BOARD OF COMMISSIONERS TRAINING

1

• BOARD OF COMMISSIONERS TRAINING
• U. S. Dept of Housing and Urban Development
• Financial Management
• March 2009

2
Board Of Commissioners Training Series

• The Commissioners Role
• The Executive Directors Role
• Agency Management
• Financial Operations and Oversight
• Physical Facilities and Maintenance
• Procurement and Contracting Overview
• Preventing and Resolving Audit Findings
• Performance Measures
• PHAS, MASS, FASS, PASS, SEMAP
• IX. Conducting an Effective Board Meeting
• X. Emergency and Disaster Preparedness

3
Questions ? ? ? ?

• Am I fully informed about the financial status
  and operating condition of our Housing Authority
  (HA), the amount of reserves, or the amount of
  Federal subsidy received for different programs?
• Do the Board members receive full reports at
  Board meetings concerning the financial and
  operating condition of the Authority?
• Do I carefully review and fully understand the
  items proposed in budgets before voting for
  approval?

4
Four Major Functions

• Financial Management is one of the FOUR
  interrelated
• functional areas of HA operations.
• Sound functional financial management is
  essential to the
• effective operations of all areas of the HA.

BOARD OVERSIGHT
GENERAL MANAGEMENT
PROGRAM MANAGEMENT
FINANCIAL MANAGEMENT
5
Roles of Commissioners

• The Commissioners role is management and
• executive in nature
• Review and monitor budgets and other financial
  documents to ensure expenditures are in
  compliance with federal, state and local laws and
  other requirements.
• Review and approve policies and procedures to
  establish sound internal controls.
• Review and approve policies and procedures which
  will detect and prevent program fraud, waste,
  mismanagement and abuse.

6
Role of Executive Director

• The focus of the EDs role is management and
  operations
• Coordinate and prepare all HA operating budgets
• Collect rents and enforce lease terms
• Supervise cash management and bank
  reconciliations
• Enforce internal control procedures and policies

7
Role of Executive Director Contd

• Monitor operations for fraud and abuse
• Maintain overall compliance with federal, state
  and local laws, as well as PHA policy and
  procedures
• Keep the Board of Commissioners informed of any
  problems, such as audit concerns, major resident
  issues, financial status, and changes to laws

8
Financial Fiduciary Responsibilities

• Make sound business decisions
• Be knowledgeable about the financial status of
  your agency
• Review and understand financial reports
• Establish internal controls
• Safeguard agency assets
• Institute Standard Operating Procedures
• Review and understand IPA audits
• Closely monitor the resolution of audit findings
• Understand and adhere to investment policies
• Avoid conflicts of interest and apparent
  conflicts of interest

9
Budgets

• The Boards Responsibility is exercised by
• Reviewing Budget Proposals
• Ask Questions
• Approve or Modified Approval
• Monitoring the budget
• Most budgets are not reviewed/approved by HUD

10
Prevent Fraud, Waste and Abuse

• Establish and Enforce Internal Controls
• Clear Job Responsibilities and Separation of
  Duties
• Personnel Selection
• Independent Audits and HUD Reviews
• Accountability of Staff

11
Internal Controls
The system within a PHA consisting of its plan
for organization, assignment of duties and
responsibilities, design of accounts and reports,
and all measures and methods employed to (1)
protect its assets, (2) to encourage the
accuracy and reliability of accounting and
other operating data and reports, (3) to promote
and judge the operational efficiency of all
aspects of the PHA's activities, and (4) to
communicate managerial policies and to
encourage and measure compliance.
12
Cash Receipts

• Internal control over cash receipts must be
  provided to expedite the flow of work, to improve
  accuracy, and to ensure accountability of cash
  received.
• While adequate internal control does serve as a
  deterrent to possible misappropriation or
  diversion of cash by employees, it also serves as
  a protection of the employees by placing
  responsibility and accountability.
• Internal Controls should be practiced to the
  greatest extent possible given the size of the
  housing authority
• Duties should be segregated so that no one
  person is in complete control of recording
  receipts and depositing receipts.

13
Cash Disbursements

• Internal control over disbursements must be
  provided to ensure disbursements are made only
  for legitimate purposes.
• The Board should designate by resolution the
  personnel authorized to sign and countersign
  checks
• All checks should require at least two signatures
• All checks should be numbered, issued, and
  recorded in the cash disbursements register in
  numerical sequence and review procedures to
  ensure compliance

14
Cash Disbursements CONTINUED

• The signing or countersigning of checks in
  advance must be prohibited. (Don't sign blank
  checks)
• Checks should only be signed after reviewing the
  supporting documentation (invoice).
• All duties should be segregated so that no one
  person is in complete control of a disbursement
  transaction.
• Documents, such as purchase orders, vendors
  invoices, receiving and inspection reports, and
  contractor's estimates should be carefully
  examined

15
Board Meeting Information

• Copy of the latest (previous months) balanced
  bank reconciliation. Large, recurring amounts
  for deposit in transit must be discussed and
  resolved.
• Summary of income/expenses by account
  classification, along with comparisons to all
  program budgets.
• Substantial deviations from program budgets
  should be discussed and corrective action taken,
  as necessary.
• Listing of check vouchers issued/voided since
  previous meeting with basic information, such as
  date, check number, payee, purpose and amount.
  The listing should be reviewed for any patterns,
  unusual payments or payees.

16
Board Meeting Information CONTINUED

• Listing of monthly rental collections/deposits.
• Subsidy payments and other transfer payments.
  Large variations from month to month should be
  explained.
• Listing of investments and monthly activity in
  this area, if any.
• Summary of travel costs with details regarding
  who traveled, the purpose of the trip and costs.
• Summary of tenants accounts receivable and
  vacancy rate. If problems exist, Executive
  Director should furnish information on actions
  take to resolve.

17
Board Meeting Information CONTINUED

• Summary of actions taken to deal with any
  outstanding HUD or IPA audit findings.
• Update on status of capital improvement
  projects.
• Information on contracts awarded where board
  approval was not required - purpose/cost/award
  method.
•  
• Information on staffing, such as payroll, number
  of vacant positions, etc.
• Status and consideration of open issues tabled
  at prior meetings for further action.

18
Commissioner DO's

• Do pass resolutions and policies only after
  thorough discussion and understanding of the
  purpose, usage, intent and implications
• Do monitor policies and procedures from time to
  time to ensure that the result is what was
  intended
• Do establish monitoring controls to detect and
  prevent conflicts of interest, fraud and abuse
• Do ensure that an audit is conducted annually
  and that the report is reviewed by the
  Commissioners. If you have an area of concern,
  you may ask the auditors to expand their review

19
Commissioner DO's CONTINUED

• Do conduct meetings at least quarterly with
  Resident Council leaders to solicit comments and
  input. We encourage Commissioners to consider
  training sessions for Resident Council leaders on
  the constructive role they can perform.
• Do ensure that the PHA operates legally and with
  integrity. Establish high ethical standards for
  PHA staff and act as positive role models.
• Do learn what the common risks are and be alert
  for problems such as embezzlement, improper
  procurement, and other irregularities.

20
Commissioner DO's CONTINUED

• Do accept reimbursement for expenses incurred
  for official PHA business. 
• Do avoid any Conflict of interest-No board member
  may have an interest, direct or indirect, in
  businesses which provide services or materials to
  the authority.
• Do volunteer your time - Compensation of board
  members, such as salary or payment for meetings
  attended, is not permissible from PHA funds.

21
Commissioner DONTs CONTINUED

• Don't sign blank checks, or checks that are not
  backed up with bills, invoices or vouchers.
• Don't have any bank accounts which are
  controlled by one (1) signature.
• Don't, if at all possible, let the persons who
  are authorized to sign checks reconcile bank
  statements.
• Don't use PHA supplies, equipment, machinery,
  construction or rehabilitation supplies or staff
  for personal use.

22
Commissioner DONTs CONTINUED

• Don't use PHA tax exempt status or PHA credit
  cards for personal use.
• Don't use PHA contractors for personal purposes
  while they are engaged in PHA work.
• Don't accept gifts, dinners, or other gratuities
  from contractors or those bidding for PHA work.
• Don't become involved in any business
  relationships between yourself and the PHA where
  you or your company are dealing with PHA matters.

23
Audit Findings

• Audit Findings are an indication that a
  significant problem exists within your
  organization.
• Preventing and resolving audit findings is a
  major component of the performance of your
  management and fiscal oversight responsibilities.

24
Audit Findings Resolution

• The prevention of findings serves to protect the
  agency.
• The resolution of findings serves to remediate
  the damage caused and to prevent reoccurrence.
• Without resolution the problem will continue,
  become more complex and will negatively impact
  your agencys operations.
• Depending upon the nature and severity of the
  finding it may result in the agency being
  designated as troubled.

25
Public Housing Assessment System
MASS Management Operation Assessment 30
pointsPASS Physical Inspection Assessment 30
pointsFASS Financial Assessment 30
pointsRASS Resident Satisfaction 10
points A score of less than 60 percent total,
or of less than 18 of 30 in any of the MASS, PASS
or FASS, will result in a HUD designation of your
PHA as a Troubled Performer (requiring recovery
in short time frames, and using sanctions and
other remedies, for any failures).
26
Financial Assessment (FASS)

• Based on
• PHA Financial Data System (FDS) Submissions
• Sub-Indicator 1 Current Ratio
• Sub-Indicator 2 Expendable Fund Balance
• Sub-Indicator 3 Tenant Receivables Outstanding
• Sub-Indicator 4 Occupancy Loss
• Sub-Indicator 5 Expense Management Utilities
• Sub-Indicator 6 Net Income/Loss divided by the
  Expendable Fund Balance

27
Section Eight Management Assessment Program
(SEMAP)

• The local Public Housing Hub Office or Program
  Center is charged with the responsibility for
  assessing and scoring the performance of PHAs,
  administering the Section 8 Housing Choice
  Voucher program.
• A score of less than 60 percent total will
  result in a HUD designation of your PHA as a
  Troubled Performer (requiring recovery in short
  time frames, and using sanctions and other
  remedies, for any failures).

28
SEMAP consists of these Indicators

• Based on PHA SEMAP certification
• Indicator 1 Selection from Waiting List
• Indicator 2 Rent Reasonableness
• Indicator 3 Determination of Adjusted Income
• Indicator 4 Utility Allowance Schedule
• Indicator 5 HQS Quality Control Inspections
• Indicator 6 HQS Enforcement
• Indicator 7 Expanding Housing Opportunities

29
SEMAP consists of these Indicators

• Based on PHA PIC system submissions
• Indicator 8 Payment Standards
• Indicator 9 Annual Reexaminations
• Indicator 10 Correct Tenant Rent Calculations
• Indicator 11 Pre-Contract HQS Inspections
• Indicator 12 Annual HQS Inspections
• Indicator 13 Lease-Up
• Indicator 14 Family Self-Sufficiency Enrollment
• Deconcentration Bonus Indicator