oversight

The Housing Authority of the City of Bremerton, Washington, Inaccurately Reported Its 2005 Section 8 Management Assessment Program Results

Published by the Department of Housing and Urban Development, Office of Inspector General on 2006-06-21.

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

                                                                Issue Date
                                                                      June 21, 2006
                                                                Audit Report Number
                                                                      2006-SE-1004




TO:        Harlan Stewart, Director, Region X Office of Public Housing, 0APH




FROM:      Joan S. Hobbs, Regional Inspector General for Audit, Region X, 0AGA

SUBJECT: The Housing Authority of the City of Bremerton, Washington, Inaccurately
           Reported Its 2005 Section 8 Management Assessment Program Results


                                   HIGHLIGHTS

 What We Audited and Why

            As part of the inspector general’s annual plan, we audited the Housing Authority
            of the City of Bremerton’s (authority) Section 8 Housing Choice Voucher
            program to determine whether it operated the program in accordance with U.S.
            Department of Housing and Urban Development (HUD) requirements. We
            wanted to determine whether the authority assisted only eligible families,
            calculated and paid tenant subsidies accurately, maintained housing quality
            standards, managed its portability program properly, and reported its Section 8
            Management Assessment Program scores accurately.


 What We Found

            The authority generally administered its Section 8 program in accordance with
            HUD requirements. However, during its 2005 Section 8 Management
            Assessment Program review, it incorrectly evaluated the quality control samples
            for waiting list selection and housing quality standards enforcement. As a result,
           HUD assigned the authority inflated scores in these areas, and HUD, authority
           management, and the authority’s board of commissioners did not have the
           information needed to identify and correct program weaknesses in these areas.

What We Recommend


           We recommend that the Region X director of the Office of Public Housing
           require the authority to develop a formal process for its Section 8 Management
           Assessment Program, perform an on-site verification to confirm the effectiveness
           of the process, and correct the waiting list procedures.

           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 draft report to the authority on May 31, 2006, and held an exit
           conference on June 5, 2006. We requested the authority’s written response by
           June 16, 2005, and received it on June 16, 2006. The authority fully agreed with
           the report finding.

           The complete text of the auditee’s response is in appendix A of this report.




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                           TABLE OF CONTENTS

Background and Objectives                                                       4

Results of Audit
      Finding 1: The Authority Incorrectly Performed Two Section 8 Management   5
      Assessment Program Quality Control Reviews

Scope and Methodology                                                           9

Internal Controls                                                               10

Appendix
   A. Auditee Comments                                                          12




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                     BACKGROUND AND OBJECTIVES


Housing Authority of the City of Bremerton

The Housing Authority of the City of Bremerton (authority) was created in 1940 to provide safe,
sanitary dwellings to low-income persons in the city. The authority operates 603 units of public
housing and administers more than 1,000 housing choice vouchers. It also administers the
Section 8 programs of Kitsap County, Mason County, Lewis County, and Jefferson County.

Section 8 Housing Choice Voucher Program

The Housing Choice Voucher program is the federal government’s major program for helping
very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary
housing in the private market. Participants are free to choose any housing that meets program
requirements. Public housing agencies administer the U.S. Department of Housing and Urban
Development (HUD)-funded housing choice vouchers, which pay a housing subsidy directly to
the landlord on behalf of the participating family. Public housing agencies determine family
eligibility based on income and family size and determine the amount of tenant subsidy.
Annually, the agencies verify family income and composition and ensure that the unit meets
minimum housing quality standards.

Our objective was to determine whether the authority operated its tenant-based Section 8
program in accordance with HUD requirements. We wanted to determine whether the authority

1. Assisted only eligible families,
2. Calculated and paid tenant subsidies accurately,
3. Maintained HUD housing quality standards,
4. Managed its portability program in accordance with HUD requirements, and
5. Administered its Section 8 Management Assessment Program correctly.




                                               4
                            RESULTS OF AUDIT

Finding 1: The Authority Incorrectly Performed Two Section 8
Management Assessment Program Quality Control Reviews

           During its 2005 Section 8 Management Assessment Program review, the authority
           incorrectly evaluated the quality control samples for waiting list selection and
           housing quality standards enforcement. This occurred because the staff was
           unfamiliar with the quality control sample review requirements and the authority
           had no formal procedure for its Section 8 Management Assessment Program.
           Consequently, HUD, authority management, and the authority’s board of
           commissioners did not have the information needed to identify and correct
           program weaknesses in the authority’s Section 8 waiting list selection and
           enforcement of housing quality standards. Further, the authority’s incorrect
           evaluation resulted in HUD designating the authority as a high performer when it
           should have only qualified as a standard performer.




 The Section 8 Management
 Assessment Program Measures
 Authority Performance


           Under the Section 8 Management Assessment Program, HUD sets performance
           standards for key areas of Section 8 program management to measure whether a
           housing authority administers its program properly and effectively. To measure
           their performance in certain key areas, housing authorities must determine
           whether documented work conforms to program requirements by selecting and
           reviewing quality control samples. Housing authorities then compare the results
           of their quality control sample reviews to the performance standards and certify
           the results to HUD. HUD uses these results to identify housing authority
           management capabilities and deficiencies. Housing authorities can also use the
           results to assess and improve their program operations.

           The waiting list selection area shows whether an authority follows its written
           policies for selecting applicants who reach the top of the waiting list and for
           admitting applicants into the Section 8 program. The housing quality standards
           enforcement area shows whether an authority requires timely correction of
           housing quality standards inspection deficiencies or takes other appropriate
           action.




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The Authority Did Not Select
Section 8 Voucher Applicants
According to Its Policy

           In 2005, the authority reported that it selected at least 98 percent of the eight
           newly admitted Section 8 voucher families in its quality control sample from the
           waiting list by application date and time in accordance with its written policy.
           However, our comparison of the application dates of the newly admitted families
           in the sample to the current waiting list found that one newly admitted family had
           a later application date than some families on the current waiting list. Therefore,
           only 87.5 percent of the families in the sample were admitted in accordance with
           authority policy.

           The authority also reported that at least 98 percent of the seven families in its
           quality control sample reached the top of the waiting list by application date and
           time. We compared the application dates of the families in the sample who
           reached the top of the waiting list to the current waiting list and found that all of
           the families in the sample had later application dates than some families on the
           waiting list. Therefore, none of the families in the sample was selected from the
           waiting list in accordance with the authority’s waiting list policy.

           In order for the authority to earn 15 points on the Section 8 Management
           Assessment Program review score, at least 98 percent of the families in both
           samples must have been selected from the waiting list and admitted to the Section
           8 voucher program in accordance with the authority’s policies. The samples
           selected by the authority did not meet this criterion, and the authority should not
           have been awarded the 15 points for the waiting list key area.

           In evaluating the selection from the waiting list key area, the authority did not
           compare the samples to the waiting list but compared them to a computer-
           generated pull list. The computer software generated the pull list from the waiting
           list, and the authority relied on the pull list for its selection of new voucher
           recipients. We compared the pull list, dated December 6, 2004, to the waiting list,
           dated December 2, 2004, and found many families on the waiting list had earlier
           application dates than families on the pull list.

           Since the authority used the inaccurate pull list instead of the waiting list for its
           sample, it could not have properly evaluated the selection from the waiting list.
           Had a written procedure specified a comparison with the waiting list, authority
           management would have had the information it needed to correctly evaluate this
           key area and would have known about the skipped applicants on the waiting list.




                                              6
            Authority management told us that they replaced the computer software in the fall
            of 2005 because it did not always select families from the waiting list in the
            correct order. The authority has also taken steps to include the skipped eligible
            families in the next group receiving vouchers.


The Authority Did Not Require
Timely Correction of Housing
Quality Standards Deficiencies


            The authority reported that its sample of failed housing inspections showed that
            all cited life-threatening deficiencies were corrected within 24 hours or that it took
            appropriate action if a deficiency was not corrected. However, our review of the
            15 case files in the sample found that the authority did not require the repair or
            replacement of malfunctioning smoke detectors within 24 hours of the housing
            quality inspections for two of the cases in the sample. In order for the authority to
            earn points on the Section 8 Management Assessment Program review score,
            HUD requires that, for the case files sampled, any life-threatening deficiencies
            shown are corrected within 24 hours of the inspection. The malfunctioning
            smoke detectors represent life-threatening situations, and no points should have
            been awarded to the authority for this key area.

            In evaluating the housing quality standards enforcement key area, authority staff
            thought they had to reinspect the units in the sample within three months of the
            original inspection to determine whether the cited deficiencies had been corrected.
            However, the regulations require a review of case file documents to determine
            whether the cited deficiencies were corrected in a timely manner. Had a written
            procedure specified a case file review, authority management would have had the
            information it needed to correctly evaluate this key area and would have known it
            was not requiring timely correction of life-threatening deficiencies.

Authority Staff Was Unfamiliar
With Review Requirements

            The authority incorrectly evaluated the quality control samples for waiting list
            selection and housing quality standards enforcement because (1) the staff was
            unfamiliar with the quality control sample review requirements and (2) the
            authority had no formal procedure for its Section 8 Management Assessment
            Program.

            Since authority staff did not fully follow HUD requirements when evaluating the
            samples during its Section 8 Management Assessment Program review, HUD,
            authority management, and the authority’s board of commissioners did not have



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          the information needed to identify and correct weaknesses in the waiting list and
          housing quality standards areas. Further, the inflated scores assigned to these
          areas allowed the authority to qualify as a high performer, giving it a competitive
          advantage when applying for certain HUD grants. If the authority had followed
          the Section 8 Management Assessment Program review procedures properly, it
          would have only qualified as a standard performer.


Recommendations



          We recommend that the director of the Region X Office of Public Housing

          1A.     Require the authority to implement a formal process for administering its
                  Section 8 Management Assessment Program.

          1B.     Perform an on-site confirmatory review to determine the effectiveness of
                  the process.

          1C.     Require the authority to verify that its present computer software selects
                  applicants from the waiting list in accordance with its administrative plan.

          1D.     Require the authority to verify that the eligible skipped applicants will be
                  included in the next group to get vouchers.




                                            8
                        SCOPE AND METHODOLOGY


Our review of the authority’s Section 8 program covered the period of October 1, 2004, through
September 30, 2005 (fiscal year 2005). We conducted the audit from February through April at
the authority’s office in Bremerton, Washington.

To accomplish our objectives, we reviewed authority records and tenant files and interviewed
authority staff, HUD program staff, and housing choice voucher holders. We also performed
housing quality standards inspections of authority housing choice voucher units.

We used 100 percent sampling in our review of the authority’s Section 8 Management
Assessment Program quality control samples for selection from the waiting list and housing
quality standards enforcement.

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




                                               9
                              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:

              •       Effectiveness and efficiency of 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.

              •       Compliance with laws and regulations – Policies and procedures that
                      management has implemented to reasonably ensure that resources are used
                      consistent with laws and regulations. This includes the Section 8
                      administrative fee that is the subject of the complaint assessment portion of
                      the audit.

              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.




                                                10
Significant Weaknesses


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

           •      The authority did not have an internal control process for evaluating and
                  certifying its Section 8 Management Assessment Program scores (finding 1).




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                APPENDIXES

Appendix A

             AUDITEE COMMENTS


                   Auditee Comments




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Auditee Comments




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