REPORT DIGEST

ILLINOIS HOUSING DEVELOPMENT AUTHORITY

FINANCIAL AND COMPLIANCE AUDIT

(In accordance with the Single Audit Act and OMB Circular A-133)

For the Year Ended:
June 30, 2000

Summary of Findings:

Total this audit 2
Total last audit 2
Repeated from last audit 1

Release Date:
March 22, 2001

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State of Illinois
Office of the Auditor General

WILLIAM G. HOLLAND

AUDITOR GENERAL

To obtain a copy of the Report contact:
Office of the Auditor General
Attn: Records Manager
Iles Park Plaza
740 E. Ash Street
Springfield, IL 62703
(217)782-6046 or TDD (217) 524-4646
This Report Digest is also available on
the worldwide web at
http://www.state.il.us/auditor

 

 

 

 

 

SYNOPSIS

  • The waiting lists at some developments were not properly maintained as required by the Department of Housing and Urban Development (HUD). HUD requires certain developments to have "waiting lists" to ensure applicants are processed on a first come, first served basis.
  • Procedures have not been implemented to periodically reconcile data from individual computer application systems to amounts recorded in the general ledger.

 

 

 

 

 

 

 

 

 

 

 

{Expenditures and Activity Measures are summarized on the next page.}

 

 

ILLINOIS HOUSING DEVELOPMENT AUTHORITY
FINANCIAL AND COMPLIANCE AUDIT
For The Year Ended June 30, 2000

GOVERNMENTAL FUND REVENUE AND EXPENDITURES

FY 2000

FY 1999

FY 1998

Total Governmental Fund Revenue
Real Estate Transfer Taxes
% of Total Revenue
Federal Home Funds
% of Total Revenue
Investment, Interest and Other Income
% of Total Revenue

$45,105,121
$28,727,805
63.7%
$11,596,124
25.7%
$4,781,192
10.6%

$49,371,402
$27,253,626
55.2%
$18,087,743
36.6%
$4,030,033
8.2%

$44,531,684
$23,450,608
52.7%
$17,560,764
39.4%
$3,520,312
7.9%

Total Governmental Fund Expenditures
Grants
% of Total Expenditures
General and Administrative
% of Total Expenditures
Provision for Est. Loss on Loans Receivable
% of Total Expenditures……………………

$12,335,912
$9,483,302
76.9%
$2,852,610
23.1%
$0
0.0%

$14,737,964
$9,856,926
66.9%
$2,588,053
17.6%
$2,292,985
15.5%

$10,391,745
$6,695,023
64.4%
$2,196,722
21.2%
$1,500,000
14.4%

PROPRIETARY FUND REVENUE AND EXPENSES (ADMINISTRATIVE)
Total Administrative Fund Revenue
Service Fees
% of Total Revenue
Interest and Investment Income
% of Total Revenue
Other Income
% of Total Revenue
Total Administrative Expenses
Salaries and Benefits
% of Total Expenses . .
Average No. of Employees
Professional Fees .
% of Total Expenses
Other General and Administrative Expenses
% of Total Expenses
All Other Operations Items
% of Total Expenses
Net Value of Property and Equipment

$19,269,528
$7,388,296
38.4%
$6,017,325
31.2%
$5,863,907
30.4%
$22,789,613
$6,695,434
29.4%
173
$1,526,563
6.7%
$3,768,033
16.5%
$10,799,583
47.4%
$1,213,508

$21,544,575
$7,406,321
34.4%
$5,220,323
24.2%
$8,917,931
41.4%
$12,271,252
$6,339,594
51.7%
164
$1,882,582
15.3%
$3,292,241
26.8%
$756,835
6.2%
$1,690,352

$22,231,267
$7,182,201
32.3%
$6,933,105
31.2%
$8,115,961
36.5%
$16,074,621
$5,862,586
36.5%
162
$1,360,009
8.5%
$3,157,930
19.6%
$5,694,096
35.4%
$1,386,712

SELECTED ACTIVITY MEASURES

FY 2000

FY 1999

FY 1998

Total Number of Bond Issues Outstanding
Total Bond Issue Value (in millions)

110
$2,054

101
$2,060

94
$2,060

AGENCY DIRECTOR(S)
During Audit Period: Peter R. Dwars, Executive Director
Currently: Peter R. Dwars, Executive Director

*Note: Statistics do not include bond activity, which is not reflected in the Authority's financial statements.

 

 

 

Waiting lists were not properly maintained at 3 of 20 developments tested

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Authority has no procedures in place to reconcile its three new operating information systems to the general ledger

 

 

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

EQUAL OPPORTUNITY AND FAIR HOUSING

The waiting lists at some housing developments were not properly maintained as required by the Department of Housing and Urban Development (HUD). HUD requires certain developments to have "waiting lists" to ensure applicants are processed on a first come, first served basis. This finding has been repeated since 1995.

We noted 3 of 20 medium-risk developments, as determined by the Authority, were not in compliance with the respective development’s Tenant Selection Plan. We found:

  • Applicants were not kept at the top of the list when there was no availability for a particular unit.
  • Procedures were not consistently applied to contact and offer vacant units to applicants.
  • Applicants were not processed according to the Tenant Selection Plan.

According to Authority officials, management may lack the adequate knowledge of waiting list requirements or are negligent in implementing procedures sufficient to ensure compliance with those requirements. The Authority requires developments to submit plans for approval and has a policy in place that defines actions to be taken in the event of noncompliance. In addition, the Authority holds training classes throughout the year to instruct management about waiting list procedures.

In response to our prior year’s recommendations, Authority officials stated that a standardized waiting list form was distributed to all developments, but due to the size and complexity of each development's waiting list it is difficult to assess the waiting list compliance during field visits.

We recommended the Authority continue to review the results and effectiveness of training classes on proper compliance with waiting list procedures, hold professional seminars on an annual basis and distribute policies detailing remedial actions to be taken to foster adherence to compliance requirements. (Finding 1, pages 15-17)

Authority officials stated they would continue to review the results and effectiveness of the training classes on proper compliance with waiting list requirements and adjust the content as necessary to address specific areas contributing to continuing instances of noncompliance. In addition, the Authority will hold professional update seminars for its staff on an as needed basis, as changes in federal regulations and Authority staff turnover dictate. The Authority, however, does not believe that it needs to distribute the remedial action policy to management companies, as they are aware of the policy in their contract and the Authority has been successful in working with these companies to correct deficiencies without the threat of termination of their contracts. (For previous Authority responses, see Digest footnote #1.)

NEED TO IMPLEMENT SYSTEM RECONCILIATION PROCEDURES

The Authority has not yet implemented periodic reconciliation procedures for data output processed by individual systems versus amounts recorded in the general ledger.

The Authority completed an implementation of four new computer application systems during fiscal year 2000. The upgraded general ledger system, the single family program system (AMOS), the investment system (CAMRA) and the multifamily, HOME and affordable trust fund loan programs billing and receivable system (Benedict). The systems are not integrated in the sense of simultaneously recording a single transaction within each of the individual systems and within the general ledger.

Authority officials stated that these systems do not interface with each other due to the fact that the operational and reporting features inherent in the individual systems were not available to the Authority in an integrated system at the time of implementation. This results in the need to create interfaces between the three new operational systems and the new general ledger system either electronically or manually in order to record transactions accurately, completely and consistently throughout the accounting system.

During the course of the our audit and during post system implementation work performed by the internal auditors, we noted that the Authority had not implemented procedures to periodically reconcile the data output produced by the individual systems to the general ledger. Although Authority management expressed a strong commitment to initiate reconciliation procedures they have not assigned specific project ownership and or planning and accountability responsibility for a "reconciliation project" to resolve the underlying internal audit findings reported.

We recommended that the Authority assign a project leader (or committee) with planning and reporting responsibilities for implementing reconciliation procedures between the Authority’s operational systems and its general ledger. (Finding 2, pages 18-19)

The Authority concurred with our recommendation and has established a committee to address the linkage and reporting issues of the CAMRA system and expects to establish similar committees for the AMOS and Benedict systems in the near future.

AUDITORS’ OPINION

Our auditors state the Authority’s financial statements as of and for the year ended June 30, 2000 are fairly presented in all material respects.

___________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:JAF:pp

SPECIAL ASSISTANT AUDITORS

Arthur Andersen LLP were our special assistant auditors for this audit.

DIGEST FOOTNOTES

#1 EQUAL OPPORTUNITY AND FAIR HOUSING - Previous Authority Responses

1999: "Authority officials stated they review all of the Tenant Selection Plans for compliance with Authority and HUD guidelines. The Plans are designed to be flexible and incorporate the developments’ marketing needs. The development of standard procedures would result in the loss of this desired flexibility. The Authority agreed with our recommendation to prepare a standardized waiting list form.

1998: "The Authority stated that they cannot do enough monitoring to ensure complete compliance with the procedures because the application of the Tenant Selection Plan procedures are not within the direct control of the Authority."

1997: "Standardized tenant selection plan models have been created for the respective programs monitored by the Authority. However, the differences among program requirements make it difficult, if not impossible, to develop universal policies, procedures, and forms.

The Housing Management Officers have been instructed to place greater emphasis on the waiting list during site visits. The frequency of these site visits is reviewed annually. All developments are visited a minimum of two times per year.

Effective January 1, 1998, management site staff will be required to attend Authority training sessions on a periodic basis. The curriculum of these training sessions has been expanded to place greater emphasis on waiting list procedures."

1996: "Each development’s Tenant Selection Plan contains specific requirements and procedures with regard to maintaining waiting lists and processing tenant applications. As a part of its ongoing management training, the Authority will train management staff in following these procedures. Compliance with these procedures will be tested as a part of the Authority’s ongoing monitoring of management performance."

1995: "The Illinois Housing Development Authority is the state’s Housing Finance Authority. It acts as a PHA only for Moderate Rehabilitation developments. It was not indicated in the Finding what type of Section 8 the property was that treated federal preference applicants in a manner inconsistent with their development’s Tenant Selection Plan. However, in its capacity as mortgagee and contract administrator, the Authority will place greater emphasis and detail on the tenant selection process (including the waiting list procedures) during its annual inspections. The Authority will more closely review the management staff’s application and tenant selection process, comparing it to their Tenant Selection Plan. Should a discrepancy between the plan and the actual implementation of site procedures be determined, the Authority will direct management to come into compliance with their approved Plan.

When Change 24 of the HUD Handbook Regulations 4350.3 was received by the Authority, it requested that all of the developments in the Authority’s portfolio submit revised Tenant Selection Plans for compliance. Models were provided for guidance depending on the type of subsidy program the development was receiving. The Authority anticipates that many of the developments are now better trained in the tenant selection process because of this action. The Authority has had many discussion with various agents and management staff on this subject. It will also review the possibility of incorporating the tenant selection process more fully into its bimonthly training for new managers and their site staff.