Audit finds Rochester Housing Authority controls effective despite lack of certain policies

Brian Sharp
Staff writer

While concluding that financial controls at the Rochester Housing Authority are generally effective, a state audit found policies lacking when it came to "morale-building" expenditures — resulting in $10,100 spent on two holiday parties and a retirement send-off.

In addition, auditors highlighted $38,250 that the authority spent on gift cards, giving a $100 card for every employee at each of the holiday parties.

Other cards were given as "Kudo Awards" to recognize outstanding performance.

Rochester Housing Authority administers the area's public housing program, Section 8 federal housing assistance and a shelter-plus-care program that aids homeless people with disabilities.

In all, the authority and its 175-person staff oversee $49 million in federal aid to 10,000 families.

The Comptroller's Office has fiscal oversight responsibility for the state's many authorities. The Rochester Housing Authority audit, released this week, is for the period from Jan. 1, 2006, to Feb. 29, 2008.

After testing 115 expenditures totaling $374,000, auditors concluded that "the Authority's review and approval process was generally operating effectively to ensure that Authority funds are spent for legitimate Authority purposes."

State auditors recommended that the authority develop a policy to govern what is appropriate spending on employee morale, as well as on food for staff meetings. On the latter point, the authority spent nearly $4,500 on food and refreshments at meetings, according to the audit — including $127 to cater a January 2007 board meeting and $2,600 for 180 employees to attend a three-hour luncheon in February 2006 that featured a 45-minute presentation by a speaker.

Anthony DiBiase, the authority's executive director and CEO, said in an e-mail that all morale-related expenses were paid for with "non-public funds," meaning that none of the money comes from state or federal grants.

"The expenditures were never considered excessive by the auditors," DiBiase said.

He noted that the authority also has passed federal review after going through a mandated conversion to a new asset management system. The two-year process coincided with the authority cutting 28 positions, or 14 percent of its staff.

Nonetheless, the authority has taken action in response to the audit. Policy revisions, adopted by the authority's board in May, address all of the auditors' concerns, he said.

The only policy that did not previously exist, he said, was one governing meals and entertainment.

"However, none of the changes resulted in changes in practice," he said, "as our current processes were already acceptable and reasonable."

A spokesman identified by the Comptroller's Office for any media questions on the audit could not be reached for comment Thursday.

The audit also recommended segregation of payroll duties to safeguard assets.

While auditors found nothing amiss, they raised concern about one person having sole oversight for processing and distributing the authority's $7.5 million payroll.

DiBiase said payroll duties have been split up and an in-house auditor will be performing quarterly reviews.

BDSHARP@DemocratandChronicle.com