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Posted: February 10, 2017 4:10 p.m.

Housing Authority audit reveals ‘questionable’ costs

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The Housing Authority of the City of Covington is looking at a total of $61,901.20 in “questionable costs” between the dates of January 2013 and September 2016 after an investigation into the authority’s financial department was initiated due to suspected employee theft, according to an independent forensic audit report from Yeager & Boyd (Y&B), an account firm out of Birmingham, Alabama.

Y&B was tasked with reviewing payroll distributions, cash disbursements and the control environment of the housing authority’s financial department.

“The audit procedure results noted that the general fund checking account had $15,246.33 of questionable costs, the medical reimbursement checking account had $12,239.96 in questionable costs and the Home Depot credit card has $34,414.91 of questionable costs,” according to the report.

Y&B reported a weakness in controls revolved around one person, former Accounts Payable Clerk Erica Morris, handling all of the responsibilities in the financial department.

“This was made possible by authorizing a person to possess the executive director’s signature stamp and to have the ability to sign checks,” according to the report. “Also, the controls to obligate the Housing Authority were not monitored appropriately.”

Y&B also reported changes in the authority’s Verizon cell phone account and creating of a gas credit card. Record keeping for the department was also reported to be 11 months late, which forced the annual audit to be pushed back.

“The findings in this report suggest strongly that the control environment needs to be monitored heavily and the correct accounting procedures need to be followed and enforced,” according to the report.

Housing Authority Executive Director Greg Williams said the majority of the authority’s funding comes from the federal government.

“We don’t get any funding locally, except from the tenants that provide a small amount of rent,” he said, estimating 10 to 15 percent of the authority’s budget came from the residents and the rest came from federal funds.

“The audit has been provided to the U.S. Department of Housing and Urban Development Office of Inspector General as part of that office’s on-going investigation and the authority is taking all necessary steps to assist in the investigation and in eventual prosecution of any charges resulting from that investigation,” Housing Authority Attorney Hillary Edgar said. “Internally, the authority has already adopted a number of improvements to its account practices and will continue to work through the audit for any additional needed improvements.”

Since Oct. 1, 2016, the housing authority has made changes in its financial procedures. Those changes include tracking the balances of all accounts, eliminating the use of signature stamps and auto-signatures and cash handling, petty cash and accounts payable procedures.

The authority has also hired someone to fill the position vacated by Morris. Keesha Tucker, of Covington, is set to start March 6. Williams said she has “substantial experience in management, accounting and human resources.

The housing authority initiated an audit of its financial department after a theft by an employee was suspected. Williams filed a report with the Covington Police Department (CPD) Oct. 26 stating the alleged theft occurred between January 2015 and September 2016.

The amount of missing funds had not been determined at the time of the CPD report, so the forensic audit was initiated to determine an exact total. 

Williams tendered his resignation with the housing authority board of commissioners Tuesday night. He will remain in his position for 30 days to help with the transition.

“It was a mutual decision,” Williams said. “We’ve parted with no hard feelings.”

Williams has been with the housing authority for seven years.

Housing Authority Board of Commissioners Chairman Landis Stephens said the board did not have any initial plans to replace Williams or who will serve in the position in the interim, but it is prepared to move forward. A nationwide search will be conducted to find Williams' replacement. 

Stephens said the housing authority strives to be a transparent organization and he encouraged anyone with questions to contact him directly. 

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