We completed an audit of the Lawrence Housing Authority, Lawrence, MA, (Authority) pertaining to its administration of U.S. Department of Housing and Urban Development (HUD) programs. The objective of this audit was to determine whether the Authority had acceptable management and financial practices to efficiently and effectively administer the use of Section 8 and public housing program funds in compliance with its annual contributions contracts and HUD requirements.
The Authority generally had acceptable management and financial practices to efficiently and effectively administer the use of HUD Section 8 and Low Income Public Housing Program funds in compliance with its annual contributions contracts and HUD requirements. However, Authority officials did not seek HUD approval to: (1) establish a trust for their other post employment benefits, (2) transfer $2.5 million in reserves to fund the trust, and (3) restrict the use of these funds to the trust exclusive of any other housing-related purpose. In addition, Authority officials did not properly delegate procurement duties, monitor or prevent interfund borrowing, have adequate procedures for tracking and reviewing the Authority’s force account labor projects, and update its travel policy. As a result, the Authority did not assign procurement duties in writing, have sufficient awareness of interfund imbalances, have a sufficient system to determine whether the use of force account labor was reasonable, or have a travel policy that was adequate. By the completion of this audit, Authority officials had begun to address most of these weaknesses and strengthen their management controls.
We recommend that HUD’s Director of Public Housing require Authority officials to provide proper supporting documentation to show how the $2.5 million in Federal funds used to fund a trust benefited each Federal program or repay the funds to the Federal program. Further, HUD should obtain a legal opinion identifying whether this trust constitutes an investment, was properly created and whether Federal funds may be used to pay for other post employment benefits. In addition, Authority officials should strengthen their management controls by updating (1) their procurement policy to delegate procurement authority to employees, (2) procedures to prevent interfund accounts, and (3) their methods of tracking force account labor. Also, the updated travel policy should be submitted to HUD and implemented.