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The U.S. Department of Housing and Urban Development's (HUD) Office of Inspector General audited the Housing Authority of the City of Milwaukee’s (Authority) nonprofit development activities. The audit was part of the activities in our fiscal year 2009 annual audit plan. We selected the Authority because it had high-risk indicators of nonprofit development activity. Our objective was to determine whether the Authority maintained complete and accurate books of record for its funds subject to its annual contributions contract, other agreement, or HUD regulations.

The Authority lacked documentation to support that funds, totaling more than $1.4 million, disbursed from its general fund were not federal funds. The funds were used to pay nonfederal expenses incurred by the Redevelopment Authority of the City of Milwaukee (City). Further, the Authority could not provide documentation to support that it did not use federal funds to pay $38,445 in City expenses.

We recommend that the Director of HUD’s Minneapolis Office of Public Housing require the Authority to provide documentation to support that funds, totaling more than $1.4 million, disbursed from its general fund were not federal funds and City expenses, totaling $38,445, were not paid with federal funds.