DALLAS — The Travis County Housing Authority in Austin is in the process of revamping its accounting procedures after federal auditors reported that the agency’s books could not be audited and that $2.5 million had been misapplied to non-federal programs.

The authority is also considering paying back $218,000 in federal funds if it cannot determine how the money was used, officials said.

Officials have admitted using $3,084 of federal program funds for travel but said they did not know that use of the funds for such purposes was prohibited. Most of the agency’s $7.3 million budget comes from federal funds. The federal audit recommended that the agency repay $600,000 in costs if they could not be documented.

As a result of the audit, the U.S. Department of Housing and Urban Development ruled in August that the Travis County authority was not qualified to receive federal stimulus funds under the American Recovery and Reinvestment Act.

In the wake of the audit, executive director Wiley Hopkins resigned in August after 10 years with the Housing Authority. The agency also fired a public relations and marketing employee, a manager, and a development director, eliminating their jobs to save money.

In response to the audit of the 2007 fiscal year, the agency said it corrected its accounting procedures and changed policies and procedures. Adjustments to the budget now require consent of the authority’s board.

The audit by HUD’s office of the inspector general found “the authority haphazardly transferred more than $2.5 million between its federal and nonfederal programs and activities without proper support or justification.

Further, its books and records were not auditable, and it did not properly allocate costs. Limited testing also showed that it could not support more than $600,000 in costs charged to federal programs, spent more than $3,000 on ineligible costs, and did not always follow procurement requirements.”

The audit added that “these violations occurred because the authority disregarded HUD requirements in order to keep its programs functioning and lacked financial controls. Consequently, HUD did not have a true understanding of the authority’s financial position, which was deteriorating.”

The audit recommended that the director of HUD’s San Antonio office of public housing hire an outside accounting firm to review the $2.5 million in transfers.

The authority is governed by a five-member board appointed by Travis County commissioners. It is an independent, government-funded agency responsible for providing low-income housing. It also administers and receives grant funds from HUD for the county’s low-income residents.

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