We audited the Grants Housing Authority located in Grants, NM, at the request of U.S. Department of Housing and Urban Development’s (HUD) Public Housing Program Center in Albuquerque, NM. Our objective was to determine whether the Authority used its capital funds and operating funds for allowable costs, performed contracting activities in accordance with program requirements, and correctly processed and paid for Section 8 housing choice vouchers. We found that the Authority’s management and board of commissioners failed to establish a control environment designed to provide reasonable assurance that it complied with Federal requirements. This condition occurred because the board relied on the executive director to operate the Authority with little or no oversight. Further, the executive director was either unwilling or unable to manage the Authority effectively. As a result of these conditions, the Authority incurred more than $64,000 in ineligible Housing Choice Voucher program expenses and put its assets at an increased risk of fraud, waste, and abuse.
We recommended that HUD retain the Authority’s capital and operating funds, release only sufficient funds to reimburse the Authority for its paid invoices, and review the Authority’s bank statements to ensure that it deposits all rents. We also recommended that HUD require the Authority to develop and implement appropriate policies and procedures, determine which Housing Choice Voucher program tenants are being assisted without valid contracts between the Authority and the landlords, and repay HUD more than $64,000 in ineligible expenses.