Audit Report 2013-FW-1006
June 19, 2013
The Management and Board of Commissioners of theHarris County Housing Authority Mismanaged theAuthority
We audited the Harris County HousingAuthority, Houston, TX, at the requestof the U.S. Department of Housing and Urban Development’s (HUD) FortWorth Office Director of Public and Indian Housing. The request followed aseries of news articles allegingmismanagement and extravagantspending at the Authority, the removalor replacement of various former managers and board of commissionersmembers, and concerns expressed bythe new managers.Our objective was to determine whether the Authority’s procurement, expenses,and financial records complied withHUD’s requirements.Our recommendations to HUD includedetermining whether the Authority is insignificant default of its annualcontributions contract, takingappropriate administrative actionsagainst the Authority’s former executive director and former board of commissioners members who wereresponsible for the mismanagement, and requiring the Authority repay $4.5million in ineligible costs, and supportor repay more than $23 million.The Authority’s management and board of commissioners failed to establish a controlenvironment designed to provide reasonable assurancethat it complied with Federal requirements. Theyfailed to enact policies and procedures to ensure theintegrity of financial operations and compliance with procurement requirements. Instead, they neglected their management and oversight responsibilities;wasted Authority funds, at times for personal gain;circumvented existing internal controls; and manipulated accounting records. These conditionsoccurred because the Authority’s management and board failed to exercise their fiduciary responsibilitiesand did not act in the best interest of the Authority. Asa result, the Authority incurred questioned costs of more than $27 million. Further, due to their actionsand inactions, the former executive director and theAuthority’s board put the Authority in a precariousfinancial position and it did not have sufficient funds torepay a $3.8 million debt due to HUD.In addition, there was a scope limitation on the audit because the Authority did not maintain accountingrecords that supported its sources and uses of funds or justified accounting entries in its books and records.
What We Audited and WhyWhat We RecommendWhat We Found