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Report Fraud, Waste and Abuse
December 13, 2006
  • Public and Indian Housing
2007-CH-1001
2007-CH-1001.pdf

What We Audited and Why

We audited the Marion Housing Authority's (Authority) nonprofit development activities. The review of public housing authorities' development activities is set forth in our fiscal year 2006 annual audit plan. We selected the Authority because it was identified as having high-risk indicators of nonprofit development activity. Our objective was to determine whether the Authority diverted or pledged resources subject to its annual contributions contract (contract), other agreement, or regulation for the benefit of non-U.S. Department of Housing and Urban Development (HUD) developments.

What We Found

The Authority, under direction of its former executive director and a considerably different board of commissioners (board), defaulted substantially on its contract when it inappropriately used public housing operating funds to support the activities of the Affordable Housing Corporation (Corporation), a nonprofit organization created by the Authority, without HUD approval. As of November 2006, the Authority owed its public housing program more than $180,000.

The Authority inappropriately used nearly $19,000 in Housing Choice Voucher/Family Self-Sufficiency Program Coordinators (Coordinators) funds D from January 2003 through June 2004 to pay its former family self-sufficiency/housing counselor’s (former counselor) salary and benefits while the former counselor worked on the Corporation's activities. In addition, the Authority could not provide adequate documentation to support that its use of more than $25,000 in Coordinators funds to pay the former counselor's salary and benefits during the same period was appropriate.

What We Recommend

We recommend that the director of HUD's Cleveland Office of Public Housing require the Authority to reimburse its public housing operating and Coordinators funds from nonfederal funds for the inappropriate disbursements and implement adequate procedures and controls to ensure it uses public housing program and Coordinators funds appropriately. We also recommend that the director refer the Authority's substantial default of its contract to HUD headquarters and request appropriate action be taken against the Authority.