BCC Meeting CliftonLarsonAllen LLP Consultant Report H.O.M.E. Program Income January 14, 2014 Dwight E. Brock
TIMELINE In a meeting with H.O.M.E. and County HHVS representatives, the 03/15/11 Clerk’s Office requested invoices, bank statements, and financial statements supporting program income and expenditures from both H.O.M.E. and HHVS. Internal Audit again requested of HHVS invoices, bank statements, 03/22/11 and financial statements. Email from Internal Audit to HHVS requesting HUD closing 03/29/11 statements for the purchase and sale of each house utilizing grant funds. From 3/15/11 to 3/31/11, Internal Audit did not receive any requested documentation. 2
TIMELINE (continued) Internal Audit received HUD closing statements for the purchase 03/31/11 and sale of 11 of 13 properties receiving public monies from HHVS. Email from Internal Audit to HHVS requesting additional invoices 05/09/11 supporting expenditure documentation to validate program income and property information previously discussed at March 15 th meeting. Internal Audit met with HHVS to discuss Management Alert dated 06/30/11 6/17/11. After the meeting, HHVS delivered QuickBooks summary documents provided by H.O.M.E. 3
TIMELINE (continued) Internal Audit received reconciliation of program income from an 07/11/11 OMB Grant Coordinator. Grant Coordinator used QuickBooks summary ledgers provided by H.O.M.E. to complete the reconciliation, instead of detailed supporting documentation such as invoices and bank statements. Internal Audit sent letter dated 07/18/11 to H.O.M.E. requesting 07/20/11 documentation to support program income and expenditures. County Staff informed of the letter via email. Email from H.O.M.E. to County Staff suggesting to disregard the 07/21/11 letter sent by Internal Audit on 7/20/11. 4
TIMELINE (continued) Follow-up letter from Internal Audit to H.O.M.E. once again 08/18/11 requesting documentation related to the expenditure of grant funds. Letter from H.O.M.E. to Internal Audit via email stating copies of 08/22/11 canceled checks supporting expenditures for 11 of the 13 properties will be provided by H.O.M.E. H.O.M.E. ’s position is that all other relevant documentation has already been provided. Internal Audit met with John Barlow, Vice President, and Mike 08/25/11 Pettit, Secretary, of H.O.M.E. to discuss availability of records. Mr. Pettit suggested the requested documentation be given to Internal Audit to conclude the review. 5
TIMELINE (continued) Copies of some, but not even close to all, cancelled checks and 09/22/11 related invoices hand delivered to Internal Audit by John Barlow. Internal Audit was advised by John Barlow, again, that he had provided all of the records Audit needed to complete the review. Emails from Internal Audit to H.O.M.E. requesting backup for 11/08/11 missing information; some records provided via email the same day. John Barlow’s e-mail from 11/08 stated he would have to check storage for additional records, such as cancelled checks, responses to RFPs, and IRS 990s. Obtaining these records from John Barlow is like pulling teeth. 6
TIMELINE (continued) Records (bid documents, related proposals, and additional 12/06/11 cancelled checks) that H.O.M.E. was willing to share hand delivered by John Barlow to Internal Audit. Between 12/06/11 and 5/09/12, Internal Audit did not receive any 05/09/12 financial records requested and therefore issued Audit Report 2011-4 citing the inability to calculate program income due to the lack of financial records. H.O.M.E. provided bank statements covering grant period for 05/18/12 “CDBG” account. These statements showed the existence of two additional bank accounts, for which we had no records. H.O.M.E. subsequently provided bank statements for these two accounts on 10/17/13 - 1 ½ years after discovery. 7
TIMELINE (continued) Collier County BCC approved motion directing “all officers of 04/23/13 H.O.M.E. provide the County Manager the documentation by Friday, April 26, 2013 and the County Manager to in turn provide them to the County Clerk for auditing …” . Documentation such as bank statements, HUD statements, and invoices needed to determine program income. County manager provided to the Clerk additional documentation 04/26/13 via e-mail indicating the documentation was submitted by H.O.M.E. Clerk of Courts engaged CliftonLarsonAllen LLP to perform an 05/30/13 independent analysis of the H.O.M.E. program with specific emphasis to determine the amount of program income. 8
TIMELINE (continued) CliftonLarsonAllen LLP met with former H.O.M.E. Directors, Internal 10/07/13 Audit staff, and HHVS staff to discuss preliminary results of analysis. H.O.M.E. offered to provide additional documentation, including debt instruments used to purchase properties and bank statements. BCBE agreed to provide their subcontractor invoices for work completed on each home to support their payments. To date, these invoices have never been received, as noted in the CliftonLarsonAllen, LLP report. Internal Audit received e-mail from H.O.M.E. with a copy of a 10/08/13 $500k LOC promissory note in the name of H.O.M.E. and guaranteed by the John Barlow Trust. 9
TIMELINE (continued) Internal Audit emailed letter to former H.O.M.E. Directors and 10/09/13 HHVS staff summarizing documentation agreed to be provided during 10/07/13 meeting, including the BCBE subcontractor invoices . Internal Audit received from H.O.M.E. copies of bank statements 10/17/13 related to accounts with Bank of America and Bank of Florida, as referenced on 5/18/12. HHVS provided copies of H.O.M.E. applications for $150k SHIP 10/17/13 grant and $427k CDBG grant, as requested at the initial 3/15/11 meeting and again during 10/07/13 meeting. 10
TIMELINE (continued) HHVS provided Internal Audit a copy of the Initial Award Letter 10/22/13 addressed to H.O.M.E. Internal Audit received from H.O.M.E. a spreadsheet detailing the 10/24/13 use of CDBG funds by H.O.M.E. Internal Audit received from HHVS a copy of a letter dated 3/09/09 10/24/13 sent from Marcy Krumbine to H.O.M.E. addressing program income. The letter incorrectly stated “Per the sub-recipient agreement … a portion of the CDBG funds were going to remain in the property in order to keep it affordable and the remainder was going to come back to H.O.M.E., Inc. as program income. ” 11
TIMELINE (continued) Internal Audit received from H.O.M.E. a letter and spreadsheet 10/25/13 dated 3/15/09 sent to HHVS documenting a plan for the use of program income and HHVS acknowledging receipt of the plan. H.O.M.E. ’s original application included home buyer’s assistance, which was not approved by the Board. The amount awarded to H.O.M.E. and approved by the Board was for $427,473, which did not include home buyer’s assistance. 12
CliftonLarsonAllen Report CliftonLarsonAllen LLP identified: • Program income not returned to the County • Insufficient Support of Construction Costs • Potential Conflicts of Interest among H.O.M.E. Directors 13
Program Generated Income (PGI) • CliftonLarsonAllen calculated $75,675 in PGI from H.O.M.E. activities • PGI amount is net of $427,473 used for home-buyer assistance • H.O.M.E. returned $644.37 to County 14
Agreement - PGI 15
OMB Circular A-110 16
Agreement – Exhibit “A” 17
H.O.M.E. Grant Application Project Description 1. Purchase or Build Home 2. Refurbish Home (w/ SHIP Funds) 3. Subsidize Home Price to Lower Mortgage Payments 4. Keep Home Affordable Over Time 5. Cover Related Administrative Expenses 6. Close the Sale to Qualified Buyer 18
Budget Application vs. Agreement H.O.M.E. Application Agreement 19
Unauthorized Change by Staff Initial request for documentation on 3/15/11. Letter received on Incorrectly, the letter stated “Per 10/24/13, 2½ years after request. the sub-recipient agreement … a portion of the CDBG grant funds were going to remain in the property in order to keep it affordable and the remainder was going to come back to H.O.M.E., Inc. as program income.” Letter does not follow OMB Circular A-110 and Project Scope defined in Agreement. Staff is making decisions contrary to Board approval. 20
CliftonLarsonAllen Report CliftonLarsonAllen LLP identified: • Program income not returned to the County • Insufficient Support of Construction Costs • Potential Conflicts of Interest among H.O.M.E. Directors 21
24 CFR Sec. 84 Procurement Standards 22
Agreement - Procurement 23
Insufficient Support of Construction Costs • All invoices from Boran Craig Barber Engel Construction Co., Inc. (BCBE) dated 10/25/2009. As of 12/04/13, no additional supporting documentation has been provided. • Without supporting documentation, it is uncertain if costs paid by Contractor were included in later invoices to H.O.M.E. (potentially double counting rehabilitation costs). 24
H.O.M.E. RFP – General Contractor 25
BCBE Proposal Absolute subterfuge of a document. Bid does not include construction costs, only contractors fee (5% of the total cost of work). BCBE charged $2,500 contractor’s fee for each property, even though total cost of work was less than $50,000 per property. 26
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