A Plan To Reduce The Number Of Vacant Units

9

3 The Agency Needs Controls To Assure Proper

Procurement Procedures Are Followed

15

4 Control Over Maintenance Operations Needs

Improvement

25

5 Applicant Screening Procedures Were Uneconomical

And Inefficient

6 The Agency Could Not Support Its Allocation Of

Indirect Costs

31

33

Internal Controls

35

Follow Up On Prior Audits

37

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97-CH-202-1008

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