The New Brunswick Housing Authority, NJ, Did Not Always Administer Its Operating and Capital Funds in Accordance With HUD Requirements | Office of Inspector General, Department of Housing and Urban Development

September 28, 2017

Public and Indian Housing

2017-NY-1013

2017-NY-1013.pdf

We audited the New Brunswick Housing Authority because it was classified as a troubled public housing agency and based on our risk analysis of public housing agencies located in the State of New Jersey. The objective of the audit was to determine whether the Authority administered its operating and capital funds in accordance with U.S. Department of Housing and Urban Development (HUD) requirements.

We found that the Authority did not always administer its operating and capital funds in accordance with HUD requirements. Specifically, it (1) did not properly procure goods and services totaling more than $1 million; (2) did not support more than $187,000 in capital fund obligations; (3) did not meet obligation deadlines for more than $704,000 in replacement housing factor funds and disbursed more than $139,000 after the expenditure deadline; (4) charged its project more than $87,000 in excessive management fees; and (5) did not ensure that its budget, financial reports, and accounting data were accurate and up to date. This condition occurred because the Authority did not fully understand HUD’s requirements and did not have adequate controls to ensure compliance with all requirements. As a result, HUD did not have assurance that the prices paid for capital improvements and professional services were reasonable, capital funds were used for eligible activities in a timely manner, operating funds were available for the operations of the Authority’s project, and it had accurate information for evaluating the Authority.

We recommend that HUD require the Authority to (1) provide documentation to show that more than $1 million paid for goods and services was reasonable; (2) provide procurement training to its staff; (3) provide documentation to support more than $187,000 in 2013 and 2014 capital fund obligations; (4) reimburse HUD $139,423 in replacement housing factor funds disbursed after the expenditure deadline; (5) improve its controls to ensure that funds are obligated and spent in a timely manner; (6) reimburse its project more than $87,000 for excessive management fees; (7) submit a request to revise its budget to reflect expenditures; and (8) improve its controls to ensure that its budget, financial reports, and accounting data are accurate and up to date. Further, we recommend that HUD reduce the Authority’s future capital funds as a penalty for obligating its replacement housing factor funds after the deadline.

Recommendation	Status	Date Issued	Summary
2017-NY-1013-001-A	Closed	September 28, 2017	We recommend that the Director of HUD’s Newark Office of Public Housing to require the Authority to provide documentation to show that the $800,439 paid for supplies and services purchased under the intergovernmental agreement for capital improvement projects was reasonable or reimburse its Capital Fund from non-Federal funds for any amount that it cannot support or that is not considered reasonable.
2017-NY-1013-001-B	Closed	September 28, 2017	We recommend that the Director of HUD’s Newark Office of Public Housing to require the Authority to provide documentation to show that the $217,403 paid for legal, fee accounting, management consulting, and auditing services was reasonable or reimburse its Capital Fund or Operating Fund from non-Federal funds for any amount that it cannot support or that is not considered reasonable.
2017-NY-1013-001-C	Closed	September 28, 2017	We recommend that the Director of HUD’s Newark Office of Public Housing to require the Authority to provide training to its staff related to HUD and Federal procurement requirements, including the requirements for using intergovernmental agreements and preparing independent cost estimates and cost analyses.
2017-NY-1013-001-D	Closed	September 28, 2017	We recommend that the Director of HUD’s Newark Office of Public Housing to require the Authority to provide documentation to show that $187,492 in 2013 and 2014 capital fund obligations or reimburse HUD from non-Federal funds for any amount that it cannot support.
2017-NY-1013-001-E	Open	September 28, 2017	We recommend that the Director of HUD’s Newark Office of Public Housing to require the Authority to reimburse HUD $139,423 in replacement housing factor funds not disbursed by the expenditure deadline from its replacement housing factor funds or reduce its future capital funds.
2017-NY-1013-001-F	Closed	September 28, 2017	We recommend that the Director of HUD’s Newark Office of Public Housing to require the Authority to improve its policies and procedures to ensure that capital funds, including replacement housing factor funds, are obligated and spent for eligible activities in a timely manner.
2017-NY-1013-001-G	Open	September 28, 2017	We recommend that the Director of HUD’s Newark Office of Public Housing to require the Authority to reimburse its project from non-Federal funds for $87,116 in excessive management fees charged for units undergoing demolition.
2017-NY-1013-001-H	Closed	September 28, 2017	We recommend that the Director of HUD’s Newark Office of Public Housing to require the Authority to submit a request to the HUD field office to revise its budget so that it reflects actual expenditures for 2014 capital funds.
2017-NY-1013-001-I	Closed	September 28, 2017	We recommend that the Director of HUD’s Newark Office of Public Housing to require the Authority to improve its policies and procedures to ensure that its budget, financial reports, and accounting data are accurate and up to date.
2017-NY-1013-001-J	Closed	September 28, 2017	We also recommend that the Director of HUD’s Newark Office of Public Housing consider reducing future capital funds as a penalty for the Authority’s obligating its 2009, 2010, and 2011 replacement housing factor funds after the deadline.