oversight

Glens Fall Housing Authority, Low-Rent Public Housing and Section 8 Housing Choice Voucher Program, Glens Falls, New York

Published by the Department of Housing and Urban Development, Office of Inspector General on 2004-11-10.

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

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                 AUDIT REPORT




       GLENS FALLS HOUSING AUTHORITY
    LOW-RENT PUBLIC HOUSING AND SECTION 8
     HOUSING CHOICE VOUCHER PROGRAMS
           GLENS FALLS, NEW YORK

                       2005-NY-1001

                   NOVEMBER 10, 2004



                       OFFICE OF AUDIT
                 NEW YORK/NEW JERSEY REGION




                                                              TOC
                                                             Issue Date
                                                                     November 10, 2004
                                                             Audit Case Number
                                                                     2005-NY-1001




TO: Joan Spilman, Director, Public Housing Division, 2CPH


FROM: Alexander C. Malloy, Regional Inspector General for Audit, 2AGA


SUBJECT: Glens Falls Housing Authority
         Section 8 Housing Choice Voucher and Low-Rent Public Housing Programs
         Glens Falls, New York

We completed an audit of the Section 8 Housing Choice Voucher and Low-Rent Public Housing
Programs of the Glens Falls Housing Authority (hereafter also called the Housing Authority).
Our review focused on tenant selection and continued occupancy activities, and whether such
activities are being carried out in accordance with requirements and regulations of the U. S.
Department of Housing and Urban Development (HUD). Specifically, for the Section 8 Housing
Choice Voucher Program, the audit objectives were to determine whether the Housing Authority
calculated rental assistance payments properly, and ensured that units under the Section 8
program met Housing Quality Standards (HQS). For both the Section 8 Housing Choice Voucher
and Low-Rent Public Housing Programs, the audit objectives were to determine whether the
Housing Authority implemented admission policies consistent with HUD requirements and
verified information on program participants’ applications and recertification forms properly.
The review covered the period between January 1, 2003, and March 31, 2004. This report
contains two findings with recommendations.

In accordance with HUD Handbook 2000.06 REV-3, within 60 days please provide us for each
recommendation without a management decision, 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 Garry Clugston, Assistant Regional
Inspector General for Audit, on (716) 551-5755, extension 5901.




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Management Memorandum




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2005-NY-1001              Page ii        TOC
Executive Summary
We completed an audit of the Section 8 Housing Choice Voucher and Low-Rent Public Housing
Programs of the Glens Falls Housing Authority. Our review focused on tenant selection and
continued occupancy activities, and whether such activities are being carried out in accordance
with HUD requirements and regulations. Specifically, for the Section 8 Housing Choice
Voucher Program, the audit objectives were to determine whether the Housing Authority
calculated rental assistance payments properly, and ensured that units under the Section 8
program met Housing Quality Standards (HQS). For both the Section 8 Housing Choice Voucher
and Low-Rent Public Housing Programs, the audit objectives were to determine whether the
Housing Authority implemented admission policies consistent with HUD requirements and
verified information on program participants’ applications and recertification forms properly.
The audit covered the period between January 1, 2003, and March 31, 2004.

 The results of our review disclosed instances where rental assistance payments under the Section
8 program were not calculated properly, HQS violations in units in the Section 8 program were
either not detected or detected but not reported properly by inspectors of the Housing Authority.
Also we found, for both the Section 8 Housing Choice Voucher and Low-Rent Public Housing
Programs, that the Housing Authority’s admission policies are not consistent with certain HUD
requirements; that information on applications and recertification forms were not properly
verified; and that tenants’ income was not properly determined. We attribute these deficiencies to
weaknesses in the Housing Authority’s procedures for verifying and documenting program
participants’ annual income, calculating program participants’ rental assistance payments and
rental amounts, and inspecting units under the Section 8 program. These issues are summarized
below and discussed in detail in the two findings in this report.



                                     Under the Section 8 program, our review disclosed
                                     deficiencies with the Housing Authority’s initial and/or
   Program participants’
                                     annual income examinations of six of the 31 cases in our
   annual income was not
                                     statistical sample. For four of these participants, we noted
   properly determined
                                     that the Housing Authority did not have adequate
   and documented
                                     documentation or verification of the participants’ annual
                                     income used in their reexaminations. Regarding the other
                                     two participants, it appears that the Housing Authority
                                     incorrectly calculated their annual income. The errors
                                     occurred because the Housing Authority did not ensure that
                                     the participants’ annual income was properly determined and
                                     documented. As a result, the Housing Authority cannot be
                                     assured that the Housing Assistance Payments for those
                                     participants were accurately calculated. Consequently, the
                                     Housing Authority could be disbursing excess Housing
                                     Assistance Payments. Details of the inadequate
                                     documentation and verification of income were provided to
                                     the Housing Authority staff.


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                                          Page iii                                   2005-NY-1001
Executive Summary

                           Regarding Housing Quality Standards (HQS), our review
   HQS violations were     disclosed that during inspections of Section 8 units the
   not identified and/or   Housing Authority’ inspectors either did not identify
   reported                certain HQS violations, or identified violations, but fail to
                           properly report them. Our review disclosed that eleven
                           units in our statistical sample of 31, or about 35 percent of
                           the units, had HQS violations. Projecting this result over
                           the Housing Authority’s 633 Section 8 units indicates that
                           about 221 units may not meet HQS. Consequently,
                           Housing Assistance Payments were made for units that did
                           meet HQS.

                           The above conditions exist because the Housing Authority
                           failed to ensure that all Section 8 participants’ housing
                           assistance were determined in accordance with program
                           requirements and procedures. The conditions also exist
                           because the Housing Authority’s inspections were not
                           adequately performed. As a result, the Housing Authority is
                           unable to provide HUD with adequate assurance that its
                           monthly housing assistance payments were used for decent,
                           safe and sanitary housing for Section 8 participants.
                           Consequently, an estimated 35 percent, or $745,352, of the
                           Housing Authority’s $2,129,578 Housing Assistance
                           Payments for Fiscal Year 2004 may have been spent on
                           units that did not meet Housing Quality Standards.

                           Apart from the above, we noted that the Housing Authority
   Tenant admission and    needs to improve controls over its Low-Rent Housing
   continued occupancy     Program tenant admissions and continued occupancy
   procedures were not     activities. Our review disclosed weaknesses in procedures
   followed                documenting tenants’ social security numbers or
                           declarations of citizenship, and calculating the amounts of
                           tenants’ annual income. This occurred because the Housing
                           Authority did not assure that tenant admission and continue
                           occupancy procedures were conducted in accordance with
                           HUD requirements and the Housing Authority’s Admission
                           and Continued Occupancy Plan. As a result, tenants may
                           have been admitted to the Housing Authority’s low-rent
                           housing units that were not eligible and/or may have been
                           charged incorrect amounts of rent.

                           As provided under each finding, we recommend that HUD
  Recommendations          require the Housing Authority to implement procedures and
                           controls to correct the deficiencies and weaknesses cited in
                           this report.




2005-NY-1001                   Page   iv                                          TOC
                                                          Executive Summary

                  The results of our audit were discussed with Housing
Exit conference   Authority officials throughout the course of the on-site
                  audit work and during an exit conference held on October
                  28, 2004. We provided a draft copy of the report to officials
                  of the Housing Authority, who generally agreed with the
                  findings and recommendations. Although we requested
                  written comments, officials of the Housing Authority chose
                  not to provide any for inclusion in this report.




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Executive Summary




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2005-NY-1001             Page vi     TOC
Table of Contents
Management Memorandum                                                       i



Executive Summary                                                         iii



Introduction                                                               1



Findings

1.    The Housing Authority is not Properly Administering its
      Section 8 Housing Choice Voucher Program                             3

2.    The Housing Authority is not Properly Following its Low-Rent
      Housing Program’s Admission and Continued Occupancy
      Procedures                                                           9



Management Controls                                                      13



Appendices
A     Schedule of Questioned Costs and Funds Put to Better Use           15



Abbreviations
CFR        Code of Federal Regulations
HAP        Housing Assistance Payments
HQS        Housing Quality Standards
HUD        U.S. Department of Housing and Urban Development
OIG        Office of Inspector General
PHA        Public Housing Authority
SSN        Social Security Number




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                                                                2005-NY-1001
Table of Contents




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2005-NY-1001        Page viii        TOC
Introduction
A seven member Board of Commissioners governs the Glens Falls Housing Authority. The board
establishes policy and takes official action as required by Federal and State law. The Executive
Director, who is responsible for managing the overall day-to-day operations of the Housing
Authority, is Robert J. Landry. The books and records are maintained at the administration office
located at Stitchman Towers, Jay Street, Glens Falls, New York.

The Housing Authority operates two senior developments. One contains 100 units and the other 75
units. In addition, the Housing Authority administers 131 units of State housing at two
developments. One development contains 81 units of senior housing and the other 50 family units.
Also, the Housing Authority administers 633 units of Section 8 housing.



                                     The review focused on tenant selection and continued
  Audit objectives                   occupancy activities, and whether such activities are being
                                     carried out in accordance with requirements and regulations
                                     of HUD. Specifically, for the Section 8 Housing Choice
                                     Voucher Program, the audit objectives were to determine
                                     whether the Housing Authority calculated rental assistance
                                     payments properly, and ensured that units under the Section
                                     8 program met Housing Quality Standards (HQS). For both
                                     the Section 8 Housing Choice Voucher and Low-Rent
                                     Public Housing Programs, the audit objectives were to
                                     determine whether the Housing Authority implemented
                                     admission policies consistent with HUD requirements and
                                     verified information on program participants’ applications
                                     and recertification forms properly.

                                     To accomplish the audit objectives, the following audit
  Audit scope
        Scope and
              and                    procedures were performed:
  Methodology
  methodology
                                     •   Interviewed HUD and Housing Authority officials and
                                         employees.

                                     •   Examined reports and information the Housing Authority
                                         maintained on HUD’s Public and Indian Housing
                                         Information Center.

                                     •   Reviewed applicable Federal and Housing Authority
                                         policies and procedures to gain an understanding of their
                                         requirements.

                                     •   Used Audit Command Language software to select a
                                         statistical sample of the Housing Authority’s Low-Rent
                                         and Section 8 tenant files for review.
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                                         Page 1                                     2005-NY-1001
Introduction



                 •   Inspected the Section 8 units included in our statistical
                     sample to determine whether the units met Housing
                     Quality Standards.

                 The audit covered the period from January 1, 2003 to
  Audit period   March 31, 2004. However, activity prior and subsequent to
                 the audit period was reviewed, as we deemed necessary.
                 We conducted our review at the administrative offices of
                 the Housing Authority between April 2004 and August
                 2004.

                 The audit was conducted in accordance with Generally
                 Accepted Governmental Auditing Standards.




2005-NY-1001         Page 2                                             TOC
                                                                                      Finding 1


      The Housing Authority is not Properly
    Administering its Section 8 Housing Choice
                Voucher Program
Under the Section 8 program, our review disclosed deficiencies with the Housing Authority’s
procedures for documenting and verifying program participants’ initial and/or annual income,
and for ensuring that units meet Housing Quantity Standards (HQS). These conditions exist
because the Housing Authority failed to ensure that housing assistance payments for all Section
8 units was determined in accordance with program requirements and procedures, and that all
participating units meet HQS. As a result, the Housing Authority is unable to provide HUD
with adequate assurance that its monthly housing assistance payments were accurately
calculated and used for decent, safe and sanitary housing for all Section 8 participants. In this
regard, we estimated that 35 percent, or $745,352, of the Housing Authority’s $2,129,578
housing assistance payments for Fiscal Year 2004 may have been spent on units that did not
meet HUD’s Housing Quantity Standards. Moreover, since we noted numerous deficiencies
with the Housing Authority’s administration of its Section 8 program, we question whether the
Housing Authority earned the $384,085 in Section 8 administrative fees it was paid during
Fiscal Year 2004. Accordingly, we consider those fees unsupported pending an eligibility
determination by HUD.



                                    We selected a statistical sample of 31 units from the
Scope                               Housing Authority’s 633 units administered under its
                                    Section 8 Housing Choice Voucher Program. We reviewed
                                    the participants’ files to determine whether recertification
                                    occurred in accordance with HUD requirements. We
                                    examined the files to determine whether participants’
                                    annual income and expenses were adequately documented
                                    and verified, and whether the Housing Authority correctly
                                    computed each participant’s annual income, rental
                                    payment, and housing assistance payments. Additionally,
                                    we inspected each unit in our sample to determine whether
                                    HQS violations exit.

Criteria                            24 CFR Part 5.240(c) states the responsible entity must
                                    verify the accuracy of the income information received
                                    from the family and change the amount of the total tenant
                                    payment as appropriate, based on such information.

                                    24 CFR Part 982.516(a) states the Public Housing
                                    Authority (PHA) must conduct a reexamination of family
                                    income and composition at least annually. The PHA must
                                    obtain and document in the tenant file third party


                                         Page 3                                   2005-NY-1001      TOC
Finding 1

                         verification, or must document in the tenant file why third
                         party verification was not available.

                         From our statistical sample of 31 units, we found six cases
Six cases with           (19 percent) with deficiencies in the Housing Authority’s
deficiencies             initial and/or annual income examinations process. As
                         such, we project that 19 percent of the Housing Authority’s
                         633 Section 8 units (120 units) may have deficiencies
                         pertaining to the income examination process.

                         Specifically, for four participants, our review disclosed that
                         the Housing Authority did not have adequate
                         documentation or verification of the participants’ annual
                         income. For two participants it appears that the Housing
                         Authority incorrectly calculated the participants’ annual
                         income. This occurred because the Housing Authority Staff
                         failed to identify or follow up on discrepancies in income
                         documentation and therefore did not ensure that the
                         participants’ annual income was properly determined,
                         verified, and documented. As a result, the Housing
                         Authority cannot be assured that the housing assistance
                         payments for those participants were accurately calculated.
                         The results of our review were provided to the Housing
                         Authority staff.

                         Section 10 of the Consolidated Annual Contribution
Criteria
                         Contract requires the Housing Authority to comply with all
                         applicable HUD regulations and requirements. Further,
                         Section 9 requires each requisition for periodic payments to
                         contain a certification that housing assistance payments
                         were made in accordance with HUD requirements and that
                         units were inspected by the Housing Authority in
                         accordance with HUD requirements.

                         Title 24 Part 982.401 of the Code of Federal Regulations
                         (CFR) established Housing Quality Standards for the
                         Section 8 Tenant Based Assistance Program. All program
                         housing must meet the HQS requirements throughout the
                         tenancy period. Further, Part 982.405 requires housing
                         authorities to inspect each leased unit at least annually to
                         determine if HUD’s standards are met. Housing Authorities
                         must conduct supervisory quality control inspections.

                         From our statistical sample of 31 units we found 11 units
35 Percent of units do   (35 percent) with HQS violations. As such, we project that
not meet HQS             35 percent of the Housing Authority’s 633 Section 8 units
                         may not meet Housing Quality Standards. Consequently,


2005-NY-1001                 Page 4                                              TOC
                                                Finding 1

35 percent, or $745,352, of the Housing Authority’s
$2,129,578 housing assistance payments for Fiscal Year
2004 may have been for units that would not meet HUD’s
Housing Quality Standards. Furthermore, the Housing
Quality Standards violations identified during our review
pose a serious concern for the well being of the Section 8
participants. The following pictures illustrate this.

              Tenant ID # 6100325




Large Hole in Ceiling and Exposed Electrical Wiring

              Tenant ID # 620512




                  Entry Way Door Not Secure



    Page 5                                   2005-NY-1001    TOC
Finding 1


                                               Tenant ID # 6810826




                                              Unsafe Kitchen Floor


                                              Tenant ID # 6810826




                                        Potential Lead-Based Paint Hazard

                         The inspection process used by the Housing Authority does
 Inspection process is
                         not assure HUD that its Section 8 units meet Housing
 inadequate
                         Quality Standards. We noted that the Housing Authority’s
                         inspectors (a) did not identify all violations, (b) passed
                         units with HQS violations, and (c) did not properly ensure
                         that reported violations were corrected. In accordance with

2005-NY-1001                 Page 6                                           TOC
                                                                              Finding 1

                          program requirements, the Housing Authority is to ensure
                          that participating Section 8 units meet HQS. In this regard,
                          we believe that once the units with violations are brought
                          into compliance with Housing Quality Standards, the
                          associated housing assistance payments of $745,352 for
                          those units will result in funds put to better use.

                          A comparison of our inspections to the Housing
Inspectors did not        Authority’s most recent inspections showed that the
identify violations and   inspectors either failed to note any Housing Quality
passed units with         Standards violations, or noted violations and provided
violations                comments indicating violations, but allowed the unit to
                          pass the inspection. Each of those units should have failed
                          the inspection and the Housing Authority should have
                          required the landlords to take corrective action.

                          Furthermore, the Housing Authority did not re-inspect the
Units not re-inspected    units where the inspectors noted violations, and did not
                          ensure that the landlord corrected the violations. The
                          Housing Authority’s Section 8 staff told us that they did not
                          have the manpower or time to perform the re-inspections.
                          In this regard, we noted that the Housing Authority has
                          only two employees assigned to the Section 8 Housing
                          Choice Voucher Program to perform all the initial, annual
                          and interim certifications, and to conduct all the initial and
                          annual HQS inspections and re-inspections. In our opinion,
                          the Housing Authority does not have sufficient staff
                          assigned to the Section 8 Housing Choice Voucher
                          Program to assure its proper administration.

                          In summary, it is our position that the Housing Authority is
Summary                   not properly managing its Section 8 Program in accordance
                          with HUD requirements since the Housing Authority does
                          not have adequate management controls to provide HUD
                          with assurances that its annual housing assistance payments
                          under it Section 8 program are accurately calculated and only
                          used for decent, safe and sanitary housing. Consequently, we
                          question whether the Glens Falls Housing Authority has
                          earned the $384,085 Section 8 administrative fees it was paid
                          in Fiscal Year 2004. Accordingly, we consider the amount of
                          those fees unsupported pending an eligibility determination
                          by HUD.



Recommendations

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                              Page 7                                      2005-NY-1001
Finding 1

               We recommend that the Director, Public Housing Division
               of HUD’s Buffalo Field Office, require the Housing
               Authority to:

                  1A. Implement procedures and controls to ensure that
                      Section 8 participants’ annual income is properly
                      determined, verified, and documented. For the two
                      participants identified with incorrectly calculated
                      annual income, determine the correct housing
                      assistance payments and take appropriate actions
                      to correct any over or under payments.

                  1B. Implement procedures and controls to ensure that
                      management monitors the Section 8 certification
                      and recertification process.

                  1C. Ensure that it has sufficient staff to properly
                      perform the inspection process for all its Section 8
                      units.

                  1D. Re-inspect its Section 8 housing units and ensure
                      that all Housing Quality Standards violations are
                      identified and corrected within required
                      timeframes.

                  1E. Discontinue requests of Housing Assistance
                      Payments on units we identified as not meeting
                      Housing Quality Standards as well as those units
                      identified during the implementation of
                      Recommendation 1D.

               We also recommend that the Director, Public Housing
               Division.

                  1F. Determine whether the Glens Falls Housing
                      Authority earned the $384,085 Section 8
                      administrative fee paid to it during Fiscal Year
                      2004. If any of the fees are determined to be
                      ineligible, that amount is to be reimbursed to HUD
                      from non-Federal funds.




2005-NY-1001       Page 8                                           TOC
                                                                                       Finding 2


      The Housing Authority is not Properly
    Following its Low-Rent Housing Program’s
       Admission and Continued Occupancy
                    Procedures
Under the Low-Rent Housing Program, our review disclosed weaknesses in the Housing
Authority’s admission and continued occupancy procedures pertaining to documenting tenants’
social security numbers or declarations of citizenship, and calculating the amounts of tenants’
annual income. This occurred because the Housing Authority did not assure that the tenant
selection and continue occupancy procedures were carried out in accordance with HUD
requirements and the Housing Authority’s Admission and Continued Occupancy Plan. As a
result, applicants may have been admitted to units under the Housing Authority’s Low-Rent
Housing Program that were not eligible and/or charged inappropriate amounts of rent.



                                    We selected a sample of eight units from the Housing
 Scope                              Authority’s 175 Low-Rent Public Housing units to review
                                    the tenants’ files. We reviewed the tenant files to determine
                                    whether the Housing Authority is conducting its tenant
                                    selection and continued occupancy activities as required by
                                    HUD regulations and its own Admission and Continued
                                    Occupancy Plan.

                                    24 CFR Part 5.216 requires each assisted applicant to
 Criteria                           submit their complete and accurate social security number
                                    for all household members who are at least six years of age.
                                    In addition, each family member is to submit a written
                                    declaration asserting the individual family member is a
                                    United States citizen or a non-citizen with immigration
                                    status. The regulations also provide that the documentation
                                    necessary to verify the social security number should be a
                                    valid Social Security card issued by the Social Security
                                    Administration.

                                    Section 12 of the Glens Falls Housing Authority Admission
                                    and Continued Occupancy Plan states that age, relationship,
                                    U.S. citizenship, and social security numbers will generally
                                    be verified with documentation provided by the family. It
                                    further notes that photocopies of the documents provided by
                                    the family will be maintained in the file.


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                                         Page 9                                   2005-NY-1001
Finding 2


                            24 CFR Part 5.240(c) states the responsible entity must
                            verify the accuracy of the income information received
                            from the family and change the amount of the total tenant
                            payment as appropriate, based on such information.

                            24 CFR Part 960.257(a) requires the PHA to conduct a
                            reexamination of family income and composition at least
                            annually and must make appropriate adjustments in the
                            rent. Further 24 CFR Part 960.259(c) requires the PHA to
                            obtain and document in the family file third party
                            verification of reported family income and expenses related
                            to deductions from family income, or must document in the
                            file why third party verification was not available.

                            Our review disclosed that for all eight units in our sample
 Documentation of           the Housing Authority did not document family members’
 citizenship and SSN not    social security numbers or declarations of citizenship in the
 in files                   tenant files. The only evidence of citizenship and social
                            security number were annotations made by the staff on the
                            required verification forms that were contained in the
                            tenant files. The files did not contain any photocopies or
                            other documentation referring to the tenants’ Social
                            Security Number. Nor did the files have the required
                            declaration statement identifying each family member’s
                            citizenship or eligible immigration status. Without proper
                            documentation the Housing Authority is unable to
                            demonstrate that its tenants and individual family members
                            are eligible to participate in the HUD funded Low-Rent
                            Housing Program.

                            For six of the eight cases in our sample we found deficiencies
   Deficiencies in tenant   with the Housing Authority’s tenant selection and continued
   admissions and           occupancy process. Specifically, the Housing Authority
   occupancy process.       incorrectly calculated the tenants’ income in two cases
                            resulting in the amount of tenants’ rent being overstated. The
                            Housing Authority overstated one tenant’s monthly rent by
                            $7 and the other tenant’s monthly rent by $20. Regarding the
                            other four cases, the tenant files did not contain adequate
                            documentation or verification of the tenants’ income and/or
                            medical expenses. Details regarding the above deficiencies
                            were provided to the Low-Rent Housing Program staff for
                            their review.

                            As previously stated, the Housing Authority did not ensure
                            that all tenants’ annual income was properly verified and
                            documented. Without proper verification and documentation



2005-NY-1001                    Page 10                                             TOC
                                                                       Finding 2


                  the Housing Authority cannot be assured that the amounts of
                  the tenants’ rents are accurately calculated. This can cause
                  the tenant’s share of the rent to be either overstated or
                  understated. This occurred because the Housing Authority
                  staff relied on prior year’s documentation and/or information
                  provided by the tenants, as well as, management’s failure to
                  provide proper oversight.

                  As discussed in this finding, the Housing Authority’s Low-
 Summary          Rent Housing Program has weaknesses in its tenant
                  selection and continued occupancy procedures that need to
                  be addressed. Proper corrective actions are needed to obtain
                  adequate assurances that applicants meet the initial
                  program requirements, as well as all program requirements
                  applicable to continued occupancy. Corrective actions are
                  also need to ensure that tenants are charged the appropriate
                  amount of rent.



Recommendations   We recommend that the Director, Public Housing Division
                  of HUD’s Buffalo Field Office require the Housing
                  Authority to:

                  2A.      Obtain and photocopy each family member’s Social
                           Security Card and/or related documents.

                  2B.      Ensure that all necessary citizen eligibility forms
                           are obtained for all applicable family members.

                  2C.      Obtain and properly verify each tenant’s annual
                           income and medical expenses during annual
                           reexaminations.

                  2D.      Recalculate tenant rents for all tenants to ensure that
                           the amount of each tenant’s annual rent is properly
                           calculated.

                  2E.      Make adjustments to correct the overcharged rent
                           for the two tenants noted in the finding.

                  2F.      Implement management controls and procedures to
                           ensure proper and consistent implementation of the
                           Admission and Occupancy plan and HUD
                           regulations.


                                                                      TOC
                        Page 11                                     2005-NY-1001
Finding 2


               2G.      Implement a quality control program whereby
                        management oversight is provided to ensure that all
                        applicable documentation is maintained and that the
                        amount of each tenant’s rent is properly calculated.




2005-NY-1001         Page 12                                          TOC
Management Controls
In planning and performing our audit, we considered the management controls of the Glens Falls
Housing Authority to determine our auditing procedures, not to provide assurance on the
controls. Management controls include the plan of organization, methods and procedures
adopted by management to ensure that its goals are met. Management controls include the
processes for planning, organizing, directing, and controlling program operations. Management
controls include the systems for measuring, reporting, and monitoring program performance.



                                    We determined that 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.

                                    •   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, loss, and misuse.

                                    •   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.

                                    We assessed all the relevant controls identified above.

                                    It is a significant weakness if management controls do not
                                    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 that significant weaknesses
   Significant weaknesses           exist in the following management controls. These
                                    weaknesses are described in the findings section of this
                                    report and summarized below.

                                    •   The Housing Authority did not ensure its Section 8
                                        housing units met HUD’s Housing Quality Standards,
                                        or that tenant initial certifications and /or


                                        Page 13                                   2005-NY-1001       TOC
Management Controls


                          recertifications were performed in accordance with
                          program requirements (Finding 1, Program Operations,
                          Compliance with Laws and Regulations. Safeguarding
                          Resources and Validity and Reliability of Data).

                      •   The Housing Authority did not ensure that tenant
                          selection and continued occupancy activities were
                          carried out in accordance with its own procedures and
                          HUD requirements (Finding 2, Program Operations,
                          Compliance with Laws and Regulations, Safeguarding
                          Resources and Validity and Reliability of Data).




2005-NY-1001              Page 14                                        TOC
                                                                                 Appendix A
Schedule of Questioned Costs and Funds Put to Better Use

                               Type of Questioned Costs
     Finding                     Unsupported                     Funds Put to
     Number                      Costs 1/                        Better Use 2/

      1                          $384,085                        $745,352

      Total                      $384,085                        $745,352


1/    Unsupported costs are costs whose eligibility cannot be clearly determined during the
      audit since such costs were not supported by adequate documentation. A legal opinion or
      administrative determination may be needed on these costs.

2/    Funds put to better use are costs that will not be expended in the future if our
      recommendations are implemented, for example, costs not incurred, de-obligation of
      funds, withdrawal of interest, reductions in outlays, avoidance of unnecessary
      expenditures, loans and guarantees not made, and other savings.




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