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Report Fraud, Waste and Abuse
September 08, 2004
  • Public and Indian Housing
2004-PH-1011
2004-PH-1011.pdf

What We Audited and Why

We completed an audit of the operations of the Petersburg Redevelopment and Housing Authority (Authority) in response to a citizen's complaint. The complainant alleged procurement irregularities, accounting problems, and overall mismanagement at the Authority.

Our audit objective was to determine if the Authority properly awarded contracts to its consultants and attorneys and whether it could support that it used HUD funds to meet its mission of providing safe and sanitary housing for the low-income citizens of the city of Petersburg, Virginia.

What We Found

The Authority did not properly award contracts to its consultants and attorneys and it could not support that it used all HUD funds to meet its mission of providing safe and sanitary housing for the low-income citizens of the city of Petersburg, Virginia. We reviewed all payments the Authority made to consultants and attorneys from January 1998 to October 2003 in which it used federal funds, and found in all instances it violated federal procurement regulations. Specifically, the Authority paid $558,842 to four consultants and attorneys who were never awarded written contracts that specified the terms and conditions of the services they would be required to provide the Authority. It also paid another law firm $324,074 under a contract that was never competitively bid to ensure it obtained the best value for those services. In addition, it could not provide required documentation such as invoices, receipts, cancelled checks and payroll records to substantiate how it spent $1.9 million HUD provided it from December 1998 to May 2003. We estimate the Authority could put $583,357 to better use annually by following federal procurement regulations and ensuring it supports its future costs.

What We Recommend

We recommend HUD take appropriate administrative action against the Authority's former Executive Director and former Finance Director. We also recommend that it require the Authority to reimburse HUD $2.8 million from non federal sources unless it can provide additional documentation to resolve the cited deficiencies. We further recommend that HUD periodically monitor the Authority to ensure it complies with federal regulations governing procurement and bookkeeping requirements in the future.

For each recommendation without a management decision, please respond and provide status reports in accordance with HUD Handbook 2000.06, REV-3. Please furnish us copies of any correspondence or directives issued because of the audit.