We audited the public housing program of the Housing Authority of the City of Hickory, NC, due to a citizen’s hotline complaint. Our objectives were to evaluate the merits of the complaint allegations and determine whether the Authority complied with U.S. Department of Housing and Urban Development (HUD) requirements for procurement, cash disbursements, a 2004 Resident Opportunity and Self-Sufficiency (ROSS) grant, and inventory control.

The Authority failed to administer some of its HUD funds in accordance with requirements. It awarded contracts to family members, disbursed funds for ineligible purchases, failed to comply with the financial requirements of its ROSS grant, and failed to maintain an adequate inventory system. As a result, it incurred $531,006 in ineligible costs, $80,634 in unsupported costs, and risked losing the public’s confidence in the integrity of its operations. These deficiencies generally occurred because management failed to maintain adequate internal controls.

We recommend that the Director of the Greensboro Office of Public Housing require the Authority to (1) reimburse its public housing operating fund $522,125 using non-Federal funds for conflict-of-interest contracts; (2) provide assurance that its board and management understand their roles and responsibilities regarding real or apparent conflicts of interest; (3) develop, implement, and enforce adequate written procedures for its cash disbursement function and ensure that responsible staff is trained; (4) require the Authority to provide support showing that $69,823 in ROSS grant funds was used for eligible grant expenses and repay any grant funds determined to be ineligible; and (5) develop and implement an improved inventory control system.