oversight

Enterprise Income Verification Users Did Not Always Take Advantage of HUD's Training and Guidance

Published by the Department of Housing and Urban Development, Office of Inspector General on 2008-04-14.

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

                                                                Issue Date
                                                                        April 14, 2008
                                                                Audit Report Number
                                                                        2008-KC-0003




TO:        Milan M. Ozdinec, Deputy Assistant Secretary, Office of Public Housing and
             Voucher Programs, PE

           //signed//
FROM:      Ronald J. Hosking, Regional Inspector General for Audit, 7AGA


SUBJECT: Enterprise Income Verification Users Did Not Always Take Advantage of
           HUD’s Training and Guidance


                                  HIGHLIGHTS

 What We Audited and Why

            We reviewed the U.S. Department of Housing and Urban Development’s (HUD)
            Enterprise Income Verification (EIV) system. This audit was included in our
            annual audit plan. HUD implemented the EIV system nationwide for public
            housing authorities to use to identify and reduce tenant income and subsidy errors
            within the Section 8 and public housing programs. Our objective was to
            determine whether HUD provided adequate guidance and training to its EIV
            coordinators and housing authority users.

 What We Found


            We found that HUD provided adequate guidance and training to its EIV
            coordinators and housing authority users. However, EIV users did not always
            take advantage of HUD’s EIV training and guidance. Since use of EIV is not yet
            mandatory, HUD did not require housing authorities to ensure that their users take
            EIV training prior to granting them access to the EIV system. As a result,
            housing authority users may not fully understand EIV’s capabilities and their
            responsibilities when using the system.
What We Recommend


           We recommend that HUD consider enhancing existing requirements to require
           housing authorities to certify that their EIV users have received EIV training prior
           to granting access to the EIV system.

           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
           The Deputy Assistant Secretary disagreed with the audit report and its
           recommendation. His office provided written comments on April 1, 2008. The
           complete text of HUD’s response, along with our evaluation of that response, is in
           appendix A of this report.




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                           TABLE OF CONTENTS

Background and Objectives                                                   4

Results of Audit
      Finding 1: Enterprise Income Verification Users Did Not Always Take   5
                  Advantage of HUD’s Training and Guidance

Scope and Methodology                                                       7

Internal Controls                                                           8

Appendixes
   A. Auditee Comments and OIG’s Evaluation                                 9




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                     BACKGROUND AND OBJECTIVES

Erroneous subsidy payments are a major problem in U.S. Department of Housing and Urban
Development (HUD) programs. In 2001, HUD initiated the Rental Housing Integrity
Improvement Project (RHIP) to address causes of errors and improper payments. Under RHIP,
the Office of Public and Indian Housing implemented a comprehensive strategy to reduce errors.
One of the key components of this strategy included Upfront Income Verification (UIV). UIV is
the verification of income, before or during a family reexamination, through an independent
source that systematically and uniformly maintains income information in computerized form for
a large number of individuals.

To assist housing authorities in identifying unreported and underreported tenant income, HUD
developed the Enterprise Income Verification (EIV) system through computer matching
agreements with the Social Security Administration and the U.S. Department of Health and
Human Services. The EIV system is a HUD-provided Internet-based tool that allows housing
authorities to view and compare employment information, wages, unemployment compensation,
and Social Security benefit information.

HUD strongly encourages housing authorities to use the EIV system to validate tenant-reported
income. In addition, housing authorities should inform tenants of the system’s capability and
their intent to compare tenant-reported information with tenant income information in the EIV
system. HUD expects housing authorities to make an effort to use all available resources,
including the EIV system, to verify tenant-reported income. HUD issued a proposed rule for
public comment in June 2007 that would make the use of EIV mandatory for all housing
authorities.

HUD lists the following as benefits of using the EIV system:

   •   Increasing the efficiency and accuracy of income and rent determinations,
   •   Reducing incidents of unreported and underreported household income,
   •   Removing the barriers to verifying tenant-reported income,
   •   Addressing material weaknesses in a housing authority’s reexamination process and
       program operations, and
   •   Assuring that more families that are eligible are able to participate in the program.

Our audit objective was to determine whether HUD provided adequate guidance and training to
its EIV coordinators and housing authority users.




                                                4
                                RESULTS OF AUDIT


Finding 1: Enterprise Income Verification Users Did Not Always Take
             Advantage of HUD’s Training and Guidance
EIV users did not always take advantage of HUD’s training and guidance. Since use of EIV is
not yet mandatory, HUD did not require housing authorities to ensure that their users take EIV
training prior to granting access to the EIV system. As a result, housing authority users may not
fully understand EIV’s capabilities and their responsibilities when using the system.



 HUD Made EIV Webcast Training
 Available to Housing Authority Users

               Housing authority users did not always take advantage of HUD’s EIV training
               and guidance. Housing authorities have access to EIV webcast training and
               materials at EIV’s website. The Office of Public Housing Programs provided
               hands on training sessions in over 40 locations at various housing industry
               conferences, as well as onsite housing authority training. Local HUD offices also
               provided ongoing EIV training opportunities. In addition, the Director of Public
               Housing Programs (Director) regularly responds to EIV questions posed by
               housing authorities.

               While HUD’s EIV training and user guide were available to housing authorities,
               only eleven of nineteen housing authority users took EIV training via HUD’s
               webcasts. The remaining eight only received local or on-the-job training while
               using EIV. Housing authority users indicated that they were either not using or
               were unaware of various EIV capabilities. For example,

                  •   Only six of fifteen housing authorities that we contacted indicated that
                      they used all available EIV reports.
                  •   Nine housing authorities were unaware that they could use the Issuance of
                      Vouchers option for Form 50058, which allows access to a Section 8
                      applicant’s income information in the EIV system, before signing a lease.
                  •   Two housing authority administrators did not know that they could
                      terminate a user’s access to the EIV system without HUD approval.

 Use of the EIV System Is Voluntary



               Since use of EIV is not yet mandatory, HUD did not require housing authorities to
               ensure that their users take EIV training prior to granting access to the EIV
               system. The Director commented that HUD’s plan was to train its field office


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             EIV coordinators and have them train housing authority administrators and users.
             In addition, HUD provided webcast training that was always available on the
             internet and an EIV user’s manual. However, HUD granted housing authority
             users access to the EIV system without ensuring the users received any EIV
             training. Users then had access to the housing authority’s tenants’ financial
             information.

Housing Authorities May Not Be Using
EIV to Its Full Potential


             Housing authority users may not fully understand EIV’s capabilities and their
             responsibilities when using the system. For example,

                   •   By not using available EIV training and materials, housing authority users
                       limit their ability to understand EIV reports to identify possible unreported
                       and underreported tenant income. The EIV reports include information on
                       head of household, income discrepancy, new hires, deceased tenants,
                       multiple subsidy, and identification verification.
                   •   Being unaware of the Issuance of Vouchers option for Form 50058 allows
                       Section 8 applicants with unreported or underreported income into the
                       Section 8 program.
                   •   Housing authorities allow users who no longer work for them
                       unauthorized access to tenant income information in EIV while awaiting
                       unnecessary HUD approval to terminate access.


Conclusion


             HUD has provided hands on training sessions across the country at various
             housing industry conferences as well as onsite housing authority training. In
             addition, Housing authority users have access to EIV webcast training and
             materials at EIV’s website. To ensure users understand and properly use the EIV
             system, HUD needs to ensure that housing authorities require their users to
             receive EIV training prior to granting them access to the system.

Recommendations

             We recommend that the Deputy Assistant Secretary for Public Housing and Voucher
             Programs

             1A.       Consider enhancing existing requirements to require housing authorities to
                       certify that their EIV users have received EIV training prior to granting
                       access to the EIV system. The housing authorities would keep the
                       certifications on file and have them available for review.



                                                 6
                         SCOPE AND METHODOLOGY

Our review covered the period from October 2005 through November 2007.

To accomplish our objective, we obtained and reviewed applicable regulations and guidance
related to the EIV system. We also

   •   Performed on-site reviews at the Denver Housing Authority, the Housing Authority for
       the City of Dallas, and the Housing Authority for the City of Los Angeles.
   •   Interviewed by telephone user administrators and users at the following housing
       authorities: the Chicago Housing Authority, Atlanta Housing Authority, Pueblo Housing
       Authority, Aurora Housing Authority, San Jose/Santa Clara Housing Authority, Benecia
       Housing Authority, Tacoma Housing Authority, Pawtucket Housing Authority, Flagler
       County Housing Authority, Housing Authority of the County of Los Angeles,
       Minneapolis Housing Authority, St. Paul Housing Authority, and New York City
       Housing Authority.
   •   Interviewed HUD’s EIV coordinators, either in person or by telephone, at the following
       HUD field offices: Denver, Dallas, Los Angeles, Seattle, Chicago, Atlanta, Boston, New
       York City, Jacksonville, Minneapolis, and Philadelphia.
   •   Reviewed 55 tenant files at the three housing authorities where we performed on-site
       work; the tenants either received Section 8 assistance or lived in public housing units.
   •   Reviewed housing authority policies and procedures related to the use of EIV at the three
       housing authorities where we performed on-site work.

We obtained an understanding of how HUD granted access to EIV and how housing authorities
used EIV. We discussed EIV practices with HUD’s EIV coordinators, housing authority user
administrators, and housing authority users. They identified concerns related to their use of the
EIV system.

We used computerized data from HUD’s Public and Indian Housing Information Center and the
EIV system solely for background information and for examples of operational concerns
identified during the review. We did not perform any tests to assess the reliability of the data.

We performed on-site work at the three housing authorities from September to November 2007.
We discussed results with the HUD’s Director of Public Housing Programs at HUD headquarters
on August 31, 2007, November 28, 2007, and February 13, 2008.

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




                                                7
                             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:

              •       HUD’s training and guidance for use of the EIV system.

              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


              We did not identify any significant weaknesses.




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                        APPENDIXES

Appendix A

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation      Auditee Comments




Comment 1




                             9
Ref to OIG Evaluation   Auditee Comments



Comment 2




Comment 3




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                         OIG Evaluation of Auditee Comments

Comment 1   We agree that the Office of Public Housing Programs (HUD) has made
            tremendous efforts to provide EIV guidance and training to housing authorities.
            We believe implementing the report’s recommendation would help ensure that
            housing authorities take full advantage of the EIV training available. As stated in
            the report, the training that users received varied considerably from viewing HUD
            webcasts to on-the-job training. In addition, the Director of HUD’s Office of
            Public Housing Programs indicated that knowledge of EIV varied considerably
            among housing authority users around the country. Implementing this
            recommendation would ensure housing authority users would all receive similar
            training on the use of EIV prior to gaining access to the system.

            In addition, Section 5.233(b) of the Proposed Rule provides penalties for failure to
            implement a Uniform Income Verification process such as EIV. Once use of EIV
            becomes mandatory, the Director indicated that HUD plans to establish a
            compliance group to monitor income discrepancies nationwide. The group would
            review unresolved, continued income discrepancies to determine if they were
            valid. If they were valid, the housing authority would have to repay any excess
            subsidy that HUD paid on that tenant's behalf. By HUD requiring housing
            authorities to ensure users received basic EIV training, it would have a solid basis
            for penalizing housing authorities because trained users should know how to use
            EIV and resolve income discrepancies.

            Finally, the report’s recommendation complements HUD’s training efforts as
            explained on its website: “HUD is focused on developing a cadre of skilled HUD
            and PHA staff through the delivery of training and technical assistance.” The
            report’s recommendation is directly in line with this statement and takes it one
            step further. When use of EIV becomes mandatory, HUD can capitalize on its
            significant commitment in time and money to training, by requiring housing
            authorities to ensure its users receive EIV training. This would ensure that HUD
            gets “more value for its training efforts” and it increase users’ ability to identify
            unreported tenant income and resolve income discrepancies. Since the primary
            purpose of EIV is to assist housing authorities to improve income verification
            during required income reexaminations, requiring EIV training would improve
            housing authorities’ ability to accomplish that purpose.

Comment 2   HUD’s comments suggest that any type of certification would be unnecessarily
            cumbersome and expensive. That was not the intent of our recommendation and
            we agree that such a process should not be bureaucratic or complicated. We
            therefore modified our recommendation to stress that HUD need not create a
            totally new requirement. HUD already has a requirement that new users must
            receive annual security awareness training and must sign the EIV User Access
            Authorization Form to signify that they that understand and accept the EIV Rules
            of Behavior. HUD could require that a housing authority’s User Administrator
            simply state in Part I (A) of this form (in the box: "Type of work which involves
            use of UIV data that is contained in the EIV system") that the user took EIV
            training on a certain date. The form could be completed and signed as before.


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            From our perspective, it is logical for HUD to ensure that users are fully trained
            on the proper use of information in EIV once HUD grants them access.
            Concerning which training housing authority users should take; HUD could
            designate its most recent beginner training session available on the web.

Comment 3   We agree that HUD has done an exceptional job making EIV training and
            guidance available to housing authorities. We believe that implementing this
            recommendation would ensure that housing authorities take full advantage of its
            efforts.




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