AUDIT REPORT
HOUSING AUTHORITY OF MARICOPA COUNTY
PHOENIX, ARIZONA
2004-LA-1007
SEPTEMBER 22, 2004
OFFICE OF AUDIT, PACIFIC/HAWAII REGION IX
LOS ANGELES, CALIFORNIA
Issue Date
September 22, 2004
Audit Case Number
2004-LA-1007
TO: Eileen M. Rogers, Acting Director, Office of Public Housing 9APH
FROM: Joan S. Hobbs, Regional Inspector General for Audit, 9DGA
SUBJECT: Housing Authority of Maricopa County
Housing Choice Voucher Program
Phoenix, Arizona
We audited the Housing Authority of Maricopa County’s Housing Choice Voucher Program (also
referred to as Section 8). We selected this housing authority’s Housing Choice Voucher Program for
audit based on a preliminary review we conducted in response to numerous complaints to HUD.
Our preliminary work revealed that the Housing Authority of Maricopa County had serious control
weaknesses over its Housing Choice Voucher Program payment process and that it had been slow to
implement corrective actions recommended by HUD in a 2002 Rental Integrity Monitoring Review.
Our report contains four findings with recommendations requiring action by your office. In
accordance with HUD Handbook 2000.06 REV-3, within 60 days please provide us, for each
recommendation without management decisions, a status report on (1) the corrective action taken,
(2) the proposed corrective action and the date to be completed, or (3) why action is considered
unnecessary. Additional status reports are required at 90 days and 120 days after report issuance for
any recommendation without a management decision. Also, please furnish us copies of any
correspondence or directives issued because of the audit.
Should you or your staff have any questions, please contact me at (213) 894-8016, or Charles
Johnson, Assistant Regional Inspector General for Audit, at (602) 379-7243.
Management Memorandum
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2004-LA-1007 Page ii
Executive Summary
We audited the Housing Choice Voucher Program operated by the Housing Authority of Maricopa
County (Maricopa) located in Phoenix, Arizona. The overall audit objective was to determine
whether Maricopa managed its Housing Choice Voucher Program (Voucher Program) effectively
and efficiently and in compliance with Federal requirements. Our specific objectives were to
determine whether Maricopa (1) met minimum performance standards required by the United
States Department of Housing and Urban Development’s (HUD) Section 8 Management
Assessment Program; (2) made only valid, fully supported Housing Assistance Payments; (3)
implemented adequate controls over its Voucher Program to ensure that the program was
managed effectively and efficiently and in accordance with HUD requirements—and whether
Maricopa had taken effective actions to correct the findings in HUD’s Rental Integrity
Monitoring (monitoring) reviews; and (4) incurred program operating costs in accordance with
applicable procurement policies and procedures and properly allocated any shared costs.
Maricopa did not ensure compliance with HUD’s minimum
Maricopa Did Not Meet performance standards that measure how effectively a
Performance Standards housing authority administers its Voucher Program.
Officials did not establish the management or quality
control procedures necessary to comply with the Section 8
Management Assessment Program (Assessment Program)
and failed to submit their online certification for fiscal year
2003. As a result, HUD could not use its normal
monitoring process to address the housing authority’s
noncompliance in the areas of rent reasonableness
determinations, utility allowance schedules, housing
inspections, and determinations of adjusted incomes and
tenant rents. Because neither the housing authority nor
HUD could be assured that the Voucher Program funds
were properly and effectively used to benefit the low- and
moderate-income households the program is designed to
help, we believe that Maricopa did not fully earn the more
than $2 million HUD paid it to administer the program over
the last three years.
In our opinion, the housing authority’s failure to ensure
compliance with minimum performance standards stemmed
from years of management neglect while the housing
authority was administered by Maricopa County and
overseen by the Maricopa County Board of Supervisors.
Under the new Board of Commissioners and new Executive
Director, Maricopa is taking steps to correct the Voucher
Program’s operating deficiencies. As part of this effort,
officials must ensure that recordkeeping and quality control
Page iii 2004-LA-1007
Executive Summary
systems are put in place to track performance and
compliance with HUD requirements.
Maricopa Made More Than Maricopa made more than $87,000 in improper housing
$87,000 in Improper assistance payments (assistance payments) to Voucher
Housing Assistance Program landlords. These payments occurred during a 13-
Payments month period as a result of weak controls over the housing
authority’s payment process. For example, inadequate
controls allowed caseworkers to use inconsistent
processing procedures and multiple identification numbers
for tenants or landlords. In addition, Maricopa’s
information system had limitations that allowed improper
payments to go undetected, and officials did not adequately
compensate for these limitations. As a result of processing
mistakes and system weaknesses, Maricopa issued many
assistance payments that were either duplicates or were for
invalid contracts (such as contracts that were previously
terminated). Furthermore, Maricopa did not systematically
account for those overpayments it did detect and could not
ensure their recovery. Of the $87,000 in improper
payments we identified, $55,947 has not been recovered.
Improper housing subsidy payments reduced funds
available to assist eligible families on Maricopa’s waiting
list. Also, HUD inappropriately paid an administrative fee
for the improper payments that Maricopa counted in its
total number of active vouchers. Finally, inadequate
controls over the payment and recovery processes increased
the risk of fraud and abuse.
Based on our random file review, we estimated that
As a Result of Inadequate Maricopa incorrectly determined assistance payment
Controls One Third of amounts for one-third of the 605 case files processed
Housing Assistance during the period December 1, 2003, through March 24,
Payments May Be Incorrect 2004. In addition, we identified significant numbers of
errors in tenant eligibility and income determinations.
These occurred even though HUD had called attention to
similar errors in its recent monitoring reviews. We
attributed the unacceptable error rates to a lack of
systematic quality controls and operating guidance over
Voucher Program case file processing, as well as to the
high turnover in staff during the past year. We recognize
that Maricopa has taken steps to correct problems, but we
believe that until it fully implements comprehensive quality
control reviews, errors in tenant eligibility certification and
subsidy calculations will continue to result in ineligible or
2004-LA-1007 Page iv
Executive Summary
excessive assistance payments that reduce funds available
to assist eligible families on Maricopa’s waiting list.
Maricopa did not have a cost allocation plan to equitably
Officials Did Not Always
charge the Voucher Program for its share of administrative
Follow Proper Cost
costs that benefited all of its operations. Although
Allocation and Procurement
Maricopa did allocate many shared costs, including
Procedures
management salary costs, it had no documented basis for
the allocation ratios used. To the extent Maricopa did not
charge the Voucher Program for its shared costs, Voucher
Program administrative fee reserves were inappropriately
increased at the expense of its other programs.
In addition, managers did not follow sound procurement
practices when obtaining certain types of services. As a
result, Maricopa had no assurance that prices it paid for
these services were fair and reasonable.
We are recommending that you direct Maricopa officials to
Recommendations
• Implement the policies, procedures, records, and quality
controls required to ensure compliance with HUD’s key
performance standards. In addition, we recommend
that you require Maricopa to repay $812,087 in Section
8 administrative fees that it did not fully earn in fiscal
year 2003;
• Implement controls and procedures to detect and
prevent improper assistance payments, examine
Maricopa’s records for past improper payments that
have not been recovered and refund to HUD any
improper/ineligible payments identified and seek
appropriate refunds from the landlords, and repay
ineligible administrative fees it received related to these
improper assistance payments, including the $5,405
identified in our report;
• Establish and implement management controls and
operating guidance to address weaknesses in Voucher
Program case file processing and ensure compliance
with participant eligibility and housing subsidy
determinations; and
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Executive Summary
• Develop and implement an equitable cost allocation
plan as well as procedures to ensure that appropriate
procurement procedures are followed for all purchases.
Audit Results Discussed We discussed the findings with Maricopa officials during
With Auditee the audit and at an exit conference held on August 18,
2004. We also provided Maricopa and HUD with a copy of
the draft report for comments on August 2, 2004. We
received Maricopa’s written responses on September 1,
2004. Maricopa generally agreed with our findings, and its
responses along with our evaluations are discussed in each
finding. The complete text of Maricopa’s response can be
found in appendix D of this report.
2004-LA-1007 Page vi
Table of Contents
Management Memorandum i
Executive Summary iii
Introduction 1
Findings
1. Maricopa Did Not Properly Manage Its Housing Choice
Voucher Program 5
2. Maricopa Made More Than $87,000 in Improper Housing Assistance
Payments to Landlords 19
3. Potentially One-Third of Recently Processed Housing Assistance
Payments Are Incorrect 27
4. Cost Allocation and Procurement Procedures Were Not Followed 35
Management Controls 41
Follow-up on Prior Audits 43
Issues Needing Further Study and Consideration 45
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Table of Contents
______________________________________________
Appendices
A. Schedule of Questioned Costs and Funds Put to Better Use 47
B. Schedule of Improper Housing Assistance Payments 49
C. Schedule of Errors in Sampled Case Files 51
D. Auditee Comments 53
2004-LA-1007 Page viii
Introduction
The Housing Authority of Maricopa County (Maricopa) was created in 1943, as authorized by the
U.S. Housing Act of 1937 and Arizona Revised Statute (ARS) 36-1404. Maricopa operated as an
independent entity until February 1992, when Maricopa County took over its administration through
the County’s Housing Department. Under the County government, the Maricopa County Board of
Supervisors functioned as the Board of Commissioners for the housing authority. In July 2003, the
County again made the housing authority an independent entity, and an intergovernmental
agreement delegated the authorities under ARS 36-1404 to Maricopa. Currently, each member of
the Maricopa County Board of Supervisors appoints one Housing Authority Commissioner, and
these Commissioners serve as the governing board of Maricopa. As one of its early actions, the
Board of Commissioners replaced the Acting Executive Director with a new Executive Director who
assumed his position in January 2004.
Maricopa assists low-income families in renting affordable housing with Federal subsidies under the
Housing Choice Voucher Program (Voucher Program). The program originated from the Housing
and Community Development Act of 1974 that authorized the Section 8 certificate program.
Congress has since modified the program and in 1998, passed housing reform legislation that
resulted in the present Section 8 program, entitled the Housing Choice Voucher Program. During
fiscal year 2003, Maricopa received approximately $11 million of Voucher Program funds to
support vouchers for approximately 1,500 families.
Maricopa must operate its Voucher Program according to the rules and regulations prescribed by the
United States Department of Housing and Urban Development (HUD) in accordance with the
United States Housing Act of 1937, as amended. The rules and regulations set forth detailed
eligibility requirements for participating families and prescribe the method for determination of rent
subsidy levels based upon each family’s income and other factors. HUD also regulates the condition
of participating properties and the rental subsidy (housing assistance payment) contracts between the
owners and the housing authority.
Our overall audit objective was to determine whether
Audit Objectives Maricopa managed its Voucher Program effectively and
efficiently and in compliance with HUD requirements. Our
specific objectives were to determine whether the housing
authority (1) met minimum performance standards required
under HUD’s Section 8 Management Assessment Program
(Assessment Program); (2) made only valid, fully
supported Housing Assistance Payments (assistance
payments); (3) implemented adequate controls over its
Voucher Program to ensure that the program was being
managed effectively and efficiently and in accordance with
HUD requirements—and whether Maricopa had taken
effective actions to correct the findings of HUD’s Rental
Integrity Monitoring (monitoring) reviews; and (4) incurred
program operating costs in accordance with applicable
Page 1 2004-LA-1007
Introduction
procurement policies and procedures and properly allocated
any shared costs.
We performed our audit during the period November 2003
Audit Scope and through June 2004. Our review generally covered the
Methodology housing authority’s records and transactions for its
Voucher Program from July 2002 through April 2004.
Where appropriate, we extended our review to cover other
periods. We selected our time period to cover Maricopa’s
fiscal year that ended on June 30, 2003, as well as most of
the time period covered by HUD’s two monitoring reviews
performed in December 2002 and November 2003.
Finally, to assess any corrective actions implemented by
Maricopa in response to HUD’s reviews, we analyzed the
most recent Voucher Program case file actions available.
To accomplish our audit objectives we
• Reviewed program requirements including Federal laws
and regulations, Office of Management and Budget
Circulars, the Consolidated Annual Contributions
Contract between Maricopa and HUD, HUD Office of
Public and Indian Housing Handbooks and guidance
including the Housing Choice Voucher Program
Guidebook HUD 7420.10G (April 2001), and
applicable Arizona Revised Statutes and Maricopa
County Codes.
• Reviewed Maricopa’s annual program reports sent to
HUD, including Estimates of Total Required Annual
Contributions, Vouchers for Payment of Annual
Contributions and Operating Statements, Assessment
Program certifications, Independent Public
Accountant’s reports, and HUD monitoring and onsite
Assessment Program confirmatory reviews.
• Interviewed Maricopa personnel and HUD officials and
reviewed meeting minutes from the housing authority’s
Board of Commissioners.
• Reviewed Voucher Program documentation at
Maricopa including the Administrative Plan(s),
applicant and certification packages, case file
documentation, management logs and information, and
accounting system records.
2004-LA-1007 Page 2
Introduction
• Used Computer Assisted Audit Techniques to analyze
Maricopa’s master and history database files for
irregular Voucher Program housing assistance
payments or operating expenses.
• Selected a nonrepresentative sample of 54 tenant files
(based upon known risk factors) and reviewed them to
resolve identified and potential assistance
overpayments.
• Inspected Voucher Program participating and nearby
properties and interviewed tenants, property owners, or
managers.
We also selected a statistical sample of Voucher Program
case files, which we reviewed for (1) compliance with
participant eligibility and income reporting requirements
and (2) compliance and accuracy of the housing subsidy
calculations. The purpose of this test was to evaluate
Maricopa’s progress in implementing corrective actions to
address deficiencies in these areas reported by HUD’s
recent monitoring reviews. To accomplish this, we used a
statistical software program to randomly select 19 case files
from a universe of 605 that had at least one reportable
action completed during the period December 1, 2003,
through March 24, 2004. Reportable actions could include
annual reexaminations, new admissions, interim
examinations, change of units and other action types coded
on section 2a of form HUD 50058 (Family Report). We
performed detailed reviews on the 19 randomly selected
files, which was the sample size for attribute testing
stipulated by a confidence interval of 90 percent, an
expected error rate of 10 percent, and a precision of 8
percent. Based on the errors we found in our sample files,
we estimated the error rates for the universe of 605 files;
however, the sampling methodology was not designed to
estimate the dollar magnitude of the errors, and we did not
do so.
We performed site work primarily at the Maricopa Main
Office located in Phoenix, Arizona, and we also visited
participating properties throughout Maricopa County. We
conducted our review in accordance with generally
accepted government auditing standards.
Page 3 2004-LA-1007
Introduction
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2004-LA-1007 Page 4
Finding 1
Maricopa Did Not Properly Manage Its
Housing Choice Voucher Program
The Housing Authority of Maricopa County (Maricopa) had not developed and implemented
management or quality control procedures necessary to effectively administer its Housing
Choice Voucher Program (Voucher Program) and ensure compliance with key HUD
requirements. Furthermore, because of Maricopa’s failure to submit its Section 8 Management
Assessment Program (Assessment Program) certification to HUD for the fiscal year ending June
30, 2003, HUD was unable to monitor and address Maricopa’s management problems through its
normal online process. In our opinion, this failure to implement procedures necessary to
properly carryout its program resulted from years of management neglect under the Maricopa
County Board of Supervisors that held executive authority over Maricopa until July of 2003. As
a result of the management deficiencies, neither Maricopa nor HUD could be assured that the
Voucher Program was carried out in a cost-effective manner and fully used for the benefit of
low- and moderate-income households the program is designed to help. Management
deficiencies were so serious that, in our opinion, Maricopa did not fully earn the more than $2
million HUD paid it to administer the program over the last three years.
HUD uses the Assessment Program to evaluate how well
HUD Monitors each housing authority spends its Voucher Program funds
Compliance with Key to help eligible families afford decent rental units at the
Program Requirements correct subsidy cost. Through the online Assessment
Through the Assessment Program reporting system, HUD officials can remotely
Program monitor the performance of thousands of housing
authorities and target those that need additional oversight
and assistance. The Assessment Program measures each
housing authority’s performance in 14 key program areas
listed below:
Page 5 2004-LA-1007
Finding 1
Assessment Program Performance Indicator Areas
Indicator
Description
No.
1 Applicant selection from the Voucher Program waiting list
2 Determination of reasonable rent for each unit
3 Accurate verification of family income
4 Maintenance of a current allowance schedule for utility costs
5 Performance of quality control inspections for housing quality standards
Ensuring that landlords and tenants promptly correct housing quality
6
deficiencies
7 Encouragement of expanded housing opportunities
8 Establishment of rental subsidy standards within program limits
9 Timely annual reexaminations of family income
Correct calculation of the tenant share of the rent and the housing assistance
10
payment
11 Ensuring that units pass inspection before assistance contracts are executed
12 Timely inspection of units for quality standards
13 Ensuring that all available housing choice vouchers are used
14 Enrolling and assisting families in the family self-sufficiency program
HUD relies on the housing authority to self-certify its
performance for the first eight area indicators and uses
information from other data sources—primarily provided
by the housing authorities—to corroborate a housing
authority’s Assessment Program answers for the remaining
indicators. HUD annually assigns housing authorities a
rating for each area, as well as an overall performance
rating of high, standard, or troubled. Any housing
authority that does not submit an annual Assessment
Program certification within 60 days after the end of its
fiscal year is automatically designated troubled. If a
housing authority does not perform adequately on any of
the 14 indicators—or is assigned an overall performance
rating of troubled—then HUD must conduct onsite reviews
to assess the magnitude of the problem. With close
oversight from HUD, the troubled housing authority must
develop and implement a corrective action plan.
Maricopa failed to submit its Assessment Program
Maricopa Did Not Submit Its
certification for the fiscal year ending June 30, 2003, and in
Fiscal Year 2003 Monitoring
accordance with the Assessment Program regulations,
Certification to HUD
HUD declared the housing authority to be troubled in
December 2003. Moreover, Maricopa officials apparently
disregarded HUD requirements that housing authorities
base their Assessment Program certification on auditable
2004-LA-1007 Page 6
Finding 1
records that document the level of performance and
compliance with program requirements over the
certification period.
Officials could not provide supporting documentation for
the Assessment Program performance certifications they
proposed to submit in 2003 and did not even track the data
needed to measure performance. Maricopa also had no
substantive documentation for its 2002 Assessment
Program certification. Maricopa officials claimed that the
2002 support had been lost and provided us with some
limited documentation that they had reconstructed. This
documentation was wholly inadequate and, in fact,
indicated that in 2002, Maricopa did not meet its claimed
performance measures, as illustrated in the following
examples:
• Officials provided correspondence with utility companies
that purported to show the utility allowance schedule was
based upon current rates, but in some cases, the
correspondence actually proved the schedule was not
updated as required when rates had increased more than
10 percent; and
• Officials provided schedules of completed housing
quality standard inspections, but the data did not show
that units were inspected within the required 12-month
timeframe or that failed units were reinspected and
passed.
In our opinion, Maricopa’s failure to submit its 2003
Maricopa Did Not Meet Key Assessment Program certification and the lack of
Performance Standards documentation to support its previous submissions not only
reflected noncompliance with the Assessment Program
reporting system but served to conceal severe deficiencies
in Maricopa’s management of its Voucher Program. Our
review of Maricopa’s operations identified serious
instances of noncompliance for the Assessment Program
indicator areas we reviewed as well as inadequate
recordkeeping systems needed for performance and
compliance reporting in other areas. Following are key
Assessment Program performance indicators that Maricopa
failed to meet:
Rent Reasonableness
Page 7 2004-LA-1007
Finding 1
Maricopa had not performed any rent reasonableness
determinations for more than 1 year. In December 2002,
HUD performed a monitoring review of Maricopa, and
reported that the housing authority inappropriately
compared Voucher Program unit rents to those of other
assisted units. At that time, Maricopa was developing a
new computer-based rent reasonableness system—having
suspended the use of its old one—and HUD directed the
housing authority to implement its new system within 30
days. Yet, as of March 2004, Maricopa was still gathering
comparison rental data needed for the new system, which it
hoped to start using by the end of the month. Thus, at least
16 months elapsed without Maricopa performing the rent
reasonableness determinations required when new
properties enter the Voucher Program or participating
owners increase their rents.
HUD’s rent reasonableness requirements ensure that
housing authorities do not subsidize rents that are above the
market rents charged for similar, nearby units without
rental assistance. HUD relies wholly on the housing
authorities to self-certify their performance for the
Assessment Program rent reasonableness area. This area
indicator asks the housing authority to affirm that it (a) has
and implements a written method to determine and
document that the rent to the owner for each unit is
reasonable when compared with current rents for
comparable unassisted units and (b) has a quality control
sample of tenant files that shows (for files requiring the
rent reasonableness determination) what percentage have
documentation of appropriate comparison units and rents.
As a result of Maricopa’s failure to implement rent
reasonableness procedures, HUD has no assurance that
housing assistance payments to Maricopa’s Voucher
Program landlords—almost $10 million in 2003—were
reasonable in comparison with local unassisted housing
markets. Subsidies for excessive rents reduce funds
available to other eligible families and inappropriately
enrich landlords, who are not the intended beneficiaries of
the Voucher Program. We believe the consequences of
Maricopa’s failure to enforce reasonable rents could be
substantial. Competition in the rental market for the
Phoenix metropolitan area has been intense as low interest
rates fuel new housing construction, and financing
incentives draw renters into home ownership. Renters who
2004-LA-1007 Page 8
Finding 1
can afford a payment around $1000 per month have opted
for home ownership. As a result, three- and four-bedroom
single-family homes are readily available for rents almost
comparable to those for apartments. Yet we noted
Maricopa had numerous assistance payment contracts for
rents of $1,100 to $1,300. In certain areas, investors even
appeared to be building new homes with the intent of
renting them out with Voucher Program assistance.
For example, in the City of Avondale, an area under
Maricopa’s jurisdiction, we determined that owners of
unassisted/comparable units near several Voucher Program
properties charged considerably less than the Voucher
Program payment standards to attract tenants. In one
newly developed community, we noted several single-
family properties renting in the $950 - $995 price range.
These properties were brand-new and had more attractive
amenities than the current Voucher Program units (see
table and pictures below).
Comparison of Unassisted and Voucher Program Single Family Units
Unassisted Properties Voucher Program Properties
st
12565 W. Monroe 12517 W. Washington 914 S. 1 St. 232 S. 3rd St.
4 Bedroom 4 Bedroom 4 Bedroom 4 Bedroom
2 Bath 2 Bath 1 Bath 1 Bath
2 Car Garage 2 Car Garage No garage No Garage
1,653 Sq. Feet 1,653 Sq. Feet 1,254 Sq. Feet 1,407 Sq. Feet
$995.00 $950.00 $1,200.00 $1,100.00
12565 W. Monroe Avondale, AZ 85323 232 S. 3rd St. Avondale, AZ 85323
Page 9 2004-LA-1007
Finding 1
12517 W. Washington, AZ 85323 914 S. 1st St. Avondale, AZ 85323
Utility Allowance Schedules
Since at least December 2002, Maricopa has used an
outdated utility allowance schedule for its Voucher
Program subsidy calculations. After its December 2002
monitoring review, HUD recommended that (1) the utility
allowance format be revised to better match the categories
presented on the Request for Tenancy Approval form and
(2) the schedule be reviewed annually and the
review/update noted on the form. In response, the housing
authority decided to engage a contractor to completely
revise its utility allowance schedule. However, this
corrective action has been delayed by (1) uncertainty and
turnover in management positions at the housing authority
and (2) Voucher Program department efforts to address
other problems deemed more pressing.
HUD requires housing authorities to maintain utility
allowance schedules that establish amounts above the rent
that it can cover for tenant-paid utilities. These amounts are
to be based on typical utility costs paid by energy-
conservative households in comparable housing. The
Assessment Program performance indicator relies wholly
on the housing authority to affirm that it maintains an up-
to-date utility allowance schedule that adjusts for any rate
increases of 10 percent or more since the last revision.
We determined that some utility rates had increased as
much as 16 percent since Maricopa last revised its utility
schedule in 2001. As a result, the allowances paid to
2004-LA-1007 Page 10
Finding 1
tenants may be smaller than necessary to cover the typical
utility charges.
Housing Quality Standard Inspections
During the latter half of fiscal year 2003, Maricopa did not
have adequate Voucher Program inspection staff to conduct
the required property inspections. At that time, the Voucher
Program was under its third supervisor in two years. One of
two property inspectors had been placed on inactive status
pending investigation of improper conduct, and the remaining
one was not certified and exhibited little knowledge of
HUD’s Housing Quality Standard requirements. He relied
upon an out-of-date manual from a commercial advisory
service and was not familiar with HUD regulations for
Housing Quality Standards. The supervisor at the time
became concerned with the quality of the Voucher Program
inspections and ordered the inspections to stop until
procedures were updated; however, several months elapsed
without further guidance. As a result, officials told us that at
one point, they were almost four months behind in the annual
inspections.
HUD requires the housing authority to perform annual
physical inspections of all Voucher Program units to ensure
that subsidized housing is decent, safe, and sanitary. In
addition, housing authority supervisors must conduct quality
control re-inspections to ensure the inspections were
adequate. The Assessment Program has two indicators that
measure the housing authority’s performance in this area.
• Indicator number 12 asks the housing authority to affirm
that it inspects each unit under contract at least annually,
and HUD verifies the answer with family data reported
periodically by the housing authority to HUD’s
Multifamily Tenant Characteristics System. However, in
fiscal year 2003 HUD could not use this system to verify
Maricopa’s performance because its reporting rate did not
meet the minimum 85 percent required by HUD.
• Indicator number five relies wholly on the housing
authority to affirm that a supervisor re-inspected a
minimum sample of units that represented a cross-section
of neighborhoods and inspectors’ workloads.
Page 11 2004-LA-1007
Finding 1
Without performing periodic Housing Quality Standards
inspections and quality control re-inspections, Maricopa
could not ensure that the housing it subsidized in fiscal year
2003 was decent, safe, and sanitary. According to
Maricopa’s case files, some properties failed the Housing
Quality Standards inspection every year. Each year the
owners made the minimum required repairs, but by the next
annual inspection, problems reappeared. Inspectors told us
that in many cases, the tenant had caused the Housing Quality
Standards violations, and the owners had not enforced lease
agreements. However, HUD requires Voucher Program units
to meet the minimum standards regardless of who caused the
violations.
Determination of Adjusted Income and Tenant Rents
At the end of fiscal year 2003, Maricopa had not yet
implemented the corrective actions recommended by HUD to
ensure that caseworkers properly verified tenant incomes and
correctly computed adjusted incomes and rent subsidies. In
its December 2002 monitoring review, HUD found a lack of
internal quality control procedures and policies and
significant error rates for income and asset verification and in
mathematical calculations. The monitoring report
recommended that Maricopa conduct quality control reviews
of 25 percent of all actions processed monthly for 12 months.
Despite this, our review at the end of 2003 determined that
Maricopa still did not have procedures in place to
systematically select and review an unbiased sample of
Voucher Program actions for quality control purposes.
Instead, officials’ primary response had been to correct the
errors identified in the monitoring report and review a portion
of the case files processed by one caseworker. This last effort
identified errors that amounted to approximately $45,000 in
incorrect assistance payment subsidies.
To ensure that only eligible families receive the proper
level of assistance, HUD requires housing authorities to
reexamine and verify each participating family’s income
and composition at least annually. The Housing Choice
Voucher Program Guidebook, issued in 2001, provides
detailed guidance for the reexamination process. The
following two Assessment Program indicators measure
performance in this area:
2004-LA-1007 Page 12
Finding 1
• Indicator number three relies upon the housing authority
to review a quality control sample of files and report the
percentage in which caseworkers properly determined the
family’s adjusted income. To receive Assessment
Program rating points, the percentage must be over 80
percent. HUD does not routinely verify the housing
authority’s Assessment Program certification for this
indicator, but the Department’s monitoring reviews focus
on compliance in this area.
• Indicator number 10 asks the housing authority to affirm
that it correctly calculates family rent to the owner, and
HUD verifies the answer with information in the
Multifamily Tenant Characteristics System. HUD awards
Assessment Program rating points if two percent or less
of the housing authority’s calculation for family rent to
the owner are incorrect. As we reported under the section
on Housing Quality Standards inspections, because
Maricopa’s reporting rate was less than 85 percent, HUD
could not use the data to score the Assessment Program
indicators.
Regarding correct determination of adjusted income and
tenant rent, HUD’s monitoring review concluded, “due to
the number and scope of errors, HUD was unable to
determine the extent of over- and under-payment in rent
subsidy.” We did not perform our own testing to estimate
the magnitude of assistance payment errors in 2003 but
believe the amount of wasted funds could be significant.
Of greater concern is the potential for fraud and abuse
resulting from a lack of caseworker guidance, support, and
oversight.
Maricopa’s management problems with its Voucher
Management Problems Program were evident before fiscal year 2003. HUD’s
Existed before 2003 December 2002 monitoring review reported that
“discrepancies were noted between the housing authority’s
self-certification for the Assessment Program (for fiscal
year 2002) and the results of HUD’s random file review.”
Maricopa officials could not provide documentation for
their 2002 Assessment Program certifications when HUD
officials attempted to perform a remote confirmatory
review of the answers in spring 2003. Finally, Maricopa
did not submit accurate or timely case information to
HUD—the Department’s information systems show that
Page 13 2004-LA-1007
Finding 1
Maricopa’s reporting rate for the required family reports
(form HUD 50058) was unacceptably low at 79 percent.
In our opinion, Maricopa’s mismanagement of its Voucher
Maricopa County Board of Program and its inability to certify compliance with HUD
Supervisors Was the requirements through the Assessment Program reporting
Responsible Authority process stemmed from years of management neglect. From
1992 until July 2003, Maricopa operated under Maricopa
County’s Housing Department with oversight by the
Maricopa County Board of Supervisors. The County Board
of Supervisors functioned as the Public Housing Authority
Commissioners for Maricopa. Commissioners have a
responsibility to HUD to ensure national housing policies
are carried out and to the housing authority’s management
staff and employees to provide sound and manageable
directives. The Board of Commissioners is accountable to
its locality and best serves it by monitoring operations to be
certain that housing programs are carried out efficiently
and effectively.
Over its tenure, the County Board appointed a series of
Executive Directors for the housing authority and relied
heavily upon these individuals to ensure that Maricopa
complied with HUD’s requirements for Voucher Program
administration. Recent Executive Directors apparently
allowed the Voucher Program caseworkers to run the
program with little guidance. For a time, each caseworker
controlled a portion of tenant files with no oversight or
shared processing duties. As these caseworkers left
employment, replacement staff was provided little training
or guidance to bring the operations up-to-date. For
example, the Section 8 Administrative Plan was out of date,
and no copies of the Housing Choice Voucher Guidebook
were in use at the start of our review. By the end of fiscal
year 2003, the annual Assessment Program certification
was due, and the Voucher Program department was in
disarray. The Acting Executive Director, who has since
departed, failed to monitor the situation and disregarded the
obligation to base his performance certifications on current
records that demonstrated performance and compliance
with program requirements.
2004-LA-1007 Page 14
Finding 1
HUD pays an annual administrative fee to Maricopa for
Maricopa Inappropriately every Voucher Program unit under assistance payment
Collected Voucher contract on the first day of every month. In the past three
Program Administrative fiscal years, Maricopa collected more than $2 million in
Fees fees for administering its Voucher Program (or other
Section 8 program) units as shown below.
Administrative Fees
Fiscal Year Ongoing
Ended on Administrative Fees
6/30/2001 $603,504
6/30/2002 $748,797
6/30/2003 $812,087
Total $2,164,388
In accordance with the Voucher Program governing
regulations set out in 24 Code of Federal Regulations
(CFR) 982.152, the housing authority may use these fees to
cover the cost of performing housing authority
administrative responsibilities for the program in
accordance with HUD regulations and requirements. HUD
may reduce or offset any administrative fee to the housing
authority if it fails to perform housing authority
administrative responsibilities correctly or adequately
under the program.
In our opinion, Maricopa inappropriately received Voucher
Program administrative fees because, as discussed above, it
failed to ensure that subsidized rents and utilities were
reasonable; subsidized housing was decent, safe, and
sanitary; and program participants were provided the
proper level of assistance. At the same time, Maricopa’s
accounting records showed it had $415,893 in its Voucher
Program administrative fee reserve at the end of fiscal year
2003—funds that should have been used to correct known
deficiencies in its operations. Because Maricopa was
unable to certify adequate performance under the
Assessment Program reporting system, it should return to
HUD the administrative fees it did not earn for fiscal year
2003.
Page 15 2004-LA-1007
Finding 1
We recognize that new Maricopa management is taking
New Management Has many steps to correct its Voucher Program deficiencies,
Made Improvements, and we support those efforts. Nevertheless, our review
But Performance raised questions regarding Maricopa’s ability to meet the
Questions Remain performance standards that will be evaluated by the
Assessment Program for fiscal year 2004. HUD officials
who performed the required onsite confirmatory review in
March 2004 have similar concerns. Their preliminary
report identified inadequate performance for seven of the
eight indicators that are wholly self-certified by the housing
authority. For Maricopa to demonstrate improvements in
its Voucher Program operations, it is imperative that
management establish recordkeeping and quality control
systems to track performance and compliance with HUD
requirements. This is not a matter of technical compliance.
Information from these systems will provide needed
oversight and signal problems that might otherwise be
overlooked.
Auditee Comments
Maricopa agreed that it needed to improve the overall management and quality control of its
Voucher Program, and outlined actions taken or currently underway to correct the deficiencies
identified in our finding. However, Maricopa disagreed with our contention that it did not earn
the $812,089 in Voucher Program administrative fees questioned in our report. Maricopa
asserted that our recommendation to repay this amount of administrative fees did not take into
consideration all HUD operating regulations, and was a broad interpretation of existing
guidance. The response further noted that Maricopa had been able to manage over 1,400
authorized voucher clients during fiscal year 2003 without “a recognizable number of resident or
landlord complaints.” Accordingly, Maricopa felt that it had earned the questioned
administrative fees.
OIG Evaluation of
Auditee Comments
Notwithstanding these assertions, in our opinion Maricopa’s inability to certify adequate
performance under the Assessment Program (apparently for several years), along with its failure
to ensure that it met HUD’s basic requirements for determination of allowable subsidy amounts
and other management deficiencies discussed in this finding and Findings 2 through 4
constituted serious disregard of its Voucher Program administrative responsibilities. While we
recognize that new management is making a sincere effort to correct the deficiencies and we
2004-LA-1007 Page 16
Finding 1
support the actions outlined in its response, we believe that pervasive mismanagement in
previous years should result in sanctions by HUD.
Recommendations We recommend the Director of the Regional Office of Public
Housing direct Maricopa to
1A. Implement rent reasonableness procedures and re-
evaluate the rent for units that have entered the
program and/or undergone rent increases without the
required reasonable rent determination.
1B. Update and use utility allowance schedules.
1C. Establish and implement quality control procedures
and recordkeeping systems to track the timeliness and
results of Housing Quality Standards inspections.
1D. Maintain documentation of activities and results to
support their annual Assessment Program certification
to HUD.
1E. Prepare and follow through with a comprehensive
corrective action plan that will respond to all findings
from this audit and the onsite confirmatory review
recently performed by HUD officials.
1F. Repay $812,087 in Voucher Program unearned
administrative fees received.
Page 17 2004-LA-1007
Finding 1
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BLANK
INTENTIONALLY
2004-LA-1007 Page 18
Finding 2
Maricopa Made More Than $87,000 in
Improper Housing Assistance Payments to
Landlords
We identified and reviewed more than $87,000 in assistance payments made to landlords
participating in the Voucher Program that were either duplicates of valid payments or were not
based on valid contracts. Our analysis of other landlord payment histories identified an
additional $109,000 in potential duplicate payments that, because of time constraints, we did not
review. Maricopa identified and obtained reimbursement for many of these duplicate payments.
However, it failed to systematically account for the overpayments it identified and thus could not
determine whether the landlords had refunded the overpayments. In this regard, we could find
no evidence that more than $55,000 of the $87,000 in overpayments we reviewed had been paid
back.
Improper assistance payments occurred as a result of weak controls involving a number of steps
in the payment process, including use of multiple identification numbers for the same landlord or
tenant, failure to execute a new contract and issue a new landlord number when unit ownership
changed, and lack of procedures to independently track subsidy adjustments as a control over the
monthly assistance payment register. Information system problems further aggravated the
situation. As a result of the housing authority’s improper assistance payments, the amount
available to assist eligible families on its waiting list was decreased. The duplicate payments
also resulted in Maricopa claiming and receiving more than $5,400 in inappropriate (ineligible)
administrative fees from HUD. Finally, inadequate controls over the processes for payments—
and for recapture of improper payments—left HUD funds susceptible to waste, fraud, and abuse.
Maricopa enters into assistance payment contracts with
Assistance Payments participating property owners (landlords) as authorized by
Must Be Accurate and its Consolidated Annual Contributions Contract with HUD.
Based on a Valid Contract The Contract stipulates that the housing authority must
comply and must require owners to comply with the
requirements of the U.S. Housing Act of 1937 and all HUD
regulations and other requirements. In addition, the
housing authority must use the assistance payment contract
form prescribed by HUD and may only use program
receipts to pay program expenditures. The regulations
clearly define the information required to execute a valid
assistance payment contract for the correct amount of
housing subsidy. According to the Housing Choice
Voucher Program Guidebook, if the housing authority
discovers that the owner is not entitled to the full amount of
Page 19 2004-LA-1007
Finding 2
assistance payments received, the owner must pay back the
housing authority the portion to which the owner is not
entitled. Finally, the Contract requires the housing
authority to maintain complete and accurate books of
account and records, in accordance with HUD
requirements, and must permit a speedy and effective audit.
Maricopa improperly paid owners more than $87,000 in
Maricopa Paid More Than
assistance payments for 35 of the 54 Voucher Program
$87,000 in Improper
tenant case files we reviewed. In most of these cases, the
Assistance Payments
owner either received an extra assistance payment for one
or more months, or the owner received assistance payments
for months that were not covered by a valid contract.
Altogether, 120 improper payments occurred over a 13-
month period that ended on December 31, 2003. The
number of improper payments for an individual case file
ranged from a one-time occurrence to seven over a period
of four months. The average amount per instance of
improper payment was $731.
The 54 case files we examined covered a fraction of the
assistance payments made by Maricopa on behalf of
approximately 1,500 Voucher Program authorized
vouchers. Limited time and resources did not allow us to
examine additional case files. However, we performed an
automated analysis of Maricopa’s landlord assistance
payment history database and identified an additional
$109,000 in assistance payments, involving 111 other cases
that were potentially duplicate payments in 2003.
Maricopa officials claimed they had reviewed many of
these potential duplicate payments, but they did not
maintain any record of the ones already reviewed or any
documentation supporting resolution of the cases.
Accordingly, Maricopa needs to review these cases, resolve
them, and document all actions taken.
We could not determine whether Maricopa recovered
Maricopa Did Not $55,947 of the $87,720 it improperly paid as Voucher
Track Recovery of Program housing assistance. According to its landlord
Improper Payments assistance payment history database, Maricopa recaptured
$31,773 of the total by holding back future assistance
payments due to landlords that were overpaid. However,
Maricopa did not maintain auditable records for other
methods it used to recover overpayments. As a result, we
could not determine whether the remaining $55,947 was
either (1) detected by Maricopa as an overpayment or (2)
2004-LA-1007 Page 20
Finding 2
recovered by repayment from the landlord or other means.
Appendix B lists the improper payments and the amounts,
if any, recovered by Maricopa.
In response to our request that Maricopa determine whether
it had recovered any of the $55,947, officials stated that
some amounts were repaid; however, they did not provide
any documentation to support this assertion. Officials
explained that we had been unable to identify some of these
recaptured amounts because Maricopa had simply reduced
the assistance payment amount owed to the landlord on
behalf of another tenant. In our opinion, without
supporting documentation, this procedure is inappropriate
as it obscures the assistance payment recovery and results
in a recorded underpayment for the second tenant’s
assistance payment contract.
Although Maricopa’s general policy was to recapture
improper payments from future assistance payments owed
to the landlord, it did not have written or consistent
procedures to record and recover improper assistance
payments. Officials did not set up any accounts receivable
or otherwise systematically track either the amounts
recovered or assistance payment checks that were never
cashed. In some instances, the case file contained a letter,
note, or adjustment slip regarding the overpayment and
recovery schedule, but this was not consistent. Case files
also did not normally contain any indication of when the
overpayment recovery was completed. Officials stated that
if they received a refund check, they manually credited the
landlord’s total assistance payments as reported on Internal
Revenue Service (IRS) form 1099.
Maricopa issued improper assistance payments largely as a
result of weak operating procedures and poor financial
Weak Operating
controls. As discussed under findings 1 and 3, the Voucher
Procedures and Lack of
Program department did not have operating procedures to
Controls Allowed Errors
ensure that caseworkers processed files consistently, and
oversight was inadequate to detect and correct patterns in
processing errors. Our detailed review of 54 case files did
not reveal any major pattern of errors that led to improper
payments. However, we observed the following types of
errors that resulted in improper payments and noted that
supervisory oversight and quality control procedures could
have detected or prevented many of these errors.
Page 21 2004-LA-1007
Finding 2
• In eight of the case files reviewed, multiple identification
numbers for either the landlord or the tenant resulted in
improper assistance payments. The additional
identification numbers occurred because the Voucher
Program department had not established protocols for
identification number assignments or changes—staff
simply accepted the number assigned by the information
system when a new record was input. If more than one
account was used (which continues to be the case for the
portability tenants1), the same identification number could
be assigned under the other account. Careless file
maintenance also contributed to the problem.
• Errors in processing Voucher Program property
ownership changes also resulted in improper assistance
payments. Maricopa’s Voucher Program
Administrative Plan—the formal operating guidance
adopted by the housing authority’s board—specifies the
required steps for documenting a property ownership
change. Basically the housing authority must either
execute a new assistance payment contract or formally
approve assignment of the existing contract to the new
owner. However, the files we reviewed showed several
instances in which procedures were not followed.
For example, in January 2003, Maricopa improperly made
six assistance payments to the current and previous owners
of a multifamily Voucher Program property (see table
below). According to a letter in one case file, the property
had been sold in July 2002. In January 2003, Maricopa
finally executed a new contract for one of the six case files.
Our review of the landlord’s assistance payment history file
did not indicate that any of these improper payments were
recaptured.
1
Portability tenants are tenants who have an assistance voucher with one housing authority and move to another
housing authority’s jurisdiction. The tenant has “ported out” of the one housing authority’s program area and
“ported in” to the other, receiving authority’s program area. The receiving authority can absorb the tenant into its
program, using one of its vouchers, or can administer the tenant and voucher on behalf of the other housing
authority, which would continue to be responsible for the assistance payments made on behalf of the tenant.
2004-LA-1007 Page 22
Finding 2
Improper Assistance Payments to Previous Landlord 0050
Tenant ID Date Landlord ID Amount
01/13/2003 1092 $489.00
0097-01
01/01/2003 0050 $489.00
01/13/2003 1092 $759.00
0136-01
01/01/2003 0050 $759.00
01/13/2003 1092 $625.00
0226-01
01/01/2003 0050 $625.00
01/13/2003 1092 $825.00
0243-01
01/01/2003 0050 $825.00
01/13/2003 1092 $382.00
0358-01
01/01/2003 0050 $382.00
01/01/2003 1092 $495.00
0855-01
01/01/2003 0050 $495.00
Officials could have readily detected the extra payments if
the Voucher Program department had procedures to track
new assistance payment contracts and other subsidy
adjustments as an independent control over the automated
monthly assistance payment register report. Instead,
accounting officials verified the caseworkers’ payment
adjustment slips to changes on the monthly register, but
this procedure did not detect duplicate payments. In an
effort to identify duplicate payments, the accounting
department last year began to examine the monthly register
for multiple instances of tenant names. This procedure
continues to catch several improper payments each month;
however, the process is cumbersome, and we believe that
the Voucher Program supervisor should independently
approve the monthly register.
Officials maintained that software errors continued to cause
Management Did Not problems despite management efforts to address them. For
Adequately Compensate example, several officials told us the system has issued
For Information System assistance payment checks after the contract end-date was
Limitations entered into the system—manual input of this date signals
the software to stop issuing checks. In one instance, the
tenant moved, and Maricopa executed a new assistance
payment contract and commenced payments of $670 to the
new landlord in January 2003. Monthly payments of $599
to the old landlord ceased until, inexplicably, Maricopa
resumed them in March 2003—while continuing payments
to the proper landlord. In June 2003, the previous landlord
notified Maricopa of the overpayments, and Maricopa
stopped them. Maricopa subsequently recovered $1,797
Page 23 2004-LA-1007
Finding 2
(this amount only covered three of the four monthly
overpayments) by personal check.
We could not establish the exact cause for extra assistance
payments in this and other instances, but we agree that
software limitations and inaccurate data contribute to the
problem. Some software limitations we observed that
should be addressed include
• Limited automated edit checks for data entry errors,
• Weak access controls,
• Lack of transaction histories for the family certification
module,
• Absence of a prompt to users when they enter an
invalid identification number, and
• Acceptance of duplicate identification numbers.
Improper assistance reduced the level of funds available to
Improper Assistance assist eligible families on Maricopa’s waiting list. Even
Payments Reduced when the overpayments were eventually recovered,
Available Assistance and officials spent considerable time and resources detecting,
Wasted Other Resources analyzing, and correcting errors—time that would have
been better spent improving the overall quality of the
Voucher Program operations. We are also concerned that
Maricopa’s inadequate controls over Voucher Program
subsidy payments leave taxpayer dollars vulnerable to
fraud or abuse.
In addition to funding the cost of improper payments made
HUD Paid Maricopa $5,405 by Maricopa, HUD inappropriately paid administrative fees
of Unearned Administrative related to many of those payments. In fiscal year 2003,
Fees HUD paid the housing authority approximately $47 per
unit for every month it issued an assistance payment—a
total of $812,087 for 17,227 unit-months. However, the
number of unit-months claimed by Maricopa included
charges for any duplicate or improper payments made on
the first of the month. Maricopa did not subsequently adjust
the unit months number for any improper assistance
payments it recaptured or otherwise detected. Our review
of 54 files identified 115 instances of improper payments
made on the first of the month—approximately $5,405 of
unearned administrative fees claimed by Maricopa.
2004-LA-1007 Page 24
Finding 2
Auditee Comments
Maricopa agreed that problems with duplicate identification numbers and procedures for
monthly reconciliation of the assistance payments need to be addressed. In this regard, Maricopa
claimed that, “as evidenced by the most recent “HUD/PIC” Reports,” the duplicate
landlord/tenant identification problem has been mostly eliminated. Maricopa also agreed to
verify the $55,947 in duplicate assistance payments that we identified and to address any non-
accountable amounts with HUD, subject to a corrective action plan. Maricopa’s formal response
stated that its Finance Manager disputed some of the overpaid amounts, however, there was no
documentation to support this claim. Regarding repayment of other potential assistance
overpayments of $109,361 and any administrative fees inappropriately paid by HUD for extra
assistance payments, Maricopa agreed to take the actions stated above.
OIG Evaluation of
Auditee Comments
Maricopa agreed with the basis for our finding and proposed to verify and address any
unallowable assistance payments in a corrective action plan with HUD. We continue to
recommend that HUD recover the full amount of any unallowable payments we identified for
which Maricopa does not either document recovery or eligibility. Regarding Maricopa’s claim
that reduced errors in HUD/PIC reports are evidence that it has eliminated duplicate
identification numbers, we note that PIC did not record Maricopa’s tenant identification numbers
and we believe additional control procedures over assignment of identification numbers are
necessary to address this finding.
Recommendations We recommend the Director of the Regional Office of Public
Housing direct Maricopa to
2A. Eliminate duplicate landlord and tenant identification
numbers in its database and establish and implement
procedures to ensure that such duplication does not
occur in the future.
2B. Establish and implement procedures to independently
reconcile the monthly assistance payment register to
the amount of assistance authorized by valid
contracts and their related amendments.
Page 25 2004-LA-1007
Finding 2
2C. Refund to HUD the $55,947 of duplicate assistance
payments identified in appendix B, or provide
documentation evidencing that appropriate
adjustments have already been made; and obtain
reimbursement from the applicable landlords for these
duplicate payments where adjustments have not
already been made.
2D. Research the $109,361 of potential overpayments
related to the other 111 case files that have not been
analyzed (provided to Maricopa as a separate
document), refund to HUD any duplicate payments
for which claims have been submitted, and obtain
appropriate reimbursement from landlords determined
to have received duplicate payments.
2E. Refund to HUD the $5,405 in unearned
administrative fees it received related to the 54 cases
we reviewed, determine whether similar ineligible
claims were made in relation to the other 111 case
files discussed in recommendation 2D that we did not
review, and refund any unearned fees to HUD.
2004-LA-1007 Page 26
Finding 3
Potentially One-Third of Recently Processed
Housing Assistance Payments Are Incorrect
Maricopa incorrectly computed assistance payments for approximately one-third of the Voucher
Program case files processed from December 2003 through March 2004. Our file reviews also
identified significant error rates for certification of tenant eligibility and for data reported to
HUD, as well as improper assistance payments. We attribute the high rate of errors not only to a
lack of systematic quality controls and operating guidance over file processing, but also to the
high turnover in Voucher Program staff as Maricopa sought to address multiple problems raised
in recent Rental Integrity Monitoring reports. Until planned improvements are implemented, the
errors in tenant certification and subsidy calculations will continue to allow ineligible or
excessive assistance payments that reduce the funds available to assist eligible families on
Maricopa’s waiting list.
Housing authorities are ultimately responsible for ensuring
Housing Authorities Must that the right people receive the right amount of subsidy,
Maintain a High Degree and they must maintain a high degree of accuracy in
of Accuracy administering the Voucher Program. In 42 United States
Code (USC) 1437f, Congress stipulated specific eligibility
requirements for program participants and limits on the
amounts of assistance they can receive. HUD’s regulations
governing the program are set out in 24 CFR 982 and
detailed administrative guidance is provided in its Housing
Choice Voucher Program Guidebook. In recognition that
the complex requirements make the program susceptible to
errors, omissions, fraud, and abuse, chapter 22 of the
Guidebook outlines the types of quality control procedures
that should be used to prevent and detect these problems.
In addition, Office of Management and Budget (OMB)
Circular A-133 (Audits of States, Local Governments and
Non-profit Organizations) states that entities receiving
more than $300,000 in Federal funds per year must
maintain management controls over Federal programs
which provide reasonable assurance that the entity is
managing Federal awards in compliance with laws,
regulations, and provisions of contracts or grant agreements
that could have a material effect on each program.
Page 27 2004-LA-1007
Finding 3
Previous Monitoring In its December 2002 monitoring review of the Voucher
Reviews Identified Program at the housing authority, HUD reported an error
Significant Problems rate of 78 percent for the tenant files it reviewed, including
errors relating to determination of tenant incomes used to
compute correct subsidy levels and to reporting accurate
data to HUD. In its follow-up monitoring review in
November 2003 HUD identified many of the same
problems and noted that many of its recommendations had
not been implemented. We attributed Maricopa’s failure to
take timely corrective action to factors including: high staff
turnover, failure to provide adequate training to new staff,
and administrative uncertainty caused when Maricopa
became a separate operating entity waiting to acquire a new
Executive Director.
To assess how effectively Maricopa’s latest actions have
We Reviewed Recently addressed the monitoring review findings, we evaluated
Processed Files case files that were recently processed and determined
whether caseworkers complied with HUD’s eligibility
criteria and accurately calculated housing subsidy levels.
We reviewed a random sample of 19 case files selected
from 605 files with processing actions that had effective
dates between December 1, 2003, and March 24, 2004, as
reported to HUD’s Public and Indian Housing Information
Center. For each selected file, we reviewed all actions with
effective dates within our time period. (For a detailed
description of our sampling method see Audit Scope and
Methodology under the Introduction section of this report.)
We planned the time period to obtain a snapshot evaluation
of Maricopa’s case processing after (1) HUD officials had
completed their last monitoring review and (2) Maricopa
had replaced most of the Voucher Program caseworkers.
Although the 605 case files comprised approximately 48
percent of 1,249 active voucher files as of March 2004, we
can only project our test results to the 605 files processed
within our sample timeframe. In addition, our
methodology excluded files for cases in which the program
participant had ported-in to Maricopa but was not absorbed
or cases in which participants had ported-out, but Maricopa
still held the voucher. Such cases represented about 110
additional vouchers.
2004-LA-1007 Page 28
Finding 3
Our review of Voucher Program case files identified
Case Files Continue to incorrect determinations of assistance payments for 6 of 19
Have a High Rate of sample files or 32 percent. Common processing errors that
Processing Errors resulted in incorrect assistance payment amounts included
errors in
• Utility allowance verification or calculation,
• Adjusted income verification or calculation,
• Rent verification, and
• Payment standards.
We found these types of errors in 14 of the 19 sample files
or 74 percent (errors in eight cases did not ultimately affect
the assistance payment). We found at least one type of
error in 15 of 19 files—an overall error rate of 79 percent.
The following table summarizes the types of errors found
in our random sample of 19 files. See appendix C for a
detailed listing of errors by case file.
Summary of Case File Errors Found by HUD OIG
Number of Percentage of
Number
Files with Files Sampled (19)
Type of Error of Errors
One or More with One or More
Found
Errors Errors
Late recertification 1 1 5%
Utility arrangements/type not verified 5 5 26%
Utility allowance calculation incorrect 6 6 32%
Utility allowance - total errors 11 9 47%
Income not verified 4 4 21%
Income calculation incorrect 6 6 32%
Income calculation - total errors 10 8 42%
Social Security number not verified 1 1 5%
Medical expense calculation incorrect 1 1 5%
Rent verification error 1 1 5%
50058 data incorrect -review required a 17 12 63%
b
50058 data incorrect –no review required 4 4 21%
50058 data incorrect - total errors 21 14 74%
Improper assistance payment 2 2 11%
c
Assistance payment amount incorrect 6 6 32%
Payment standard incorrect 2 2 11%
a
The action under review should have included reentering or verifying that this data element was correctly
recorded in the family report.
b
The action under review would not necessarily include reentering or verifying this data element.
c
Incorrect assistance payment amounts could result from errors in the determination of utility allowance,
income, medical expenses, rent, or payment standard.
Page 29 2004-LA-1007
Finding 3
In our opinion, error rates of this magnitude do not
demonstrate adequate compliance with HUD requirements.
Also, for the most part, we found the same types of errors
that HUD reported in its previous monitoring reviews. One
exception was the decrease we observed in the frequency of
errors for verification of Social Security number, birth date,
and citizenship. Due to differing test methodologies, we
cannot directly compare our results with HUD’s; however,
both reviews examined most of the same processing details.
The last monitoring review covered the period May
through October 2003, and the report recommended
corrective actions for the following errors:
Summary of Voucher Program Case File Errors Reported in HUD’s Monitoring Review
Number
of
Type of Error(s) Instance
s in 36
Files
Missing Social Security number, birth certificate, or proof of
citizenship 10
Inadequate income/asset verification 9
Inaccurate income calculations 30
Missing deduction verifications 4
Inaccurate dependent calculations 7
Inappropriate payment standard 4
Inappropriate utility calculation 11
50058 data incorrect 8
Our test results indicate that Maricopa continues to issue
Improper Assistance improper assistance payments as a result of the same types
Payments Continue to of errors we described under finding 2. In our random
Occur sample of 19 files, we found one duplicate assistance
payment and one that was not based on a valid contract—
an improper payment rate of 11 percent (2 of 19). The
improper payments totaled $1,003 for one month. Based
upon this rate, we estimated that as many as 67 of the 605
files randomly sampled could have had improper payments
over the roughly four-month period covered by our test.
We cannot estimate the potential dollar amount of the
improper payments because our sampling methodology was
not designed to do so.
Duplicate payment: For one sample file, we reviewed the
processing of an annual reexamination with an effective
2004-LA-1007 Page 30
Finding 3
date of January 1, 2004. Maricopa paid the January 2004
assistance payment to the same landlord twice, once at the
new rate of $638 and once at the previous rate of $619.
The extra payment apparently occurred when caseworkers
assigned two identification numbers to the landlord—one
for use with regular accounts and another for use with port-
in accounts that were not absorbed. As of April 2004, the
landlord history reports did not show that Maricopa had
recaptured the duplicate payment.
Invalid assistance payment contract: For another sample
file, we reviewed an interim reexamination with an
effective date of March 1, 2004. Log notes in the file
indicated that, upon discovery that the unit had changed
ownership some time ago, the caseworker simply changed
the owner’s name and address. The same landlord number
was kept because no other tenants were on that account.
Because the new owner retained the same management
agent and the account was under the agent’s tax
identification, failure to execute a new contract went
unnoticed.
When Maricopa pays ineligible or excessive housing
Excessive or Improper subsidies because of errors in qualifying tenants or
Payments Reduce computing assistance amounts, fewer funds are available to
Funds for Eligible assist other eligible families. At the time of our review,
Families Maricopa had almost 500 applicants on its Voucher
Program waiting list and had not opened the list to new
applicants since August 2002. In our sample of 19 cases,
we determined that incorrect assistance payment
calculations resulted in a monthly net overpayment of
$222. Improper payments such as those described above
drain even more funds from the program. We cannot
project these amounts to the rest of the 605 files that were
not selected for testing, but clearly the amount of wasted
funds could be significant (also see finding 2).
In addition, our sample files showed a high rate of data
errors reported to HUD on form HUD-50058. Such
inaccurate family data reduces the ability of both HUD and
the housing authority to use the data for effective program
oversight and analysis. For example, HUD could not use
50058 data to evaluate Maricopa’s performance under the
Assessment Program because the reporting rate was too
low (see finding 1). Also, inaccurate data can contribute to
Page 31 2004-LA-1007
Finding 3
misleading or false analyses of trends and patterns that may
be used to make administrative or program adjustments.
The new managers at Maricopa as well as new staff in the
Improved Quality Voucher Program department have already greatly
Control System and improved the control environment. Officials demonstrate
Operating Guidance renewed interest in keeping up with HUD’s program
Will Help changes and correcting old problems. The new Executive
Director, who arrived in January 2004, appears to expect
accountability and has taken steps to provide the necessary
training and/or staffing to raise the overall level of
expertise at the housing authority. Such leadership appears
to have been absent from Maricopa for a long time, and we
fully recognize and support the positive changes. At the
same time, we believe it is imperative for the housing
authority to establish quality control procedures and
recordkeeping that will enable it to detect or prevent
problems and to measure improved performance.
As it implements these changes Maricopa must address the
following weaknesses that contributed to many of the
ongoing errors in determination of tenants’ eligibility and
subsidies:
• Although newly updated and improved, Maricopa’s
Administrative Plan does not have the detailed operating
procedures needed to standardize the day-to-day
processing of case files. For example, the Plan does not
discuss the specific steps a caseworker should take when
the housing authority absorbs an assistance payment
contract it previously administered under the portability
program. Additionally, the Plan’s chapter on
recertification contains many important rules and
guidelines but does not discuss how caseworkers should
use the file checklists or organize the case files. Finally,
the section on quality control (chapter 1, section J) has no
detailed procedures for sampling or recordkeeping and
should not be used as a substitute for the housing
authority’s quality control plan.
• Strict protocols over the use of accounts and
documentation of changes in identification numbers do
not exist.
2004-LA-1007 Page 32
Finding 3
• Caseworkers inconsistently utilize quality control tools
such as the file checklist.
• Caseworkers do not adequately document their
calculations or the basis of their decisions, such as the
exclusion of declared child support.
• Written procedures for use of the State unemployment
database to corroborate reported levels of income do
not exist.
• Written procedures regarding responsibilities and
timeframes for correction of errors do not exist.
• Supervisory approval to adjust assistance payments is
not required, and the Voucher Program department
does not independently track its monthly assistance
payment adjustments to provide a control for the
assistance payment register prepared by the accounting
department (see finding 2).
Auditee Comments
Maricopa agreed that it needed to improve its management controls and operating guidance for
the Voucher Program, ensure accuracy and compliance with HUD requirements, and monitor the
accuracy of its 50058 reporting. Actions outlined in Maricopa’s response included: revised
controls and internal guidance, development of day-to-day operating procedures, hiring of a
quality control specialist, and new software expected to improve 50058 reporting.
OIG Evaluation of
Auditee Comments
Because Maricopa agreed with the finding, we have no further comment.
Recommendations We recommend the Director of the Regional Office of Public
Housing direct Maricopa officials to
3A. Establish and implement management controls and
operating guidance to ensure that Voucher Program
Page 33 2004-LA-1007
Finding 3
funds are used consistent with laws, regulations, and
policies and to safeguard Voucher Program resources
from waste, fraud, and abuse. Management controls
and guidance should include policies and procedures
to address weaknesses in the (1) documentation of
detailed operating procedures, (2) assignment of
unique identification numbers, (3) implementation of
quality control tools, (4) complete documentation of
calculations and other determinations in case files, (5)
procedures for use of online resources for
employment verification, (6) timely correction of
errors, and (7) monthly approval and reconciliation of
assistance payment adjustments.
3B. Monitor case files on an ongoing basis for accurate
calculations and compliance with all certification
requirements.
3C. Monitor the accuracy of case data reported on HUD
form 50058 and make needed corrections.
2004-LA-1007 Page 34
Finding 4
Maricopa Did Not Follow Cost Allocation and
Procurement Procedures
Maricopa did not have a cost allocation plan to equitably distribute all of its shared
administrative costs to the Voucher Program and did not always follow sound procurement
policies. Although Maricopa did allocate some costs, including management salaries, it had no
plan or other documented basis supporting the allocation ratios it used. To the extent Maricopa
did not charge the Voucher Program for its shared costs, Maricopa inappropriately increased its
Voucher Program administrative fee reserves at the expense of its other programs. Also,
managers did not follow sound procurement practices because they did not use the purchasing
department to obtain certain types of services. As a result, Maricopa had no assurance that
prices it paid for these services were fair and reasonable.
Federal cost principles require all activities that benefit
Office of Management from a governmental unit’s2 indirect costs to receive an
and Budget Requires a appropriate allocation of those indirect costs. Also, when
Cost Allocation Plan indirect costs will be charged to a Federal award, a cost
allocation plan is required. These Office of Management
and Budget requirements (Circular No. A-87 Attachment
A, May 4, 1995, and as revised May 10, 2004) apply to
other Federal programs administered by Maricopa, such as
its low-income public housing program. The Voucher
Program is conditionally exempted from A-87;3 however,
under A-87 the housing authority cannot charge costs that
benefit the Voucher Program to its other Federal programs.
Maricopa operates its Voucher Program under a
Consolidated Annual Contributions Contract between the
housing authority and HUD. Under the Contract, HUD
pays Maricopa a fee to administer the Voucher Program,
and the housing authority must maintain an administrative
fee reserve that is credited for (1) the amount by which
program administrative fees exceed the housing authority’s
administrative expenses for the fiscal year plus (2) interest
earned on the reserve account. The Contract further
2
Maricopa now operates as a political subdivision of Maricopa County, and the Board of Directors is appointed by
the County Supervisors. Accordingly, Maricopa is considered a governmental unit under Office of Management
Budget Circular A-87.
3
In accordance with Volume 53 Number 48 of the Federal Register, the Section 8 programs are outside the scope of
Office of Management and Budget Circular A-102 and Circular A-87.
Page 35 2004-LA-1007
Finding 4
stipulates that the housing authority must use the funds in
its administrative fee reserve to pay administrative
expenses in excess of program receipts. If any funds
remain in the reserve, the housing authority may use these
funds for other housing purposes. In addition, paragraph
14 of the Contract states that the housing authority must
maintain complete and accurate books of account, in
accordance with HUD requirements, and must permit a
speedy and effective audit.
HUD regulations contained in 24 CFR 85.36 set out the
Maricopa Must Follow
minimum procurement standards that housing authorities
Procurement Standards
must use when procuring goods or services. The standards
allow the housing authority to adopt procedures that reflect
the applicable State and local laws and regulations,
provided that the procurements conform to applicable
Federal law and the standards identified in section 85.36.
In accordance with applicable regulations, Maricopa used
procurement procedures in the Maricopa County
Procurement Code. Article 3, section 342, paragraph C of
the Code stated that for purchases estimated to cost $5,000
or more but less than $10,000, the Procurement Officer
should solicit written quotations by using a Request For
Quotations to at least three vendors, if possible. If only one
responsive quotation was received, the purchase could be
based on that quotation upon a determination that the price
was fair and reasonable. A statement was to be included in
the contract file setting forth the basis for determining that
the price was fair and reasonable. Maricopa’s procurement
procedures also required departments to request services by
means of a requisition for services to the purchasing
department, which then issued a purchase order. Before the
invoice was paid, the accounts payable department should
have matched the invoiced amount or rate to the purchase
order.
Maricopa had no documented cost allocation plan to
Maricopa Had No equitably charge its programs for their share of indirect or
Documented Cost joint administrative costs. For example, Voucher Program
Allocation Plan offices occupied roughly one half of a main office building,
but officials did not charge the Voucher Program for any
utilities for fiscal year 2003. Expenses for computer
software and services also did not appear as charges to the
Voucher Program, but officials stated those costs had been
paid from a capital grant fund. Officials did allocate
2004-LA-1007 Page 36
Finding 4
administrative charges billed by Maricopa County, but they
had no documented rationale for the amounts attributed to
each program. Likewise, Maricopa allocated some
administrative salaries to the Voucher Program. We
audited salary expenses for one pay period in fiscal year
2004, and in most cases, the allocation ratio appeared
reasonable based upon our limited observations of
employee responsibilities. However, the allocation ratios
were based on spreadsheet formulas, and officials could not
recall how or when the formulas were established.
To the extent Maricopa charged the Voucher Program’s
Maricopa’s portion of shared expenses to other Federal programs, it
Administrative Fee understated its Voucher Program operating expenses and
Reserve May Be inappropriately increased the program’s administrative fee
Overstated reserve. At the end of fiscal year 2003, Maricopa’s
administrative fee reserve showed a balance of $415,893
that was included in Voucher Program unrestricted net
assets of $449,219 reported in Maricopa’s audited financial
statements. Those statements also showed an excess of
$64,866 in revenues over expenses. In the prior year’s
financial statements, Maricopa reported unrestricted net
assets of $345,914 and an operating loss of $16,361 for its
Voucher Program. We believe the increase in the
unrestricted net assets during 2003 includes administrative
fee reserves that should have been used to pay for the
program’s shared expenses or otherwise improve the
administration of the Voucher Program.
Managers authorized procurements for training services
Management Disregarded and temporary help without utilizing the housing
Sound Procurement authority’s purchasing department and procedures. Instead,
Practices managers told us that the human resources department
independently and routinely made arrangements to
purchase services for training and temporary help. For
example, managers executed a training contract with an
estimated cost of at least $7,800 based on a proposal
received by the human resources department. However,
the human resources department did not obtain three
written quotations as required. The official stated she had
obtained a favorable price by negotiating between two
organizations, but there was no purchasing file or other
documentation to support the basis used to determine that
the price was reasonable. Instead, the human resources
department had maintained the final contract and payment
information in its files. The Finance Director and the
Page 37 2004-LA-1007
Finding 4
Administrator approved the payment requisition without
reviewing the contract.
The human resources department also arranged for
temporary help services without using the purchasing
department. Because officials procured the services under
a county contract, the purchase was not subject to the
quotations process. However, the human resources official
made verbal agreements with the temporary help agency
regarding the level of expertise to be provided and the
hourly cost. From this point on, the human resources
department had nothing to do with the procurement.
Department managers approved time slips for the
temporary workers, and the temporary help agency billed
the housing authority using an hourly rate. Since the
Finance Director and the Administrator were not privy to
the verbal arrangement between human resources and the
temporary help agency, they approved payments without
any way of knowing whether the agency billed at the
agreed upon price.
When officials circumvent procurement policies and
procedures, they may fail to comply with laws and
regulations, make uneconomical purchases, and invite
abuse. For example, failure to obtain multiple bids on
higher dollar procurements can result in reduced
competition and higher prices than necessary. Also,
procedures that require documentation of agreed-upon
prices, quantities, and qualities of goods or services prevent
abuses such as overcharges and invalid claims for payment.
Auditee Comments
Maricopa agreed that it needs a revised cost allocation plan and revised procurement practices
with special emphasis on federal requirements. The response questioned the direction of our
recommendation that it reallocate shared costs according to the benefiting program in fiscal year
2003.
2004-LA-1007 Page 38
Finding 4
OIG Evaluation of
Auditee Comments
Maricopa should apply the cost allocation methods that it adopts in its new cost allocation plan
to the financial operating statements for fiscal year 2004. In addition, it should use the new cost
allocation methods to re-compute and restate any shared expenses that were incorrectly reported
in its fiscal year 2003 financial statements.
Recommendations We recommend the Director of the Regional Office of Public
Housing direct Maricopa officials to
4A. Develop and implement a cost allocation plan to
equitably distribute shared costs among HUD
programs as well as any applicable nonfederal
programs.
4B. Using the established cost allocation plan, reallocate
shared costs to the benefiting program for fiscal years
ending June 30, 2003, and 2004.
4C. Implement procedures to ensure appropriate
procurement procedures are followed for all
purchases.
Page 39 2004-LA-1007
Finding 4
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2004-LA-1007 Page 40
Management Controls
In planning and performing our audit, we obtained an understanding of the management controls
that were relevant to our audit. We reviewed the Maricopa’s management controls to determine
our audit procedures and not to provide assurance on management controls.
Management controls include the plan of organization; methods and procedures adopted by
management to ensure that its goals are met; the processes for planning, organizing, directing,
and controlling program operations; and the systems for measuring, reporting, and monitoring
program performance.
We determined the following management controls were
Relevant Management
relevant to our audit objectives:
Controls
• Program Operations – Policies and procedures that
management has implemented to reasonably ensure that a
program meets its objectives.
• Validity and Reliability of Data – Policies and procedures
that management has implemented to reasonably ensure
that valid and reliable data are obtained, maintained, and
fairly disclosed in reports.
• Compliance with Laws and Regulations – Policies and
procedures that management has implemented to
reasonably ensure that resource use is consistent with
laws and regulations.
• Safeguarding Resources – Policies and procedures that
management has implemented to reasonably ensure that
resources are safeguarded against waste, fraud, loss, and
misuse.
We assessed the relevant controls identified above.
It is a significant weakness if management controls do not
Significant Weaknesses provide reasonable assurance that the process for planning,
organizing, directing, and controlling program operations will
meet an organization’s objectives.
Based on our review, we believe the following items are
significant weaknesses:
Page 41 2004-LA-1007
Management Controls
• Maricopa did not establish recordkeeping systems to track
performance, quality control, or compliance with
Voucher Program administrative requirements (see
finding 1).
• Maricopa did not have adequate procedures to ensure that
participant family data submitted to HUD was accurate
and timely (see finding 3).
• Maricopa did not have adequate procedures to ensure that
its administrative fees were based on accurate program
participation data (see finding 2)
• Maricopa did not have adequate controls to ensure that it
correctly certified eligibility for its Voucher Program
participants and correctly calculated housing subsidy
levels (see finding 3).
• Maricopa did not have adequate controls to ensure that it
safeguarded its Voucher Program funds from improper
payments that were wasteful, fraudulent, or abusive (see
finding 2).
• Maricopa did not have adequate controls to ensure that all
purchases were economical and appropriately charged to
the Voucher Program (see finding 4).
2004-LA-1007 Page 42
Follow-up on Prior Audits
The prior HUD OIG audit of Maricopa covered the period January 1, 1992, through May 31,
1993, and focused on activities after Maricopa County took over operations of the Maricopa
Housing Authority in February 1992 (HUD OIG Audit Report 93-SF-202-1016, September 24,
1993). No findings remain unresolved from that audit; however during the current audit, we
noted deficiencies that are similar to problems we reported in 1993. These deficiencies were in
the areas of procurement, cost allocation, rent reasonableness determinations, and utility
allowances. Finding 1 of this report discusses rent reasonableness determinations and utility
allowances. Finding 4 discusses procurement and cost allocation.
The latest Independent Public Accountant’s report covered the fiscal year ending June 30, 2003.
The Accountant’s report on compliance and internal controls noted the following reportable
conditions that pertain to our audit: Maricopa did not comply with requirements for (1) the
submission of the Assessment Program report to HUD and (2) the maintenance of Section 8
Voucher Program tenant files. Findings 1 and 3 of our report address these conditions. The
Independent Accountant’s report concluded that none of the reportable conditions rose to the
level of a material weakness. We disagree. In our opinion, these management deficiencies were
so serious that Maricopa did not fully earn the administrative fees it received from HUD to
administer the program in 2003.
Page 43 2004-LA-1007
______________________________________________________________________________
Follow Up On Prior Audits
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2004-LA-1007 Page 44
______________________________________________________________________________
Issues Needing Further Study and
Consideration
We did not perform a complete review of Maricopa’s Voucher Program portability accounts;
however, we noted that many of the processing errors in our sample files were related to these
accounts. The portability program has significantly affected Maricopa’s operations because the
housing authority’s jurisdiction—unincorporated Maricopa County and its cities with no housing
authorities of their own—is contiguous with jurisdictions for at least 10 other housing
authorities. According to Maricopa officials, the other housing authorities do not always process
portable accounts properly or consistently, and guidance from HUD has been inadequate. In
addition, although the Independent Auditor issued an unqualified opinion on Maricopa’s
Financial Statements for the fiscal year ending June 30, 2003, the report found deficiencies in
Maricopa’s accounting for portability receivables. The finding also noted that Maricopa had not
adjusted its financial statements to correct for portability accounting errors identified in the fiscal
year 2001 financial audit.
Further study and consideration of Maricopa’s procedures and controls for its portability
accounts is needed to determine whether Maricopa properly processes, accounts for and reports
its Voucher Program participants in the portability program.
Page 45 2004-LA-1007
______________________________________________________________________________
Issues Needing Further Study and Consideration
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2004-LA-1007 Page 46
Appendix A
Schedule of Questioned Costs
and Funds Put to Better Use
Recommendation Type of Questioned Cost Funds Put to
Number Ineligible 1/ Unsupported 2/ Better Use 3/
1G $812,087
2C $ 55,947
2D $109,361
2E $ 5,405
Totals $873,439 $109,361
1/ Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity
that the auditor believes are not allowable by law; contract; or Federal, State or local
policies or regulations.
2/ Unsupported costs are costs charged to a HUD-financed or HUD-insured program or
activity, and eligibility cannot be determined at the time of audit. The costs are not
supported by adequate documentation, or there is a need for a legal or administrative
determination on the eligibility of the costs. Unsupported costs require a decision by
HUD program officials. This decision, in addition to obtaining supporting
documentation, might involve a legal interpretation or clarification of departmental
policies and procedures.
3/ Funds Put to Better Use are costs that will not be expended in the future if our
recommendations are implemented.
Page 47 2004-LA-1007
Appendix A
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2004-LA-1007 Page 48
Appendix B
Schedule of Improper Assistance Payments
Case Count Tenant Number Landlord Number Improper Payments Recaptured Uncollected
1 0057-01 1202 $7,588.00 $0.00 $7,588.00
0057-01 1144 $2,916.00 $0.00 $2,916.00
2 0088-01 481 $654.00 $436.00 $218.00
3 0090-01
0123-01 455 $3,540.00 $3,540.00 $0.00
4 0097-01 50 $489.00 $0.00 $489.00
5 0120-01 1054 $4,260.00 $3,000.00 $1,260.00
6 0136-01 1092 $1,518.00 $0.00 $1,518.00
7 0193-01 248 $1,080.00 $0.00 $1,080.00
8 0195-01 25 $2,067.00 $1,378.00 $689.00
9 0213-01 481 $1,670.00 $1,616.00 $54.00
10 0226-01 50 $625.00 $0.00 $625.00
11 0243-01 50 $825.00 $0.00 $825.00
12 0358-01 50 $382.00 $0.00 $382.00
13 0378-01 754 $832.00 $416.00 $416.00
14 0463-01 417 $3,300.00 $3,300.00 $0.00
15 0535-01 417 $5,375.00 $1,455.00 $3,920.00
16 0570-01 91 $1,035.00 $0.00 $1,035.00
17 0706-01
0050-01 570 $3,240.00 $3,240.00 $0.00
18 0852-01 481 $1,962.00 $0.00 $1,962.00
19 0855-01 50 $495.00 $0.00 $495.00
20 0882-01 614 $1,250.00 $0.00 $1,250.00
21 1044-01 50 $2,396.00 $1,797.00 $599.00
22 1084-01 174 $3,356.00 $1,668.00 $1,688.00
23 2073-01 1161 $2,196.00 $0.00 $2,196.00
24 2085-01
1086-01 455 $2,840.00 $2,840.00 $0.00
25 3117-01 823 $1,125.00 $0.00 $1,125.00
26 3121-01
0247-01 323 $2,322.00 $0.00 $2,322.00
27 3145-01 366 $5,970.00 $0.00 $5,970.00
28 0514-01
3147-01 481 $2,010.00 $2,005.00 $5.00
29 4026-01 455 $5,997.00 $0.00 $5,997.00
30 6054-01 1292 $374.00 $0.00 $374.00
31 6096-01 1186 $6,342.00 $2,114.00 $4,228.00
32 6117-01 1253 $2,991.00 $1,994.00 $997.00
33 7015-01 738 $974.00 $974.00 $0.00
34 7025-01
6096-01 1186 $3,171.00 $0.00 $3,171.00
35 7072-01 23 $553.00 $0.00 $553.00
Totals $87,720.00 $31,773.00 $55,947.00
Page 49 2004-LA-1007
Appendix B
Schedule of Improper Assistance Payments
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2004-LA-1007 Page 50
Appendix C
Schedule of Errors in Sampled Case Files
Sample Number of
Type of Error Description of 50058 Data Error(s)
No. Occurrences
1 Late recertification 1
Utility verification/calculation mistake 1
Utility verification/calculation mistake 1
2 Income verification/calculation mistake 2 Food Stamp income omitted
Incorrect 50058 data 1
Incorrect assistance payment calculation 1
3 None
4 Income verification/calculation mistake 2
5 Incorrect 50058 data 1 Incorrect last name*
6 Utility verification/calculation mistake 1 Incorrect unit size
Incorrect 50058 data 1
Medical expense verification/calculation error 1
7 Incorrect 50058 data 1 Incorrect payment standard
Incorrect assistance payment calculation 1
Incorrect assistance payment calculation 1
8 Income verification/calculation mistake 1 Incorrect effective date
Incorrect 50058 data 1
Utility verification/calculation mistake 1
9 Incorrect 50058 data 2 Incorrect unit size, incorrect action code
Improper assistance payment 1
Utility verification/calculation mistake 2 Incorrect unit size, Food Stamp income
10
Incorrect 50058 data 2 omitted*
Incorrect Soc.Sec. number and inspection
11 Incorrect 50058 data 3
pass date, Food Stamp income omitted
Utility verification/calculation mistake 1
Income verification/calculation mistake 1
12 Rent verification mistake 1 Incorrect first name
Incorrect 50058 data 1
Improper assistance payment 1
Utility verification/calculation mistake 1
Income verification/calculation mistake 1 Incorrect Social Security number, incorrect
13 Social Security number not verified 1 inspection pass date, incorrect owner tax
identification number
Incorrect 50058 data 3
Incorrect assistance payment calculation 1
Utility verification/calculation mistake 2
14 Income verification/calculation mistake 1 Food Stamp income omitted
Incorrect 50058 data 1
Incorrect assistance payment calculation 1
15 None
Income verification/calculation mistake 1
Incorrect birth date,* unverified owner tax
16 Utility verification/calculation mistake 1 identification number
Incorrect 50058 data 2
Income verification/calculation mistake 1
17 Incorrect 50058 data 1 Incorrect unit size
Incorrect assistance payment calculation 1
Incorrect payment standard 1
Incorrect 50058 data 1
18 Social Security number incorrect*
Incorrect payment standard 1
19 None
* Indicates that the action we reviewed did not include verification of the 50058 data. For example, an interim monitoring exam to change
family income does not require the caseworker to reverify the Social Security numbers.
Page 51 2004-LA-1007
Appendix C
Schedule of Errors in Sampled Case Files
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2004-LA-1007 Page 52
Appendix D
Auditee Comments
Page 53 2004-LA-1007
Appendix D
2004-LA-1007 Page 54
Appendix D
Page 55 2004-LA-1007
Appendix D
2004-LA-1007 Page 56
Appendix D
Page 57 2004-LA-1007
Appendix D
2004-LA-1007 Page 58
Housing Authority of Maricopa County, Phoenix, Arizona
Published by the Department of Housing and Urban Development, Office of Inspector General on 2004-09-22.
Below is a raw (and likely hideous) rendition of the original report. (PDF)