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We audited the Housing Authority of the Township of Irvington, NJ, regarding the administration of its public housing program because it was classified as a troubled public housing agency and based on a complaint from the union representing its maintenance and clerical employees.  The complaint alleged serious financial and operational mismanagement.  The audit objectives were to determine whether the issues identified in the complaint could be substantiated and whether the Authority administered its public housing program in accordance with U.S. Department of Housing and Urban Development (HUD) regulations and had sufficient financial controls.

The allegations in the complaint regarding serious financial and operational mismanagement were valid.  Authority officials did not always administer the Authority’s public housing program in accordance with program requirements.  Specifically, officials spent program funds for unsupported and ineligible costs, excessive compensation was provided to the former executive director, HUD was not notified about litigations, deficiencies were noted in rent collection, program income was spent for ineligible and unsupported costs, and controls over procurement were inadequate.  We attributed these deficiencies to the Authority officials’ unfamiliarity with program requirements, disregard for the financial condition of the Authority, and failure to establish a proper control environment.  As a result, HUD had no assurance that $1.2 million in expenditures charged by the Authority was eligible and adequately supported.

We recommended that HUD require Authority officials to (1) reimburse the public housing program from non-Federal funds for $95,240 in ineligible expenditures, (2) provide supporting documentation to justify $1.1 million in unsupported expenditures charged to the public housing program or repay the program from non-Federal funds, and (3) establish adequate controls to ensure compliance with program requirements.  We also recommend that the Director of HUD’s Departmental Enforcement Center pursue administrative sanctions against any current or former Authority officials found to have spent public housing program funds for personal or unallowable use.