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We audited the Crisfield Housing Authority’s use of public housing program operating and capital funds because we received a hotline complaint alleging misuse of public housing assets and we had never audited the Authority.  The audit objective was to determine whether the Authority administered its public housing program in accordance with applicable U.S. Department of Housing and Urban Development (HUD) requirements and its annual contributions contract. 

The Authority did not properly administer its public housing program according to applicable HUD requirements and its annual contributions contract.  It did not (1) properly administer its operating funds, (2) comply with conflict-of-interest requirements, and (3) comply with capital fund requirements.  As a result, the Authority’s use of operating funds totaling $137,500 for security services and more than $1.4 million for unit repairs were unsupported and it made ineligible payments totaling $111,568 for unit repairs and repairs to its public housing vehicles using operating funds.  In addition, regarding its use of capital funds, the Authority could not show that the prices it paid for products and services totaling $171,822 were fair and reasonable, and payments it made totaling $236,284 for salaries and other services were ineligible.   

We recommend that HUD direct the Authority to (1) provide documentation to support  $137,500 it paid for security services, or reimburse its operating fund for any costs that it cannot support; (2) reimburse its operating fund $111,568; (3) submit a retroactive request for a waiver to the conflict-of-interest requirements to support payments of nearly $1.5 million or reimburse the appropriate fund  for any amount not covered by a waiver; (4) provide documentation to show that purchases of products and services totaling $171,822 using capital funds were at fair and reasonable prices; and (5) reimburse its capital fund $170,784.  We also recommend that HUD’s Departmental Enforcement Center evaluate the apparent conflict-of-interest situations identified in this report and pursue administrative sanctions if warranted.