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March 10, 2011
  • Public and Indian Housing
2011-NY-1007
ig1121007.pdf

We audited the Jersey City Housing Authority’s (Authority) administration of its public housing capital fund program funded under the American Recovery and Reinvestment Act of 2009 (Recovery Act). This is the second audit report regarding the Authority’s capital fund programs. We selected the Authority because of the size of its capital fund programs and because of its U.S. Department of Housing and Urban Development (HUD) risk rating. Our audit objective was to determine whether the Authority obligated and expended its Recovery Act Public Housing Capital funds in accordance with HUD regulations.

Authority officials generally complied with HUD regulations; however, weaknesses existed in the Authority’s financial management system. Specifically, (1) it was difficult to trace the drawdowns to the source documentation, (2) Authority officials charged their Recovery Act Capital Fund program with more expenses than were incurred, and (3) costs were miscategorized. Consequently, (1) HUD was precluded from effectively and efficiently monitoring and evaluating the Authority’s administration of its Recovery Act Capital funds. These deficiencies were due to the lack of adequate fiscal controls and accounting procedures in place and because Authority officials believed that their accounting system was adequate and complied with HUD regulations.

We recommended that the Director of HUD’s New Jersey Office of Public Housing instruct Authority officials to (1) improve their financial controls and accounting procedures to ensure that drawdowns can be traced to source documentation as required by HUD regulations; (2) develop procedures to ensure that drawdowns are made only on a reimbursement basis so that the specific costs paid are identified for each drawdown; (3) reimburse more than $5,000 from non-Federal funds to the Recovery Act Capital Fund program; (4) reimburse more than $13,000 to the dwelling structure line item from the administrative costs line item and correct the financial records in HUD’s Line of Credit Control System to ensure that the proper categories were charged; and (5) develop procedures to improve the accounting system and internal controls to ensure that funds are drawn down and used as budgeted and financial reports are accurate, current, and complete.