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We audited the Newark Housing Authority’s Housing Choice Voucher Program.  We selected the Authority for review because the U.S. Department of Housing and Urban Development (HUD) authorized more than $111 million in program funding for its Housing Choice Voucher Program in fiscal years 2016 and 2017 and based on our risk analysis of public housing agencies located in the State of New Jersey.  The objective of the audit was to determine whether the Authority ensured that its program units met HUD’s housing quality standards and whether it abated housing assistance payments when required. 

We found that the Authority did not ensure that its program units met housing quality standards, and it did not accurately calculate housing assistance payment abatements.  Of 29 program units inspected, 25 did not meet HUD’s housing quality standards, and 23 of those units materially failed to meet HUD’s standards.  Further, the Authority incorrectly calculated the abatement amount for 4 of the 20 abated units reviewed.  These conditions occurred because the Authority’s inspectors did not apply their housing quality standards training to thoroughly inspect units and it did not have adequate controls over the calculation of abatements.  As a result, the Authority disbursed $110,943 in housing assistance payments for units that materially failed to meet HUD’s housing quality standards and paid its contractor $708 in fees to inspect these units.  Additionally, it disbursed $4,459 for housing assistance payments that should have been abated.  Unless the Authority improves its inspection program and controls over the calculation of abatements, it will continue to pay housing assistance for units that materially fail to meet housing quality standards.  Further, its program participants will continue to be subjected to unsafe living conditions.

We recommend that HUD require the Authority to (1) certify, along with the owners of the 25 units cited in the finding, that the applicable housing quality standards violations have been corrected; (2) reimburse its program $111,651 for the 23 units that materially failed to meet housing quality standards; (3) improve controls over its inspection program; (4) reimburse its program $4,459 for housing assistance payments that were not properly abated; and (5) improve controls over the calculation of abatements.