We audited the Yorkville Cooperative’s administration of its U.S. Department of Housing and Urban Development (HUD)-insured property and housing assistance contract based on a complaint alleging that the Cooperative (1) spent excessive amounts for maintenance and repairs and (2) did not recertify tenants in a timely manner. Our objective was to determine whether the Cooperative administered its HUD-insured property and housing assistance contract according to applicable requirements.
The Cooperative did not always administer its HUD-insured property and housing assistance contract in accordance with its regulatory agreement and applicable HUD requirements Specifically, it (1) did not always obtain the required number of written cost estimates or have documentation to support payments for products and services, including maintenance and repair work on units totaling more than $1.8 million, and (2) it paid nearly $297,000 for prohibited legal services. It also did not ensure that it correctly calculated housing assistance payments. The payments for prohibited legal services and the inaccurate housing assistance payments are repeat findings from our 2009 audit of the Cooperative.
We recommend that HUD direct the Cooperative to (1) provide documentation to support payments totaling more than $1.8 million or reimburse the project from nonproject funds for amounts that it cannot support and (2) reimburse the project nearly $297,000 from nonproject funds for the ineligible legal expenses. Also, from our previous audit report, we will reopen recommendations that HUD direct the Cooperative to develop and implement procedures to ensure that (1) disbursements made from its operating account are for expenses that are reasonable, necessary, and in accordance with program requirements and (2) housing assistance payments are correctly calculated and supported with the required documentation.
Recommendations
Housing
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Status2017-PH-1003-001-AOpenClosed$970,381.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Provide documentation to show that prices paid for purchases of products and services totaling $970,381 were fair and reasonable or reimburse the project from nonproject funds for any amounts that were not fair and reasonable.
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Status2017-PH-1003-001-BOpenClosed$716,693.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on October 26, 2022Provide documentation to show that payments for work totaling $716,693 complied with applicable building codes or reimburse the project from nonproject funds for payments that did not comply with the codes and take action to bring the work up to code.
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Status2017-PH-1003-001-COpenClosed$163,885.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on September 08, 2022Provide documentation to support payments totaling $163,885 or reimburse the project from nonproject funds for payments that it cannot support.
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Status2017-PH-1003-001-DOpenClosedClosed on September 24, 2019
Develop and implement written procedures to ensure that it obtains written cost estimates as required and maintains complete documentation to support expenditures and that contractors performing or managing construction, removal, repair, or improvement work are properly licensed as required.
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Status2017-PH-1003-002-AOpenClosed$296,787.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on September 24, 2019Reimburse the project $296,787 from nonproject funds for the ineligible legal expenses.
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Status2017-PH-1003-002-BOpenClosed$3,892.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on September 24, 2019Reimburse HUD $3,892 from nonproject funds for the overpayment of housing assistance.
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Status2017-PH-1003-002-COpenClosedClosed on May 20, 2021
Correct the errors in the tenant files identified during the audit.
General Counsel
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Status2017-PH-1003-002-DOpenClosedClosed on December 18, 2018
Review the issues identified in this audit report and if appropriate, pursue administrative sanctions against the board of directors for the violations cited in this report.