Report No. 2009-65
Complete Audit Report
The following findings were included in our audit report on the Missouri Housing Development Commission.
The Missouri Housing Development Commission (MHDC) Standards of Conduct policy does not require commissioners and employees in positions with significant decision making capacity to publicly disclose actual and potential conflicts of interest and/or situations which could present the appearance of a conflict of interest. Commissioners are not required to recuse themselves in situations involving actual/potential conflicts of interest. We identified two commissioners who appeared to have at least the appearance of conflicts of interest, but did not recuse themselves from decision making or actions relevant to the parties involved in the potential conflict. As noted in our audit report No. 2008-23, Analysis of Low Income Housing Tax Credit Program, a perception exists that political influence and campaign contributions to elected officials on the commission influenced the project selection process. In addition, soliciting donations for conference expenses from entities doing business with the MHDC gives the appearance of, and may result in, potential conflicts of interest. Also, assistant attorney generals acting on the behalf of the Attorney General do not file annual personal financial disclosure forms with the Missouri Ethics Commission pursuant to state law.
According to some former and current employees, MHDC's management practices contribute to low employee morale. The results from a survey we sent to 48 former and 27 current employees indicate there are employee morale problems, some involving the relationship between employees and management. For former employees, the most commonly cited reason for leaving was conflict with management and/or supervisors. There was also the perception management did not use fair practices when hiring or promoting employees. The MHDC does not normally verify applicants' education, professional certifications, prior employment, or personal references when filling job vacancies. MHDC records were not always in agreement with state merit system records maintained by the Office of Administration (OA). One employee's actual job responsibilities and duties did not appear compatible with the job description for the employee's merit system classification. A second employee's position and classification did not appear to be properly identified in OA records.
MHDC procurement policies and procedures need to be improved. There is inadequate guidance on the solicitation method, evaluation criteria, renewal options and frequency of bids, and documentation to be maintained/retained. The procurement policy, revised effective September 2008, now requires written price quotes from at least three vendors, and provides some guidance on selecting the supplier using objective and/or subjective criteria. However, the policy does not require documentation of the evaluation of bids/proposals, nor does it provide guidance regarding limits on the number of renewal options for contracts, or the frequency of when goods and services should be bid. On an individual basis, MHDC management determines the length of contracts/agreements and when to bid for goods and services. Also, the policy does not include guidance on documentation retention requirements.
Competitive proposals are not always obtained on a periodic basis for some professional services. It has been many years since the procurement of bond trustee services for the single and multi-family bond programs, and limited documentation was available to substantiate the performance reviews or assessment of the reasonableness of the trustee's fees. Also, the bond trustee made campaign contributions to some elected officials serving as commissioners. The MHDC did not always solicit bids or request competitive proposals for goods and services in compliance with its procurement policy or retain documentation of the bids or requests. The MHDC has not established procedures to file payment documentation in a centralized location. Some invoices did not provide sufficient information for management to verify accuracy and reasonableness of the amounts billed and invoices were not on file for some expenditures. Documentation to support journal entries in the accounting system was not always adequate, and there was no management review or approval of the journal entries. Some expenditures reviewed did not appear to be allowable, prudent, or necessary uses of public funds, including alcohol purchases totaling nearly $15,000 for receptions during the 2006 and 2007 Governor's Conferences on Housing and the purchase of 1,000 promotional brochures (at $28 each) about MHDC programs/activities. Similar information about MHDC programs/activities was previously available in the MHDC annual report at a lower cost per report. Additionally, other expenditures were not properly classified in the MHDC accounting system.
The supporting documentation for employee related expenses such as meals, lodging, and conference/meeting charges was not always adequate and did not always comply with MHDC policy. Executive staff expense reimbursements and credit card account statements are not always properly reviewed and approved. In November 2008, the Executive Director and Director of Operations received expense reimbursements of $18,000 and $2,545, respectively, for professional fee expenses incurred between November 2007 and November 2008. Documentation supporting the reimbursements did not include any itemization of these expenses, information supporting these expenses were actually incurred, or information explaining how the expenses related to official MHDC business. Upon our request for additional information, the Executive Director responded, "The requested information is relative to an ongoing investigation, the specifics of which we are not at liberty to discuss."
Policies regarding public access to MHDC records, record retention, and document destruction need to be improved. The MHDC does not have a complete written policy regarding public access to its records as required by Chapter 610, RSMo (Sunshine Law). The MHDC has also not established a formal written policy for record retention and document destruction as required by state law.
Various concerns were noted regarding the MHDC capital asset/property records and related procedures. Capital asset duties are not adequately segregated, property tag numbers are not unique, and a disposition policy has not been established. Finally, the MHDC does not periodically perform a cost-benefit analysis for leased property and equipment.