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DHCD calls for forensic audit of Greenfield housing

GREENFIELD — A recent audit of the Greenfield Housing Authority raised some red flags, and has triggered the state to seek a full forensic audit of the agency’s finances.

An audit of the GHA’s books from March 2011 to March 2012 turned up areas of concern, including travel expenses that have more than doubled, ineligible charges on the agency’s credit card, improperly logged cash reimbursements, and a lack of best accounting practices, according to documents provided by the state Department of Housing and Community Development.

Local housing authorities are required to undergo a yearly audit required by the federal Department of Housing and Urban Development. The HUD provides partial funding to local housing authorities, which also receive money from the DHCD.

“Travel costs increased by 139 percent (more than the previous year’s figure),” said Matthew Sheaff, DHCD spokesman. Most of that travel, he said, was from housing authority-related conferences.

John Counter, executive director of the Greenfield Housing Authority, said the disputed expenses are the result of an internal accounting error.

The expenses in question should have been charged to the Winslow Building, he said, as they were accrued while he and other housing authority staff attended conferences relating to the management of that building.

However, he said, the charges were sent to HUD instead.

“It was an internal accounting error,” he said. “We’ve worked out the questions from HUD, and they’re satisfied with our response.”

Ineligible expenses had also been charged to the housing authority’s credit card, and reimbursed in cash without being properly recorded in the ledger, said Sheaff.

The HUD found that the housing authority’s travel reimbursement policies were “not to be sufficiently comprehensive,” said Sheaff.

The audit also found that the housing authority did not maintain a proper “contract register,” which would compile all active contracts the housing authority is involved in, such as landscaping or snow removal, said Sheaff.

Several suggestions were made by the DHCD. The agency recommends that the housing authority adopt more comprehensive travel policies, clearly identify eligible and ineligible expenses, put limits on reimbursement amounts, limit the use of its credit card, and accept only checks or money orders for reimbursement of charges. It also recommended that the housing authority determine the need for training and conferences while formulating a budget, so it wouldn’t over-spend on education.

The audit also found that the housing authority has no formal fraud policy, and recommended that one be established.

Counter said an independent audit of the same period resulted in an “unqualified opinion,” and a “management letter” that made a few suggestions.

“An unqualified opinion is the cleanest audit (report) you can get,” said Counter.

The DHCD requires the housing authority to put together a “corrective action plan,” which will address the areas of concern. The DHCD asks that the plan be submitted to it within 30 days of the receipt of Friday’s letter.

The housing authority must also hire a forensic auditor, which must be approved by the DHCD.

Sheaff said he would not speculate on the possible outcomes of a forensic audit.

Counter said the housing authority has nothing to hide, and he’s confident that a forensic audit will show that the housing authority is well-managed.

“Our agency is running as smoothly as possible, with the proper controls in place,” he said.

Counter said he believes the matter is an example of the high level of scrutiny local housing authorities have faced since it was discovered that the Chelsea Housing Authority’s former director, Michael McLaughlin, may have concealed $164,000 of his pay from 2008 to 2011.

David Rainville can be reached at:
drainville@recorder.com
or 413-772-0261, ext. 279

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