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We audited the Southern Nevada Regional Housing Authority’s use of U.S. Department of Housing and Urban Development (HUD) public housing operating funds.  We audited the Authority based on a complaint alleging that the Authority (1) failed to competently oversee the Federal dollars entrusted to it and (2) did not have inventory controls in place to prevent the fraudulent use of supplies.  Our audit objective was to determine whether the Authority used its operating funds in accordance with HUD requirements.
We determined that the allegations in the complaint had merit.  The Authority did not always use its public housing operating funds in accordance with HUD requirements.  Specifically, it used funds to pay for ineligible expenses and did not comply with HUD procurement regulations.  It also did not have adequate inventory procedures in place to maintain effective control of and accountability for its assets.  As a result, the Authority paid more than $507,000 in operating funds for ineligible costs, and HUD had no assurance that more than $187,000 paid for janitorial services was the best value.  Further, we were unable to locate appliances, valued at $5,500, during our review. 

We recommend that HUD require the Authority to (1) reimburse its operating fund $507,459 for ineligible costs; (2) develop policies and procedures and provide staff with training on operating funds, procurement, contracting, and inventory controls; (3) issue a new janitorial services request for proposal and provide support that the $187,731 paid for janitorial services represented the best value to HUD or reimburse its operating fund from non-Federal funds; and (4) locate the missing appliances or reimburse its operating fund $5,500 from non-Federal funds.