Audit of LNEDC Finds Inadequate, Missing Documentation for More Than $130,000 in Payments

A partner in a property management company hired by the Lafayette Neighborhoods’ Economic Development Corporation (LNEDC) issued $32,959 in checks to himself between March and August of 2015, the Legislative Auditor said in a report released today.

The investigative audit also found that between March and November 2015 – the period during which JR Property Management operated the LNEDC’s Evangeline Apartments – the LNEDC issued 116 checks totaling $97,891 to 10 individuals but was unable to provide any information about their employment status to auditors.

The $32,959 in payments appeared to be reimbursements for services, materials, supplies, furniture, and equipment, the state auditor said, but several of the transactions were misclassified within the accounting system, and there was no documentation to support seven of the checks totaling $18,059. Of this amount, auditors found that: (a) the contract between LNEDC and JR Property Management did not require or contemplate these reimbursements; (b) reimbursements of at least $5,450 did not appear to have been necessary for the Evangeline Apartments’ operations; (c) one invoice supporting a reimbursement for $5,000 seemed to have been fabricated; and (d) equipment totaling $1,290 in reimbursements could not be located.

In addition, the auditors’ examination showed that the time frame for JR Property Management’s contract – March 1, 2015 to March 1, 2016 – overlapped with the partner’s employment by the Louisiana Housing Corporation (LHC), which ran from November 2014 to June 2015. The LHC is the state agency responsible for overseeing Evangeline Apartments’ compliance with state and federal housing regulations, and the partner worked as a compliance specialist.

Auditors also found that the LNEDC had no internal controls over its payroll, could provide no documentation to determine if the 10 people receiving the 116 checks were employees of LNEDC or contract laborers, and did not issue any relevant IRS forms (W-2 or 1099) to any of the individuals.

In their response, LNEDC Board members did not dispute the audit findings and said they were working to put the report’s recommendations into effect.