In accordance with our regional plan to review public housing programs and because of a complaint received by our office, we reviewed the Housing Authority of the City of Nixon, Nixon, TX.  Our objective was to determine whether the Authority operated its public housing and related grant programs in accordance with the U.S. Department of Housing and Urban Development’s (HUD) requirements.  Specifically, we wanted to determine whether the complainant’s allegations regarding payroll and vacation payments, petty cash, and fund accounting issues were valid. 

Many of the complainant’s allegations were valid.  The Authority did not properly manage its public housing and related grant programs in accordance with HUD requirements.  Specifically, the Authority made ineligible and unsupported payroll and vacation leave payments.  It also lacked support for its executive director’s travel and other costs, payments made to a contractor, and purchases made with petty cash.  It failed to properly report its employees’ wages and a contractor’s income to the IRS and may owe additional taxes on some of these amounts.  These conditions occurred because the Authority’s management, consisting of its executive director and board of commissioners, did not exercise adequate control over the Authority.  Further, they did not ensure that policies, procedures, and controls existed and were followed.  As a result, the Authority paid ineligible and unsupported costs totaling $116,341. 

We recommended that HUD require the Authority repay the ineligible amounts and support or repay the unsupported amounts.  We also recommended HUD require the Authority to implement policies and controls, correct its tax reporting, and update its executive director’s contract and correct its fund balances. In addition, HUD should require the Authority to submit a plan to improve board oversight and operate in a fiscally responsible manner or transfer the program to another public housing agency.