We completed an audit of the Housing Authority of the City of Asbury Park, Asbury Park, New Jersey. The objectives of the audit were to determine whether (1) capital funds were properly expended and obligated in accordance with HUD requirements, (2) salaries and related benefits allocated to different programs were reasonable and supported, and (3) controls over maintenance and repairs were adequate.

The Authority did not adequately administer its capital grant program. It did not (1) disburse funds for administrative costs within budget limitations, (2) obligate capital grant funds in a timely manner, and (3) use prudent procurement practices. These deficiencies occurred because the Authority did not have adequate procedures in place to ensure that limits on administrative costs were not exceeded, capital grant funds were obligated within 24 months, and procurements were made in a cost-effective manner. The Authority's employee compensation cost was not always reasonable and supported. The Authority does not have adequate controls in place to ensure that its preventive maintenance program is effective. As a result, it did not operate in a manner that promoted the serviceability of the projects.

We recommend that the director, New Jersey Office of Public Housing, instruct the Authority to (1) reimburse HUD for the $692,990 in excess administrative fees charge to the capital fund grant, (2) reimburse HUD $721,701 related to the untimely obligation of capital funds, (3) comply with federal procurement requirements to ensure that the Authority procures its goods and services in the most economical manner, (4) request the Authority to repay $190,339 for excessive employee compensation from nonfederal funds, and (5) develop and implement procedures to ensure units meet uniform physical condition standards and repairs are completed and inspected before closing the work order.