We audited the Housing Authority of the City of Paterson, Paterson, NJ’s Housing Choice Voucher program based on a risk assessment of authorities administered by the HUD Newark, NJ, field office that considered funding, HUD’s 2012 risk score, and prior OIG audits. The audit objectives were to determine whether Authority officials implemented adequate controls to ensure that the program was administered in accordance with HUD regulations and its own administrative plan. 

The Authority lacked adequate controls to ensure that its program was administered in accordance with regulations.  Specifically, documentation was lacking that assisted rental units were inspected annually and annual quality control inspections were performed, and some units did not comply with housing quality standards.  As a result, housing assistance of almost $3.8 million was paid for units without evidence that they complied with housing quality standards.   In addition, documentation was inadequate to support that rental subsidy amounts were accurately calculated, all tenants were eligible for subsidy, and applicants were properly selected from the waiting list.  Consequently, $184,867 in questionable housing assistance was disbursed, and HUD lacks assurance that tenants were properly selected from the waiting list.  Further, financial controls were not adequate to ensure that port-in receivables were collected, duplicate housing assistance payments were not made, and uncashed checks disbursed to landlords and tenants were adequately monitored.  As a result, Authority officials failed to collect all receivables on behalf of port-in tenants, lacked assurance that housing assistance payments were not made for vacant units, and outstanding checks to landlords and tenants were cashed within a reasonable timeframe.  In addition, Authority officials did not properly execute a contract or adequately monitor the status of the contractor’s performance against the contact provisions.  Consequently, the contractor has been paid in excess of the small procurement threshold. 

We recommend that HUD instruct Authority officials to provide documentation to support that assisted units complied with housing quality standards, and strengthen controls over the unit inspection, tenant certification,  port-in receivables collection, and procurement processes.