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We audited the Crisfield Housing Authority’s use of public housing program operating and capital funds because we received a hotline complaint alleging misuse of public housing assets and we had never audited the Authority.  The audit objective was to determine whether the Authority administered its public housing program in accordance with applicable U.S. Department of Housing and Urban Development (HUD) requirements and its annual contributions contract. 

The Authority did not properly administer its public housing program according to applicable HUD requirements and its annual contributions contract.  It did not (1) properly administer its operating funds, (2) comply with conflict-of-interest requirements, and (3) comply with capital fund requirements.  As a result, the Authority’s use of operating funds totaling $137,500 for security services and more than $1.4 million for unit repairs were unsupported and it made ineligible payments totaling $111,568 for unit repairs and repairs to its public housing vehicles using operating funds.  In addition, regarding its use of capital funds, the Authority could not show that the prices it paid for products and services totaling $171,822 were fair and reasonable, and payments it made totaling $236,284 for salaries and other services were ineligible.   

We recommend that HUD direct the Authority to (1) provide documentation to support  $137,500 it paid for security services, or reimburse its operating fund for any costs that it cannot support; (2) reimburse its operating fund $111,568; (3) submit a retroactive request for a waiver to the conflict-of-interest requirements to support payments of nearly $1.5 million or reimburse the appropriate fund  for any amount not covered by a waiver; (4) provide documentation to show that purchases of products and services totaling $171,822 using capital funds were at fair and reasonable prices; and (5) reimburse its capital fund $170,784.  We also recommend that HUD’s Departmental Enforcement Center evaluate the apparent conflict-of-interest situations identified in this report and pursue administrative sanctions if warranted.

Recommendation Status Date Issued Summary
2018-PH-1007-001-A Cerrado Septiembre 25, 2018 Provide documentation to support the $137,500 paid for security services from operating funds or reimburse its program from non-Federal funds for any costs that it cannot support.
2018-PH-1007-001-B Cerrado Septiembre 25, 2018 Provide the documentation that was missing from the 14 files reviewed. If documentation cannot be provided, the Authority should follow applicable regulations and terminate or modify assistance as necessary.
2018-PH-1007-001-C Cerrado Septiembre 25, 2018 Develop and implement controls to ensure that families are properly selected from the waiting list and that their selection is documented in their tenant files.
2018-PH-1007-001-D Cerrado Septiembre 25, 2018 Correct the rent calculations for the 54 families identified by the audit to properly implement flat rent.
2018-PH-1007-001-E Cerrado Septiembre 25, 2018 Correct the rent calculations for the employees whom it charged an extremely low rent, thereby ensuring that it collects an estimated $25,248 more in rent over the next year.
2018-PH-1007-001-F Cerrado Septiembre 25, 2018 Develop and implement controls to ensure that it pays for services only after it receives the documentation required to be provided by contract and that provided services are supported by a contract.
2018-PH-1007-001-G Cerrado Septiembre 25, 2018 Develop and implement procedures to have a supervisor review tenant files to ensure that the files are accurate and complete and comply with program requirements.
2018-PH-1007-001-H Cerrado Septiembre 25, 2018 Develop and implement procedures to ensure that flat rents are calculated correctly for those families that choose to pay flat rent, thereby ensuring that it collects at least $38,664 in additional rental income.
2018-PH-1007-001-I Cerrado Septiembre 25, 2018 Provide training and technical assistance to the Authority to ensure that it properly administers its operating funds in accordance with applicable requirements.
2018-PH-1007-002-A Cerrado Septiembre 25, 2018 Reimburse its program $111,568 from non-Federal funds for the ineligible payments it made due to the conflict-of-interest situations identified by the audit.
2018-PH-1007-002-B Cerrado Septiembre 25, 2018 Submit a retroactive request for a waiver to the conflict-of-interest requirements to support payments totaling $1,499,137 or reimburse the appropriate fund from non-Federal funds for any amount not covered by a waiver.
2018-PH-1007-002-C Cerrado Septiembre 25, 2018 Develop and implement controls to prevent and detect conflict-of-interest situations.
2018-PH-1007-002-D Cerrado Septiembre 25, 2018 Evaluate the apparent conflict-of-interest situations in this report and pursue administrative sanctions if warranted.
2018-PH-1007-003-A Cerrado Septiembre 25, 2018 Provide documentation to show that products and services totaling $171,822 were purchased at fair and reasonable prices. For any amounts determined to be unreasonable and not supported, the Authority should reimburse the program from non-Federal funds.
2018-PH-1007-003-B Cerrado Septiembre 25, 2018 Reimburse its program $170,784 from non-Federal funds for the ineligible salary payments and ongoing security payments.
2018-PH-1007-003-C Cerrado Septiembre 25, 2018 Develop and implement controls over its procurement actions to ensure that prices paid for goods and services are reasonable.
2018-PH-1007-003-D Cerrado Septiembre 25, 2018 Develop and implement controls to ensure that program funds are used for eligible activities only.