Issue Date
June 28, 2006
Audit Report Number
2006-AT-1012
TO: Karen Cato-Turner, Director, Office of Public Housing, 4DPH
FROM:
James D. McKay
Regional Inspector General for Audit, 4AGA
SUBJECT: The Miami Dade Housing Agency, Miami, Florida, Paid Housing Choice
Voucher Program Funds for Some Overhoused Tenants
HIGHLIGHTS
What We Audited and Why
As part of the U.S. Department of Housing and Urban Development (HUD),
Office of the Inspector General’s (OIG) strategic plan, we audited the Miami
Dade Housing Agency’s (Agency) Section 8 Housing Choice Voucher program to
determine whether it paid excess subsidies for overhoused tenants. We selected
the Agency for review based on risk factors associated with a Section 8 risk
assessment.
What We Found
The Agency overhoused 17 tenants and unnecessarily paid $61,862 in excess
subsidies on behalf of 13 of these tenants. In addition, the Agency has 228
tenants who could be overhoused with the potential to incur excess subsidy
payments. The Agency does not have adequate procedures to ensure that tenants
receive the proper voucher size. By improving its procedures, the Agency could
avoid future losses of $81,828, which would allow it to provide vouchers to
additional tenants.
Table of Contents
What We Recommend
We recommend that the Director of the Office of Public Housing require the
Agency to (1) submit a corrective action plan to correct the 17 overhoused tenant
vouchers; (2) reimburse its program $61,862 in non-federal funds; (3) submit a time
schedule to review the additional 228 tenants for overhousing, a corrective action
plan to correct any overhoused tenant vouchers, and reimburse its program in non-
federal funds; and (4) develop and implement procedures to ensure that tenants
receive the proper voucher size to avoid future losses of $81,828.
For each recommendation without a management decision, please respond and
provide status reports in accordance with HUD Handbook 2000.06, REV-3.
Please furnish us copies of any correspondence or directives issued because of the
audit.
Auditee’s Response
We discussed the findings with Agency and HUD officials during the audit. We
provided a copy of the draft report to Agency officials on May 8, 2006, for their
comments and discussed the report with the officials at the exit conference on
May 19, 2006. The Agency provided its written comments to our draft report on
May 26, 2006. The Agency generally concurred with our recommendations and
has begun to take corrective action. The Agency agreed that tenants were
overhoused. However, they disagreed with certain conclusions of the audit.
The complete text of the auditee’s response, along with our evaluation of that
response, can be found in appendix B of this report. The Agency also provided an
attachment with its response that is available for review upon request.
Table of Contents
2
TABLE OF CONTENTS
Background and Objectives 4
Results of Audit
Finding 1: The Agency Paid Excess Subsidies for Some Overhoused 5
Tenants
Scope and Methodology 8
Internal Controls 9
Appendixes
A. Schedule of Questioned Costs and Funds to Be Put to Better Use 10
B. Auditee Comments and OIG’s Evaluation 11
C. Criteria 16
D. Schedule of Overhoused Tenants 19
3
BACKGROUND AND OBJECTIVES
The Miami-Dade Housing Agency (Agency) is a department of Miami-Dade County, Florida.
The Agency reports directly to the County Manager, who reports to the Mayor and a 13-member
board of County Commissioners. The Agency’s objective is to provide low- and moderate-
income residents with quality, affordable housing opportunities.
The Agency administers the Section 8 Housing Choice Voucher program, funded by the U.S.
Department of Housing and Urban Development (HUD). The program provides rental
assistance to eligible families and elderly residents. For fiscal year 2005, the Agency
administered 13,636 housing choice vouchers and received more than $122 million in rental
housing assistance.
The Agency determines the family voucher size (number of bedrooms) based on occupancy
standards prescribed in its Section 8 administrative plan. The assigned voucher size and the
payment standard are used to calculate the maximum monthly subsidy the Agency will pay on
behalf of the tenant. The payment standard is the amount generally needed to rent a moderately
priced housing unit in the local market, not to exceed HUD’s fair market rent for the number of
bedrooms. The Agency pays the monthly subsidy directly to the landlord, while the tenant pays
the difference between the rent charged by the landlord and the monthly subsidy. Tenants may
incur excess subsidies if the Agency assigns a larger voucher size than allowed by its occupancy
standards.
Our objective was to determine whether the Agency paid excess subsidies for overhoused
tenants.
Table of Contents
4
RESULTS OF AUDIT
Finding 1: The Agency Paid Excess Subsidies for Some Overhoused
Tenants
The Agency overhoused 17 tenants and unnecessarily paid $61,862 in excess subsidies on behalf
of 13 of these tenants. In addition, the Agency has 228 tenants who could be overhoused with
the potential to incur excess subsidy payments. The overhousing of tenants occurred because the
Agency does not have adequate procedures to ensure that tenants receive the proper voucher size
in accordance with the Agency’s Section 8 administrative plan. By improving its procedures, the
Agency could avoid incurring $81,828 in additional subsidies, which would allow it to provide
vouchers to additional tenants.
Overhoused Tenants Resulted
in Excess Subsidies of $61,862
The Agency overhoused tenants by issuing vouchers for larger units than supported
by the family composition. HUD’s Housing Choice Voucher Program Guidebook
explains that when determining unit size, the subsidy standards must provide for the
smallest number of bedrooms needed to house a family without overcrowding. In
addition, the Agency’s administrative plan states that vouchers are assigned based on
family composition.
We identified 253 potentially overhoused tenants and reviewed Agency records for
25 of these tenants to verify whether the appropriate voucher size was assigned. Our
review identified 17 tenants who were overhoused. The Agency unnecessarily paid
$61,862 in excess subsidies on behalf of 13 of these tenants. Based on the
circumstances of the 17 tenants identified, we estimate that the Agency may pay
$81,828 in excess subsidies over the next 36 months. Appendix D provides a
summary of our results.
Agency officials agreed that there was no supporting documentation to justify the
tenants retaining a larger voucher size and that the voucher size should have been
decreased.
Table of Contents
5
Tenants Were Overhoused Due
to Inadequate Procedures
The Agency needs to improve its procedures to ensure that tenants receive the
proper voucher size in accordance with the Agency’s Section 8 administrative
plan. It needs to improve its procedures for conducting tenant recertifications and
quality control reviews.
Our review found that the Agency properly housed tenants and provided the
appropriate voucher during the initial certification. However, when the family
composition decreased and was reported during the tenant recertification, the
Agency often failed to reduce the tenant’s voucher size to comply with the
occupancy standards established in its administrative plan. In other instances, the
Agency failed to conduct timely recertifications that would have provided a
greater opportunity to detect the overhousing and reduce the excessive subsidies
paid to the landlords.
Agency officials explained that tenant recertification procedures are not specific
and allow for personal interpretation and judgment by the staff. For example,
although occupancy standards allow for a family of three to receive either a two-
or three-bedroom voucher, procedures do not specify a standard for the voucher
size assigned.
The Agency conducts quality control reviews on initial certifications and change
of dwelling transactions. Since the 17 tenants were not initial certifications or
change of dwelling transactions, they were not selected for a quality control
review. Agency procedures to select tenants for quality control reviews allowed
the overhousing and payment of excess subsidies to continue. The Agency needs
to strengthen its quality control procedures to ensure that tenants are selected for
quality control reviews regardless of the transaction type.
The Agency has recently reorganized its Section 8 Department. The new
management team has begun to revise the Section 8 administrative plan and
quality control procedures. In addition, the Agency has provided training on the
entire tenant certification process.
Table of Contents
6
Conclusion
Overhousing 17 tenants caused the Agency to pay excess subsidies of $61,862
from January 2003 to February 2006. If the Agency strengthens its procedures, it
could avoid additional overpayments of $81,828. The Agency could strengthen
its procedures by (1) providing detailed guidance to ensure that voucher sizes are
assigned consistently and (2) selecting tenants for quality control reviews based
on a representative sample of the various transactions that may occur.
Recommendations
We recommend that the director of the Office of Public Housing require the Agency
to
1A. Submit a corrective action plan to correct the 17 overhoused tenant
vouchers. Per HUD Notice 2005-7, a housing authority not responding to
its corrective action plan within the timeframe specified and approved by
the field office will have 10 percent of its monthly scheduled administrative
fee advance withheld beginning the month the field office imposes the
sanction and lasting until the housing authority has complied with the
corrective action plan.
1B. Reimburse its program $61,862 in non-federal funds.
1C. Submit a time schedule to review the additional 228 tenants for
overhousing, a corrective action plan to correct any overhoused tenant
vouchers, and reimburse its program in non-federal funds.
1D. Develop and implement procedures to ensure that tenants receive the proper
voucher size to avoid future losses of $81,828.
Table of Contents
7
SCOPE AND METHODOLOGY
Our audit objective was to determine whether the Agency paid excess subsidies for overhoused
tenants. To accomplish our audit objective, we did the following:
• Interviewed HUD and Agency program staff;
• Reviewed applicable laws, regulations, and other HUD program requirements;
• Reviewed the Agency’s Section 8 policies and procedures and administrative
plan;
• Reviewed the Agency’s latest independent public accountant report and HUD
program monitoring reviews; and
• Obtained a download of the Agency’s Section 8 tenants in the Housing Choice
Voucher program as of February 2006. We then performed limited tests of the
reliability of the data, such as the tenant family composition, housing assistance
payments, and voucher sizes. Based on the tests, we assessed the data as
sufficiently reliable, given our objective and intended use.
The download resulted in 12,073 Section 8 tenants. Using an analysis software program, we
identified 253 potentially overhoused tenants who may have incurred excess subsidies. From the
253 tenants, we randomly selected 25 tenants to determine whether the Agency assigned the
appropriate voucher size and to calculate any excess subsidies. We reviewed 25 tenant files to
determine whether the voucher size exceeded the number of persons in the household and
whether justification was provided to allow the tenant to retain the larger bedroom voucher size.
If no justification was found, we considered the tenant to be overhoused. We identified 17
tenants who were overhoused. We calculated the overhoused period from the recertification date
(limited to January 1, 2003) when the Agency should have identified the change in family
composition and reduced the voucher size to the date the Agency actually reduced the tenant
voucher, (or February 28, 2006, our cutoff date). We used the largest voucher size allowed by
the administrative plan in computing the monthly housing assistance payment. We compared
our monthly calculation to monthly landlord payments from Agency accounting records to
compute the monthly excess subsidy. We totaled the monthly excess subsidies for the
overhoused period. At February 28, 2006, eight tenants received excess subsidies and would
continue to receive excess subsidies because the Agency’s review procedures did not detect the
overhousing. We estimated the funds that could be put to better use for the eight tenants by
multiplying the monthly excess subsidy by 36 months. We used the 36-month period because
the Agency had overhoused some tenants for at least 36 months, and a HUD study indicates the
36-month period is the average number of months that a tenant stays in a unit.
We conducted our fieldwork from February to April 2006 at the Agency’s office in Miami,
Florida. Our audit period was from January 1, 2003, through February 28, 2006. We conducted
the audit in accordance with generally accepted government auditing standards.
Table of Contents 8
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,
• Compliance with applicable laws and regulations, and
• Safeguarding of assets.
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 objective:
• Controls over program operations.
• Controls over the reliability of data.
• Controls over compliance with laws and regulations.
• Controls over the safeguarding of assets.
We assessed the relevant controls identified above.
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.
Significant Weaknesses
Based on our review, we do not believe a significant weakness exists for assigning
voucher sizes. However, we believe the Agency could improve its procedures by
(1) providing detailed guidance to ensure that voucher sizes are assigned
consistently and (2) selecting tenants for quality control reviews based on a
representative sample of the various transactions that may occur.
Table of Contents
9
APPENDIXES
Appendix A
SCHEDULE OF QUESTIONED COSTS
AND FUNDS TO BE PUT TO BETTER USE
Funds to be put
Recommendation Ineligible 1/ to better use 2/
1B $ 61,862
1D $ 81,828
_______ _______
Total $ 61,862 $ 81,828
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/ “Funds to be put to better use” are estimates of amounts that could be used more
efficiently if an Office of Inspector General (OIG) recommendation is implemented.
This includes reductions in outlays, deobligation of funds, withdrawal of interest subsidy
costs, costs not incurred by implementing recommended improvements, avoidance of
unnecessary expenditures noted in preaward reviews, and any other savings which are
specifically identified. In this instance, if the Agency implements our recommendation, it
will cease to incur Section 8 costs for eight tenants who have a larger voucher size than
warranted, and, instead can use the funds to provide vouchers for additional tenants.
Once the Agency successfully improves its controls, this will be a recurring benefit. Our
estimate reflects three years for these recurring benefits, because a HUD study indicates
the 36-month period is the average number of months that a tenant stays in a unit.
Table of Contents
10
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
Table of Contents
11
Comment 1
Table of Contents
12
Comment 1
Comment 2
Comment 3
Table of Contents
13
Table of Contents
14
OIG Evaluation of Auditee Comments
Comment 1 Based on our review of Section 8 policies and procedures in effect when the
overhousing occurred, and discussions with Agency officials, we concluded that
the Agency had inadequate procedures to identify overhousing conditions.
The Agency stated that while the annual reexamination procedure is specific and
detailed, not every scenario could be anticipated by written procedures. They
added that in order to adequately serve the participant families, certain discretion
and judgment should be granted to staff to make decisions appropriate to each
family’s individual situation. During the audit, Agency officials told us that
tenant recertification procedures are not specific and allow for personal
interpretation and judgment by the staff. Agency officials also informed us that
they planned to revise their policies and procedures to ensure more
standardization among the staff. We recognize that not every scenario can be
anticipated by written procedures. However, by revising its policies and
procedures to ensure more standardization in assigning voucher sizes consistently,
the Agency could avoid future losses.
Comment 2 The Agency stated that during fiscal year 2005, the quality control review staff
reviewed more than 4,100 files or approximately 30% of case files for all assisted
families. This number of reviews well exceeds the requirements of the SEMAP
for quality control reviews.
We do not dispute the number of quality control reviews conducted by the
Agency in fiscal year 2005 or that staff confirmed the families were housed in
appropriate unit sizes according to their family composition. We do take
exception with the Agency’s procedures in selecting tenant files for quality
control reviews. The Agency conducts quality control reviews on initial
certifications and change of dwelling transactions. Since the 17 overhoused
tenants were not initial certifications or change of dwelling transactions, they
would not have been selected for a quality control review based on Agency
procedures. We maintain that the Agency needs to strengthen its quality control
procedures to ensure that tenants are selected for quality control reviews
regardless of the transaction type.
Comment 3 The Agency questioned our methodology in computing any future savings. We
removed one tenant from our calculations and revised the amount of funds that
could be put to better use. These funds represent what would have been overspent
for the eight tenants had the problem not been identified because the overhousing
would not have been caught at annual recertification. We clarified our
calculations for ineligible costs and funds to be put to better use in the Scope and
Methodology section of this report.
Table of Contents
15
Appendix C
CRITERIA
Federal Regulations at 24 CFR [Code of Federal Regulations] 982.153
The public housing authority must comply with the consolidated annual contributions contract,
the application, HUD regulations and other requirements, and the authority’s administrative plan.
Federal Regulations at 24 CFR [Code of Federal Regulations] 982.54(a) to (d)
The public housing authority must adopt a written administrative plan that establishes local
policies for administration of the program in accordance with HUD regulations and
requirements. The authority must administer the program in accordance with its administrative
plan. Among other authority policies, the plan must cover the subject of subsidy standards.
Federal Regulations at 24 CFR [Code of Federal Regulations] 982.4
Subsidy standards are defined as standards established by a public housing authority to
determine the appropriate number of bedrooms and amount of subsidy for families of different
sizes and compositions. The family unit size is the appropriate number of bedrooms for a family
as determined by the authority under its subsidy standards.
HUD Housing Choice Voucher Program Guidebook
Chapter 5.9 of the guidebook requires that when determining the family unit size, the subsidy
standards must provide for the smallest number of bedrooms needed to house a family without
overcrowding. Chapter 22.1 states that public housing authorities should address program errors,
omissions, fraud, or abuse through both prevention and detection.
Chapter 22.3 requires the following:
Public housing authorities are ultimately responsible for ensuring that the right people receive
the right amount of subsidy, and they must maintain a high degree of accuracy in administering
the Housing Choice Voucher program. Nonetheless, errors, omissions, fraud, and abuse will
occur, and authorities must have preventive measures in place so that any irregularity can be
quickly detected and resolved as efficiently, professionally, and fairly as possible.
One approach to preventing and detecting errors, omissions, fraud, and abuse is to establish
quality control procedures. A good quality control system will ensure that staff’s daily decisions
about tenant eligibility, tenant rent, rent reasonableness, housing assistance payments, and
housing quality conform to program requirements and are based on accurate information.
Information obtained during quality control reviews should not only help identify individual
errors or omissions, but it should also be collected on an aggregate basis so that the authority can
Table of Contents 16
determine error rates by category and the extent and causes of errors. Samples (of tenant files,
new admissions, housing units, inspection files, etc.) should include the work of all staff
responsible for the processing function being reviewed. The sample should also include a
representative sample of the various transactions that may occur.
Another approach to preventing and detecting errors, omissions, fraud, and abuse is to provide
adequate training to staff and monitor performance. Staff training on the objectives, rules, and
regulations governing the Housing Choice Voucher program and authority discretionary policies
and procedures significantly reduces the likelihood of errors and omissions. Training staff as a
group helps to promote consistency and standardization of processing. In addition, it helps staff
to understand how their work responsibilities relate to others’ work and the overall goals of the
authority.
The authority’s administrative plan and written operating procedures are also vehicles for
preventing errors and omissions. To provide better guidance to front-line staff, procedures
should clearly define program terms and items that may be interpreted differently. The more
simplified the policy or procedure, the less opportunity there is for error. Public housing
authority management must also ensure that authority policies and procedures are consistently
applied by both staff and management.
Agency’s Section 8 Administrative Plan: Chapter 5 – Occupancy Policies
The Agency’s administrative plan, adopted in December 2001, outlines the occupancy standard
that was used to determine the voucher bedroom size assigned to a family.
Voucher size Minimum # of Maximum # of
allowed persons in persons in
household household
0 1 1
1 1 2
2 2 4
3 3 6
4 4 8
5 6 10
6 8 12
The Agency would grant exceptions upon written request for a larger unit as an accommodation
to a family member with disabilities or a verifiable medical or health reason or to adult members
of the same gender.
Federal Regulations at 24 CFR [Code of Federal Regulations] 982.505
A payment standard is used to calculate the monthly housing assistance payment for a family.
The payment standard is the maximum monthly subsidy payment. The public housing authority
shall pay a monthly housing assistance payment on behalf of the family that is equal to the lower
of
(1) The payment standard for the family minus the total tenant payment or
Table of Contents 17
(2) The gross rent minus the total tenant payment.
The payment standard for the family is the lower of
(i) The payment standard amount for the family unit size or
(ii) The payment standard amount for the size of the dwelling unit rented by the
family.
Irrespective of any increase or decrease in the payment standard amount, if the family unit size
increases or decreases during the housing assistance contract term, the new family unit size must
be used to determine the payment standard amount for the family beginning at the family’s first
regular reexamination following the change in family unit size.
Table of Contents
18
Appendix D
SCHEDULE OF OVERHOUSED TENANTS
Sample Client (1) Overhoused period (2) Excess (3) Monthly (3) Funds to be
item number subsidy for the excess subsidy put to better
number overhoused for February use for 36
period 2006 months
1 093855 Sept. 1, 2004 – Feb. 28, 2006 $ 3,114 $ 159 $ 5,724
2 096763 Dec. 1, 2003 – Feb. 28, 2006 $ 3,007 $ 195 $ 7,020
3 094958 June 1, 2005 – Feb. 28, 2006 $ 1,329 $ 9 $ 324
4 003365 Apr. 1, 2005 – Feb. 28, 2006 $ 3,840 $ 195 $ 7,020
5 007409 Nov. 1, 2005 – Dec. 31, 2005 $ $ $
6 056127 Aug. 1, 2004 – Feb. 28, 2006 $ 645 $ $
7 069146 June 1, 2005 – June 30, 2005 $ $ $
8 076258 Jan. 1, 2003 – Feb. 28, 2006 $ 2,470 $ 216 $ 7,776
9 010123 Apr. 1, 2003 – Feb. 28, 2006 $ 11,839 $ $
10 075437 Sept. 1, 2004 – Feb. 28, 2006 $ 21,366 $ 961 $ 34,596
11 070921 Jan. 1, 2003 – Feb. 28, 2006 $ 7,642 $ 256 $ 9,216
12 075293 Jan. 1, 2004 – Jan. 31, 2006 $ 2,782 $ $
13 069903 Mar. 1, 2005 – Feb. 28, 2006 $ 2,964 $ 282 $ 10,152
14 073195 May 1, 2005 – Sept. 30, 2005 $ $ $
15 058306 Mar. 1, 2004 – Feb. 28, 2006 $ 134 $ $
16 054686 July 1, 2004 – Feb. 28, 2006 $ $ $
17 032543 Oct. 1, 2004 – Oct. 31, 2005 $ 730 $ $
Total $ 61,862 $ 81,828
Table of Contents
19
(1) The overhoused period is from the recertification date (limited to January 1, 2003) when the
Agency should have identified the change in family composition and reduced the voucher
size to when the Agency actually reduced the tenant voucher. However, if the Agency failed
to reduce the voucher size, we used February 28, 2006, as a cutoff date because we began our
review at that time. We used the overhoused period to compute the excess subsidy.
(2) Since the Agency administrative plan allows for different voucher sizes for the same number
of persons in a household, we calculated the monthly housing assistance payment by using
the largest voucher size allowed by the administrative plan. We compared our monthly
calculation to monthly landlord payments from Agency accounting records. The difference
is the monthly excess subsidy. We totaled the monthly excess subsidies for the overhoused
period.
(3) We determined that eight tenants were paid excess subsidies for February 2006. Had we not
identified this issue, these eight tenants would have continued to incur excess subsidies. As a
result, we estimated funds to be put to better use for these eight tenants by multiplying the
monthly excess subsidy for February by 36 months. A HUD study indicates the 36-month
period is the average number of months that a tenant stays in a unit.1
1
PDR Publication “Housing Choice Voucher Location Patterns,” page 94, table A-7, “Median
Length of Time in Program (Years) for Those Receiving Assistance as of 9/30/00.”
20
Table of Contents
The Miami Dade Housing Agency, Miami, Florida, Paid Housing Choice Voucher Program Funds for Some Overhoused Tenants
Published by the Department of Housing and Urban Development, Office of Inspector General on 2006-06-28.
Below is a raw (and likely hideous) rendition of the original report. (PDF)