oversight

The Housing Authority of the City of Annapolis, Annapolis, MD, Did Not Adequately Administer Its Section 8 Waiting List

Published by the Department of Housing and Urban Development, Office of Inspector General on 2006-03-23.

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

                                                                 Issue Date
                                                                       March 23, 2006
                                                                 Audit Report Number
                                                                       2006-PH-1009




TO:        William D. Tamburrino, Director, Baltimore Public Housing Program Hub,
            3BPH



FROM:



SUBJECT:   The Housing Authority of the City of Annapolis, Annapolis, MD, Did
            Not Adequately Administer Its Section 8 Waiting List


                                  HIGHLIGHTS

 What We Audited and Why

           We audited the Housing Authority of the City of Annapolis’ (Authority) Section 8
           Housing Choice Voucher program as part of our fiscal year 2006 annual plan. Our
           audit objective was to determine whether the Authority adequately administered
           its Section 8 program according to U.S. Department of Housing and Urban
           Development (HUD) requirements.

 What We Found

           The Authority generally administered its Section 8 program according to HUD
           requirements but did not adequately administer its waiting list. It generally followed
           HUD procedures and provided reasonable housing assistance payments to eligible
           recipients. It also inspected housing units annually to ensure its Section 8 tenants
           were provided decent, safe, and sanitary housing.
           However, the Authority did not follow controls in its Section 8 administrative plan
           requiring it to update and purge its waiting list annually and to maintain its Section 8
           applications in a permanent file in the order in which the applicants applied for
           assistance. These controls were needed to ensure that families received assistance as
           quickly and efficiently as possible and to provide assurance that the Authority
           provided fair and consistent treatment of families. This occurred because the
           Authority needed to improve its management oversight and control of its waiting
           list.

What We Recommend

           We recommend that HUD require the Authority to provide adequate management
           oversight to ensure its Section 8 waiting list is updated and purged on an annual
           basis and its Section 8 applications are maintained in a permanent file in order of
           date and time of the application.

           For each recommendation without a management decision, please respond and
           provide status reports in accordance with HUD Handbook 2000.06, REV-3.
           Please furnish us copies of any correspondence or directives issued because of the
           audit.

Auditee’s Response


           We discussed the report with the Authority during the audit and at an exit
           conference on March 10, 2006. The Authority provided written comments to our
           draft report on March 20, 2006. In its response, the Authority agreed with the
           report and stated it would provide adequate oversight and controls to ensure it
           adequately administered its Section 8 waiting list. The complete text of the
           Authority’s response can be found in appendix A of this report.




                                              2
                            TABLE OF CONTENTS


Background and Objectives                                                      4

Results of Audit
      The Authority Did Not Adequately Administer Its Section 8 Waiting List   5

Scope and Methodology                                                          8

Internal Controls                                                              9

Appendixes
   A. Auditee Comments                                                         10




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                     BACKGROUND AND OBJECTIVES


The Housing Authority of the City of Annapolis (Authority) was created in 1937 to provide
affordable housing to very low-, low-, and moderate-income residents. The Authority is an
independent agency under the direction of a board of commissioners appointed for five-year
terms by the mayor of Annapolis, Maryland. The board of commissioners, which currently has
seven members, appoints an executive director. The chairman of the board is Trudy McFall, and
the executive director is Eric Brown. The Authority administers public housing and Section 8
programs and has 1,104 public housing units and 200 Section 8 vouchers under its annual
contributions contract with the U.S. Department of Housing and Urban Development (HUD).
The Authority’s office is located at 1217 Madison Street, Annapolis, Maryland.

HUD authorized the Authority the following Section 8 assistance from fiscal years 2003 to 2005:

                              Fiscal year      Authorized funds
                                 2003             $1,053,568
                                 2004             $1,069,596
                                 2005             $1,120,844
                                 Total            $3,244,008

Our audit objective was to determine whether the Authority adequately administered its Section
8 program according to HUD requirements.




                                               4
                                 RESULTS OF AUDIT


The Authority Did Not Adequately Administer Its Section 8 Waiting
List
The Authority did not adequately administer its Section 8 waiting list due to a lack of
management oversight and controls. It did not follow provisions in its administrative plan
requiring it to update and purge its waiting list annually and to maintain its Section 8 applications
in a permanent file in the order in which the applicants applied. As a result, the Authority did
not ensure that families received assistance as quickly and efficiently as possible and that it was
providing fair and consistent treatment of families.



 The Authority Did Not Update
 and Purge Its Section 8 Waiting
 List Annually


               The Authority did not update and purge its waiting list on an annual basis, which
               caused its waiting list to be outdated and resulted in inefficiencies. According to
               24 CFR [Code of Federal Regulations] 982.204, a housing authority is required to
               select participants from its waiting list in accordance with its administrative plan,
               and its administrative plan should state when applicants are to be removed from
               the waiting list. The Authority’s Section 8 administrative plan stated that the
               waiting list was to be updated and purged at least annually to ensure that only
               interested families were listed.

               In November 2005, the Authority was able to successfully issue 22 new vouchers.
               However, to issue these 22 vouchers, it expended considerable time and effort to
               contact 101 applicants on the waiting list. Of the 101 applicants, 70 (69 percent)
               either did not respond or were no longer interested in obtaining housing
               assistance. Additionally, during the audit, the Authority had 200 Section 8
               vouchers under its annual contributions contract with HUD. However, only 50 of
               those vouchers were available to issue to applicants at the time of our audit.
               Nevertheless, the Authority had a waiting list containing 2,058 applicants, many
               of whom needed to be removed from the list.

               The Authority needs to purge and update its waiting list to prevent delays in
               leasing activities. Since the Authority’s waiting list was significantly out of date,
               it was difficult to reach applicants. Considerable time and effort were
               unnecessarily expended by the Authority’s employees.




                                                 5
 The Authority Did Not
 Properly Maintain
 Applications



           We selected 23 applicants from the Authority’s waiting list and found it could not
           provide support for 11 (48 percent) of the 23 applicants we requested for review.
           As previously stated, 24 CFR [Code of Federal Regulations] 982.204 requires a
           housing authority to select participants from its waiting list in accordance with its
           administrative plan. However, the Authority's administrative plan requires all
           Section 8 applications be kept in a permanent file. Although the Authority
           properly selected from its current waiting list, without supporting documentation,
           the Authority could not ensure the list was complete and accurate and that tenants
           were always selected in the proper order.

           We also noted the 22 applicants who received assistance in November 2005 had
           been on the waiting list for extended periods, ranging from 3 to 27 years. Since
           there was either no permanent file or no documentation in the permanent file to
           adequately explain why some applicants had not received assistance prior to this
           date, we have no assurance tenants were selected in the proper order.

 The Authority Needs to
 Improve Management
 Oversight and Control



           The Authority acknowledged its waiting list had not been updated and purged on
           an annual basis and its applications were not consistently and properly filed. It
           attributed this problem to its high management turnover and lack of management
           oversight. For example, during the 17-month period from May 2004 to October
           2005, the Authority had three different executive directors. By providing
           improved management oversight and controls, the Authority can ensure its
           families receive assistance as quickly and efficiently as possible and that they are
           provided fair and consistent treatment.

Recommendations



           We recommend that the director of the Baltimore Public Housing Program Hub

           1A.    Require the Authority to provide adequate oversight and controls to ensure
                  its Section 8 waiting list is updated and purged on an annual basis.




                                             6
1B.   Require the Authority to provide adequate oversight and controls to ensure
      its Section 8 applications are maintained in a permanent file in order of date
      and time of the application.




                                 7
                         SCOPE AND METHODOLOGY


We performed the audit

   •   From August 2005 through February 2006 in accordance with generally accepted
       government auditing standards.

   •   At the Authority, located in Annapolis, Maryland.

The audit covered transactions representative of operations current at the time of the audit and
included the period July 2003 through June 2005. We expanded the scope of the audit as
necessary.

To determine whether the Authority adequately administered its Section 8 program according to
HUD requirements, we

   •   Reviewed applicable guidance and federal regulations and discussed operations with
       management and staff personnel at the Authority.

   •   Used audit software to randomly select and review 10 Section 8 tenant files to verify
       tenant eligibility and propriety of rental assistance and to verify that housing quality
       standards inspections were performed according to HUD requirements.

   •   Nonstatistically selected and reviewed 23 applicants from the fiscal year 2005 waiting list
       to determine whether the Authority organized and maintained its waiting list according to
       HUD requirements.

   •   Selected and reviewed all 22 new vouchers issued in November 2005 to determine
       whether the Authority selected applicants from its waiting list according to its
       administrative plan.

   •   Reviewed the Authority’s Section 8 year-end settlement statements for years 2004 and
       2005.

   •   Reviewed the Authority’s independent auditor’s report for fiscal year 2004.

   •   Nonstatistically selected and reviewed the Authority’s financial transactions to determine
       whether financial information the Authority reported to HUD was complete and accurate.




                                                 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 objectives:

                  •   Policies, procedures, and controls implemented to administer the Section 8
                      program properly.

              We assessed the relevant controls identified above.

              A significant weakness exists if management controls do not provide reasonable
              assurance that the process for planning, organizing, directing, and controlling
              program operations will meet the organization’s objectives.

 Significant Weaknesses


              Based on our review, we believe the following item is a significant weakness:

                  •   The Authority did not provide adequate management oversight to ensure
                      its waiting list was updated and purged on an annual basis and applications
                      were maintained in a permanent file.




                                                9
Appendix A

             AUDITEE COMMENTS




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