The U.S. Department of Housing and Urban Development, Office of Inspector General audited the Springfield Metropolitan Housing Authority’s American Recovery and Reinvestment Act of 2009 Public Housing Capital Fund Stimulus (formula) Recovery Act Funded grant. The audit was part of the activities in our fiscal year 2011 annual audit plan. We selected the Authority for audit based on the Office of Inspector General’s (OIG) commitment to ensure the proper use of Recovery Act grant funds. Our objective was to determine whether the Authority administered its capital grant in accordance with Recovery Act and U.S. Department of Housing and Urban Development (HUD) requirements.
The Authority did not administer its Capital Fund grant in accordance with Recovery Act and HUD requirements. Specifically, it did not (1) properly obligate $152,000 in Recovery Act grant funds for eligible management improvement costs, and (2) adequately monitor its contractors for the enforcement of labor standards. The problems occurred because the Authority lacked adequate procedures and controls regarding the administration of its grant funds to ensure that obligations and expenditures met HUD and the Recovery Act requirements. Additionally, it lacked adequate procedures and controls to ensure that it complied with HUD’s and its own requirements for the administration of contracts. As a result, it improperly obligated $152,000 in formula grant funds contrary to HUD’s requirements and its reporting of Recovery Act funded activities on FederalReporting.gov was inaccurate.
We recommend that the Director of HUD’s Cleveland Office of Public Housing require the Authority to (1) implement adequate procedures and controls regarding the administration of its Recovery Act grant funds, (2) provide supporting documentation or reimburse HUD $110,580 for wages paid to its contractors, (3) review all payments to its contractors’ employees to determine whether wage restitution is owed and provide the review results to HUD for review and approval. If wage restitution is required, the Authority should make the restitution from non-Federal funds, and (4) implement adequate procedures and controls regarding its contracting process to ensure that its contractors’ employees are paid the appropriate Federal prevailing wage rates. These procedures and controls would include but not be limited to reviewing contractors’ weekly certified payrolls, maintaining full documentation such as weekly payrolls and copies of wage determinations, and making any applicable changes or modifications needed to comply with Davis-Bacon Act.
We also recommend that the Director of HUD’s Cleveland Office of Public Housing recapture $152,000 in Recovery Act capital funds that was improperly obligated for ineligible management improvement expenses for transmission to the U.S. Treasury. As of September 27, 2011, HUD is in the process of recapturing the funds.