We audited the Housing Authority of DeKalb County’s Rental Assistance Demonstration (RAD) conversion and Public Housing Capital Fund program. We selected the Authority for review in accordance with our annual audit plan. Our audit objective was to determine whether the Authority properly administered its RAD conversion and obligated and authorized capital funds in accordance with the U.S. Department of Housing and Urban Development’s requirements.
The Authority generally administered its RAD conversion in accordance with HUD’s requirements for written agreements, project financing sources, reporting of financial data, the expenditure of HUD funding, tenant occupancy, the calculation of contract rents, and physical conditions assessments. However, the Authority failed to accurately report on the obligation and authorization of its capital funds. Specifically, it inaccurately reported its fiscal year 2015 capital funds as obligated when binding agreements were not executed and caused some of its fiscal year 2016 capital funds to be authorized for a previously completed activity. This condition occurred because the Authority lacked (1) an understanding of HUD’s requirements and (2) adequate internal controls over its financial reporting. As a result, more than $940,000 in capital funds was improperly obligated and authorized.
We recommend that the Director of HUD’s Atlanta Office of Public and Indian Housing require the Authority to (1) deobligate more than $542,000 in capital funds until binding agreements are executed and reclassify more than $398,000 in capital funds for eligible and reasonable activities, or coordinate with HUD for terminating its capital funds including more than $217,000 of its current allocation, (2) provide adequate training to its staff, and (3) develop and implement adequate procedures and controls to ensure accurate reporting on capital funds. In addition, we recommend the Authority confirm the replacement of program units was appropriate for the number of units demolished at Johnson Ferry East, and submit a development proposal to construct new public housing units, transfer public housing assistance to another public housing agency, or terminate its annual contributions contract and return all unobligated and unexpended capital funds to HUD.
Recommendations
Public and Indian Housing
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Status2017-AT-1006-002-AOpenClosed$542,289.00Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
Closed on March 11, 2019Deobligate $542,289 in fiscal year 2015 capital funds in HUD’s system until binding agreements are executed for eligible and reasonable purposes, or coordinate with HUD for terminating its funding.
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Status2017-AT-1006-002-BOpenClosed$398,022.00Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
Closed on March 22, 2019Reclassify $398,022 in fiscal year 2016 capital funds as authorized in HUD’s system to an eligible and reasonable activity, or coordinate with HUD for terminating its funding.
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Status2017-AT-1006-002-COpenClosed$217,553.00Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
Closed on March 22, 2019Coordinate with HUD for terminating the allocation of the remaining $217,553 funds given the Authority’s current intentions to not build or purchase public housing units.
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Status2017-AT-1006-002-DOpenClosedClosed on October 03, 2017
Develop and implement adequate procedures and controls to ensure that the reporting of allocated capital funds in HUD’s system is accurate.
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Status2017-AT-1006-002-EOpenClosedClosed on October 03, 2017
Provide adequate training to staff responsible for making entries into HUD’s system to ensure accurate reporting on allocated funds. The training should include but not be limited to ensuring that its staff understands all of HUD’s reporting requirements for obligations and authorizations.
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Status2017-AT-1006-002-FOpenClosedClosed on March 11, 2019
Confirm the replacement of program units was appropriate for the number of units demolished at Johnson Ferry East, and submit a development proposal to construct new public housing units, transfer public housing assistance to another public housing agency, or terminate its annual contributions contract and return all unobligated and unexpended capital funds to HUD.