We audited the White Mountain Apache Housing Authority’s Indian Housing Block Grant (IHBG). We conducted the audit primarily due to concerns raised by HUD’s Southwest Office of Native American Programs regarding the Authority’s financial management practices. The objective of the audit was to determine whether the Authority used its IHBG funds in accordance with HUD requirements.
The Authority failed to use its IHBG funds in accordance with HUD requirements. It (1) charged its IHBG more than $2.2 million for ineligible charges and $48,065 for unsupported charges; (2) did not adequately procure vendors, ensure that it safeguarded grant assets, and support the categorization of $8.2 million as nonprogram income; and (3) incorrectly categorized $1million in program income as nonprogram income. These problems occurred primarily because the Authority’s procedures and financial controls for administering its IHBG were not adequate to ensure that charges complied with HUD’s requirements and its staff was not sufficiently familiar with grant requirements.
Additionally, although it had a waiting list of more than 2,000 families, the Authority housed ineligible tenants whose incomes exceeded HUD limits. This condition occurred because the Authority disregarded its policies and HUD regulations. As a result, it charged an estimated $84,900 (finding 2) to house eight ineligible families. Additionally, it charged an estimated $11,578 to house two families whose income eligibility was not supported.
We recommend that the Administrator of the Southwest Office of Native American Programs require the Authority to (1) reimburse its grant $2.3 million (findings 1 and 2) for duplicate, ineligible, and unsupported costs; (2) support the miscategorization of $8.2 million in nonprogram funds or reclassify it to program income; (3) reclassify $1 million in nonprogram income funds to program income funds; and (4) develop and implement policies and procedures to ensure IHBG requirements are met. We also recommend that the Administrator consider receivership until it has demonstrated sufficient capacity and exhibits a strong IHBG control environment.