We audited the Pell City and Ragland Housing Authorities’ financial operations. We began our review of Pell City and Ragland because it aligns with a goal in our annual audit plan to improve the U.S. Department of Housing and Urban Development’s (HUD) execution of and accountability for grant funds. Our audit objective was to determine whether the Pell City Housing Authority complied with HUD’s regulations regarding the management of its financial operations and its management of the Ragland Housing Authority.
The Pell City Housing Authority failed to follow Federal requirements and its policies governing program execution for both Pell City and Ragland. Specifically, Pell City did not (1) always administer its and Ragland’s funds in accordance with Federal requirements and its policies and procedures, (2) comply with conflict-of-interest requirements, and (3) always comply with its and Ragland’s housing requirements. This condition occurred because the Authorities lacked adequate controls and their boards of commissioners lacked the appropriate knowledge of Federal requirements and the Authorities’ guidelines to ensure adequate oversight. As a result, the Authorities spent more than $1,000 for unallowable costs and disbursed more than $44,000 that was not properly supported.
We recommend that the Director of HUD’s Birmingham Office of Public and Indian Housing require the Pell City Housing Authority to (1) repay from non-Federal funds the $1,188 for payments made for unallowable costs, (2) provide documentation for costs or repay more than $12,000 from non-Federal funds, (3) comply with conflict-of-interest requirements, and (4) implement adequate procedures and controls to ensure that waiting list applicants are selected in accordance with HUD requirements. We also recommend that the Ragland Housing Authority (1) repay from non-Federal funds the $105 in payments made for unallowable costs, (2) provide documentation for costs or repay more than $31,000, and (3) implement adequate procedures and controls to ensure that waiting list applicants are selected in accordance with HUD requirements.