Issue Date December 7, 2005 Audit Report Number 2006-LA-1004 TO: Cecilia Ross, Director, Los Angeles Office of Public Housing, 9DPH FROM: Joan S. Hobbs, Regional Inspector General for Audit, Region IX, 9DGA SUBJECT: Inglewood Housing Authority, Inglewood, California, Did Not Adequately Administer Its Section 8 Housing Choice Voucher Program HIGHLIGHTS What We Audited and Why We audited Inglewood Housing Authority (Authority) in Inglewood, California, in response to a request for audit from the U.S. Department of Housing and Urban Development’s (HUD) Los Angeles Office of Public and Indian Housing. This is the fourth and final report resulting from our audit of the Authority. Our audit objectives were to determine whether the Authority administered its Section 8 Housing Choice Voucher program in compliance with pertinent HUD requirements and its annual contribution contract and operated its program in an effective and efficient manner. What We Found The Authority did not adequately administer its Section 8 Housing Choice Voucher program in a manner that complied with program requirements, did not operate its program in an efficient and effective manner, and the Authority did not request additional funds from HUD when needed to alleviate some of its cash deficit problem. The Authority did not comply with program requirements relating to portability procedures and responsibilities, tenant certification and housing quality standards requirements, housing assistance payment register maintenance, and salary allocation and procurement procedures. We also determined that the Authority was not operated in an efficient and effective manner because its organizational structure and management responsibilities were not clearly defined and its financial reporting function was ineffective and inefficient. What We Recommend We recommend that HUD direct the City of Inglewood’s mayor and board of commissioners to remove and replace the current executive director and housing manager, establish a separate housing authority commission, and require the city of Inglewood to designate sufficient finance department personnel dedicated to work solely on Authority-related financial reporting activities. After these recommendations are implemented, evaluate the status of the Authority’s progress on its latest corrective action plan after one year under the plan. 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 Authority the draft report on October 26, 2005, and held an exit conference on November 8, 2005 and made minor changes to one recommendation as a result of agreements made at the exit conference. The Authority provided written comments on November 28, 2005. The Authority generally agreed with our report findings. The complete text of the Authority’s response, along with our evaluation of that response, can be found in appendix B of this report. 2 TABLE OF CONTENTS Background and Objectives 4 Results of Audit Finding 1: The Authority Did Not Adequately Administer Its Section 8 Housing 6 Choice Voucher Program Scope and Methodology 15 Internal Controls 16 Follow-up On Prior Audits 18 Appendixes A. Schedule of Questioned Costs 19 B. Auditee Comments and OIG’s Evaluation 20 3 BACKGROUND AND OBJECTIVES The City of Inglewood, located at Inglewood City Hall, One Manchester Boulevard, Inglewood, California, was incorporated in 1908. The city administrator is responsible for setting operational goals, implementing legislative action and policy decisions approved by the mayor and city council, monitoring the annual operating budget, overseeing the personnel system, and providing direction to all city departments to ensure they meet the needs of the community. The Inglewood Housing Authority (Authority) is a part of the community development department. The governing body is comprised of members of the city council and the mayor. Among the duties of the governing body are the approval of the Authority’s budget and the appointment of management. The financial activities of the Authority are reported as a special revenue fund of the city. The city council is the board of commissioners for the Authority; the mayor is the board chairperson, and the city administrator is the executive director. The council meets as a board when it makes decisions on Authority business. The housing manager conducts the day-to-day business of the Authority, reporting through the director of community development and the deputy city administrator for community and social services to the executive director. Below is an organization chart showing the City of Inglewood’s structure. 4 The Authority has a baseline allocation of 1,002 Section 8 vouchers and an additional 1,167 vouchers from portable tenants. The U.S. Department of Housing and Urban Development’s (HUD) approved budget for the Authority’s Housing Choice Voucher program is as follows: Fiscal year Amount 2001 $6,634,342 2002 $6,786,996 2003 $6,564,723 2004 $7,033,835 This audit report is the fourth and final audit report resulting from our audit of the Authority. The other three reports we issued relate to findings that the Authority did not 9 Follow proper salary allocation and procurement procedures for the Housing Choice Voucher program (report number 2005-LA-1005, issued July 11, 2005), 9 Comply with the Housing Choice Voucher program portability procedures and responsibilities (report number 2005-LA-1008, issued August 26, 2005), 9 Ensure tenant reexaminations and housing quality standards inspections were completed properly and in a timely manner (report number 2005-LA-1009, issued September 7, 2005). Our audit objectives were to determine whether the Authority administered its Section 8 Housing Choice Voucher program in compliance with pertinent HUD requirements and its annual contribution contract and operated its program in an effective and efficient manner. 5 RESULTS OF AUDIT Finding: The Authority Did Not Adequately Administer Its Section 8 Housing Choice Voucher Program Contrary to pertinent HUD requirements and its annual contribution contract, the Authority did not administer its Section 8 Housing Choice Voucher program in a manner that complied with program requirements, did not operate its program in an efficient and effective manner, and the Authority did not request additional funds from HUD when needed. We found that the Authority did not comply with program requirements relating to portability procedures and responsibilities, tenant certifications and housing quality standards requirements, housing assistance payment register maintenance, and salary allocation and procurement procedures. We also found that the Authority was not operated in an efficient and effective manner because the organizational structure and management responsibilities were not clearly defined and the financial reporting function was ineffective and inefficient. Further, the Authority did not submit a written request for additional funds from HUD that may have alleviated some of its cash deficit if HUD had approved the additional funds. These problems occurred because the Authority’s management lacked adequate knowledge of the Section 8 Housing Choice Voucher program; therefore, it did not establish and implement the necessary controls and procedures and provide adequate oversight of its operations. As a result, of the inadequate management of the Authority, it owes nearly $4.4 million to the City of Inglewood’s general fund and is currently under its second corrective action plan with HUD to improve its performance. The Authority Did Not Comply with Applicable Laws and Regulations The Authority did not comply with sections 5(b), 11(a), and 14(a) of its annual contributions contract and applicable Code of Federal Regulations and Housing Choice Voucher program requirements. The Authority did not comply with program requirements relating to portability procedures and responsibilities, tenant certification and housing quality standards requirements, housing assistance payment register maintenance, and salary allocation and procurement procedures. The deficiencies stated in the following paragraphs were previously reported in issued audit reports. The Authority Did Not Comply with Portability Procedures and Responsibilities Contrary to section 5(b) of its annual contributions contract and Housing Choice Voucher program requirements, the Authority did not comply with portability 6 procedures and responsibilities. We reviewed the 143 portable tenants for whom the initial public housing agency, Housing Authority of the City of Los Angeles, refused to pay the housing assistance payment because the Authority did not submit the initial bill to the Housing Authority of the City of Los Angeles within the required six-month timeframe. We also found that the Authority did not submit the family portability information form within 10 days to ensure duplicate payments were not made on behalf of tenants. These errors occurred because the Authority did not establish or implement procedures to ensure compliance with the pertinent HUD requirements. As a result, the Authority had to unnecessarily absorb the 143 portable tenants and incurred excess costs of $1,991,283 in housing assistance payments that exceeded the maximum allowed for fiscal year 2004. Ultimately, these families are at risk of losing their housing. The Authority Did Not Always Ensure Tenants Were Eligible for Assistance Contrary to section 11(a) of the annual contributions contract and applicable Code of Federal Regulations requirements, the Authority did not always ensure that tenants were eligible for assistance. We reviewed 72 tenant files and found 43 were missing a total of 96 required documents. Also, 15 tenant reexaminations were completed between 4 and 184 days late. The tenant files were incomplete because the Authority did not develop and implement procedures to follow up on missing tenant eligibility documents, use alternative certifications when documents could not be obtained, and document followup efforts for the missing documents in the corresponding tenant files. We attribute the late reexaminations to inadequate procedures to allow adequate time to complete annual reexaminations according to HUD requirements. As a result, HUD lacked assurance that tenants whose initial certifications were processed without eligibility documents were eligible for housing assistance, resulting in $153,495 in unsupported housing assistance payments. The late tenant reexaminations cause tenants to either overpay or underpay their rent. The Authority’s Inspections Did Not Sufficiently Detect Housing Quality Standards Violations and Were Not Always Completed in a Timely Manner We inspected 35 units and found that 25 contained a total of 119 housing quality standards violations. We also reviewed the timeliness of the Authority’s inspections for 48 tenants and found that 26 of the inspections were not completed by the tenants’ annual anniversary dates as required. The inadequate inspections occurred because the Authority did not develop a quality control plan to ensure inspections complied with HUD regulations. The late inspections occurred because the Authority did not have an adequate system in place to ensure that all annual inspections were appropriately scheduled and completed in a timely manner. As a result, the Authority did not ensure that its program participants resided in housing that was decent, safe, and sanitary; and we questioned $27,411 in housing assistance payments made for units that did not meet the minimum standards. 7 The Authority Did Not Maintain an Accurate Housing Assistance Payment Register Contrary to section 14(a) of its annual contributions contract, our review of the Authority’s October 2004 housing assistance payment register identified inaccuracies regarding problems with 20 tenants because the tenants were either deceased, had erroneous and/or false Social Security numbers, or were no longer program participants receiving housing assistance. The inaccuracies occurred because the Authority did not have adequate procedures and controls to ensure that tenants were removed from the register as needed, entries into the register were accurate, tenants’ Social Security numbers and other information were validated during their initial certification, and the information received on tenants that ported from another jurisdiction was certified. As a result, the Authority made housing assistance payments of $6,864 to at least one owner on behalf of a deceased tenant and $107,916 for tenants who may not have been eligible. The Authority Did Not Track Staff Time and Allocate $1.8 Million in Salary Expenses among Its HUD Programs Contrary to section 14(a) of its annual contributions contract, our review disclosed that the Authority did not track its employees’ time by program activity or implement an indirect cost allocation plan to allocate its administrative salary expenses among HUD programs. This occurred because the responsible Authority and City of Inglewood personnel lacked adequate knowledge of the financial reporting requirements for HUD programs. As a result, the Authority could not provide documentation to support the portion of the $1.8 million in salary expenses the Authority reported to HUD for fiscal years 2001 through 2003 for the Housing Choice Voucher program. The Authority Improperly Procured Software Totaling $31,279 The Authority did not comply with HUD’s procurement requirements when it purchased two software packages totaling $31,279. This improper procurement occurred because the Authority did not develop and implement procurement policies and procedures that met HUD’s requirements. As a result, there was no assurance that the software packages were cost-effective purchases and fully met the needs of the Authority. 8 The Authority’s Operations Were Not Efficient or Effective In addition to the noncompliance issues discussed above, the Authority’s operations were neither effective nor efficient because its organizational structure did not clearly define areas of authority and responsibility and did not facilitate the flow of information. Organizational Structure and Management Responsibilities Were Not Clearly Defined The Authority is a part of the City of Inglewood’s community development department. The housing manager conducts the day-to-day operations of the authority, reporting to his first line supervisor the director of community development. The director of community development is responsible for the operations of the Authority as well as five other divisions in that department (see the organization chart in the background section of this report). The housing manager’s second line supervisor is the deputy city administrator who is responsible for managing three departments and thirteen sub-departments. Finally, the housing manager reports to the executive director who is also the City Administrator for the City of Inglewood. The director of community development, the deputy city administrator and the executive director have too many other responsibilities and duties to focus sufficient attention on the Authority’s operations. In addition, we noted that the executive director does not have any direct contact with the housing manager or the employees unless he is needed to sign a HUD-related document or needs to address specific issues with the Authority. The director of community development, deputy city administrator, and executive director, while ultimately responsible for the Authority’s operations, have not demonstrated practical experience in operating and/or managing a housing authority. In our opinion, the Authority should be run as an independent entity and the housing manager should report directly to the executive director. The executive director is ultimately responsible for the operations of the Authority and, therefore, should take a more direct role in the daily operations of the Authority. To fulfill these obligations, the role of the executive director should be delegated to a person who has knowledge of the Housing Choice Voucher program to ensure the controls are in place and provide assurance the program is run in accordance with HUD regulations. As a result, the level of management oversight and supervision has been inadequate, perpetuating the recurring significant noncompliance issues previously cited. 9 Financial Reporting Was Ineffective and Inefficient The financial recording and reporting functions for the Authority are handled by the finance department for the City of Inglewood, which we determined to be ineffective and inefficient in performing the financial responsibilities of the Authority. As illustrated in the chart below, the Authority’s portability receivable account deficit has increased significantly since fiscal year 2002. The City of Inglewood’s finance department maintains and balances the Authority’s portability receivable account. It is the Authority’s responsibility to collect the delinquent receivables and follow up on the delinquent accounts, but the Authority believes it is the city finance department’s responsibility to collect and follow up on the delinquent portability receivables for the Authority. Therefore, the Authority has not taken responsibility to follow up on the delinquent receivables and did not develop or implement adequate procedures to request collection on these receivables. As a result, in fiscal year 2004, the City of Inglewood’s finance department plans to restate $1,532,000 million of the prior year’s delinquent portability receivables as an allowance for doubtful accounts. The Authority also has $2,990,862 in recent outstanding portability receivables, of which $1,789,188 (or 60 percent) is delinquent 90 days or more. Therefore, it is very doubtful these funds will be collected. The ending balance on the Authority’s portability receivable account and its cash and investment account were as follows: Fiscal year Portability Cash and investment receivable ending account ending balance balance 2001 $150,293 $1,769,000 2002 $957,599 ($839,000) 2003 $2,273,874 ($3,055,000) 2004 $2,990,8621 ($4,375,000)2 In the beginning of fiscal year 2004, the City of Inglewood paid $1.2 million from its general fund in housing assistance payments on the 143 portable tenants who were later absorbed in the same fiscal year by the Authority. The general fund is the chief operating fund for the City of Inglewood. The general fund supports core municipal services such as public safety, public works, parks, and libraries. Since the Authority’s financial statements are being reclassified in fiscal year 2004, the Authority owes the City of Inglewood’s general fund $4,375,000, which includes the $1.2 million from fiscal year 2004. Therefore, the City of Inglewood cannot afford to pay for the additional absorbed tenants, and the residents of the City of Inglewood may have lost a number of needed services because the Authority did not administer its program efficiently or effectively. 1 This amount does not include the $1,532,000 allocated to the allowance for doubtful accounts. 2 The negative cash balance is being reclassified as “due to the City of Inglewood’s general fund.” 10 There were also inconsistent budget tracking reports between the Authority and the finance department. The budget reports used by the Authority show actual expenditures, income to date, and variances against the budget. However, the budget reports used by the Authority would be more effective in monitoring its budget balance if the Authority reflected the unrecognized budget balance that is budgeted/expected throughout the fiscal year. This would have assisted the Authority in recognizing the increase in actual expenses incurred in relation to the tenants porting in from other jurisdictions. Further, the Authority does not submit monthly budget reports to the board of commissioners that compare actual expenses to budget expenses and year-to-date costs. If the board had reviewed the monthly reports with this important information, it would have seen the steady increase in the portability receivable account, and been prompted to take immediate action for receipt of the funds owed from other public housing agencies. Lastly, with the exception of our audit, there has not been an independent audit of the Authority’s internal controls. Therefore, there could have been deficiencies or findings that went undetected until the current audit. Single audit reports were prepared annually by independent auditors; however, the independent auditor’s review of the Authority’s internal controls over compliance with federal programs for fiscal year 2003 did not disclose the excessive receivables or the fact that management did not provide reasonable assurances that these funds would be safeguarded against loss. In addition, the independent auditor’s review did not provide any recommendations for improvement of the Authority’s internal controls. The comprehensive annual financial report combined the schedules that reflected a negative cash balance. However, the negative cash balances should have been reclassified as a liability or due to the City of Inglewood’s general fund. Starting in fiscal year 2004, the Authority and the City of Inglewood are issuing separate financial statements, and the negative cash balance has been reclassified as a liability due to the City of Inglewood. The Authority Did Not Request Additional Funds from HUD The Federal Fiscal Year 2004 Consolidated Appropriations Act modified the method of calculating renewal funds for housing assistance payments and public housing agency administrative expenses, authorized a central fund maintained by HUD, and prohibited the use of fiscal year 2004 funds for overleasing. The central fund will only be used to fund contract amendments to support voucher units leased that were authorized in the public housing agency’s baseline but were not included in the renewal calculation. As part of the renewal calculation, HUD would identify additional leasing that has occurred since the August 2003 reporting cycle (from the latest data submission used in the renewal 11 calculation) and would provide funding for the additional leasing from the central fund at the time of the renewal. Public housing agencies must have requested the funds before December 31, 2004 by submitting a written request for funding and completing HUD Form 52681B, “Voucher for Payment of Annual Contributions and Operating Statement”, to the Section 8 Financial Management Center. The Authority did not submit the request for the additional funds to the Financial Management Center. Requesting the additional funds requires the public housing agency to maintain accurate current and historical records on its unit months leased and housing assistance payment expenses including portability expenses. The request for additional funds was not made because the needed information was not accurate or readily available to the housing manager. If the Authority had applied for the additional funds, there was no guarantee that it would have received the funds. However, considering the Authority’s dire financial condition, the attempt to apply for the funds would have at least shown that the Authority was concerned about solving its financial problems. Management Lacked Adequate Knowledge and Failed to Provide Necessary Oversight Collectively, as illustrated by the significant problems above, the Authority did not administer its Section 8 Housing Choice Voucher program in a manner that complied with program requirements or in a manner that was effective and efficient. In addition, during 2004 the Authority did not submit a written request for additional funds that would have alleviated some of their cash deficit if HUD would have approved the additional funds. We attribute the problems to management’s lack of adequate knowledge of the Section 8 Housing Choice Voucher program; therefore, it did not establish and implement the necessary controls and procedures to administer the program and control its program funding. In addition, the Authority’s management failed to provide necessary oversight of the program operations. The Authority Was Placed under Two Corrective Action Plans In 2002 and 2003, HUD’s Los Angeles Office of Public Housing conducted rental integrity monitoring and Section 8 management assessment plan reviews and noted deficiencies that the Authority needed to correct. The deficiencies were not 12 corrected, and the Authority was placed under a corrective action plan for the period September 15, 2004, through September 30, 2005. In April 2005, HUD’s Recovery and Prevention Center completed limited tenant file reviews and performed unit inspections. Some of the problems found during their review included the following: • Budget tracking between the Authority and the finance department was inconsistent; • The Authority did not have a general depository agreement with its depository institution for the Housing Choice Voucher program; • There was a lack of policy and procedures for the allocation of information and technology expenses; • The independent auditor’s review of internal controls did not disclose excessive receivables in the Section 8 voucher program or the deficiencies with 11 of the 14 Section 8 Management Assessment Program indicators; • The Authority did not use proper billing forms for requesting payment on the port-in tenants, and the Authority did not have current and essential financial policies and procedures; • The finance department does not have board of commissioners- approved policies and procedures for the financial operations of the Authority; • Based on the 2005 Consolidated Appropriations Act the Authority faces a funding decrease of approximately $9,000 per month; and • The Authority does not have a plan in place to bring its Section 8 program in line with its funding allocation. The Authority did not correct the deficiencies in the previous corrective action plan. In addition, the current review by the Recovery and Prevention Center noted additional deficiencies not included in the previous corrective action plan. Thus, the Los Angeles Office of Public Housing submitted a new corrective action plan that is effective from July 1, 2005, through July 30, 2006, to the Authority and the City of Inglewood’s board of commissioners (city council). The board of commissioners and board chair approved the corrective action plan on August 12, 2005. Conclusion Based on the foregoing, we believe that the Authority’s current administration has driven the Authority into a serious negative financial situation. Despite an opportunity to receive additional funds, and significant attempts by HUD to provide remedial help through monitoring and one corrective action plan, it does not appear that improvements are either being made or intend to be made by Authority management although the Authority continues to earn an administrative 13 fee. Management’s failure to adequately administer the Section 8 Housing Choice Voucher program is putting HUD and the City of Inglewood at significant financial risk, and immediate action is needed to minimize further losses. Recommendations We recommend that the director of the Los Angeles Office of Public Housing 1A. Direct the City of Inglewood’s mayor and board of commissioners to remove the executive director and housing manager from their respective positions and replace them with more effective management. 1B. Require the City of Inglewood to establish a separate housing authority commission. 1C. Require the City of Inglewood to designate sufficient finance department personnel dedicated to work solely on Authority-related financial reporting activities. 1D. Implement recommendations 1A, 1B, and 1C and then require the Authority to establish and implement the necessary controls and procedures to effectively administer the program. Such action will ensure that the Authority’s administrative fee will be funds to be put to better use ($975,833 for fiscal year 2004). 1E. Evaluate the status of recommendation 1D and the status of the Authority’s progress on its latest corrective action plan after one year under the plan. 14 SCOPE AND METHODOLOGY We performed the audit work from September 2004 through March 2005. The audit covered contracts, transactions, and tenant information from October 2003 through September 30, 2004. We expanded the scope of the audit as necessary. We reviewed applicable guidance and discussed operations with management and staff personnel at the Authority and key officials from HUD’s Los Angeles office. The primary methodologies included reviews of the Authority’s • Procurement and billing policies, procedures, and processes. • Housing quality standards and tenant eligibility policies and procedures. • Policies and procedures to ensure the maintainence of an accurate housing assistance payment register. • Organizational structure. • Policies and procedures to ensure the Authority is managing the program in accordance with federal regulations. • Policies and procedures to ensure the Authority maintains accurate books and records. We conducted our audit in accordance with generally accepted government auditing standards and included tests of management controls in the three previous audits of the Authority that we considered necessary under the circumstances. 15 INTERNAL CONTROLS Internal controls are 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: • Policies and procedures to ensure the Authority are conducting all procurement transactions in accordance with federal procurement regulations. • Policies and procedures to ensure the Authority performs portability billing procedures in accordance with HUD regulations, • Policies and procedures to ensure the Authority make a good faith effort to follow up on missing documents to validate tenant eligibility. • Controls over performing housing quality standards inspections. • Policies and procedures to ensure the Authority is safeguarding Section 8 program resources, 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. 16 Significant Weaknesses Based on our review, we believe the following items are significant weaknesses: The Authority did not have management and financial systems in place to ensure the Housing Choice Voucher regulations are properly implemented and the program is running efficiently and effectively. (finding 1). 17 FOLLOWUP ON PRIOR AUDITS Prior Audit Report Number and Date We issued audit report number 2005-LA-1005 on July 11, 2005. The report contained two findings that the Authority did not follow proper salary allocation and procurement procedures for the Housing Choice voucher program. We have management decisions on the five recommendations and final corrective action is due to be completed by March 31, 2006. We issued audit report number 2005-LA-0008 on August 26, 2005. The report contained one finding that the Authority did not comply with Housing Choice Voucher program portability procedures and responsibilities. Final action has been completed on one recommendation. On the other recommendation, we have reached a management decision and final corrective action is due to be completed by February 28, 2006. We issued audit report number 2005-LA-1009 on September 7, 2005. The report contained three findings that the Authority did not ensure tenant reexaminations and housing quality standards inspections were completed properly and in a timely manner. Also, the authority did not maintain an accurate housing assistance payment register. We have reached management decisions on the eleven recommendations and final corrective action is due to be completed by July 1, 2006. 18 Appendixes Appendix A SCHEDULE OF QUESTIONED COSTS AND FUNDS TO BE PUT TO BETTER USE Recommendation Funds to be put to better use 1/ number 1A $975,833 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. 19 Appendix B AUDITEE COMMENTS AND OIG’S EVALUATION Ref to OIG Evaluation Auditee Comments Comment 1 20 Comment 2 Comment 3 21 Comment 3 22 Comment 3 Comment 4 23 Comment 4 Comment 5 24 Comment 6 25 26 OIG Evaluation of Auditee Comments Comment 1 We acknowledge that $100,000 is a lot of money; however, this must be weighed against the effective and efficient administration of the Authority’s entire Section 8 program, which is at stake. We believe the responsibility of administering a Section 8 program is a full-time job that requires full attention to understanding and applying ever-changing Section 8 regulations. We applaud the Authority for wanting to take training to increase its knowledge of Section 8, and while training is helpful, the mayor and the city council cannot devote the time needed to monitor the Authority’s daily activities. In our opinion, the City of Inglewood residents would be best served if they had individuals on the housing commission that have prior Section 8 experience, understand the requirements of administering a Section 8 program and devote their time to the Authority activities on a routine basis. In addition, we believe the restructuring of the program needs to include a housing manager that is also knowledgeable and committed to managing the Section 8 program and will report directly to an executive director whose sole job is to administer the Authority program activities (no multifamily new construction programs). Implementing these changes, and establishing a separate housing commission is the most effective way, in our opinion, to ensure that the Authority’s required policies, procedures and controls are implemented, reviewed and updated as required. Nevertheless, if the Authority can demonstrate to HUD that it can ensure an effective and efficient program that complies with HUD requirements, through other means we would consider that alternative during the audit resolution process. Comment 2 This finding was from audit report 2005-LA-1008. We have reached management decisions on the subject recommendations, and thus, have no further comments. These findings were from audit report 2005-LA-1009. We have reached Comment 3 management decisions on the recommendations, and thus, have no further comments. These findings were from audit report 2005-LA-1005. We have reached Comment 4 management decisions on the recommendations, and thus, have no further comments. 27 Comment 5 At the exit conference, Authority officials stated they would provide us with documentation on financial reporting information that they believed was misstated or incomplete in our report. However, as of the date of this report, we had not received any additional documentation to support their claim; therefore, we did not make any changes. We reviewed the portability receivable information provided, and revised the report to show $1,789,188 or 60 percent of the outstanding portable receivables. We also disagree with the City of Inglewood’s comment that no services were lost or reduced because of the advances to the Authority. The money advanced from the general fund cash and investments account was intended to be used for city needs. However, since the money was instead used for housing assistance payments, it precluded the city from using the funds for their original intended purpose. Nevertheless, we have changed the sentence to read that residents of the City of Inglewood “may have” lost a number of needed services. Comment 6 We disagree with the Authority’s claim that it had “no ability” to request additional funds from HUD. The Authority would have, and should have, had the ability to request the additional funds if they had accurate and current historical records. As we previously stated in the report, there was no guarantee HUD would have granted the additional funds, but given the Authority’s dire financial condition, applying for these funds would have given the appearance the Authority was concerned about solving their financial problems. 28
Inglewood Housing Authority, Inglewood, California, Did Not Adequately Administer Its Section 8 Housing Choice Voucher Program
Published by the Department of Housing and Urban Development, Office of Inspector General on 2005-12-07.
Below is a raw (and likely hideous) rendition of the original report. (PDF)