oversight

The Housing Authority of the City and County of Denver, Colorado, Properly Assigned Section 8 Voucher Sizes But Made Errors on Nine Vouchers

Published by the Department of Housing and Urban Development, Office of Inspector General on 2006-03-15.

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

                                                                Issue Date
                                                                        March 15, 2006
                                                                Audit Report Number
                                                                         2006-DE-1003




TO:         Ann Roman, Director, Office of Public Housing, 8APH

            //signed//
FROM:       Ronald J. Hosking, Regional Inspector General for Audit, 8AGA

SUBJECT: The Housing Authority of the City and County of Denver, Colorado, Properly
           Assigned Section 8 Voucher Sizes But Made Errors on Nine Vouchers


                                   HIGHLIGHTS

 What We Audited and Why

             We reviewed the Housing Authority of the City and County of Denver
             (Authority) to determine whether it paid excess subsidies for oversize units. We
             selected the Authority based on an Office of Inspector General (OIG) analysis of
             Section 8 data.

 What We Found
             Authority staff properly calculated subsidies and made no overpayments for 31 of
             the 40 files we reviewed. We found nine errors that resulted in overpayment of
             $26,683 in Section 8 subsidies.

 What We Recommend
             The Authority has already corrected the errors and repaid the $26,683 to the
             Section 8 program. Therefore, the U.S. Department of Housing and Urban
             Development (HUD) does not need to require additional action by the Authority.

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



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

Auditee’s Response
           We provided the draft report to the Authority on March 3, 2006. Authority
           officials gave verbal concurrence with the report on March 7, 2006.




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                            TABLE OF CONTENTS

Background and Objectives                                               4

Results of Audit
      Finding: Errors Occurred in Nine Section 8 Subsidy Calculations   5

Scope and Methodology                                                   7

Internal Controls                                                       8

Appendixes
   A. Schedule of Funds to Be Put to Better Use                         9




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                     BACKGROUND AND OBJECTIVES

The Housing Authority of the City and County of Denver (Authority) was formed in 1938. Its
mission was “to promote adequate and affordable housing, economic opportunity, and a suitable
living environment free from discrimination.” The Authority signed annual contributions
contracts for public housing in 1938 and for Section 8 programs in 1981. The U.S. Department
of Housing and Urban Development (HUD) changed these to consolidated annual contributions
contracts in 1996 and 1998.

For 2004, the Authority received $12,458,410 for 3,901 public housing low-rent units and
$51,418,610 for 5,362 Section 8 housing choice vouchers.

A nine-member board of commissioners governs the Authority. The executive director manages
the daily operations. The Authority maintains its records at 777 Grant Street, Denver, Colorado.

Our objective was to determine whether the Authority overpaid subsidies for overhoused tenants.




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                                 RESULTS OF AUDIT

Finding: Errors Occurred in Nine Section 8 Subsidy Calculations
Authority housing technicians properly calculated and paid the Section 8 subsidy payments, but
some errors occurred. We reviewed 40 Section 8 tenant files with indications of overhoused
conditions. Authority staff properly calculated subsidies and made no overpayments for 31 of these
tenants. The remaining nine files contained human and processing errors that resulted in Section 8
overpayments of $26,683.



 Errors Occurred in Nine
 Section 8 Subsidy Calculations


               Nine of the forty files in our sample contained human and processing errors that
               resulted in overpaid subsidies totaling $26,683 for the two and one-half year audit
               period. The errors consisted of seven instances in which the family composition
               changed, but the information in the computer system did not; one instance in
               which a technician accidentally changed information in the computer system; and
               one computer conversion problem.

               Thirty-one of the files contained correct subsidy calculations but showed up in our
               sample because

               •   Twenty had approved reasonable accommodations requests. The data we
                   used to select our sample did not contain reasonable accommodation
                   information.
               •   Two used the correct payment standards but had wrong voucher sizes listed in
                   the system because of computer conversion problems.
               •   Eight had correct tenant file data, which did not agree with the HUD data we
                   used to select the samples.
               •   One had a temporary overhoused situation due to a legal ruling.

               The housing technicians followed HUD requirements and the Authority’s policies
               and procedures for calculating rents and subsidy payments. The errors
               represented a reasonable level of human error and did not show patterns of
               noncompliance.

               Authority staff had identified and corrected five of the errors before we did our file
               reviews. One tenant had moved out, so those overpayments ended before our
               review. On February 3, 2006, Authority staff provided documentation showing they
               had corrected the other errors. On January 27, 2006, Authority staff provided
               documentation showing they had repaid the $26,683 to the Section 8 account.


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Recommendations

          We recommend that the Office of Public Housing require no further action by the
          Authority, since the recommendation is resolved. The recommendation is shown for
          resolution action tracking purposes.

          1A. Require the Authority to correct the nine errors and repay its Section 8
              program $26,683 from nonfederal funds.




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                        SCOPE AND METHODOLOGY

We reviewed HUD and Authority criteria and contracts. We met with Authority staff. We
looked at HUD and Authority records.

The Authority had 5,372 Section 8 vouchers in 2005. We did a computer-based analysis of data
provided to HUD for the vouchers. The analysis showed 264 tenants with indications of
overhoused situations. We used nonrepresentative samples to select 40 of these for the tenant
file review.

For the first sample of 20, we used a spreadsheet containing the 264 cases and a spreadsheet of
current cases obtained from the Authority to select 20 that had indications of the most highly
overhoused families or other possible problems.

For the second sample, we used the random number generator in Excel to select an additional 20
from the 264 without duplicating any cases from the first sample. We reviewed the tenant files
and talked with Authority staff to determine the actual situation for each.

Our review period was from January 1, 2003, to July 31, 2005. We did our work at the
Authority’s office in Denver, Colorado, from July 2005 to January 2006.

We performed our review in accordance with generally accepted government auditing standards.




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                             INTERNAL CONTROLS

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

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

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



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

              •       Controls over calculating subsidy payments

              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


              We did not identify any significant weaknesses in the controls over calculating the
              subsidy payments.




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                                    APPENDIXES

Appendix A

     SCHEDULE OF FUNDS TO BE PUT TO BETTER USE

                             Recommendation        Funds to be put
                                    number          to better use 1/
                                            1A             $26,683

1/   “Funds to be put to better use” are quantifiable savings that are anticipated to occur if an
     Office of Inspector General (OIG) recommendation is implemented, resulting in reduced
     expenditures at a later time for the activities in question. This includes costs not incurred,
     deobligation of funds, withdrawal of interest, reductions in outlays, avoidance of
     unnecessary expenditures, loans and guarantees not made, and other savings.




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