We audited the Public Housing Capital Fund program at the Housing Authority of the City of Woonsocket, RI, based on a request by the U.S. Department of Housing and Urban Development (HUD) and because we have not audited the Authority in more than 10 years.  We also received a complaint regarding a property purchase and later demolition next to one of the Authority’s developments.  The audit objective was to determine whether the Authority administered its Capital Fund program in accordance with HUD’s requirements; specifically, whether costs were eligible and supported and the Authority procured and awarded contracts in accordance with HUD requirements and its procurement policies.  In addition, we wanted to determine whether the complaint regarding the Authority’s purchase of a property and later demolition of the property next to one of its developments had merit.

Authority officials did not administer the Capital Fund program in accordance with HUD requirements.  Specifically, they did not always ensure that Capital Fund activity costs were eligible and supported.  They did not always follow environmental review requirements and support that awarded contracts were procured in accordance with HUD requirements.  Although the complaint reviewed had merit, non-Federal funds were used for the property purchase and demolition.  These deficiencies occurred because Authority officials did not have adequate policies and procedures or always follow them to ensure that they met environmental review, procurement, and contract administration requirements.  As a result, the Authority spent more than $1.9 million for ineligible costs and more than $1.4 million for unsupported costs and may spend $125,491 for ineligible costs.

We recommend that the Director of HUD’s Boston Office of Public and Indian Housing require Authority officials to (1) repay from non-Federal sources more than $1.9 million in ineligible costs related to environmental deficiencies and for payments made beyond the contract terms, (2) support that more than $1.4 million spent was fair and reasonable and in accordance with Federal procurement and environmental review requirements or repay from non-Federal funds any amounts that cannot be supported, and (3) deobligate $125,491 in funds not yet spent on ineligible activities and costs.

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