The U.S. Department of Housing and Urban Development's (HUD) Office of Inspector General audited the Akron Metropolitan Housing Authority's (Authority) 5(h) homeownership program (program). We selected the Authority based on a risk analysis showing that it may have improperly used program funds. Our objectives were to determine whether the Authority properly accounted for and used its program's proceeds in accordance with requirements.

The Authority failed to maintain a separate identity for $196,247 of its program's proceeds because it commingled the proceeds with monies in its general public housing fund account. The $196,247 consisted of $90,764 in program sales proceeds from 11 properties sold between April 1993 and June 1995, and $105,483 in earned interest on the sales proceeds. It also did not use its program sales proceeds in a timely manner. As a result, the program's proceeds were not used to assist low-income families.

We recommend that the Director of HUD's Cleveland Office of Public Housing require the Authority to reimburse its appropriate account the 5(h) sales proceeds plus earned interest, submit a proposal for HUD's approval on how the program's proceeds will be used, and implement adequate procedures and controls to ensure that the proceeds are used to provide housing assistance for low-income families in accordance with HUD's requirements.