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Glenbrook Manor Could Not Always Show That Project Costs Were Eligible and Supported in Accordance With HUD Requirements

We audited the multifamily project, Glenbrook Manor, in Stamford, CT, based on a request by officials from the U.S. Department of Housing and Urban Development’s (HUD) Hartford, CT, Office of Multifamily Housing Programs.  Our audit objectives were to determine whether Glenbrook Manor expended project funds for eligible activities and costs that were reasonable and supported, and whether surplus cash was properly calculated and deposited into the residual receipts account.

Glenbrook Manor could not always show that project costs were eligible and supported in accordance with HUD requirements.  Specifically, its management agent did not ensure that project costs paid through the agent’s revolving fund and salaries paid in 2011 were supported.  In addition, surplus cash was not properly calculated and deposited into the residual receipts account as required by the regulatory agreement.  These conditions were caused by a lack of (1) proper internal controls over settling the project’s payable to the agent’s revolving fund, which resulted in noncurrent payables, and charging salaries to the project, and (2) job descriptions showing the frontline and nonfrontline activities employees charged to the project.  As a result, officials paid $496,980 in unsupported costs and did not deposit $61,067 in surplus cash into the residual receipts account as required.

We recommend that HUD require Glenbrook Manor officials to provide support showing that the $239,870 liability to the agent’s revolving fund and the $200,000 transferred to the agent’s revolving fund represented expenses for eligible project costs or repay the transferred funds and remove the liability from the project’s books.  In addition, project officials should provide documentation to support that $57,110 expended in 2011 was for eligible project salaries and repay any unsupported amounts from non-Federal funds.  Lastly, Glenbrook Manor officials should deposit $61,067 in surplus cash into the residual receipts account.