We audited the Housing Authority of the City of Elizabeth, New Jersey’s, (Authority) administration of its capital fund program (CFP) in support of the U.S. Department of Housing and Urban Development (HUD) Office of the Inspector General’s (OIG) goal to contribute to improving HUD’s execution and accountability of fiscal responsibilities. The audit objectives were to determine whether Authority officials (1) obligated and expended capital funds in accordance with HUD regulations, and (2) implemented a financial management system in compliance with program requirements.
Authority officials did not always obligate or expend capital funds in accordance with program regulations, nor implement a financial management system in compliance with program requirements. Specifically, Authority officials obligated and expended funds without adequate supporting documentation, and did not ensure that CFP financial monitoring and reporting was complete and accurate. We attribute these conditions to Authority officials’ unfamiliarity with HUD regulations and weaknesses in the Authority’s financial controls over its CFP. Consequently, approximately $1.8 million was improperly recorded as obligated in HUD’s Line Of Credit Control System (LOCCS), $95,626 was drawn down without adequate documentation, reclassification of $394,487 in administrative costs to other budget line items was unsupported, and the status of CFP funds was not effectively monitored.
We recommend that the Acting Director of HUD’s New Jersey Office of Public Housing, instruct Authority officials to ensure that the $1.8 million of CFP funds are properly obligated, provide adequate supporting documentation for the $95,626 of CFP drawdowns, provide documentation to adequately support reclassification of administrative costs of $394,487 to other budget line items, and strengthen financial controls over the administration of its CFP funds.