$88,000 in county housing funds lost in shuffle

October 13, 1998|By BRENDAN KIRBY

During the early 1990s, as the Washington County Office of Housing and Community Development transferred money from one account to another to finance the purchase of 25 houses, $88,000 got lost in the shuffle, according to officials.

Since then, the error has eluded audits due to a combination of shoddy accounting procedures and out-of-date bookkeeping.

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"It almost didn't exist," said Richard Willson, director of the Washington County Housing Authority.

Today, housing officials plan to ask the Washington County Commissioners to fix the $88,000 mistake by reclassifying the money as a grant.

Housing officials found the error in the fall of 1997 as they were modernizing an arcane accounting system, Willson said.

The housing office reviewed all checks that were written by the agency and concluded that missing money was not the result of fraud, Willson said. Heller, Blosky & Dabagian, an independent accounting firm, concurred with those findings.


Still, the episode offers a look at what can happen when a large agency's books are not kept in order.

The Public Housing Authority bought 22 three-bedroom houses and three four-bedroom houses throughout the county to use as low-rent public housing.

The federal Department of Housing and Urban Development paid for the homes, but since bureaucratic red tape delayed the funds, local officials put the money up front and sought reimbursed later, Willson said.

Housing officials got the up-front money from a variety of sources, Willson said.

The County Commissioners gave thousands of dollars from the general fund. The money was later paid back.

Two of the houses, one in Hancock and one in Maugansville, were purchased in 1991 with $158,212 from the Community Development Block Grant program. But the Public Housing Authority held the deeds, Willson said.

"That was not an appropriate way for those transactions to be recorded. But that's the way they were recorded," he said.

In November 1991, $40,000 was paid back to the Community Development Block Grant program. In January 1992, $30,000 more was repaid.

That left $88,212 that was not accounted for. The 25 houses were purchased and the program closed at the end of the fiscal year, Willson said.

Since both the Community Development Block Grant program and the Public Housing Authority were administered by the housing office at the time, it was an internal transfer that did not affect the agency's overall budget, Willson said.

It would be like moving $100 from a person's savings account to his or her checking account.

But the money should have been paid back to the Community Development Block Grant program, which was placed under the control of the Office of Planning and Community Development in July 1997.

The missing money went undiscovered, though, because of a variety of lax accounting procedures, Willson said.

Public Housing Authority records did not indicate that it owed money. And records at the Community Development Block Grant program did not indicate that it was owed money.

As a result, the $88,000 went into the authority's operating budget and was spent, Willson said.

"Somebody lost track of it," Willson said. "It appears it fell off the screen. Somebody was not looking at it."

Since the operating funds were used for similar activities - like property rehabilitation - Willson said he is asking the County Commissioners to designate it as a grant.

The alternative would be to pay $10,000 per year until the money is repaid. That would hinder efforts by the authority to become independent from county government, he said.

The mistake is a result of a poorly designed and executed accounting system, Willson said.

There was only one accounting employee in the office during much of the 1990s and the books were not kept current. At its worst, they were six to seven months behind. As a result, audits lagged two years behind, Willson said.

Willson said it has taken about four years to rework the accounting system and catch up. Officials discovered the missing money in the fall of 1997 when they matched all expenditures with receipts.

The housing office has added another accountant and now does monthly accounting checks to ensure that detailed records are kept for each program and that each program corresponds to the accounting books.

"We were not using the books as a tool. We now place the books at the center," Willson said. "Now we have to clean up the sins of the past."

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