HUD OIG Audit Survey

1. HUD OIG Audit Survey

2. How Did This Start? • 2017 • September • County releases RFP for first time in compliance with OMB Super Circular 2 CFR § 110 • County announces decision not to pay indirect costs • County meets with all subrecipients including People Working Cooperatively (PWC)

3. How Did This Start? • 2017 • October • PWC contacts HUD about indirect cost rate with DOE • HUD says County does not have to follow it* • HUD requests contract from County • HUD Columbus has concerns about labor rate and lobbying expenses *corrected since then – 2 CFR§200.331

4. Chinese Wall • 2017 • November – County monitors PWC, finds issues • December – 2018 RFP recommendations made • 2018 • January 13 – RFP funding awards made • January 15 – County issues monitoring letter to PWC

5. OIG Comes to Town • 2018 • January 16 - Areas of Concern letter via email • January 29 - Opening Conference via phone • February to April – OIG on-site at County and PWC • February to July – Emails soliciting information • *All documents and communication with OIG were confidential until final report was released

6. OIG Results • 2018 • July 24 - Survey Results Meeting - OIG elects not to expand audit survey to full audit • July 31 – Survey Results Presentation • August 30 - Discussion Draft Audit Report • September 6 - Exit Conference • September 27 - Final Audit Report Issued

7. Post Audit Steps • 2018 • November 28 – County Response to HUD Columbus • 2019 • March 1 - HUD Columbus Deadline to OIG • May 1 - Management Decision Letter • July 30 - Corrective Actions Response Due

8. Scope of Audit Survey • Review subrecipient contract, invoices, work orders, source documentation, etc. • Statistically significant sample of 23 jobs • Covered 4/1/15 to 11/30/17 • Concerns over labor rate and lobbying expenses

9. Summary of Issues • Labor rate ($48) paid by County more than paid to staff • 4% Mark up added to materials and services • Indirect Costs included lobbying • Indirect costs included unrelated expenses • Income verification not current • Verification of Disability not available • Program income not deducted from invoices • Invoice discrepancies • 20% indirect costs on overpayments • Policies and Procedures needed for these issues

10. Repayment of Funds • Seven (7) recommendations were closed – County has paid $22,860

11. Policies & Procedures • Eight (8) recommendations require the County to submit policies and procedures to HUD for review and approval • County is reviewing and updating these policies and procedures • Hamilton County Prosecutor’s Office (HCPO) will review as completed and submit to HUD

12. Additional Repayment • One (1) recommendation requires County to review and document the following information for 85 work orders selected by the OIG: • The address and job number for each job; • Employees who worked on each job; • The date and number of hours worked the employees worked on each job; • The hourly rate for each employee that worked on each job; • The corporations fringe rate; • The combined hourly and fringe rate for each employee for each job; • Labor billed by PWC and paid by County at $47.75 per hour; • The actual labor costs for each employee for each job; and • Difference between actual labor paid by PWC and labor amount paid by County; and associated indirect costs.

13. Additional Repayment • County hiring forensic accounting firm to complete task • HUD will validate the labor data for these 85 jobs and project amount due for 1,640 jobs • Indirect costs will be added to labor overpayment • Anticipated overpayment between $300,000 and $500,000

14. Next Steps • 1 to 3 years for repayment to HUD • Likely to implement claw back provision in contract to get money from subrecipient • Payments to HUD will occur as those repayments are received • Assume there will be litigation • No media coverage to date

15. Tips • Involve your city/county attorney as soon as possible • Always have a third person on a call or in the room • Make notes during every meeting – send email to OIG to confirm anything that was not put into writing

16. Tips • Use executive session if available in your state – always potential for litigation when it comes to corrective actions • Before threat of audit, review contracts, policies & procedures and invoicing (now!) • Keep good communication, to let the OIG know of improvements you are already implementing

17. Document, Document, Document.

18. 2019 Emergency Home Repairs • PWC attorney raised Q’s about indirect costs in OMB Super Circular 2 CFR § 200.331 • County prosecutor and staff determined County must follow DOE fringe rate of 44.97% and indirect cost rate of 37.79% • Advisory Committee recommended not funding them • Commissioners agreed not to fund - set aside $300K • County managing 5 RFQ’s process for August 1

19. Joy PiersonCommunity Development Administrator(513) 946-8234

20. Summary of Recommendations

21. Summary of Recommendations (continued)