During the audit of the City of Long Branch, New Jersey Housing Authority’s administration of its Public Housing Capital Fund and Capital Fund Financing Programs (report number 2011-NY-1013), we found that Authority officials had not accurately accounted for some transactions with its affiliated entities. Therefore, we performed a limited review of the Authority’s processes for recording these transactions.

Authority officials did not properly allocate, among its seven asset management projects, funds received from its for-profit entity as reimbursement for services the Authority’s maintenance staff provided to this entity. As a result, one asset management project was credited with approximately $1,000 in excess reimbursement, and Authority officials did not properly reflect the operating cost of the Authority’s asset management projects. In addition, Authority officials transferred $12,223 of Section 8 certificate reserves set aside for the purchase and renovation of local houses to fund its for-profit entity startup costs and $53,000 to its redevelopment fund. As a result, funds were used for purposes other than that initially approved by HUD.

We recommended that the Acting Director of the New Jersey Office of Public Housing instruct the Authority officials to reallocate the excess credit of $1,000 to the appropriate asset management project(s), thereby ensuring that each project’s costs are proper and request HUD approval of the use of the reallocated $65,223 in Section 8 certificate reserves to ensure that the funds were reallocated in accordance with 24 CFR 982.155(b)(1), thus ensuring that all funds are put to better use.