The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited the development activities of the Kansas City, Kansas, Housing Authority (Authority) to determine whether the Authority improperly spent federal public housing funds when developing and operating nonfederal developments. We conducted the audit because of a citizen complaint received by our office.

We concluded that the Authority inappropriately transferred nearly $1 million of its public housing funds to a nonprofit affiliate, which used the funds for nonfederal development activities. The Authority also inappropriately spent federal funds for payroll costs when its staff worked on nonfederal development activities.

We recommended that HUD require the Authority to repay its public housing program nearly $184,000 from nonfederal sources for federal funds that were inappropriately used and not yet repaid. We also recommended that HUD require the Authority to provide documentation to support payroll costs allocated to HUD programs or reimburse its HUD programs from nonfederal sources for costs that it cannot adequately support.