East St. Louis Housing Authority Didn't Properly Manage Recovery Act Funds

HUD audited the East St. Louis Housing Authority's American Recovery and Reinvestment Act of 2009 Public Housing Capital Fund program to determine whether the authority: (1) complied with applicable procurement requirements and properly managed its Recovery Act contracts; (2) properly drew down and expended funds for eligible activities; and (3) properly reported its Recovery Act activities.

The auditors concluded that the authority (1) improperly awarded Recovery Act-funded contracts; (2) improperly approved change orders; (3) didn't enforce the fair labor standards prevailing wage rate requirements in its contracts; (4) paid for a Recovery Act contract before receiving HUD approval to obligate or expend the funds; (5) improperly drew down all of its administrative fees; and (6) reported incomplete and inconsistent information on the number of jobs created and the amounts expended on Recovery Act contracts. As a result, the authority used Recovery Act funds for unsupported and ineligible expenses and failed to ensure that all contractors paid the appropriate wages, and its reported use of Recovery Act capital funds wasn't accurate.

HUD auditors recommended that HUD require the authority to: (1) support that nearly $1.9 million in Recovery Act contracts and change orders was granted at a reasonable cost and repay any amount determined to be unreasonable; (2) collect $46,922 in overpaid funds from its contractor and return these funds to the U.S. Treasury; (3) ensure that contractors make any required wage restitution; and (4) provide documentation to support all administration expenses incurred or repay $132,322 to the U.S. Treasury for the unsupported expenses. In addition, auditors recommended that HUD require the authority to correct the amounts reported in FederalReporting.gov and verify that its data entries meet Recovery Act reporting requirements.

• HUD Audit Report No. 2012-KC-1002, March 2, 2012