Attached is the final report on our audit of the Housing Authority of the City of Allentown (Authority), Allentown, Pennsylvania, Audit Report Number 2008-PH-1003, dated November 21, 2007. Our objectives were to determine whether the Authority calculated housing assistance payments accurately and properly maintained documentation in its tenant files for its Section 8 Housing Choice Voucher program according to U.S. Department of Housing and Urban Development (HUD) regulations; settled interfund payables accruing to its Section 8 program in a timely manner; and properly allocated administrative salary and benefit costs to its programs on a reasonable and fair basis.

The Authority generally calculated housing assistance payments accurately and properly maintained documentation in its tenant files for its Section 8 program according to HUD regulations. The Authority did not settle interfund payables accruing to its Section 8 program in a timely manner and it did not allocate administrative salary and benefit costs to its programs on a reasonable and fair basis. As a result, the Authority allowed the Section 8 program's interfund payables to accumulate to $760,109 over a 10-month period and it charged excess administrative salary and associated employee benefit costs totaling $150,837 to its low-rent public housing program.

We recommend that HUD verify the Authority's reimbursement of $760,109 to settle the Section 8 program's interfund payables and direct the Authority to reimburse its low-rent public housing program $150,837 from the programs that benefited from the improper allocation of administrative salary and benefit costs.