Audit finds lack of controls at Kenner Housing Authority

The Kenner Housing Authority paid one of its former directors more than $143,000 when he retired, despite a policy that would have capped that payment at about $8,800, according to state audit released Monday.

That audit, performed by a private company hired by the Louisiana Legislative Auditor’s Office, determined that the payment to former executive director Lawson Harvey was part of an overall lack of policies and procedures regarding the authority’s finances that has been a problem for years.

The audit’s findings align with an ongoing review by the U.S. Department of Housing and Urban Development, which has been investigating the authority since last year for possible financial mismanagement.

The state’s audit found that Harvey received $143,555 when he retired in 2004 despite the authority’s policy of capping cash payments at an amount equal to 300 hours, or 611 days of work. According to the audit, the Board of Commissioners at the time voted to ignore its policy to provide the payment.

Auditors found that Harvey was paid for more than 4,000 hours of accrued leave when he left the authority. The audit said that housing authority officials determined Harvey’s leave by assuming that he’d never taken any leave during his tenure or that any leave he had taken was offset by unpaid hours he worked over his regular hours. The authority kept no records of either figure, according to the audit.

Auditors recommended that the authority do a definite accounting of Harvey’s leave, determine if underpayments or overpayments were made and take appropriate action. The state’s audit focused on financial documents from 2010 and 2011 but examined the authority’s financial practices from 2005.

Interim Executive Director Richard Murray said he’s only been in his position for a few weeks and couldn’t comment on the audit’s findings. Longtime Executive Director Claudette Raphael resigned in March in the midst of HUD’s review, and Murray said much of his staff is new as well. He added that he’s only in his position until the board can decide on a permanent executive director.

“I just got here,” Murray said.

An attempt to contact Board of Commissioners Chairman Donnie Small was unsuccessful Monday. Kenner Mayor Michael Yenni said he had not had a chance to review the audit and would comment once his review is complete. He did note that Harvey’s tenure was long ago, although shortly after Harvey resigned his position, former Kenner Mayor Ed Muniz tried to appoint him as a commissioner. Harvey declined that appointment.

Overall, auditors found that the authority’s internal controls were either inadequate or nonexistent. According to the audit, the possibility existed for duplicate payments, unjustified payments and overpayment for goods and services. The authority also does not have a system to track its inventory of supplies, and it did not have a way to verify submitted invoices, the audit said.

There also were concerns that Raphael previously had the ability to authorize and review expenditures at the same time.

According to the audit, the housing authority lacks policies related to vehicles, cellphones, check signing, insurance, payroll, petty cash, travel and many other items. The audit also found that the authority lacked an employee handbook.

Many of the findings were mentioned in a 2006 review done by HUD.

Some of the issues were linked to the authority’s decision to eliminate its fee-based accountant in 2009 and turn many of those duties over to Raphael and her staff, according to the audit.

The audit questioned whether there were enough staff members to properly monitor the authority’s finances, and in response, Raphael said the authority would hire a full-time accountant. It was not clear if that hiring occurred.

Several other long-standing issues were the authority’s inability to complete timely annual audits and the large number of vacancies at its public housing units.

About 35 percent of the housing authority’s 139 units are vacant, and those vacancies are tied to the dilapidated condition of the buildings, the audit said.

The audit also found that the authority lacked a plan for maintaining the units it does operate.

Kenner’s Housing Authority takes in about $11.9 million in revenues and has about $9.5 million in expenses.

In addition to the accounting concerns, the audit also found problems with general record-keeping related to the authority’s tenants and voucher-recipients.