The D.C. auditor, in a preliminary report, has concluded there were "serious deficiencies" in the operation of a federally funded H Street NE renovation project and urged the city's housing agency to recover $49,316 in funds that were never spent by the community group that ran the project.

The draft audit, which sharply criticizes both the housing agency and H Street Business Community Association (HBCA), the local group that operated the loan and grant program, also questioned $16,650 in administrative expenditures claimed by HBCA.

Those expenditures were made in the form of checks written for cash that were endorsed by HBCA officials and drawn from a bank account that had been set up solely to provide loans to H Street businessmen to fix up their properties.

"HBCA's failure to provide any records made it impossible to establish that these funds were spent in accordance with the terms of the contract," Otis H. Troupe, the D.C. auditor, said in his draft report. "We are . . . recommending additional investigation to determine the validity of the $16,650 in question."

Troupe also recommended that W. Loraine Alexander, president of HBCA, and Ozzie Turner, the vice president, be barred from doing additional business with the D.C. government until they account for the federal funds they already have received.

Alexander has denied that there was anything wrong with the way she had run the loan and grant program.

Alexander is a principal partner in another group called Suca Corp. that has proposed building a $26 million apartment-and-office-building complex on city-owned land along the riot-torn H Street NE corridor, between Sixth and Seventh streets NE. The city's Redevelopment Land Agency, which currently owns the land, supports the plan.

The report, which was requested by City Council member Nadine P. Winter (D-Ward 6), represents the second time in a year that Troupe's office has documented major problems with a program administered by the D.C. Department of Housing and Community Development.

In a report issued last August, Troupe said the department squandered millions of dollars through its poor management of the renovation of Bates Street, the showpiece of Mayor Marion Barry's housing program.

In the new study, a copy of which was shown to The Washington Post by a source, Troupe criticized housing department officials for permitting Alexander's loan and grant program also to operate without adequate supervision and review.

The housing department's "failure to adhere to strict enforcement of the requirements of the contract resulted in the credibility of the program being called into question," the report stated. "The major deficiency on the part of the department was its failure to require adequate reports."

James Clay, director of the housing department, who was provided with a copy of the draft report last week, has declined to comment on it.

Alexander said yesterday that she hasn't received a copy of the report, but hotly denied that she had been uncooperative in the audit, as Troupe contended.

Alexander's organization was under contract with the city between September 1979 and March 1982 to disburse federal block grant funds to fix up the exteriors of 17 businesses along H Street that were damaged during the 1968 riots.

"I am saying that we gave one of Troupe's auditors access to every report, every bank statement and every receipt this organization has," said Alexander, who showed a reporter a receipt for some of the records she furnished to Troupe's office.

"And if he reported anything other than what was in these documents, he chose to overlook it the complete record . There is not a penny in this grant program that has not been accounted for," she added.

HBCA received a total of $160,612 in federal funds under its contract, but could only account for $111,296 in loans, grants and administrative costs, according to the draft audit.

Alexander declined to comment directly on the nearly $50,000 in funds that Troupe contends still have not been accounted for, saying that she left all of her bookkeeping to a private accountant, Charles W. Jordan.

However, she defended her past practice of writing checks to cash from the revolving loan account, explaining that she used the money to cover administrative costs whenever the housing department was late in sending her funds to cover those costs.

"There's nothing wrong with using checks written to cash, especially when the government hasn't paid you in five months and you had the money available in another account," she said.

Alexander and her lawyer, Edwin C. Brown Jr., both suggested that Troupe's draft audit may have been instigated by competitors who are interested in taking the proposed H Street commercial project away from Alexander. "There might be some undercurrent to try to defeat Miss Alexander's development project," Brown said.

Council member Winter, whose ward includes the H Street area, requested an audit after several of the 17 businesses listed by the city as receiving loans and grants complained to her that the work was not worth the value listed by the city.

Troupe concluded in his report that the businesses that had been renovated appeared to have received their money's worth, based on a sampling of eight or nine businesses listed.

Alexander and Turner, the vice president of HBCA, each received loans from the program, the audit confirmed.

Alexander obtained a total of $12,000 in loans to renovate A&W Deli, a shop she owned at H and Fourth streets that closed recently.

Turner, who was out of town yesterday and unavailable for comment, obtained two loans for his businesses--one for $6,500 to refurbish Rocket Cleaners at H and Fourth streets NE, and another for $4,575 to fix up Turner Laundromat, according to the report.

Winter said in an interview on Friday that Troupe's draft audit "only scratches the surface of the problem," adding that she holds Clay, the department head, totally responsible.

"The intentions were honorable and good, but to give the program to that group with no monitoring, despite the complaints, is inexcusable," Winter said. "I'm ashamed of the city . . . I think the department has been very negligent. I think they have created chaos."