(CNSNews.com) - The Government Accountability Office published a June report that found 200 federal housing agencies were regularly writing bad checks of $25,000 or more between 2002 and 2006.
Nearly three-quarters of them had passed a test monitoring their fiscal well-being, but the test isn't designed to determine if housing agencies are mismanaging their funds or using them inappropriately, the GAO said..
The report urges the Department of Housing and Urban Development (HUD) to overhaul its oversight mechanisms to better identify at-risk housing agencies.
"Our analysis . . . found that 200 housing agencies had written checks that exceeded the funds available in their bank accounts (bank overdrafts) by $25,000 or more,” the report said, “indicating a potential that these housing agencies could have serious cash and financial management problems and could be prone to increased risk of fraudulent use of funds.”
The GAO found that nearly 75 percent of those agencies that had written bounced checks had passed HUD’s benchmark for financial health, the Public Housing Assessment System (PHAS). Additionally, some of the agencies were given no PHAS score at all.
But according to the government auditor, the PHAS test does not identify potentially inappropriate uses of funds.
“Key HUD oversight processes could be more focused to enable HUD to identify housing agencies that may be at greater risk of inappropriately using or mismanaging public housing funds. The primary process that HUD uses to identify inappropriate use and mismanagement of public housing funds is housing agencies’ single audits,” the report said.
The report said 837 housing agencies were found to have given some of their operating budget, public money in excess of $100,000 per case, to outside agencies, where it was “potentially not used for public housing purposes.”
Working in conjunction with the HUD inspector general, the GAO recommended that someone in the department review all audits of the housing agencies and create financial indicators that could suggest potential misuse or mismanagement of federal money.
However, in a response letter to the GAO, Paula Blunt, HUD general deputy assistant secretary for public and Indian housing (PIH), said that the report “provided PIH with recommendations on how to strengthen oversight of housing agencies administering public housing,” but that “PIH does not believe that the recommendations provided will accomplish these objectives.”
Instead, Blunt told the GAO she would brief the new assistant secretary for PIH when one was installed, and allow her to formulate her own plan.
President Obama named Sandra Henriquez to that position on April 10, and she was confirmed by the Senate on May 21, but has not yet taken command, according to HUD.
Henriquez, who was formerly administrator and CEO of the Boston Housing Authority, wrote in a 2004 Boston Globe editorial that programs like the ones the GAO report mentions could not afford budget cuts.
HUD was unable to comment on how soon Henriquez starts her new job -- or when she would be briefed on the GAO report.
HUD’s Public and Indian Housing office said it “assures the fiscal integrity of all program participants.”
Roughly 3,300 public housing agencies across the country received $6.7 billion in government funding for fiscal year 2008.