We audited the Richmond Housing Authority due to a complaint alleging that the Authority submitted falsified documentation to the U.S. Department of Housing and Urban Development (HUD) and allowed the City of Richmond to use the Authority’s HUD funds and the Authority’s assets and that the City charged the Authority for rent and services at an unreasonable price.  Our audit objective was to validate complaint allegations regarding whether the Authority spent HUD funds and used its assets in accordance with HUD requirements.

The complaint allegations had merit.  The Authority mismanaged its financial operations and did not spend HUD funds and use its assets in accordance with HUD requirements.  We attributed these deficiencies to the Authority’s disregard for HUD requirements and its agreement with HUD, the lack of independence in the relationship between the Authority and the City, and a weak internal control environment.  As a result, the Authority misspent $2.2 million in HUD funds, had $944,910 in unsupported costs, and incurred other questionable transactions that unnecessarily limited its resources and effectiveness with its public housing program.

We recommend that the Associate General Counsel for Program Enforcement determine legal sufficiency and if legally sufficient, pursue remedies under the Program Fraud Civil Remedies Act for submitting misleading documentation to HUD.  We recommend that the Director of the Departmental Enforcement Center take the appropriate administrative actions against Authority officials for submitting misleading documentation to HUD.  We recommend that the Director of the San Francisco Office of Public Housing require the Authority to (1) repay more than $2 million for the ineligible use of HUD funds, $53,347 for duplicate charges, and $60,000 for a City-initiated management audit; (2) support $80,890 of the executive director’s salary spent on Authority activities and $180,000 spent on office rent; (3) determine the proper use of the Authority’s former maintenance building property; and (4) develop and implement financial policies and procedures for the current operating environment.  We also recommend that the Director of the San Francisco Office of Public Housing work with HUD headquarters on corrective actions to improve the Authority’s control and accountability regarding its finances and operations, including but not limited to HUD receivership and separating the Authority’s finances from those of the City. 

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