We initiated a review of the Housing Authority of the City of Lumberton, NC, at the request of the U.S. Department of Housing and Urban Development’s (HUD) Greensboro, NC, Office of Public Housing. HUD staff described many areas of concern, including cash management, procurement, and inventory controls. Our objective was to determine whether the Authority operated its public housing program in accordance with HUD and other Federal requirements.
The Authority lacked adequate controls over its financial operations. Its management and board failed to create an internal control environment that included sufficient written policies and procedures and a knowledgeable, properly trained staff. As a result, the Authority did not always accurately account for its interfund program balances, improperly coded $16,368 in expenses to its revolving fund and asset management properties, and improperly drew down $9,706 in capital funds.
The Authority generally failed to follow HUD’s procurement regulations or its own procurement policy. This condition occurred because the Authority’s management and board failed to implement sufficient internal controls over the procurement process. As a result, the Authority could not assure HUD that it procured goods and services at the lowest cost using full and open competition. For the procurements we reviewed, the Authority was unable to support more than $131,000 in spending and another $1,500 for ineligible expenses.
The Authority did not maintain an adequate inventory control system. Management did not implement written procedures for staff to follow, and the Authority’s informal system was inadequate. As a result, it could not assure HUD that funds expended for equipment and supplies were properly used for Authority activities or that the values reflected in its inventory records were accurate.
We recommend that the Director of Public Housing require the Authority (1) to perform a 5-year review of its accounting records to track all Federal funds; (2) implement written policies and procedures for financial controls, procurement, and inventory; (3) repay $1,500 for ineligible expenditures; and (4) support that it disbursed $157,861 for eligible expenditures.