HUD audited the Recovery Act formula and competitive grants administered by the Hammond Housing Authority in Hammond, Ind., as part of its annual audit plan. It selected the authority based on its analysis of risk factors related to the housing agencies in Region V’s jurisdiction.

The auditors found that the authority didn’t administer its grants in accordance with Recovery Act, HUD, and its own requirements. While the authority generally obligated and expended its Recovery Act funds in accordance with Recovery Act rules and regulations, it didn’t ensure small purchases or contracts above its small purchase threshold were properly procured and executed in accordance with HUD’s requirements and its own procurement policies. Further, it didn’t ensure federal and its own procurement requirements were followed when change orders were approved for work items that were outside the scope of work for construction contracts.

The authority also didn’t ensure that Recovery Act grant funds were: (1) disbursed within HUD’s required time frame; (2) properly allocated and drawn from appropriate budget line items; and (3) spent on eligible items. The authority also didn’t ensure that its contractors complied with the “buy American” requirements of the Recovery Act, the Davis-Bacon Act, and HUD’s Section 3 Act of 1968. It also didn’t accurately report its Recovery Act information for all three Recovery Act grants in FederalReporting.gov.

The auditors recommended that HUD require the authority to:

• Provide documentation or reimburse HUD $174,471 from non-federal funds for transmission to the U.S. Treasury for inappropriate change orders;
• Support or reimburse HUD more than $106,000 from non-federal funds for transmission to the U.S. Treasury;
• Pursue collection of $7,000 from its mixed finance development partner; and
• Implement adequate procedures and controls to address the findings in the audit report.

• HUD Audit Report 2012-CH-1009: The Hammond Housing Authority, Hammond, IN (8/3/12)