Issue Date
September 29, 2006
Audit Report Number
2006-CH-1020
TO: Steven E. Meiss, Director of Public Housing Hub, 5APH
FROM: Heath Wolfe, Regional Inspector General for Audit, 5AGA
SUBJECT: Rockford Housing Authority, Rockford, Illinois, Needs to Improve Its Controls
over Program Housing Assistance and Utility Allowance Payments
HIGHLIGHTS
What We Audited and Why
We audited the Rockford Housing Authority’s (Authority) Section 8 Housing
Choice Voucher program (program). The audit was part of the activities in our
fiscal year 2005 annual audit plan. We selected the Authority based upon a risk
analysis that identified it as having a high-risk program. Our objective was to
determine whether the Authority managed its program in accordance with the
U.S. Department of Housing and Urban Development’s (HUD) requirements.
What We Found
The Authority’s program administration regarding housing assistance and utility
allowance payments was inadequate. The Authority did not ensure that its
households’ files contained required documentation to support its housing
assistance and utility allowance payments. Of the 85 files statistically selected for
review, 73 did not contain documentation required by HUD and the Authority’s
program administrative plan to support more than $547,000 in housing assistance
and utility allowance payments.
The Authority incorrectly calculated households’ payments, resulting in nearly
$50,000 in overpayments and more than $2,500 in underpayments for the period
October 2003 through November 2005. Based on our statistical sample, we
estimate that over the next year the Authority will overpay more than $338,000 in
housing assistance and utility allowance payments.
We informed the Authority’s interim executive director and the director of HUD’s
Chicago Office of Public Housing of minor deficiencies through a memorandum,
dated September 29, 2006.
Based on our review, the Authority ensured that program units met HUD’s
housing quality standards.
What We Recommend
We recommend that the director of HUD’s Chicago Office of Public Housing
require the Authority to provide documentation or reimburse its program from
nonfederal funds for the unsupported housing assistance and utility allowance
payments and associated administrative fees, reimburse its program from nonfederal
funds for the improper use of program funds, reimburse the appropriate households
for the underpayment of housing assistance and utility allowance payments, and
implement adequate procedures and controls to address the deficiencies cited in this
audit report.
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 issued because of the audit.
Auditee’s Response
We provided our discussion draft audit report to the Authority’s interim executive
director, its board chairman, and HUD’s staff during the audit. We held an exit
conference with the Authority’s interim executive director on September 13, 2006.
We asked the Authority’s interim executive director to provide comments on our
discussion draft audit report by September 22, 2006. The interim executive director
provided written comments dated September 21, 2006. The Authority generally
agreed with our findings and recommendation to implement procedures and controls
to address the issues contained in the report. However, the Authority disagreed with
our recommendation to provide supporting documentation or reimburse its program
more than $750,000 from nonfederal funds for the unsupported payments and
associated administrative fees. The complete text of the auditee’s response, along
with our evaluation of that response, can be found in appendix B of this report
except for 488 pages of documentation that was not necessary for understanding the
Authority’s comments. A complete copy of the Authority’s comments plus the
documentation was provided the director of HUD’s Chicago Office of Public
Housing.
2
TABLE OF CONTENTS
Background and Objective 4
Results of Audit
Finding : Controls over Housing Assistance and Utility Allowance Payments 5
Were Inadequate
Scope and Methodology 9
Internal Controls 11
Appendixes
A. Schedule of Questioned Costs and Funds to Be Put to Better Use 13
B. Auditee Comments and OIG’s Evaluation 14
C. Criteria 22
D. Tenant File Reviews – Missing or Incomplete Documentation 26
E. Housing Assistance and Utility Allowance Payment Errors 28
3
BACKGROUND AND OBJECTIVE
The Rockford Housing Authority (Authority) is a municipal corporation established by the City
of Rockford, Illinois (City) in 1951 under chapter 310 of the Illinois Compiled Statutes to
provide decent, safe, and sanitary housing for low-income families under the United States
Housing Act of 1937. The Authority is governed by a five-member board of commissioners
appointed by the City’s mayor to five-year staggered terms. The board of commissioners’
responsibilities includes overseeing the operations of the Authority, as well as the review and
approval of its policies. The Authority’s board of commissioners appoints the executive director,
who is responsible for the general supervision of the administration of the Authority’s business
and affairs.
The Authority administers a Section 8 Housing Choice Voucher program (program) funded by
the U.S. Department of Housing and Urban Development (HUD) in the City. The Authority
provides assistance to low- and moderate-income individuals seeking decent, safe, and sanitary
housing by subsidizing rents with owners of existing private housing. As of August 15, 2006,
the Authority had 1,504 units under contract with annual housing assistance payments totaling
more than $8.2 million in program funds.
Our objective was to determine whether the Authority managed its program in accordance with
HUD’s requirements.
4
RESULTS OF AUDIT
Finding: Controls over Housing Assistance and Utility Reimbursement
Payments Were Inadequate
The Authority did not to comply with HUD’s regulations and its program administrative plan
regarding housing assistance and utility allowance payments. It lacked documentation to support
housing assistance and utility allowance payments to program landlords and households,
respectively, and incorrectly calculated payments because it lacked adequate procedures and
controls to ensure that HUD’s regulations and the Authority’s administrative plan were
appropriately followed. As a result, it was unable to support more than $547,000 in housing
assistance and utility reimbursement payments made, and overpaid nearly $50,000 and underpaid
more than $2,500 in housing assistance and utility allowance payments. Based on our statistical
sample, we estimate that over the next year the Authority will overpay more than $338,000 in
payments.
The Authority Lacked
Documentation to Support
More Than $706, 000 in
Housing Assistance and Utility
Allowance Payments
The Authority lacked documentation to support issuing housing assistance and
utility allowance payments totaling $547,238 for the period October 2003 through
November 2005. Of the 85 households’ files statistically selected for review, 73
(86 percent) were missing or had incomplete documents as follows:
• 39 were missing proof of criminal activity screening,
• 29 were missing 30 or 90-day zero-income certifications,
• 24 were missing or had incomplete signed United States citizen
certifications,
• 15 were missing signed lease agreements,
• 12 were missing or had incomplete HUD Form 9886, Authorization for
the Release of Information and Privacy Act Notice,
• 6 were missing proof of legal identity,
• 4 were missing rent reasonableness certifications, and
• 2 were missing proof of Social Security numbers.
The 73 files did not include documentation required by HUD’s regulations and
the Authority’s program administration plan. Appendix D of this report shows
the results of our household file reviews.
5
In addition, the Authority failed to conduct timely annual certifications for six
households for one or more years and one annual certification was not performed.
HUD performed a rental integrity monitoring review in 2002 and rental integrity
re-review in 2004. The 2002 review identified that the Authority’s household
files contained errors similar to the ones cited in this finding. HUD’s 2004 re-
review revealed that the Authority’s household files still included errors. HUD
and the Authority have been aware of the file errors since October 2002. As
previously discussed, the Authority’s maintenance of required documentation in
its household files is still a problem. The Authority has failed to correct this issue
for more than three years.
The Authority Incorrectly
Calculated and Made
Inaccurate Housing Assistance
and Utility Allowance Payments
The Authority incorrectly calculated and made inaccurate housing assistance and
utility allowance payments, resulting in overpayments of $49,034 and
underpayments of $2,550 from October 2003 through November 2005. To
determine whether the Authority correctly calculated housing assistance and
utility allowance payments, we reviewed the Authority’s certifications affecting
payments from October 2003 through November 2005 for 85 program households
statistically selected for review. The Authority incorrectly calculated and/or made
inaccurate housing assistance and/or utility allowance payments for 48 (56
percent) of the 85 households for one or more certifications. The 48 household
files contained the following errors:
• 18 had payments that were not in accordance with one or more
certifications,
• 18 had annual income calculation errors for one or more certifications,
• 13 had inappropriate use of income allowances for one or more
certifications,
• 11 had incorrect utility allowances for one or more certifications,
• 10 had failures to establish or enforce repayment agreements,
• 10 had incorrect payment standards for one or more certifications, and
• 6 did not use the Authority’s minimum rent.
Appendix E of this report details the housing assistance and utiltiy allowance
payment errors that resulted from the Authority’s incorrect calculations.
6
The Authority’s Procedures
and Controls Had Weaknesses
The weaknesses regarding missing documentation, incorrect calculations, and
inappropriate payments occurred because the Authority lacked adequate
procedures and controls to ensure that it appropriately followed HUD’s
regulations and the Authority’s administrative plan. The Authority did not ensure
that it fully implemented HUD’s regulations and its administrative plan, and
standardized tenant certifications and file management procedures.
The director of assisted housing said the Authority performed criminal
background checks on households’ members, but destroyed the documentation.
She did not realize it was necessary to keep a record of the criminal background
checks. The overpayments and underpayments occurred because the Authority
did not use the appropriate annual income figures, program payment standards,
and utility allowances; made payments based on prior calculations; and failed to
establish or enforce repayment agreements. The Authority’s administrative plan
also did not address how households would be reimbursed when the Authority
underpaid housing assistance and/or utility allowance payments.
Conclusion
The Authority did not properly use its program funds when it failed to comply
with HUD’s regulations and the Authority’s administrative plan. In accordance
with 24 CFR [Code of Federal Regulations] 982.152(d), HUD may reduce or
offset any administrative fee to public housing authorities (authorities), in the
amount determined by HUD, if the authorities fail to perform their administrative
responsibilities correctly or adequately under the program.
As previously mentioned , the Authority disbursed $547,238 in housing assistance
and utility allowance payments without proper documentation, and overpaid
$49,034 and underpaid $2,550 in housing assistance and utility allowance
payments. In addition, the Authority received $67,430 in program administrative
fees related to the unsupported and inappropriate payments for 79 of the 85
program households.
If the Authority implements adequate procedures and controls over its housing
assistance and utility allowance payments to ensure compliance with HUD’s
regulations and its program administrative plan, we estimate that more than
$338,000 in payments will be accurately spent over the next year based on the error
rate found in our sample. Our methodology for this estimate is explained in the
Scope and Methodology section of this audit report.
7
Recommendations
We recommend that the director of HUD’s Chicago Office of Public Housing
require the Authority to
1A. Provide supporting documentation or reimburse its program $582,926
($547,238 in housing assistance and utility allowance payments and $35,688
in associated administrative fees) from nonfederal funds for the unsupported
payments and associated administrative fees related to the 73 household files
cited in this finding.
1B. Reimburse its program $80,776 ($49,034 for the overpayment of housing
assistance and utility allowance payments for 34 households and $31,742 in
administrative fees associated with the overpayment and underpayment of
housing assistance and utility allowance payments for 48 households) from
nonfederal funds.
1C. Reimburse the appropriate households $2,550 for the underpayment of
housing assistance and utility allowance payments for the 14 households.
1D. Implement adequate procedures and controls over its housing assistance and
utility allowance payments to ensure that they meet HUD’s regulations and
the Authority’s program administration plan. The procedures and controls
should include, but not be limited to ensuring, that all required
documentation is maintained in the Authority’s current household files to
support housing assistance and utility allowance payments and payment
calculations are correct. By implementing adequate procedures and controls,
the Authority should help ensure that $338,477 in program funds is
appropriately used for future payments.
1E. Revise its program administrative plan to address how households will be
reimbursed when an underpayment of housing assistance or utility allowance
occurs.
8
SCOPE AND METHODOLOGY
To accomplish our objective, we reviewed:
• Applicable laws; regulations; and the Authority’s program administrative
plans effective prior to and as of February 2004; and HUD program
requirements at 24 CFR [Code of Federal Regulations] Parts 5, 35, 982, 984,
and 985; HUD’s Public and Indian Housing Notice 2005-9; and HUD’s
Housing Choice Voucher Guidebook 7420.10.
• The Authority’s accounting records; annual audited financial statements for
2002, 2003, 2004, and 2005; general ledgers; checks; household files;
computerized databases; by-laws; policies and procedures; board meeting
minutes from October 2004 through September 2005; organizational chart;
and program annual contributions contract.
• HUD’s files for the Authority.
We also interviewed the Authority’s employees, HUD staff, and program households.
We statistically selected 85 of the Authority’s program households’ files using Excel and ACL
Services Limited software from the 1,523 households to which the Authority made housing
assistance payments from October 2003 through November 2005. The 85 households were
selected to determine whether the Authority had supporting documentation for and correctly
calculated their housing assistance and utility allowance payments. Our sampling criteria used a
90 percent confidence level, 10 percent estimated error rate, and a precision of plus or minus 10
percent.
Our sampling results determined that the Authority incorrectly calculated and/or made inaccurate
housing assistance and/or utility allowance payments for 48 (56 percent) of the 85 households.
The Authority made $874,480 in housing assistance and utility allowance payments for the 85
households from October 2003 through November 2005. The Authority made net overpayments
totaling $46,484 ($49,034 in overpayments minus $2,550 in underpayments). The net
overpayments consisted of 5.3 percent ($46,484 divided by $874,480) of the total housing
assistance and utility allowance payments.
The Authority’s September 2005 through November 2005 housing assistance and utility
allowance payments registers showed that the average payment was $458. Using the lower limit
of the estimate of the number of units and the average payment, we estimated that the Authority
will annually make $338,477 (1,162 units times $458 average payment times 12 months times
5.3 percent) in overpayments of housing assistance and utility allowance payments for its
program households. This estimate is presented solely to demonstrate the annual amount of
program funds that could be put to better use on appropriate payments if the Authority
implements our recommendation. While these benefits would recur indefinitely, we were
conservative in our approach and only included the initial year in our estimate.
9
We performed our on-site audit work from October 2005 through February 2006 at the
Authority’s central office, located at 223 South Winnebago Street, Rockford, Illinois. The audit
covered the period October 1, 2004, through November 30, 2005, and was expanded as
determined necessary.
We performed our audit in accordance with generally accepted government auditing standards.
10
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 resources.
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 objective:
• Program operations – Policies and procedures that management has
implemented to reasonably ensure that a program meets its objectives.
• Validity and reliability of data – Policies and procedures that management
has implemented to reasonably ensure that valid and reliable data are
obtained, maintained, and fairly disclosed in reports.
• Compliance with laws and regulations – Policies and procedures that
management has implemented to reasonably ensure that resource use is
consistent with laws and regulations.
• Safeguarding resources – Policies and procedures that management has
implemented to reasonably ensure that resources are safeguarded against
waste, loss, and misuse.
We assessed all of 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.
11
Significant Weakness
Based on our review, we believe the following item is a significant weakness:
• The Authority lacked adequate procedures and controls to ensure
compliance with HUD’s regulations and its administrative plan regarding
housing assistance and utility allowance payments (see finding).
12
APPENDIXES
Appendix A
SCHEDULE OF QUESTIONED COSTS
AND FUNDS TO BE PUT TO BETTER USE
Recommendation Funds to be put
number Ineligible 1/ Unsupported 2/ to better use 3/
1A $582,926
1B $80,776
1C $2,550
1D 338,477
Totals $80,776 $582,926 $341,027
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
polices 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 the 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.
3/ Recommendations that funds be put to better use are estimates of amounts that could be
used more efficiently if an OIG recommendation is implemented. This includes
reduction in outlays, deobligation of funds, withdrawal of interest subsidy costs not
incurred by implementing recommended improvements, avoidance of unnecessary
expenditures noted in preaward reviews, and any other savings that are specifically
identified. In this instance, if the Authority implements our recommendation, it will
cease to make overpayments of housing assistance and utility allowance, and instead will
expend those funds for allowable housing assistance and utility allowance payments.
Once the Authority successfully improves its procedures and controls, this will be a
recurring benefit. Our estimate reflects only the initial year of these recurring benefits.
13
Appendix B
AUDITEE COMMENTS AND OIG’s EVALUATION
Ref to OIG Evaluation Auditee Comments
14
Ref to OIG Evaluation Auditee Comments
Comment 1
Comment 2
15
Ref to OIG Evaluation Auditee Comments
Comment 2
Comment 1
Comment 3
Comment 1
16
Ref to OIG Evaluation Auditee Comments
Comment 1
Comment 1
Comment 4
Comment 1
Comment 1
17
Ref to OIG Evaluation Auditee Comments
Comment 5
18
Ref to OIG Evaluation Auditee Comments
Comment 5
Comment 6
Comment 7
Comments 1,
5, and 6
19
OIG Evaluation of Auditee Comments
Comment 1 We reduced the housing assistance and utility allowance payments in which the
Authority lacked documentation to support from $706,656 to $547,238 for the
period October 2003 through November 2005. We reduced the number of
household files that were missing or had incomplete documentation from 76 (89
percent) to 73 (86 percent).
We reduced the number of household files that were missing or had incomplete:
Proof of criminal activity screening from 50 to 39;
30 or 90-day zero-income certifications from 38 to 29;
Signed United States citizen certifications from 34 to 24;
Signed lease agreements from 18 to 15;
HUD Form 9886 from 20 to 12;
Proof of legal identity from eight to six,
Rent reasonableness certifications from nine to four; and
Proof of Social Security numbers from three to two.
We adjusted the recommendation to state the Authority provide supporting
documentation or reimburse its program $582,926 ($547,238 in housing assistance
and utility allowance payments and $35,688 in associated administrative fees) from
nonfederal funds for the unsupported payments and associated administrative fees
related to the 73 household files cited in this finding.
We also made the necessary adjustments to Appendix D.
Comment 2 Prior to February 2004, the Authority’s program administrative plan, section D of
chapter 6, stated that families who report zero income must complete a written
certification of zero income every 30 days. As of February 2004, the Authority’s
program administrative plan, section D of chapter 6, states that families who
report zero income must complete written certifications of zero income every 90
days. The written certifications require a signature.
Comment 3 HUD’s regulations at 24 CFR [Code of Federal Regulations] 5.508 require
evidence of citizenship or eligible immigration status for each family member,
regardless of age. For U.S. citizens or U.S. nationals, the evidence consists of a
signed declaration of U.S. citizenship or U.S. nationality.
Comment 4 HUD’s regulations at 24 CFR [Code of Federal Regulations] 982.158(a) state that
authorities must maintain complete and accurate accounts and other records for
the program and in accordance with HUD requirements in a manner that permits a
speedy and effective audit. Section 982.158(e) states that during the term of each
assisted lease and for at least three years thereafter, authorities must keep a copy
of the executed lease. HUD’s regulations at 24 CFR [Code of Federal
Regulations] 982.308(b) state the household and the owner must enter a written
lease for the unit. The owner and the household must execute the lease.
20
Comment 5 We reduced the housing assistance and utility allowance payments in which the
Authority made overpayments and underpayments from $53,348 to $49,034 and
$2,473 to $2,550, respectively, from October 2003 through November 2005. We
reduced the number of households that the Authority incorrectly calculated and/or
made inaccurate housing assistance and/or utility allowance payments from 49
(58 percent) to 48 (56 percent).
We reduced the number of household files that contained the following errors:
• Payments that were not in accordance with one or more certifications from
19 to 18; and
• Failures to establish or enforce repayment agreements from 13 to 10.
We adjusted the recommendation to state the Authority reimburse its program
$80,776 ($49,034 for the overpayment of housing assistance and utility allowance
payments for 34 households and $31,742 in administrative fees associated with the
overpayment and underpayment of housing assistance and utility allowance
payments for 48 households) from nonfederal funds.
We adjusted the recommendation to state the Authority reimburse the appropriate
households $2,550 for the underpayment of housing assistance and utility allowance
payments for the 14 households.
We also made the necessary adjustments to Appendix E.
Comment 6 We adjusted the report by removing the section regarding the Authority
inappropriately making $1,146 in housing assistance payments the month after
tenants passed away. We also removed the recommendation for the Authority to
pursue reimbursement from the applicable landlords or its program $1,146 from
nonfederal funds for the inappropriate housing assistance payments made the month
after three heads of household passed away.
Comment 7 The Authority receives an administrative fee of 6.5 percent of gross collections
for providing management services for Concord Commons, a Section 221
apartment complex owned by the Rockford Housing Development Corporation
(Corporation). The Corporation is a nonprofit organization affiliated with the
Authority.
21
Appendix C
CRITERIA
HUD’s regulations at 24 CFR [Code of Federal Regulations] 5.216 require that each assistance
applicant submit the following information to the processing entity when the assistant applicant’s
eligibility under the program involved is being determined.
A complete and accurate Social Security number assigned to the assistance applicant and
to each member of the assistance applicant’s household who is at least six years of age, or
If the assistance applicant or any member of the assistance applicant’s household who is
at least six years of age has not been assigned a Social Security number, a certification
executed by the individual involved.
HUD’s regulations at 24 CFR [Code of Federal Regulations] 5.230(a) require each member of
the family of an assistance applicant or participant who is at least 18 years of age and each
family head and spouse regardless of age to sign one or more consent forms.
HUD’s regulations at 24 CFR [Code of Federal Regulations] 5.240(c) state that authorities must
verify the accuracy of the income information received from a household and change the amount
of the total tenant payment, tenant rent, or program housing assistance payment, or terminate
assistance, as appropriate, based on such information.
HUD’s regulations at 24 CFR [Code of Federal Regulations] 5.508 require evidence of
citizenship or eligible immigration status for each family member, regardless of age. For U.S.
citizens or U.S. nationals, the evidence consists of a signed declaration of U.S. citizenship or
U.S. nationality.
HUD regulations at 24 CFR [Code of Federal Regulations] 982.54 require authorities to adopt a
written administrative plan that establishes local policies for the administration of the program in
accordance with HUD requirements. The administrative plan states the authorities’ policies on
matters for which authorities have discretion to establish local policies. The authorities must
administer the Program in accordance with their administrative plan.
HUD’s regulations at 24 CFR [Code of Federal Regulations] 982.158(a) state that authorities
must maintain complete and accurate accounts and other records for the program, and in
accordance with HUD requirements in a manner that permits a speedy and effective audit.
Section 982.158(e) states that during the term of each assisted lease and for at least three years
thereafter, authorities must keep a copy of the executed lease, the housing assistance payment
contract, and the application from the family. Section 982.158(e) states that authorities must
keep the following records for at lease three years: records that provide income, racial, ethnic,
gender, and disability status data on program applicants and participants, and records to
document the basis for authorities’ determination that rental payments are reasonable (initially
and during the term of a housing assistance payments contract).
HUD’s regulations at 24 CFR [Code of Federal Regulations] 982.305(a) state that authorities
may not execute a housing assistance payments contract until the authorities determine that the
22
lease includes the tenancy addendum and the rent to the owner is reasonable. Section 982.305(b)
requires that the owner and the household execute a lease before the beginning of the initial term
of the lease. Section 982.305(c) states that a housing assistance payment contract must be
executed no later than 60 calendar days from the beginning of the lease term. The authorities
may not pay any housing assistance payment to an owner until the housing assistance payment
contract has been executed.
HUD’s regulations at 24 CFR [Code of Federal Regulations] 982.308(b) state the household and
the owner must enter a written lease for the unit. The owner and the household must execute the
lease.
HUD regulations at 24 CFR [Code of Federal Regulations] 982.451 require authorities to
determine the amount of the monthly housing assistance payment in accordance with HUD
regulations and other requirements.
HUD regulations at 24 CFR [Code of Federal Regulations] 982.505(b), state that authorities
should pay a monthly housing assistance payment on behalf of a family participating in the
program that is equal to the lower of the payment standard for the family minus the total tenant
payment or the gross rent minus the total tenant payment. Section 982.505(c)(4) states that if the
payment standard amount is increased during the term of the contract, the increased payment
standard amount shall be used to calculate the monthly housing assistance payment for the
family beginning at the effective date of the family’s first regular reexamination on or after the
effective date of the increase in the payment standard amount.
HUD regulations at 24 CFR [Code of Federal Regulations] 982.507 require authorities to re-
determine reasonable rent before providing any increase in rent to the owner.
HUD regulations at 24 CFR [Code of Federal Regulations] 982.514(b) state that when the
housing assistance payment exceeds the rent to the owner, authorities may pay the balance of the
housing assistance payment (utility reimbursement) either to the family or directly to the utility
supplier to pay the utility bill on behalf of the family.
HUD’s regulations at 24 CFR [Code of Federal Regulations] 982.516(a)(1) require authorities to
conduct a reexamination of family income and composition at least annually. The authorities
must obtain and document in the household file third-party verification or why third-party
verification was not available for the following factors: (i) reported family annual income, (ii)
the value of assets, (iii) expenses related to deductions from annual income, and (iv) other factors
that affect the determination of adjusted income. At any time, authorities may conduct an
interim reexamination of family income and composition. Interim examinations must be
conducted in accordance with policies in the authorities’ administrative plans. As a condition of
admission to or continued assistance under the program, the authorities shall require the family
head and such other family members as the authorities designate, to execute a HUD-approved
release and consent form (including any release and consent as required under 5.230 of this title)
authorizing any depository or private source of income or any federal, state or local agency to
furnish or release to the authorities or HUD such information as the authorities or HUD
determine to be necessary. The authorities and HUD must limit the use or disclosure of
information obtained from a family or from another source pursuant to this release and consent
to purposes directly in connection with administration of the program.
23
HUD’s regulations at 24 CFR [Code of Federal Regulations] 982.517 state that authorities must
use the appropriate utility allowance for the size of dwelling unit leased by the family and the
utility allowance schedules must take into consideration unit size and unit types.
Form HUD 9886, Authorization for the Release of Information/Privacy Act Notice, states that
each member of an applicant’s or participant’s household, 18 years of age or older, of the
program is required to sign the form.
The Authority’s program administrative plans
Section L of chapter 1 states that to demonstrate compliance with HUD’s and other pertinent
regulations, the Authority will maintain records, reports, and other documentation for a time that
is in accordance with HUD requirements and in a manner that will allow an auditor, housing
professional, or other interested party to follow, monitor, and or assess the Authority’s
operational procedures objectively and with accuracy.
Chapter 2 states that to be eligible for participation, an applicant must meet HUD's criteria, as
well as any permissible additional criteria established by the Authority. Among other
requirements, HUD eligibility criteria include that applicants must be within the appropriate
income limits, furnish Social Security numbers or certify that they do not have one, and furnish
evidence of citizenship or eligible immigrant status.
Section E(5) of chapter 2 states that the Authority will screen all applicants for criminal activity
as part of the processing of an application for assistance. Applicants or applicant family
members, who are found to have engaged in drug related or violent criminal activity within 36
months of the date of the initial application, will be denied admission.
Section A of chapter 6 states households are required to pay a minimum rent of $25. Prior to
February 2004, section D of chapter 6, stated that families who report zero income must
complete a written cerification of zero income every 30 days. As of February 2004, section D of
chapter 6, states that families who report zero income must complete written certifications of
zero income every 90 days. Section N states that minimum rent hardship exceptions are required
to be in writing. Section P states that an air conditioning allowance will only be granted when
the Authority has confirmed that the unit has an operable air conditioner in the unit.
Section A of chapter 7 states families are required to submit an affidavit or notarized statement to
certify income when verification cannot be made by third-party verification or through a review
of documents. Prior to February 2004, section A also stated that documents for verification
purposes may not be more than 60 days old. As of February 2004, section A states that
documents for verification purposes may not be more than 90 days old.
Section D of chapter 7 states that items to be verified include: all income from all sources,
monetary or non-monetary; zero-income status of a household; family composition; full-time
student status, to include students who are 18 years of age or older; assets and asset income; U.S.
citizenship or eligible immigrant status; Social Security numbers; and disability for the
determination of preferences, allowances, or deductions. Section E considers written verification
from the registrar's office or other school official and school records indicating enrollment for a
sufficient number of credits to be considered a full-time student by the educational institution as
verification of full time student status. Section I requires applicants to furnish verification of
24
legal identity for all family members and consider receipt of supplemental security income or
Social Security Administration disability payments as verification of disability.
Prior to February 2004, section D of chapter 11, stated and as of February 2004, section C of
chapter 11, states that at least three units will be used for each rent determination and all
comparable units must be based on current market rents.
Section E of chapter 12 states that families must report interim changes in income and assets to
the Authority within 30 days after the change occurs. Increases in the household rent are
effective on the first of the month following at least 30 days’ notice. Increase in household rent
will be effective retroactive to the date it would have been effective had it been reported on a
timely basis. The family will be liable for any overpaid housing assistance and may be required
to make a lump sum repayment. Decreases in household rent will be effective on the first of the
month following completion of processing by the Authority and not retroactively.
Chapter 18 states that the Authority will use repayment agreements to recover overpayments of
assistance for families. The Authority’s repayment agreements state that a household under a
repayment agreement is required to fully comply with the terms and conditions of the agreement.
If the initial payment or any subsequent payment is not received on or before the due date, the
household’s assistance will be terminated.
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Appendix D
HOUSEHOLD FILE REVIEWS – MISSING OR INCOMPLETE
DOCUMENTATION
30-day Housing/
and/or utility
Criminal Social United States Proof 90-day zero- assistance
Household activity Security citizen of legal Information income Rent payments not
number screening number certification identity Lease release certification reasonableness supported
14784 X X X $13,585
14818 X 0
14890 X 13,646
18586 X 11,115
19506 X X 6,146
21210 X 3,019
21297 X 1,324
21311 X 1,996
21352 X 922
22003 X X 1,824
2801 X 6,042
5071 X 172
5147 X 8,096
5282 X 5,586
5345 X 2,974
5425 X 20,520
5449 X 0
5612 X 8,404
5623 X 3,091
5710 X X X 15,871
5747 X X 12,076
5818 X 12,124
5861 X 6,588
5873 X X X 12,157
5973 X X 10,928
6001 X X 19,705
6048 X 0
6056 X X X X 10,002
6149 X 2,659
6186 X X 11,449
6343 X 8,190
6383 X X X X 7,187
6575 X X 2,460
6593 X X 8,053
6611 X X 9,967
6624 X X 7,005
6630 X X X 16,224
6762 X X X X 14,766
6830 X X 9,542
6848 X 7,734
6934 X X X 19,312
6967 X 13,567
6985 X X 6,036
7044 X X 11,484
7134 X X 5,866
7143 X X 9,852
7149 X X X 14,573
7203 X X X 13,650
7285 X 3,906
26
HOUSEHOLD FILE REVIEWS – MISSING OR INCOMPLETE
DOCUMENTATION (CONTINUED)
30-day Housing/
and/or utility
Criminal Social United States Proof 90-day zero- assistance
Household activity Security citizen of legal Information income Rent payments not
number screening number certification identity Lease release certification reasonableness supported
7363 X X $2,492
7372 X X 10,055
7456 X 7,769
7517 X X 3,430
7623 X 8,011
7741 X X 13,728
7978 X X 6,864
8144 X X 5,258
8159 X X 4,692
8372 X 1,236
8461 X X 944
8598 X X X X 9,102
8612 X X 3,548
8673 X X X X X 10,567
8681 X 9,759
9047 X 1,364
12294 X 6,908
12318 X 1,770
21285 X 3,046
23563 X X 1,912
23659 X X 1,764
5136 X 5,033
6644 X X X 10,711
6933 X 5,880
Totals 39 2 24 6 15 12 29 4 $547,238
Note: An “X” identifies the missing or incomplete documentation in the tenant’s file.
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Appendix E
HOUSING ASSISTANCE AND UTILITY ALLOWANCE
PAYMENT ERRORS
Total 2003 housing and Total 2004 housing and Total 2005 housing and Total housing and utility assistance
utility assistance utility assistance utility assistance payments
Household payments over(under)- payments over(under)- payments over(under)-
number payments payments payments Overpayment Underpayment
14784 $0 $0 $60 $60 $0
14818 N/A (125) (178) 0 (303)
14890 45 3,431 1,596 5,072 0
18586 0 (24) 0 0 (24)
19506 N/A (1) 0 0 (1)
22003 N/A N/A 80 80 0
5071 66 252 120 438 0
5147 123 492 451 1,066 0
5345 0 1,116 1,056 2,172 0
5449 729 1,334 0 2,063 0
5623 36 96 N/A 132 0
5642 0 284 890 1,174 0
5710 46 159 0 205 0
5747 0 1,407 2,765 4,172 0
5818 0 (106) (583) 0 (689)
5873 (2) 0 0 0 (2)
6001 (93) (81) 32 0 (142)
6056 (111) (37) 0 0 (148)
6186 0 0 (186) 0 (186)
6340 0 464 0 464 0
6343 133 1,197 N/A 1,330 0
6383 36 186 132 354 0
6593 0 (104) 1,214 1,110 0
6624 0 710 554 1,264 0
6762 0 0 562 562 0
6830 27 252 203 482 0
6934 0 97 58 155 0
7044 0 (45) 393 348 0
7134 (3) (67) N/A 0 (70)
7143 0 136 (166) 0 (30)
7155 198 918 957 2,073 0
7285 1,086 3,798 1,626 6,510 0
7372 8 24 4 36 0
7402 0 (85) (171) 0 (256)
7456 365 553 820 1,738 0
7623 319 61 28 408 0
7741 (30) (100) (110) 0 (240)
7978 348 552 483 1,383 0
8144 254 243 (152) 345 0
8457 143 564 222 929 0
8461 708 236 N/A 944 0
8598 182 (133) 0 49 0
8617 189 764 256 1,209 0
8673 36 24 513 573 0
8681 0 (528) 114 0 (414)
5019 36 462 364 862 0
5136 2,106 7,166 0 9,272 0
6644 0 0 (45) 0 (45)
Totals $6,980 $25,542 $13,962 $49,034 ($2,550)
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Rockford Housing Authority, Rockford, Illinois, Needs to Improve Its Controls over Program Housing Assistance and Utility Allowance Payments
Published by the Department of Housing and Urban Development, Office of Inspector General on 2006-09-29.
Below is a raw (and likely hideous) rendition of the original report. (PDF)