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We audited the Buffalo Municipal Housing Authority based on our risk analysis of public housing agencies that fall under the jurisdiction of the U.S. Department of Housing and Urban Development’s (HUD) Buffalo, NY, field office.  The objective of our audit was to determine whether the Authority administered its operating funds in accordance with applicable HUD, Federal, and Authority requirements.

We found that the Authority did not administer its operating funds in accordance with applicable HUD, Federal, and Authority requirements.  Specifically, it (1) did not properly procure goods and services with related operating fund disbursements and (2) improperly requested, received, and used operating funds.  These issues occurred because the Authority did not fully understand applicable requirements and did not have adequate controls to ensure compliance with HUD, Federal, and Authority requirements.  As a result, HUD did not have assurance that (1) the Authority conducted procurements in a manner that provided full and open competition, (2) more than $1.4 million in operating funds paid under five contracts and to two vendors for purchase orders was for prices that were fair and reasonable, and (3) $464,166 in operating funds was available and used for its intended purpose.

We recommend that HUD require the Authority to (1) provide documentation to show that more than $1.4 million in operating funds paid under five contracts and to two vendors for purchase orders was for prices that were reasonable; (2) evaluate apparent conflict-of-interest situations and pursue administrative sanctions if warranted; (3) provide documentation to justify $372,695 in unsupported Operating Fund subsidies received and $8,564 in excessive property management fees charged; (4) reimburse its Operating Fund account from non-Federal funds $82,907 for document management services contract payments that should have been paid with non-Federal funds; (5) strengthen its controls to ensure compliance with HUD, Federal, and Authority requirements; and (6) provide training to employees involved in the procurement, funding, and expenditure processes to ensure compliance with HUD, Federal, and Authority requirements.