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We audited the Housing Authority of the City of Long Branch, New Jersey’s, (Authority) administration of its Capital Fund Program and Capital Fund Financing Program 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 objectives of this audit were to determine whether Authority officials obligated and disbursed Capital Fund and Capital Fund Financing Program funds in accordance with HUD regulations and maintained a financial management system that complied with program requirements.

Authority officials generally obligated and disbursed Capital Fund and Capital Fund Financing Program funds in accordance with HUD regulations and maintained a financial management system that complied with program requirements. However, they received add-on subsidy incentive payments from HUD to repay an energy performance contract loan to which they were not entitled because they had already used Capital funds for the repayment. In addition, Authority officials did not use proceeds from the sale of Authority land for the activities initially approved by HUD. We attribute these issues to Authority officials’ unfamiliarity with HUD regulations. Consequently the Authority received approximately $1.1 million and was scheduled to receive more than $1.4 million in additional add-on subsidy incentive payments, to which it was not entitled, and used $5 million to fund activities that, while allowable by HUD regulations, were not for the purposes HUD had initially approved.

We recommend that the Acting Director of the New Jersey Office of Public Housing instruct Authority officials to repay the $1.1 million add-on subsidy incentive and strengthen controls to ensure that HUD is informed in a timely manner of any changes to HUD’s approved use of Authority funds. In addition, we recommend that action be taken to deobligate the more than $1.4 million in obligated add-on subsidy incentive to which the Authority would have been entitled.