oversight

Corrective Action Verification Miami-Dade Housing Agency Did Not Ensure Section 8-Assisted Units Met Housing Quality Standards, Audit Report 2006-AT-1001

Published by the Department of Housing and Urban Development, Office of Inspector General on 2008-02-11.

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

                                                           U.S. Department of Housing and Urban Development
                                                           District Office of Inspector General
                                                           Office of Audit, Box 42
                                                           Richard B. Russell Federal Building
                                                           75 Spring Street, SW, Room 330
                                                           Atlanta, GA 30303-3388
                                                           (404) 331-3369


                                                                Issue Date

                                                                    February 11, 2008
                                                                Audit Report Number

                                                                    2008-AT-0801


MEMORANDUM FOR:               Deborah A. Hernandez, Deputy Assistant Secretary for Field
                               Operations, PQ


FROM:          James D. McKay, Regional Inspector General for Audit, 4AGA

SUBJECT:       Corrective Action Verification
               Miami-Dade Housing Agency Did Not Ensure Section 8-Assisted
                 Units Met Housing Quality Standards
               Audit Report 2006-AT-1001

We performed a corrective action verification of the subject audit recommendations at the Miami
Dade Housing Agency (Agency) in response to a request from the HUD Deputy Secretary. The
purpose of the corrective action verification was to determine if the selected audit
recommendations were implemented and the deficiencies reported in the audit report corrected.

                                    Scope and Methodology

Our Corrective Action Verification focused on Recommendation 1A, 1B, and 1C from audit
report 2006-AT-1001 issued December 21, 2005. We reviewed the audit report and associated
supporting documentation, as well as the HUD management decisions and the supporting
documentation used by HUD to close the recommendations. We also reviewed Agency
inspection files, quality control reports, accounting records and other supporting documentation,
and applicable HUD regulations. We conducted housing quality standards inspections on 30
Section 8 housing choice voucher-assisted units throughout Miami Dade County and were
accompanied by Agency inspection officials. In addition, we interviewed staff from the Miami
Office of Public Housing, Miami Dade Housing Agency, and the Miami Dade County Finance
Department.
                                         Background

On December 21, 2005, we issued audit report 2006-AT-1001 on the Miami-Dade Housing
Agency Section 8 Housing Quality Standards inspection program. Finding 1 of the report noted
that Section 8 housing choice voucher-assisted units did not meet housing quality standards. As
a result, tenants lived in units that were not decent, safe, and sanitary, and HUD made housing
assistance payments (HAP) for units that did not meet housing quality standards.

We recommended that the Miami Office of Public Housing require the Agency to:

       1A.    Inspect the 117 Section 8 housing choice voucher-assisted units to verify that
              corrective actions were taken by the landlords and if not, to abate the rent or
              terminate the tenants’ vouchers.

       1B.    Develop and implement an internal control plan and incorporate it into the
              Agency’s Section 8 administrative plan to ensure units meet housing quality
              standards and inspections meet HUD requirements to prevent an estimated $25.9
              million from being spent on units with significant violations.

       1C.    Reduce or offset $7,300 in the Section 8 administrative fees for the 38 units with
              significant housing quality standards violations.

The December 19, 2005 proposed management decisions from the Miami Office of Public
Housing stated that:

       •      For recommendation 1A, the Agency shall provide a final report, by unit number,
              summarizing the results of the housing quality standards reinspections by
              categories of violations. The report will outline, for each reinspected unit, if the
              unit failed or passed the reinspection; the failed deficiencies found (new or
              previously identified by the OIG) and a determination as to the abatement or
              termination of the housing assistance payment contract.

       •      For recommendation 1B, the Agency shall provide (1) a copy of the amended
              Section 8 Administrative Plan outlining in detail the amended quality control
              program, including a certification that the minimal five percent goal identified
              will be achieved every year, and (2) a certification that all Agency staff
              responsible for unit and quality control inspections receive training conducted by
              a nationally recognized training or consulting firm, identifying the name of the
              firm.

       •      For recommendation 1C, the Agency will show proof of deposit of the $7,300
              into their Section 8 Housing Choice Voucher Program Administrative Fee
              account within 60 days of the date of the issuance of the final audit report.




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On December 27, 2005, our office concurred with the proposed management decisions. On June
29, 2006, the Miami Office of Public Housing certified that final action had been completed on
the recommendations.

                                       Results of Review

Our corrective action verification found that the Agency disregarded the management decisions
and did not implement the three recommendations. As a result, the deficiencies reported in our
audit report were not corrected, and the Agency continued to violate HUD requirements.

Recommendation 1A

The Agency provided HUD with a final report summarizing the results of the housing quality
standards reinspections of the 117 failed units. HUD reviewed the Agency’s inspection reports
for 14 units and accounting records for evidence the Agency reinspected the units and abated
housing assistance payments for units that failed the reinspections. HUD accepted the Agency’s
report.

Our review found that the Agency did not correct the housing quality standards violations we
cited in our prior audit. We reinspected 20 units and found that 18 units continue to have the
same violations. Three of the 18 failed units HUD had confirmed as being corrected in
reviewing the Agency inspection reports. We also consider eight units to have failed our
reinspection with significant housing quality standards violations.

The following factors may have contributed to the violations being uncorrected:

       •       Agency inspectors accompanied us on our inspections of the 117 units during the
               prior audit, and we provided Agency management with our preliminary inspection
               results. However, during our corrective action verification, we found that many
               of the violations cited were not documented in Agency inspection files. As a
               result, Agency inspectors who reinspected these units may have been unaware of
               these violations and therefore did not verify if they were corrected.

       •       Agency inspectors may have passed a unit despite the existence of housing quality
               standards violations because of (1) a lack of consistency on what is considered a
               violation; (2) a misunderstanding of the intended meaning of violations cited by
               other inspectors when conducting compliance inspections; (3) an avoidance to
               conduct compliance inspections if a few minor violations continue to exist; (4)
               pressure and complaints from landlords, tenants, and Agency supervisors to pass
               units; and (5) lack of enforcement to conduct adequate housing quality standards
               inspections and accountability of Agency inspectors by supervisors.

Based on the results of our review, we will reopen the following recommendation from our
previous audit report 2006-AT-1001 because the Agency did not implement the agreed upon
corrective actions.




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       1A.     Inspect the 117 Section 8 housing choice voucher-assisted units to verify that
               corrective actions were taken by the landlords and if not, to abate the rent or
               terminate the tenants’ vouchers.

Recommendation 1B

The Agency provided HUD with its revised Section 8 administrative plan effective April 2006.
The revision included three main components: (1) conducting quality control inspections on five
percent of the units under lease annually; (2) conducting quality assurance inspections on five
percent of the quality control inspections; and (3) having inspection supervisors assure corrective
action is taken on violations cited in both quality control and quality assurance reports, and to
analyze the reports for repeated patterns of failure by individual inspectors for disciplinary
action. HUD reviewed the revised plan and found it to be adequate. In addition, the Agency
provided HUD with housing quality standards certifications for its inspectors. HUD arranged a
two-day seminar for Agency inspectors on how to conduct housing quality standards inspections.

Our review found that the Agency failed to implement its revised Section 8 administrative plan.
Specifically, the Agency (1) excluded quality control inspections on initial and complaint
inspections, and did not ensure that quality control inspections were conducted on five percent of
the units under lease annually; (2) failed to ensure that quality assurance inspections were
conducted; and (3) neglected to prepare and distribute quality control reports in a timely manner
to the appropriate Agency officials for corrective action. In addition, the Agency failed to
conduct housing quality standards inspections in accordance with HUD requirements.

       Insufficient Quality Control Inspections
       The Agency conducted quality control inspections from April 2006 to June 2007.
       However, the Agency excluded initial and complaint inspections even though they were
       required by the revised Section 8 administrative plan. Also, the Agency did not conduct
       quality control inspections on five percent of the units under lease annually for fiscal year
       2007. Agency management believed that they met the annual five percent goal and
       discontinued quality control inspections as of June 2007. However, the five percent goal
       does not appear to have been met because multiple quality control inspections were
       conducted on the same units.

       Lack of Quality Assurance Inspections
       The Quality Assurance Inspector stated that inspections were not conducted due to
       missing and untimely distribution of the quality control reports. The Quality Assurance
       Inspector said he received the July and August 2006 reports in September 2006; the
       September and October 2006 reports in January 2007; never received the November and
       December 2006 reports; and received the January to June 2007 reports in August 2007.
       Agency management failed to ensure that quality assurance inspections were conducted
       on the quality control reports received by the Quality Assurance Inspector.




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       Failure to Distribute Quality Control Reports
       The Agency plan required both quality control and quality assurance reports to be
       distributed to Section 8 Inspection supervisors, Quality Control Supervisor, Quality
       Assurance Inspector, and the Private Rental Director at the beginning of each month for
       the previous month’s inspections. The Agency failed to distribute the quality control
       reports in a timely manner to the appropriate officials for corrective action. Agency staff
       stated that management did not provide a clerk to type up the handwritten inspection
       results into a report.

       The Section 8 Inspection supervisors informed us that they had not received quality
       control reports for June 2006 – June 2007, and had never received any quality assurance
       reports. Thus the Section 8 Inspection supervisors said they could not analyze the reports
       for repeated patterns of failure by individual inspectors for disciplinary action. In
       addition, Section 8 Inspection supervisors said they could not take corrective action to
       assure violations cited in the quality control reports were corrected. However, we found
       that when the Section 8 Inspection supervisors did receive quality control reports they did
       not take action to assure that violations were corrected.

       Inadequate Housing Quality Standards Inspections
       We reinspected 10 units in September 2007 that were inspected by the Agency between
       May and July 2007. All 10 units failed the housing quality standards inspections with
       eight units found to have significant housing quality standards violations. Of the eight
       units with significant housing quality standards violations, seven units appear to have
       violations that existed when the Agency conducted its inspections. The most frequently
       cited violations were the same as our prior audit and include electrical hazards, heating
       and cooling ventilation equipment problems, and security issues.

Based on the results of our review, we will reopen the following recommendation from our
previous audit report 2006-AT-1001 because the Agency did not implement the agreed upon
corrective actions.

       1B.    Develop and implement an internal control plan and incorporate it into the
              Agency’s Section 8 administrative plan to ensure units meet housing quality
              standards and inspections meet HUD requirements to prevent an estimated $25.9
              million from being spent on units with significant violations.

Recommendation 1C

The Agency provided HUD with an accounting entry that the Section 8 administrative fees
account was replenished by $7,300. The Agency informed HUD that their Overhead account
used to repay the $7,300 to the Agency Section 8 administrative fees account contained
nonfederal funds. HUD accepted the explanation and supporting documentation.

The management decision was for the Agency to replenish their Section 8 administrative fees
account within 60 days of the date of the issuance of the final audit report (December 2005).
This did not occur. The Agency accounting entry to replenish their Section 8 administrative fees



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account occurred in March 2006. In addition, we reviewed the funding sources for the Overhead
account used to repay the $7,300 from March 2005 to March 2006 and found that the account
contained both nonfederal (county surtax) and federal (Federal Emergency Management
Agency) funds. The Office of Management and Budget Circular A-87 states that federal funds
are not allowed to be used to repay costs that are considered penalties or damages resulting from
violations or failure to comply with Federal laws and regulations.

                                      Auditee’s Response

We discussed our results with your office during the review. We also provided your office a
draft report on December 14, 2007, and discussed the report with your representative at the exit
conference on January 10, 2008. You agreed with the finding and agreed with reopening
recommendations 1A and 1B from our prior audit report. Based on your response, and in
accordance with HUD Handbook 2000.06, REV-3, upon issuance of this report, we are recording
the management decisions in the Department’s Audit Resolution and Corrective Action Tracking
system, with a target completion date of October 1, 2008.

Your response and our evaluation of the response are included in the appendix to this report.




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Appendix

                      Auditee Comments and OIG’s Evaluation

Refer to OIG Evaluation




Comment 1



Comment 1




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Appendix

                      Auditee Comments and OIG’s Evaluation

Refer to OIG Evaluation




Comment 2



Comment 2




Comment 2




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                         OIG Evaluation of Auditee Comments


Comment 1   We will record your agreement to reopen recommendations 1A and 1B from our
            prior audit report in the Audit Resolution and Corrective Action Tracking System,
            with a target completion date of October 1, 2008.

Comment 2   We recognize that the Agency is under HUD receivership and that seeking
            recovery of additional funds may be counterproductive to addressing Agency
            problems. Accordingly, we deleted the proposed new recommendations from this
            final report. Also, we will not reopen recommendation 1C from the prior report.




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