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We audited the Long Branch Housing Authority based on the results of our previous audits of the Asbury Park and Red Bank Housing Authorities, which received management services and technical assistance from Long Branch for several years. The objective of the audit was to determine whether Long Branch properly handled income and expenses associated with its agreements with Asbury Park and Red Bank in accordance with requirements.

Long Branch did not properly handle income and expenses related to services provided under agreements with two other public housing agencies.  Specifically, it improperly accounted for more than $2.2 million as non-Federal funds.  Additionally, it did not properly allocate and support base payroll expenses and maintain adequate documentation to substantiate incentive payments.  This condition occurred because Long Branch improperly considered itself to be a contractor and did not have adequate controls to ensure compliance with Federal requirements.  As a result, HUD did not have assurance that $1.5 million in incentives paid from agreement income was eligible and reasonable, and nearly $700,000 in unspent agreement income that had not been used continued to improperly reside in a Long Branch account.  Additionally, HUD did not have assurance that an estimated $1 million in base payroll expenses was paid from the proper funds, and any Long Branch program funds used were not available to benefit its own residents.

We recommend that HUD require Long Branch to (1) provide support to show the reasonableness and eligibility of the $1.5 million in employee incentives paid from agreement income or reimburse its program for any amount it cannot support, (2) provide support for a reasonable estimate of employee time used to perform services for the two agencies and reimburse its program for any program funds improperly used for those expenses, and (3) implement adequate controls to ensure that it properly classifies income received under any future agreements or activities and to ensure compliance with applicable cost principle requirements in the future.  Additionally, we recommend that HUD make a determination regarding nearly $700,000 in outstanding agreement income, including whether those unspent funds should be returned to the public housing agencies.

Recommendation Status Date Issued Summary
2022-NY-1003-001-A Open August 24, 2022 We recommend that the Director of HUD’s Newark Office of Public Housing make a determination regarding outstanding agreement income, including whether those unspent funds should be returned to the public housing agencies, thereby putting up to $697,912 to better use, including $478,165 related to Asbury Park and $219,747 related to Red Bank.
2022-NY-1003-001-B Open August 24, 2022 We recommend that the Director of HUD’s Newark Office of Public Housing provide technical assistance to Long Branch and require updates to its procedures to ensure that it properly classifies income received under any future agreements or activities.
2022-NY-1003-002-A Open August 24, 2022 We recommend that the Director of HUD’s Newark Office of Public Housing require Long Branch to prepare and provide support for a reasonable estimate of the amount of employee time used to perform services for Asbury Park and Red Bank and the amount of Long Branch program funds used to pay for that time. This estimate should include all employees known or believed to have provided services under the agreements based on language in the agreements, incentive payments, after-the-fact documentation provided, and any other applicable knowledge or documentation, which would show that the employees performed work under the agreements.
2022-NY-1003-002-B Open August 24, 2022 We recommend that the Director of HUD’s Newark Office of Public Housing require Long Branch to reimburse Long Branch’s program from non-Federal funds for any Long Branch program funds used for payroll expenses related to services provided to Asbury Park and Red Bank as established in recommendation 2A, estimated to be $1,014,660.
2022-NY-1003-002-C Open August 24, 2022 We recommend that the Director of HUD’s Newark Office of Public Housing require Long Branch to prepare and provide support to show the reasonableness and eligibility of the $1,583,652 in employee incentive payments related to services performed for Asbury Park and Red Bank, which was paid from agreement income, or reimburse its program from non-Federal funds for any amount it cannot support.
2022-NY-1003-002-D Open August 24, 2022 We recommend that the Director of HUD’s Newark Office of Public Housing require Long Branch to implement adequate controls to ensure compliance with applicable cost principle requirements for employees, including those covering compensation for personal services, such as wages, salaries, and incentive payments, at 2 CFR 200.430. Records should reasonably reflect the total activity for which Long Branch’s employees are compensated by the non-Federal entity and support the distribution of compensation among specific activities and cost objectives.