oversight

Inglewood Housing Authority, Inglewood, California, Housing Choice Voucher Program, Did Not Ensure Tenant Reexaminations and Housing Quality Standards Inspections Were Completed Properly and in a Timely Manner

Published by the Department of Housing and Urban Development, Office of Inspector General on 2005-09-07.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                                              Issue Date
                                                                       September 7, 2005
                                                              Audit Report Number
                                                                       2005-LA-1009




TO:        Cecilia J. Ross, Director, Los Angeles Office of Public and Indian Housing,
             9DPH




FROM:      Joan S. Hobbs, Regional Inspector General for Audit Region IX, 9DGA

SUBJECT: Inglewood Housing Authority, Inglewood, California, Housing Choice Voucher
            Program, Did Not Ensure Tenant Reexaminations and Housing Quality
            Standards Inspections Were Completed Properly and in a Timely Manner

                                    HIGHLIGHTS

 What We Audited and Why


             We audited the Inglewood Housing Authority (Authority) in response to a request
             from the U.S. Department of Housing and Urban Development’s (HUD) Los
             Angeles Office of Public and Indian Housing. This is the third of four audit
             reports resulting from our audit of the Authority.

             Our audit objectives were to determine whether the Authority (1) accurately,
             thoroughly, and clearly determined tenant eligibility in the Section 8 Housing
             Choice Voucher program in accordance with statutory, regulatory, and HUD
             requirements; (2) made Section 8 subsidy payments only for units that provided
             decent, safe, and sanitary housing for its tenants; and (3) maintained an accurate
             housing assistance payment register.
What We Found


         The Authority did not always ensure that the initial certification was completed
         with all necessary documents, resulting in $153,495 in unsupported housing
         assistance payments. The Authority also did not complete tenant reexaminations
         in a timely manner. The late reexaminations ranged from 4 to 184 days late.

         The Authority’s unit inspections did not sufficiently detect housing quality
         standards violations and were not always completed in a timely manner. We
         inspected 35 units and found that 25 contained a total of 119 violations, resulting
         in $27,411 in housing assistance payments for units that did not meet minimum
         standards. We also reviewed the timeliness of the Authority’s inspections for 137
         tenants and found that 26 of the inspections were not completed by the tenants’
         anniversary dates as required.

         In addition, the Authority did not maintain an accurate housing assistance
         payment register. Our review of the Authority’s October 2004 register identified
         inaccuracies due to problems with 20 tenants because these tenants were either
         deceased, had erroneous and/or false Social Security numbers, or were no longer
         receiving housing assistance, resulting in $107,916 in unsupported housing
         assistance payments.

What We Recommend


         We recommend that HUD require the Authority to develop and implement
         procedures to follow up on missing tenant eligibility documents and to document
         efforts to obtain such documents in the corresponding tenant files. We also
         recommend that the Authority follow up on the missing documents for the tenants
         in our sample, determine their eligibility for continued housing assistance, and
         repay HUD from nonfederal funds for the portion of the $153,495 in unsupported
         housing assistance payments for those tenants determined to be ineligible.

         We recommend that HUD require the Authority to repay the appropriate HUD
         program $27,411 for ineligible expenses paid for units that were not decent, safe,
         and sanitary; provide documentation of reimbursement by the owner for $6,864
         received on behalf of the deceased tenant and repay the appropriate HUD
         program; provide documention supporting the validity of the Social Security
         numbers for the tenants with multiple numbers or repay $107,916 in housing
         assistance payments; and develop a quality control plan plan to ensure inspections
         comply with HUD regulations.

         For each recommendation without a management decision, please respond and
         provide status reports in accordance with HUD Handbook 2000.06, REV-3.

                                          2
           Please furnish us copies of any correspondence or directives issued because of the
           audit.

Auditee’s Response


           We provided the Authority the draft report on August 8, 2005. The Authority
           declined to hold an exit conference and agreed to provide its written comments on
           the draft report by August 24, 2005. Subsequently, the Authority requested an
           extension to provide their written comments and was granted an extension until
           August 31, 2005. On September 1, 2005, we told the Authority that we would be
           issuing the report without comments if not received by close of business on
           September 2, 2005. The Authority still had not provided any written comments as
           of September 7, 2005; therefore, we issued the report without its comments.




                                            3
                             TABLE OF CONTENTS

Background and Objectives                                                            5

Results of Audit
Finding 1: The Authority Did Not Always Ensure That Tenants Were Eligible for        7
Assistance
Finding 2: The Authority’s Inspections Did Not Sufficiently Detect Housing Quality   10
Standards Violations and Were Not Always Completed in a Timely Manner
Finding 3: The Authority Did Not Maintain an Accurate Housing Assistance Payment     15
Register

Scope and Methodology                                                                18

Internal Controls                                                                    19

Appendixes
   A. Schedule of Questioned Costs and Funds to Be Put to Better Use                 21
   B. Schedule of Tenant Files with Missing Documents                                22
   C. Schedule of Tenant Rent Overpayments/Underpayments                             24
   D. Schedule of Units That Did Not Meet Housing Quality Standards                  26
   F. Schedule of Monetary Benefits Calculations                                     27




                                             4
                      BACKGROUND AND OBJECTIVES

The City of Inglewood, located at Inglewood City Hall, One Manchester Boulevard, Inglewood,
California, incorporated in 1908. The city administrator is responsible for setting operational goals,
implementing legislative action, making policy decisions approved by the mayor and city council,
monitoring the annual operating budget, overseeing the personnel system, and providing direction to
all city departments to ensure they meet the needs of the community. The Inglewood Housing
Authority (Authority) is a blended component unit of the Community Development Department.
The governing body of the Authority is comprised of members of the city council and the mayor.
Among its duties, it approves the Authority’s budget and appoints its management. The financial
activities of the Authority are reported as a special revenue fund of the city.

The Authority has a baseline allocation of 1,002 Section 8 housing choice vouchers and an
additional 1,167 vouchers from tenants transferring from other housing authorities. HUD’s
approved budget authority for the Authority’s Housing Choice Voucher program is as follows:

                                 Fiscal year            Amount
                                     2001             $6,634,392
                                     2002             $6,786,996
                                     2003             $6,564,723
                                     2004             $7,033,835


The Authority began receiving rental certificates from HUD in 1975 to provide decent, safe, and
sanitary housing for low-income citizens. The Authority has a primary focus on improving service
delivery to clients, expanding their housing choice voucher options, providing them safe
environments in which to live, and improving compliance with changing HUD policies. The
voucher program and current regulations were created under the Housing and Urban Rural
Recovery Act of 1983 to enable eligible lower income families to obtain modest housing in the
private sector that is decent, safe, and sanitary. HUD provides the rental subsidy to the landlords
through its public housing agencies. The public housing agency’s administrative plan must contain
procedures for determining eligibility for and denial of assistance.

The public housing agency establishes the family’s eligibility upfront but is then required to
reexamine the income and composition of the families at least annually. The reexamination
determines the continued eligibility of the family and establishes the housing assistance payment
amount to be made on behalf of the family. The public housing agency must establish a policy
regarding annual reexamination effective dates that ensures reexamination for every family takes
effect within a 12-month period. Verification information obtained at reexamination must be no
more than 120 days old on the reexamination effective date. It is important that the public
housing agency has tracking and monitoring procedures and systems in place to ensure that the
required reexaminations for each assisted family are initiated and completed on time for each
assisted family. If third party verification information is not received in a timely fashion, the
public housing agency should choose an acceptable alternate form of verification and document
in the tenant file the effort made by the public housing agency to obtain third party verification.

                                                  5
The goal of the Housing Choice Voucher program is to provide decent, safe, and sanitary
housing at an affordable cost to low-income families. Accordingly, program regulations set forth
basic housing quality standards, which all units must meet before assistance can be paid on
behalf of a family and at least annually throughout the term of the assisted tenancy. Housing
quality standards define “standard housing” and establish the minimum criteria necessary for the
health and safety of program participants. At least annually, it is the responsibility of the public
housing agency to conduct inspections of units to determine compliance with housing quality
standards before the execution of the entire term of the assisted lease.

This audit report is the third of four audit reports resulting from our audit of the Authority.

Our audit objectives for this report were to determine whether the Authority (1) accurately,
thoroughly, and clearly determined tenant eligibility in its Section 8 Housing Choice Voucher
program in accordance with statutory, regulatory, and HUD requirements; (2) made Section 8
subsidy payments only for units that provided decent, safe, and sanitary housing for its tenants;
and (3) maintained an accurate housing assistance payment register.




                                                  6
                                 RESULTS OF AUDIT

 Finding 1: The Authority Did Not Always Ensure That Tenants Were
 Eligible for Assistance
 We reviewed 72 tenant files and found 43 were missing a total of 96 required documents. Also,
 15 tenant reexaminations were completed between 4 and 184 days late. The tenant files were
 incomplete because the Authority did not develop and implement procedures in its administrative
 plan to follow up on missing tenant eligibility documents, use alternative certifications when
 documents could not be obtained, and document followup efforts for the missing documents in
 the corresponding tenant files. We attribute the late reexaminations to inadequate procedures in
 the Authority’s administrative plan to allow adequate time to complete the annual
 reexaminations according to HUD requirements. As a result, HUD lacked assurance that tenants
 whose initial certifications were processed without the required eligibility documents were
 eligible for housing assistance, resulting in $153,495 in unsupported housing assistance
 payments. The late tenant reexaminations caused tenants to either overpay or underpay their
 rent.


The Authority Did Not Always
Ensure Initial Certifications
Were Completed with All
Required Eligibility Documents


               We reviewed 72 tenant files and found that 43 (60 percent) were completed
               without obtaining 84 required initial eligibility documents (see appendix B). We
               also determined that 11 of the 43 certifications were completed without
               reexamination documents that should have been obtained. The Authority could
               not provide evidence that it made a good faith effort to obtain the documents. The
               number of missing documents ranged from one to eight documents per
               tenant/family and included the following:




                                                7
                                       Initial certifications
                     Proof of citizenship/legal residency       36    (38%)
                     Driver’s license                           5      (5%)
                     Social Security card                       11    (11%)
                     Birth certificate                          32    (33%)
                                         Reexaminations
                     Personal declaration form                  7      (7%)
                     Compliance with annual requirements        5     (5%)
                     recertification form
                     Total                                      96

              As shown above, the missing documents were for items that are critical to
              establishing the identity and eligibility of the tenant/family. Therefore, while it is
              allowable to complete the initial certification and reexaminations without all of
              the documents, the Authority must document its attempts to obtain the documents.

The Authority Did Not Always
Complete Reexaminations in a
Timely Manner


              We also found that 15 (21 percent) of the 72 tenant reexaminations were not
              completed in time to be in effect by the tenants’ anniversary dates as required by
              HUD’s Housing Choice Voucher Guidebook. We also noted that the Authority
              did not accurately document when it completed the reexaminations; the forms
              only showed tenant anniversary date and the process date. We found that the
              Authority completed the reexaminations late, but backdated the reexamination
              completion date to the tenant anniversary date; therefore, we could not determine
              the true completion dates. Consequently, we used the tenant’s anniversary date
              and the date the Authority’s process date to calculate the number of days late.
              The late reexaminations ranged from 4 to 184 days late (see appendix C) and
              caused six tenants to overpay before the reexamination was completed. The other
              nine tenants underpaid their portion of the rent before the reexamination was
              completed. We reviewed the tenant files and did not find written notifications to
              the tenants about the rent overpayments or underpayments. The Authority’s
              housing manager claimed that the Authority instructs the tenants to reduce the
              rent for the next month by the overpayment amount or works out a plan directly
              with the respective landlords to correct any rent underpayments; however, the
              Authority could not provide documentation to substantiate this claim.




                                                8
Conclusion



             The lack of required tenant eligibility documents occurred because the Authority
             did not establish procedures in its administrative plan to follow up on missing
             eligibility documents, use alternative certifications when documents could not be
             obtained, and document its efforts to obtain such documents in the corresponding
             tenant files. As a result, HUD lacked assurance that tenants, whose certifications
             were processed without their eligibility being documented, were eligible for
             housing assistance; thus, we questioned the eligibility of $153,495 in housing
             assistance payments.

             The late reexaminations caused six tenants to overpay their rent before the
             reexaminations were completed and nine tenants to underpay their rent. We
             attribute the late reexaminations to inadequate procedures in the Authority’s
             administrative plan to allow adequate time to complete the annual reexaminations
             according to HUD requirements.


Recommendations

     We recommend that the director of the Los Angeles Office of Public and Indian Housing
     direct the Authority to

     1A.     Obtain eligibility documents (see appendix B) or repay HUD from nonfederal
             funds the portion of the $153,495 in housing assistance payments that remain
             unsupported.

     1B.     Develop and implement procedures in the administrative plan relating to followup
             for missing tenant eligibility documents and maintain the resident history log to
             document the Authority’s efforts to obtain the documents.

     1C      Make adjustments to the administrative plan as needed to allow sufficient time to
             complete the tenant reexaminations in a timely manner.




                                              9
Finding 2: The Authority’s Inspections Did Not Sufficiently Detect
Housing Quality Standards Violations and Were Not Always Completed
in a Timely Manner
We inspected 35 units and found that 25 contained a total of 119 housing quality standards
violations. We also reviewed the timeliness of the Authority’s inspections for 48 tenants and
found that 26 of the inspections were not completed by the tenants’ annual anniversary dates as
required. The inadequate inspections occurred because the Authority did not develop a quality
control plan to ensure inspections complied with HUD regulations. The late inspections
occurred because the Authority did not have an adequate system in place to ensure that all annual
inspections were appropriately scheduled and completed in a timely manner. As a result, the
Authority did not ensure that its program participants resided in housing that was decent, safe,
and sanitary; and we questioned $27,411 in housing assistance payments made for units that did
not meet the minimum standards.



25 of 35 Units Contained
Housing Quality Standards
Violations

              We inspected a nonstatistical sample of 35 units and found that 25 contained a
              total of 119 housing quality standards violations. While the units inspected were
              generally livable and structurally sound, they were not decent, safe, and sanitary
              as required by HUD. Of the 25 units with violations, 22 (88 percent) had 47, 24-
              hour emergency repair violations (detailed in appendix D). The other three (12
              percent) had nonemergency violations. We noted that the Authority’s inspectors
              had previously inspected these units and had passed 18 of the 25 units without
              citing violations. For example, one unit we inspected disclosed 17 violations (six
              were 24-hour emergency repair items); however, the Authority had inspected this
              same unit five months earlier and had passed the unit with no comments or
              problems noted, although according to the tenants, the violations existed at that
              time. Some of the major 24-hour emergency repair violations we identified
              during our inspections included items such as

                    9 Garbage disposal has exposed electrical wiring and faceplate for the
                      on/off switch missing, posing a fire hazard.
                    9 Heater is inoperable.
                    9 Gas leak.
                    9 Broken mirrors/windows.
                    9 Inoperable gas burner.
                    9 Inoperable smoke detectors.



                                               10
Examples of nonemergency violations we found included items such as

     9 Plumbing leaks/continuous water running in bathroom.
     9 Bathroom cabinet crumbling due to water corrosion, mildew, or dark
       organic growth.
     9 Hot water faucet handle missing.
     9 Water heater temperature-pressure relief valve missing.

While it is possible that some violations could have occurred during the period
between the two inspections, many of the violations we identified occurred over a
lengthy period and should have been identified by the Authority’s inspectors
during their last inspection of the unit.

Below are photographs illustrating some of the major violations found.

                 Location: 3714 W. 106th Street




   Exposed electrical wiring on/off switch for garbage disposal




                                11
                Location: 411 W. Queen Street, #6




                  Broken medicine cabinet mirror

                  Location: 6619 West Blvd., #1




                       Hole in the ceiling.


After reviewing the 35 inspections sampled, we found deficiencies that varied in
their level of urgency or importance. Therefore, we categorized the deficiencies
by the four different levels and assigned a dollar amount attributable to each level.
We determined the four levels based on our judgment and analysis of the
Authority’s administrative plan, HUD handbooks and directives, applicable to
Code of Federal Regulations references, and discussions with the HUD Office of
Inspector General’s (OIG) appraiser. We applied this methodology to conclude
there was $27,411 in housing assistance payments made for units that were not
decent, safe, and sanitary. Based on the level of importance, the calculations are
based on a dollar amount per unit or a percentage from the first housing assistance


                                 12
           payments to the end of the fieldwork. A complete explanation of our
           methodology is detailed in appendix E.


The Authority Did Not Perform
Housing Quality Standards
Inspections in a Timely Manner


           We also reviewed the timeliness of the Authority’s inspections for 137 units and
           found that 26 of the units’ inspections between fiscal years 2001 and 2004 were not
           completed by the tenants’ annual anniversary dates as required by 24 Code of
           Federal Regulations Part 982.405 and ranged from 3 to 100 days late. However,
           there appears to be a growing trend of inspections not conducted on time. As shown
           in the table below, for fiscal year 2004, 13 of 45 inspections were not conducted on
           time, which is nearly double the number from the previous year. In addition, for
           fiscal year 2004, only 32 of 45 inspections were completed on time. The Authority
           changed to a new computer system but is not using the capability to track the timely
           completion of annual inspections.

                  Inspections      2004       2003          2002         2001     Total
                Not conducted on    13         7             6           None     26
                      time
                    On time         32           34          22           23      111
                     Total          45           41          28           23      137

           Note: The 137 units was derived from the 50 units we selected for inspections.


   Conclusion


           The inadequate inspections occurred because the Authority did not develop a
           quality control plan to ensure inspections complied with HUD regulations. As a
           result, the Authority did not ensure that its program participants resided in
           housing that was decent, safe, and sanitary; and we questioned housing assistance
           payments of $27,411 for units that did not meet the minimum housing quality
           standards.

           The late inspections occurred because the Authority did not have an adequate
           system in place to ensure that all annual inspections are appropriately scheduled
           and completed in a timely manner. As a result, the Authority did not ensure that
           its program participants resided in housing that was decent, safe and sanitary.




                                            13
Recommendations


        We recommend that the director of the Los Angeles Office of Public and Indian
        Housing require the Authority to

        2A. Repay to HUD the $27,411 from nonfederal funds for housing assistance
            payments it paid for ineligible units.

        2B. Develop a quality control plan that to ensure inspections comply with HUD
            regulations.

        2C. Establish controls in its procedures to ensure that annual unit inspections are
            completed by the tenants’ annual anniversary dates.

        2D. Reinspect the units shown in appendix D and ensure that all violations have
            been corrected.




                                        14
Finding 3: The Authority Did Not Maintain an Accurate Housing
Assistance Payment Register

Our review of the Authority’s October 2004 register identified inaccuracies regarding problems
with 20 tenants because the tenants were either deceased, had erroneous and/or false Social
Security numbers, or were no longer program participants receiving housing assistance. These
inaccuracies occurred because the Authority did not have adequate procedures and controls to
ensure that tenants were removed from the register as needed, entries into the housing assistance
payment register were accurate, tenants’ Social Security numbers and other information were
validated during their initial certification and the information received on tenants that ported
from another jurisdiction was verified. As a result, the Authority made housing assistance
payments of $6,864 to at least one owner on behalf of a deceased tenant and $107,916 for tenants
who may not be eligible.


   The Authority’s Housing
   Assistance Payment Register
   Was Not Accurate

              Our review disclosed that contrary to section 14 of its annual contributions
              contract, the Authority did not maintain an accurate housing assistance payment
              register. We queried the tenants’ Social Security numbers in the October 2004
              register and identified problems with 20 tenants. Initially, our query showed that
              18 of these tenants were using Social Security numbers associated with deceased
              persons and the other two were valid numbers but had not been issued by the
              Social Security Administration. We conducted further reviews of these 20 tenants
              and found the following problems, discussed separately below.

              Deceased (seven tenants): We identified seven tenants who were deceased but
              still on the Authority’s housing assistance payment register. The Authority was
              aware of the deceased status of four of the tenants and had discontinued their
              housing assistance payments but had not removed them from the register.

              The Authority was not aware that the other two tenants were deceased until we
              informed the Authority. The Authority was not paying a subsidy for one of the
              tenants because the inspectors could not get access to the property. However, it
              improperly paid housing assistance payments of $6,864 to the owner between
              April 2004 and April 2005 for the other tenant. After we brought this to the
              Authority’s attention, the responsible housing specialist submitted a cancellation
              of payment to the accounts payable department and sent a letter to the owner
              requesting reimbursement of the housing assistance payments.

              Our query showed that the remaining tenant’s Social Security number was
              associated with a deceased person; however, the Authority was unable to locate

                                               15
        the tenant’s file. Thus, we were unable to validate the status or eligibility of the
        tenant.

        Legitimate tenants – input errors (six tenants): We identified six tenants who
        had multiple Social Security numbers shown within the tenant files. We ran a
        second validation of the Social Security numbers and found that the tenants were
        legitimate and receiving housing assistance, but the Authority made errors when it
        input the tenants’ Social Security numbers into the housing assistance payment
        register.

        Tenants with false Social Security numbers (four tenants): We identified four
        additional tenants who had multiple Social Security numbers shown within the
        corresponding tenant files. We noted that three of the four tenants ported from
        other public housing agencies with multiple Social Security numbers. The other
        tenant was not a portable tenant. We ran a second validation of the Social
        Security numbers and found that the Social Security numbers being used by these
        tenants did not belong to them. We were unable to determine the tenants’
        legitimate Social Security numbers.

        Tenants no longer receiving housing assistance (three tenants): We identified
        three tenants who were no longer program participants and were not receiving
        housing assistance but were still listed on the housing assistance payment register.
        One tenant had moved, and the other two had ported out to another jurisdiction.

Conclusion

        The inaccuracies on the housing assistance payment register occurred because the
        Authority did not have adequate procedures and controls in its administrative plan
        to ensure that tenants were removed from the register as needed, entries into the
        housing assistance payment register were accurate, tenants’ Social Security
        numbers and other information were validated during their initial certifications,
        and information received on tenants who ported from another jurisdiction were
        verified. As a result, the Authority improperly continued making housing
        assistance payments of $6,864 to an owner on behalf of a deceased tenant and
        $107,916 in unsupported housing assistance payments to tenants who may not be
        eligible.




                                          16
Recommendations


       We recommend that the director of the Los Angeles Office of Public and Indian
       Housing

       3A. Ensure that the Authority collects $6,864 in ineligible housing assistance
           payments from the owner, who was paid for the deceased tenant, and
           reimburse the funds to the appropriate HUD program.

       3B. Instruct the Authority to validate the tenants’ Social Security numbers in the
           future and ensure the Authority develops and implements procedures in its
           administrative plan to validate Social Security numbers during the initial
           examination process and when tenants port in from another jurisdiction.

       3C. Require the Authority to provide documenation supporting the validity of
           the Social Security numbers for the tenants who showed multiple numbers
           or repay HUD $83,343 in unsupported housing assistance payments.

       3D. Require the Authority to provide documenation supporting the validity of the
           Social Security numbers for the tenants who showed multiple numbers or
           repay $24,573 in unsupported housing assistance payments plus any
           additional payments made to date to the appropriate HUD program.




                                       17
                         SCOPE AND METHODOLOGY

We performed the audit from September 2004 through February 2005. The audit covered tenants
during the audit period of October 1, 2001, through September 30, 2003. We expanded the
scope of the audit as necessary. We reviewed applicable guidance and discussed operations with
management and staff personnel at the Authority and key officials from HUD’s Los Angeles
Office of Public and Indian Housing. The primary methodologies included

    •   Reviewing applicable HUD regulations at 24 Code of Federal Regulations Part 982, the
        Housing Choice Voucher Guidebook 7420.10G, and the Authority’s administrative plan.

    •   Interviewing management and staff responsible for the reexamination of tenants and
        conducting housing unit inspections.

    •   Performing a nonstatistical sample of tenants on the October 2004 housing assistance
        payment register. We initially selected a statistical sample of 325 tenants, but was later
        reduced the sample size to 82 tenants (25 percent). Ultimately, we reviewed 72 of the 82
        tenants because the Authority could not locate four tenant files and we excluded another
        six tenants because two were port-in tenants, two ported to another jurisdiction, and the
        other two are under an abatement.

    •   Reviewing tenant files in our sample to determine whether the reexamination was
        completed in a timely manner with the proper documentation.

    •   Conducting inspections of a nonstatistical sample of 48 (3 percent) of 1,740 units that
        were inspected by the Authority in fiscal year 2004 to determine whether they met
        housing quality standards. We only inspected 35 of the 48 because of problems in
        contacting the tenants or gaining unit access.

    •   Comparing the lease date and the inspection date on 100 percent of the 1,740 units’
        housing quality standards inspections performed during fiscal year 2004 to determine
        whether the annual inspections were performed in a timely manner.

    •   Reviewing 100 percent of the units originally selected for inspection to determine the
        timeliness of the Authority’s inspections during the period 2001 through 2004.

    •   Reviewing the tenant Social Security numbers contained in the October 2004 housing
        assistance payment register to validate them against Social Security Administration data
        as of September 1, 2004.

We conducted our audit in accordance with generally accepted government auditing standards and
included tests of management controls that we considered necessary under the circumstances.


                                               18
                             INTERNAL CONTROLS

Internal control is an integral component of an organization’s management that provides
reasonable assurance that the following objectives are being achieved:

   •   Effectiveness and efficiency of operations,
   •   Reliability of financial reporting, and
   •   Compliance with applicable laws and regulations.

Internal controls relate to management’s plans, methods, and procedures used to meet its
mission, goals, and objectives. Internal controls include the processes and procedures for
planning, organizing, directing, and controlling program operations. They include the systems
for measuring, reporting, and monitoring program performance.



 Relevant Internal Controls


              We determined the following internal controls were relevant to our audit objectives:

                  •   Policies and procedures to ensure the Authority makes a good faith effort
                      to follow up on missing documents to validate tenant eligibility.
                  •   Policies and procedures to ensure tenant reexaminations are completed in
                      a timely manner.
                  •   Controls over performing housing quality standards inspections.
                  •   Policies and procedures to ensure the Authority maintains accurate books
                      and records, including its housing assistance payment register.

              We assessed all of the relevant controls identified above during our audit of the
              Authority’s Section 8 program.

              A significant weakness exists if management controls do not provide reasonable
              assurance that the process for planning, organizing, directing, and controlling
              program operations will meet the organization’s objectives.




                                               19
Significant Weaknesses


           Based on our review, we believe the following items are significant weaknesses:

           The Authority did not

               •   Have procedures to follow up on missing tenant eligibility documents
                   during the initial examination and document those efforts and related
                   tenant certifications in the corresponding tenant files (finding 1).

               •   Have adequate procedures to ensure timely completion of tenant
                   reexaminations and annual inspections (findings 1 and 2).

               •   Develop a quality control plan to ensure inspections comply with HUD
                   regulations (finding 2).

               •   Have procedures to ensure that its housing assistance payment register was
                   accurately maintained (finding 3).




                                            20
                                   APPENDIXES

Appendix A

              SCHEDULE OF QUESTIONED COSTS
             AND FUNDS TO BE PUT TO BETTER USE

                 Recommendation         Ineligible 1/         Unsupported 2/
                     number
                       1A                                        $153,495
                       2A                 $27,411
                       3A                  $6,864
                       3C                                        $107,916
                      Total               $34,275                $261,411


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 those costs charged to a HUD-financed or HUD-insured program
     or activity when we cannot determine eligibility at the time of audit. 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.




                                            21
           Appendix B

           SCHEDULE OF TENANT FILES WITH MISSING DOCUMENTS

            1             2        3          4        5       6        7        8       9        10         11         12          13         14             15
                                             Missing documents                                   Calculation of unsupported housing assistance payments
         Tenant                             Social
      identification    Cert of Driver’s   Security Birth Pers      Compliance       Payment Tenant                    Anniv.     Modified Months       Total
No.      number        residency license     card     cert   decl     forms    Total to owner portion         Total     date       date    elapsed    payments
1       1V2677            1                                                      1   $   750 $          - $     750   10/1/2004   2/1/2005    4           $ 3,000
2       1V2236                                        1                          1   $   581 $       169 $      750   9/1/2004    2/1/2005    5           $ 2,905
3        104003           1                   1       1                          3   $   523 $       193 $      716   3/1/2004    2/1/2005   11           $ 5,753
4        102052                    1          1       1                 1        4   $   625 $       225 $      850   10/1/2004   2/1/2005    4           $ 2,500
5        109005           1                   1       1                          3   $   573 $       162 $      735   6/1/2004    2/1/2005    8           $ 4,584
6       1V2300                                        1                          1   $   572 $       178 $      750   12/1/2004   2/1/2005    2           $ 1,144
7       1V2773                                        1                          1   $   474 $       276 $      750   10/1/2004   2/1/2005    4           $ 1,896
8       1V2157                                        1                          1   $   611 $       129 $      740   11/1/2004   2/1/2005    3           $ 1,833
9       1V2526            1                                                      1   $   690 $        25 $      715   7/1/2004    2/1/2005    7           $ 4,830
10       106024           1                                                      1   $   404 $       134 $      538   8/1/2004    2/1/2005    6           $ 2,424
11       102020                    1          1       1                          3   $       665 $   195 $      860   7/1/2004    2/1/2005    7           $ 4,655
12       213017           3                           3                 1        7   $   672 $       163 $      835   11/1/2004   2/1/2005    3           $ 2,016
13      1TV830            1                                             1        2   $   565 $       181 $      746   2/1/2005    2/1/2005    0           $        0
14      2EQ037            5                           3                          8   $   262 $       440 $      702   6/1/2004    2/1/2005    8       $       2,096
15       205010           3                           2                          5   $   726 $       310 $ 1,036      2/1/2004    2/1/2005   12       $       8,712
16       102027           2                                                      2   $   181 $       484 $      665   4/1/2004    2/1/2005   10       $       1,810
17       109014           1                                                      1   $   604 $       166 $      770   8/1/2004    2/1/2005    6       $       3,624
18      2V1076                                        1       1                  2   $   703 $       297 $ 1,000      3/1/2004    2/1/2005   11       $       7,733
19       207026           2                                                      2   $   622 $       243 $      865   8/1/2004    2/1/2005    6       $       3,732
20       111013           1                                   1                  2   $   507 $       163 $      670   2/1/2004    2/1/2005   12       $       6,084
21       102041           1                           1                          2   $   828 $       147 $      975   9/1/2004    2/1/2005    5       $       4,140
22     1TV1026            1                                                      1   $       538 $   162 $      700   5/1/2004    2/1/2005    9       $       4,842
23      2TV086            2        1          1                                  4   $       906 $    70 $      976   6/1/2004    2/1/2005    8       $       7,248
24       102002           1                                                      1   $   596 $       151 $      747   8/1/2004    2/1/2005    6       $       3,576
25      1EQ001                                                1                  1   $       457 $   168 $      625   5/1/2004    2/1/2005    9       $       4,113
26      1V2818                                        1                          1   $   512 $       238 $      750   10/1/2004   2/1/2005    4       $       2,048
27      1V2121                                        1                          1   $       557 $   168 $      725   8/1/2004    2/1/2005    6       $       3,342
28      1V2658                                        1                          1   $   546 $       169 $      715   9/1/2004    2/1/2005    5       $       2,730
29       102064                                                         1        1   $   570 $       197 $      767   11/1/2004   2/1/2005    3       $       1,710
30      1TV485            1                                                      1   $       294 $   328 $      622   9/1/2004    2/1/2005    5       $       1,470
31       202080                                       2       1                  3   $   893 $       230 $ 1,123      4/1/2004    2/1/2005   10       $       8,930
32       102080           1                           1                          2   $       463 $   162 $      625   5/1/2004    2/1/2005    9       $       4,167
33      1V2467            1                                                      1   $   632 $       168 $      800   5/1/2004    2/1/2005    9       $       5,688
34      1TV738            1                                                      1   $       412 $   167 $      579   11/1/2004   2/1/2005    3       $       1,236
                                                                                                                                           10 mos
35       101023                               1       1       1         1        4   $       649 $   151 $      800   3/11/2004   2/1/2005 21 days    $       6,521




                                                                            22
                  1         2      3          4        5       6        7         8         9    10         11         12          13         14             15
                                             Missing documents                                  Calculation of unsupported housing assistance payments
         Tenant                             Social
      identification    Cert of Driver’s   Security Birth Pers      Compliance       Payment Tenant                  Anniv.1    Modified Months        Total
No.      number        residency license     card     cert   decl     forms    Total to owner portion       Total     date       date    elapsed     payments
36       102061                                1      1                           2     $   552 $   163 $     715 Sept. 1, 2004 2/1/ 2005    5           $ 2,760
37       102045             2      1           1                                  4     $   540 $   196 $     736   2/1/2005    2/1/2005     0           $        0
38       105005                                       1                           1     $   628 $   172 $     800   8/1/2004    2/1/2005     6           $ 3,768
39       106012                                       1       1                   2     $   208 $   442 $     650   7/1/2004    2/1/2005     7           $ 1,456
40       1V2520                                       1                           1     $   570 $   180 $     750   7/1/2004    2/1/2005     7           $ 3,990
41       2V2728                    1           1      1                           3     $   783 $   217 $ 1,000     11/1/2004   2/1/2005     3           $ 2,349
42       106001             1                  1      1       1                   4     $   511 $   239 $     750   6/1/2004    2/1/2005     8           $ 4,088

43       101026             1                  1      1                           3     $   498 $   202 $     700   10/1/2004   2/1/2005     4           $ 1,992
      Total              36        5           11     32      7         5         96
                        38%       5%        11%      33%     7%        5%        100%                                                                $ 153,495


              Legend:

                        Column         Title                            Description of column
                        1              Tenant identification            The tenant identification number
                                       number
                        2              Cert of residency                The tenant’s missing a certificate of residency to document the
                                                                        tenants and/or family members that were missing proof of
                                                                        citizenship
                        3              Driver’s license                 The tenant’s drivers license is missing
                        4              Social Security card             The tenant’s Social Security card is missing
                        5              Birth cert                       The tenant’s and/or family member’s birth certificate is missing
                        6              Pers Decl                        The tenant’s file does not include a personal declaration form
                        7              Compliance forms                 The tenant’s file does not include the personal declaration form
                                                                        and/or the compliance with recertification form
                        8              Total                            The total number of missing documents for each tenant for
                                                                        columns 2 through 7
                        9              Payment to owner                 The owner’s portion of the housing assistance payment
                        10             Tenant portion                   The amount of rent the tenant has to pay the landlord (owner)
                        11             Total                            Total payment for the unit (columns 9 and 10)
                        12             Anniv. date                      The tenant’s anniversary date to recertify eligibility and amount
                                                                        of Section 8 assistance
                        13             Modified date                    The end of OIG’s onsite field work
                        14             Months elapsed                   The number of month/days the Authority has not received the
                                                                        missing documents (column 12 minus column 13)
                        15             Total payments                   Total of housing assistance payments owner received while
                                                                        documents were missing (column 9 times column 14)




              1
               We numerically formatted dates in the appendixes of this report in the sequence month, day, and year. For
              example, October 1, 2004, was formatted as 10/1/04.

                                                                            23
Appendix C

                      SCHEDULE OF TENANT RENT
                    OVERPAYMENTS/UNDERPAYMENTS

Overpayment of rent:

       1             2           3             4               5            6         7

    Tenant          Prior     Current
 identification   payment     payment                     Anniversary             Number of
    number        to owner    to owner    Overpayment        date     Process date days late
   1TV1026          $409        $538         $129           5/1/04       7/8/04       68
    2TV086          $868        $906          $38          6/1/2004     6/9/2004      8

   1TV485          $190        $294           $104          9/1/2004    10/6/2004     35

   1TV2172         $464        $486           $22          10/1/2004    10/13/2004    12

    2V2382         $681        $796           $115          7/1/2004     8/3/2004     33

    101023         $481        $649           $168         3/11/2004    5/17/2004     67

Underpayment of rent:

       1              2           3            4              5              6             7
    Tenant           Prior     Current
 identification    payment     payment                    Anniversary     Process   Number of
    number         to owner    to owner   Underpayment        date          date     days late
    102020           $665        $655         $10           7/1/2004     11/3/2004     125
    202028           $898        $760         $138         10/1/2004     11/22/2004     52
    1EQ001           $464        $457          $7           5/1/2004     9/23/2004     145
    3EQ006          $1,252      $1,243         $9          10/1/2004     10/5/2004       4
    1V2121           $562        $557          $5           8/1/2004     10/5/2004      65
    102080           $464        $463          $1           5/1/2004     11/1/2004     184
    1EQ022           $440        $407         $33           4/1/2004      4/5/2004       4
    106012           $222        $208         $14          10/1/2004     11/22/2004     52
    2V2728           $810        $783         $27          11/1/2004     11/15/2004     14




                                                     24
Legend:

      Column   Title                   Description of column
      1        Tenant identification   The tenant identification number
               number
      2        Prior payment to        The housing assistance payment received by the
               owner                   owner before the tenant’s anniversary date
      3        Current payment to      The housing assistance payment received by the
               owner                   owner after the anniversary date
      4        Underpayment/           Column 2 minus column 3
               overpayment
      5        Anniversary date        The date the tenant is supposed to recertify
      6        Process date            The date the Authority processed the annual
                                       reexamination forms
      7        Number of days late     Column 5 minus column 6
      8        Total underpayment/     Column 7 divided by 30 days (one month) times
               overpayment             column 4




                                          25
Appendix D

 SCHEDULE OF VIOLATIONS FOUND IN UNITS THAT DID
     NOT MEET HOUSING QUALITY STANDARDS


       Types of violations                              Number of violations
       *Smoke detectors                                         25
       *Exposed electrical wiring/missing face                   7
       plate(s) --- electrical
       *Heat – no heat or hazardous                              7
       *Gas burner(s) not working                               3
       *Broken glass (window or mirror)                         3
       *Gas leaks                                               2
                        Subtotal (24-hour violations)           47
       Doors, windows, and locks                                17
       Kitchen or bathroom water leak resulting in               7
       corrosion, mildew, or dark organic growth
       Shower/bath tub                                           6
       Water heaters                                             6
       Heater protective shields                                 5
       Flooring                                                  4
       Continuous running or dripping water                      4
       Trash and debris                                          3
       Bedroom mildew/moisture or dark growth                    2
       Wall outlets                                              2
       Garbage disposal                                          2
       Gas lines                                                 2
       Exterior surfaces                                         2
       Stove/refrigerator                                        2
       Structural                                                2
       Building elevator                                         2
       Exhaust or ventilation                                    1
       Unauthorized living space                                 1
       Cabinets                                                  1
       Fire hazard                                               1
                             Total                              119




                                         26
Appendix E

   SCHEDULE OF MONETARY BENEFITS CALCULATIONS

Calculation of monetary benefits:

            Level     Level 1       Level    Level 2      Level      Level      Level 4      Total
             1(a)       (b)          1(c)                  3(a)      3(b)
 Total        8          8            16        3           1          1           0          23
 units
 Total     $11,276     $400         $400       $90       $2,360     $12,885        0       $27,411
dollars

Calculation methodology:

              Level 1 has three categories: a, b, and c. Level 1(a) is for life-threatening, 24-
              hour repair deficiencies such as electrical hazards and gas leaks. The deficiency
              is $100 of the housing assistance payment per unit identified with the deficiency.
              Level 1(b) is a non-life-threatening, 24-hour emergency repair such as heating,
              stoves, and water heaters. The deficiency is $50 per unit identified with the
              deficiency. Level 1(c) is for smoke detectors, a 24-hour emergency repair. We
              took into consideration that the smoke detector could have been working at the
              time of the inspection and the batteries could have been removed by the tenant;
              therefore, we imposed $25 per unit.

              Level 2 is for nonemergency repairs, which can be completed by the Authority in
              30 days. The deficiency is $30 per unit of the housing assistance payments.

              Level 3 has two categories, a and b. Level 3(a) indicates that the unit is illegally
              split into multiple units with only one utility meter for all units. The deficiency is
              25 percent of the housing assistance payments. Level 3(b) indicates that a
              building has been converted into a unit that otherwise is unallowable by local
              codes for the purpose of obtaining housing assistance payments. For example, a
              garage is converted into living quarters. We assessed 100 percent of the unit’s
              housing assistance from the date of the last recertification to the end of fieldwork.

              Level 4 is for abatements. An abatement indicates that the owner is not entitled to
              housing assistance because the owner or tenant did not correct the deficiencies
              found during the inspection. When the Authority has inspected the unit and it
              does not pass inspection, the Authority sends a letter to the owner regarding the
              deficiencies, and the owner or tenant has 30 days in which to make the repairs
              with an additional 10 days for the inspector to reinspect the unit. We assessed 100
              percent of the housing assistance payment from 40 days after the reinspection of
              the unit to the last day of fieldwork.

                                                27