In accordance with our regional plan to review public housing programs and because of a complaint filed by a contractor with the U.S. Department of Housing and Urban Development’s (HUD) Office of the Inspector General (OIG) and issues identified by HUD’s Office of Public Housing, we performed a review of the Hot Springs Housing Authority. The contractor alleged that the Authority did not procure a contract in compliance with Federal regulations. In addition, HUD was concerned that the Authority’s travel costs appeared excessive and that the Authority had a large staff turnover during a 42-month period in which 64 staff left the Authority. Our objectives were to determine whether the Authority procured contract services in compliance with Federal, State, and the Authority’s requirements and whether the Authority spent public housing funds on allowable costs. We also reviewed the appropriateness of the Authority’s board of commissioners’ oversight.
The Authority did not operate its public housing programs in accordance with Federal regulations and other requirements. Specifically, it improperly procured or lacked support for the 10 contracts reviewed totaling $611,338. Further, it spent $14,651 on ineligible costs and did not have support for an additional $51,470. These conditions occurred because the former executive director ignored or failed to follow Federal regulations and the Authority’s consolidated annual contributions contract with HUD. In addition, the board of commissioners failed to provide adequate oversight of the Authority and former executive director. As a result, the Authority incurred at least $677,459 in questioned costs.
We recommended that the Director, Office of Public Housing, Little Rock, require the Authority to support or repay its public housing program at total of $677,459 from non-Federal funds for either unsupported or ineligible payments. Additionally, the Authority should implement adequate controls, policies, and procedures to ensure compliance with regulations, including maintaining complete and accurate records, appropriate board of commissioners’ oversight, and proper spending of funds. We also recommended that the Director review the current actions of the board of commissioners to determine its effectiveness and whether it is “presently responsible.” If not, appropriate action should be taken, such as referring the board members to the Departmental Enforcement Center for proper administrative sanctions, including suspensions, limited denials of participation, and debarments as deemed appropriate.