We audited the New Rochelle Municipal Housing Authority’s (Authority) administration of its Low-Rent housing program as part of the Office of Inspector General’s (OIG) strategic plan goals to improve the U.S. Department of Housing and Urban Development’s (HUD) fiscal accountability for its assisted housing programs. The audit objectives were to determine whether the Authority administered its low-rent housing program in accordance with applicable regulations. The audit disclosed that the Authority had weaknesses in the administration of its low-rent program because it did not (1) properly determine tenant eligibility; (2) ensure that program units were decent, safe, and sanitary, and (3) support rent charged to an employee-tenant. In addition, the Authority had weaknesses in its procurement, payroll, and financial management functions because it (1) executed contracts contrary to HUD and its own policy, (2) did not maintain adequate support for payroll, and (3) expended and loaned funds among programs contrary to regulation. As a result, the Authority lacked assurance that low-rent program tenants were properly certified and resided in units that were decent, safe, and sanitary, services were obtained at the most economical and efficient price, payroll costs were eligible and adequately supported, and funds were always expended in accordance with HUD regulations.

We recommended that the Director, Office of Public Housing, New York, instruct Authority officials to (1) strengthen controls over low-rent tenant certification and unit inspection procedures to ensure that tenant eligibility is properly determined and adequately documented, and that annual inspections of low-rent units are conducted; (2) establish procedures for the approval and calculation of rents; (3) provide documentation to justify the rent charged to an employee-tenant or pay the $57,252 that should have been collected; (4) strengthen controls to ensure compliance with HUD procurement, payroll, and financial management regulations; and (5) repay from non-Federal funds the $38,355 expended for ineligible costs.