We reviewed the Housing Authority of the County of San Joaquin's (the Authority) capital fund program to determine whether it used capital funds in accordance with U.S. Department of Housing and Urban Development (HUD) rules and regulations. The Authority did not use capital funds in accordance with requirements. Specifically, the Authority used $175,775 to absorb shared administrative costs of other housing programs, improperly charged $114,771 in ineligible indirect administrative fees, recorded an additional $77,188 in questioned costs to its capital fund grant, and did not have policies and procedures in place to ensure accurate and complete financial information.

We recommend that the Director of HUD's San Francisco Office of Public Housing require the Authority to repay HUD and reimburse the capital fund $175,775 for shared administrative costs of other housing programs and that it repay HUD and reimburse the capital fund for $114,771 in ineligible administrative fees. We also recommend that the Authority remove liabilities in the amount of $77,188 from its accounting records and establish policies and procedures to ensure it spends and supports its use of capital funds in accordance with HUD requirements in the future.