oversight

Oklahoma Housing Finance Agency, Oklahoma City, Oklahoma, Made Minor Mistakes in Computing Housing Assistance Payments and Housing Tenants

Published by the Department of Housing and Urban Development, Office of Inspector General on 2006-06-29.

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

                                                              Issue Date
                                                                           June 29, 2006
                                                              Audit Report Number
                                                                           2006-FW-1012




TO:        Glen Chafey
           Acting Program Center Coordinator, 6IPH


FROM:      Frank E. Baca
           Regional Inspector General for Audit, Fort Worth Region, 6AGA

SUBJECT: Oklahoma Housing Finance Agency, Oklahoma City, Oklahoma, Made Minor
           Mistakes in Computing Housing Assistance Payments and Housing Tenants


                                 HIGHLIGHTS

 What We Audited and Why

            As part of the U.S. Department of Housing and Urban Development (HUD),
            Office of Inspector General’s (OIG) annual audit plan, we audited the Oklahoma
            Housing Finance Agency’s (Agency) Section 8 program to determine whether the
            Agency overhoused or underhoused tenants, computed housing assistance
            payments correctly, and complied with housing quality standards.


 What We Found


            Overall, the Agency operated its Section 8 program in accordance with HUD
            requirements and complied with housing quality standards. During our audit
            period, the Agency assisted more than 11,000 tenants. It miscalculated nine
            housing assistance payments and one utility reimbursement and overhoused two
            tenants. One Agency employee was responsible for 8 of the 12 mistakes. The
            miscalculations and overhousing of tenants resulted in $815 in overpayments and
            $1,214 in underpayments. The Agency took appropriate corrective actions and
            incorporated improvements into its training sessions. As of May 16, 2006, we
                 verified that the Agency had reimbursed its housing assistance payment account
                 for $815 in identified overpayments and reimbursed its tenants $1,104 of the
                 identified underpayments.

    What We Recommend


                 We recommend that HUD’s acting program center coordinator, Office of Public
                 Housing, require the Agency to (1) repay $2,029 for housing assistance
                 overpayments and underpayments, 1 (2) review potentially overhoused tenants at
                 their next annual reexamination to ensure proper support for an additional bedroom,
                 and (3) perform a quality control review of the files of the employee who had the
                 majority of the mistakes. The Agency should correct any additional mistakes. This
                 review can be conducted at the tenants’ next annual reexamination.

                 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 provided the Agency with a draft report on June 7, 2006. We received the
                 Agency’s response on June 23, 2006. The response requested that we reevaluate
                 conclusions reached on several files. The Agency’s response, along with our
                 evaluation, can be found in Appendix B. We did not include supporting
                 documentation and redacted tenant and employee information.




1
     As discussed in the What We Found section, the Agency has corrected $1,919 in payments.


                                                       2
                            TABLE OF CONTENTS

Background and Objectives                                                       4

Results of Audit
      Finding: The Agency Made Minor Mistakes in Computing Housing Assistance   5
      Payments and Housing 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




                                            3
                        BACKGROUND AND OBJECTIVES

The Oklahoma Housing Finance Agency (Agency) is an Oklahoma state beneficiary public trust.
The governor of Oklahoma approved the creation of the Agency on May 1, 1975. The governor
also appoints the five-member board of trustees and the resident board member representing the
Section 8 program.

In fiscal year 2005, the Agency disbursed approximately $44 million for 9,395 Section 8 housing
choice vouchers and received a 96 on its Section 8 Management Assessment Program. 2 In fiscal
year 2006, the Agency received a 100 on its Section 8 Management Assessment Program. As of
May 20, 2006, the Agency has disbursed more than $29 million for Section 8 housing choice
vouchers in fiscal year 2006.

The Agency disburses Section 8 housing choice voucher funds through housing assistance
payments and utility reimbursements. It pays a housing subsidy directly to the landlord on
behalf of the participating family; the family pays the difference between the actual rent and the
subsidy amount. The Agency determines eligibility based on income and family size in
accordance with its administrative plan. It verifies family income and composition annually and
ensures that the unit meets minimum housing quality standards.

The Agency’s mission is to provide affordable housing resources and to help place people in
homes. It maintains its records at 100 Northwest 63rd Street, Oklahoma City, Oklahoma.

Our objective was to determine whether the Agency overhoused or underhoused tenants,
computed housing assistance payments correctly, and complied with housing quality standards.




2
    The Section 8 Management Assessment Program measures the performance of the public housing agencies that
    administer the Housing Choice Voucher program in 14 key areas.



                                                     4
                                        RESULTS OF AUDIT

Finding: The Agency Made Minor Mistakes in Computing Housing
Assistance Payments and Housing Tenants
Of the 25 3 Section 8 tenant files reviewed, the Agency made 12 mistakes in computing housing
assistance payments and housing tenants. It miscalculated nine housing assistance payments and
one utility reimbursement. While the Agency properly assigned the appropriate voucher size for
23 of 25 tenants, it overhoused two tenants. One employee was responsible for 8 of the 12
mistakes. As a result, the Agency made $815 in housing assistance overpayments and $1,214 in
housing assistance underpayments. The Agency has taken measures to correct the mistakes,
recoup overpayments, and reimburse tenants for underpayments.



    Miscalculations Resulted in
    Overpayments and
    Underpayments

                   Of the 25 files reviewed, the Agency miscalculated nine housing assistance
                   payments and one utility reimbursement. Two of the nine housing assistance
                   payments resulted in $441 in overpayments. The remaining seven and one utility
                   reimbursement resulted in $1,214 in underpayments. One employee was responsible
                   for six of the miscalculations.

                   For one of the two housing assistance payments that resulted in overpayments, the
                   Agency did not use the correct utility allowance. It had corrected this mistake on
                   the most recent reexamination and the previous examination. For the other
                   overpayment, the Agency included medical deductions when it should not have.
                   The Agency corrected the housing assistance payment.

                   The Agency did not apply the appropriate disability or dependent deductions in
                   six housing assistance underpayments and one utility reimbursement
                   underpayment. The remaining housing assistance underpayment was a result of
                   the Agency including a loan as an asset when it should not have. It also used an
                   incorrect payment standard for one of the housing assistance payments. The
                   Agency corrected the mistakes.




3
      Twenty tenant files had indications of potential overhousing and five had indications of potential underhousing.


                                                           5
    The Agency Overhoused Two
    Section 8 Tenants


                  Of the 20 potentially overhoused tenant files reviewed, two contained mistakes
                  that resulted in overhousing tenants. One of the two mistakes resulted in a
                  housing assistance overpayment totaling $374. The same employee that made six
                  housing assistance mistakes was responsible for both overhousing mistakes.

                  One of the two overhoused tenants had a doctor’s letter that described the need for
                  an additional bedroom in the future. A future need does not constitute granting an
                  additional bedroom in the present. The Agency made its last payment on behalf
                  of this tenant in August 2004.

                  The final overhoused tenant had a son who moved out of the unit to attend
                  college. The tenant told the Agency about the decrease in family size during her
                  annual reexamination. However, the Agency did not reduce the voucher
                  accordingly. This mistake did not result in an overpayment of housing
                  assistance. 4 The Agency corrected the mistake on the most recent reexamination
                  and the previous examination.

    Conclusion


                  While the Agency made minor miscalculations and overhoused two tenants, it has
                  acted appropriately to correct the mistakes and minimize future occurrences. The
                  Agency corrected its files, repaid its accounts or tenants as appropriate, and included
                  discussions of the deficiencies in its training sessions.

                  As of May 16, 2006, we verified that the Agency has reimbursed its housing
                  assistance payment account for $815 in overpayments and five of the eight tenants
                  for $1,104 in underpayments. The Agency was unable to locate two former tenants
                  and another tenant left without notice.




4
     The tenant’s rent was less than the maximum subsidy amount for the correct voucher size.


                                                        6
Recommendations



          We recommend that HUD require the Agency to:

          1A. Repay ineligible housing assistance overpayments of $815 and reimburse
              tenants for housing assistance underpayments of $1,214. As discussed in the
              finding above, we verified that the Agency has reimbursed its housing
              assistance account $815, and reimbursed tenants $1,104.

          1B. Review potentially overhoused tenants at their next annual reexamination to
              ensure proper support for an additional bedroom.

          1C. Perform a quality control review of the files of the employee who had the
              majority of the mistakes. The Agency should correct any additional
              mistakes. This review can be conducted at the tenants' next annual
              reexamination.




                                          7
                          SCOPE AND METHODOLOGY

The audit covered the period from January 2003 through April 2006. To accomplish our
objective, we analyzed HUD and Agency data. We reviewed the Agency’s policies and
procedures, tenant files, and audited financial statements. We also reviewed federal regulations
and the Agency’s administrative plans. We obtained an understanding of the Agency’s internal
controls and inspected units for compliance with housing quality standards. We performed
fieldwork at the Agency’s office in Oklahoma City, Oklahoma, from February to May 2006.

The Agency had 9,395 Section 8 housing choice vouchers for fiscal year 2005. During our audit
period, the Agency disbursed funds for more than 11,000 vouchers. We analyzed Agency voucher
data provided to HUD. Our analysis concluded that the Agency potentially overhoused 461 tenants,
potentially underhoused 28 tenants, and had 225 tenant files with missing information. We selected
a sample for each category.

We used statistical software to select our samples for the potentially overhoused and files with
missing information, 20 files each. For the potentially underhoused, we selected five files.

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




                                                  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, 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 objective:

                  •   Calculation of housing assistance payments,
                  •   Assignment of voucher size, and
                  •   Compliance with housing quality standards.

              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


              Our reviewed disclosed no significant weaknesses in the above controls.




                                                9
                                      APPENDIXES

Appendix A

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


                   Recommendation           Ineligible 1/      Funds to be put
                       number                                  to better use 2/

                           1A                   $815                $1,214




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 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. In this
     situation, funds to be put to better use also includes repayment to program participants for
     underpayments caused by noncompliance with regulations and avoidance of continued
     underpayments the Agency will realize by correcting the noncompliance issue.




                                                10
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation   Auditee Comments




                         11
Comment 1




            12
Comment 1




            13
Comment 2




Comment 3




            14
                        OIG Evaluation of Auditee Comments

Comment 1   We changed our report based on the Agency's comments and supporting
            documentation. We excluded two overhoused tenants from the report and
            reduced the amount of overpayments accordingly. We also reduced the amount
            of underpayments based on the Agency's response and supporting documentation.

Comment 2   We commend the Agency for taking appropriate action concerning potentially
            overhoused tenants.

Comment 3   We commend the Agency for implementing the recommendation.




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