We audited the Fort Smith Housing Authority (Authority) in response to a request from the U. S. Department of Housing and Urban Development's (HUD) Office of Public Housing. The objectives were to determine whether the Authority and its instrumentality, North Pointe Limited Partnership (Partnership), spent HUD-provided funds in compliance with HUD's rules and regulations for costs related to North Pointe Development (the development), including relocation activities, and whether they complied with federal procurement regulations.

Between November 2006 and April 2007, the Authority and its instrumentality improperly encumbered Authority assets. Also, the Authority and its instrumentality did not comply with federal procurement regulations for three procurements. Further, between October 2006 and January 2008, the Authority inappropriately spent HUD program funds on activities that did not benefit those programs.

Our recommendations include requiring the Authority to obtain the release of any encumbered assets and ensure that it will no longer encumber assets support or repay $400,000 to its HOME Investment Partnerships Program, more than $94,000 to its Community Development Block Grant program, more than $30,000 to its capital fund grants, and more than $9,700 to its Section 8 project reserve, or HUD, as appropriate; ensure that it procures goods and services as required; and implement written procedures and controls to prevent future occurrences