We audited the Housing Authority of the City of New Brunswick’s American Recovery and Reinvestment Act Capital Fund Program based upon a risk analysis of authorities administered through the U.S. Department of Housing and Urban Development (HUD) Newark, NJ field office, which considered the funding received and HUD’s assigned risk score. The objectives of the audit were to determine whether Authority officials (1) obligated and expended their funds in accordance with the Recovery Act and HUD regulations, and (2) complied with Recovery Act reporting requirements.
Authority officials obligated and expended Recovery Act funds for eligible activities within required timeframes; however, there were weaknesses in budgetary and procurement controls, and officials did not properly report Recovery Act-funded activities. Specifically, (1) $56,993 was expended prior to Board approval and $107,319 was expended in excess of the approved budget for security cameras; (2) two of five contracts lacked sufficient documentation to show that procurements were based upon a complete cost analysis and a detailed scope of work; and (3) $157,701 expended for labor cost was not adequately supported. In addition, reporting of Recovery Act-funded activity did not reconcile with approved budgets or the actual work performed. We attribute these deficiencies to inadequate oversight and unfamiliarity by Authority officials with Recovery Act reporting requirements. As a result, HUD lacks assurance that procurement of security cameras was executed in the most economical manner and accurate information on the expenditure of Recovery Act funds was reported.
We recommend that HUD instruct Authority officials to (1) provide support for the board approval of the $107,319 expended in excess of the amount authorized for the installation of security cameras; (2) provide documentation to adequately support that the $157,701 paid for installation and maintenance labor costs was reasonable and that the costs were incurred; (3) strengthen procurement, financial, and budgetary controls; and (4) ensure that any future reporting of activities undertaken with grant funds complies with applicable reporting requirements.