oversight

Housing Authority of the City of El Paso, El Paso, Texas, Administered Its Housing Choice Voucher Program in Accordance with Requirement

Published by the Department of Housing and Urban Development, Office of Inspector General on 2009-05-20.

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

                                                                  Issue Date:
                                                                           May 20, 2009
                                                                  Audit Report Number
                                                                           2009-FW-1008




TO:         Justin R. Ormsby
            Director, Office of Public and Indian Housing, 6APH


FROM:       Gerald R. Kirkland
            Regional Inspector General for Audit, Fort Worth Region, 6AGA

SUBJECT: Housing Authority of the City of El Paso, El Paso, Texas, Administered its
         Housing Choice Voucher Program in Accordance with Requirements


                                    HIGHLIGHTS

 What We Audited and Why

              As part of our strategic plan objective to assist the U. S. Department of Housing
              and Urban Development’s (HUD) efforts to reduce rental assistance
              overpayments, we audited the Housing Authority of the City of El Paso’s
              (Authority) Housing Choice Voucher program (program). In response to a
              congressional request, we previously audited the Authority’s procurement
              function. As a result of that work, we decided to perform an audit of the
              Authority’s program. The purpose of our audit was to determine whether the
              Authority properly administered its overall program. Specifically, we wanted to
              determine whether the Authority properly verified and calculated tenant income
              and eligibility.

 What We Found


              The Authority properly administered its program and adequately verified tenant
              income and eligibility. In most instances, the Authority used HUD’s Enterprise
              Income Verification (EIV) system to determine tenant income. However, in 3 of
              22 randomly selected files the Authority did not use EIV, resulting in less than
           $6,000 in potential overpayments. HUD explained that there could be timing
           differences between the income information reflected in the summary EIV report
           and the income reflected on HUD Form-50058.

What We Recommend


           We recommend that the Director of the Fort Worth Office of Public and Indian
           Housing require the Authority to repay $2,841 for the overpayment for two
           tenants and obtain support or repay $3,147 for the potential overpayments for one
           tenant.

Auditee’s Response


           We provided a draft to the Authority on April 28, 2009, and held an exit
           conference on May 7, 2009. The Authority provided written comments on
           May 15, 2009. The complete text of the auditee’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:   The Authority Administered Its Program in Accordance with   5
                 Requirements

Scope and Methodology                                                        8

Internal Controls                                                            10

Appendixes
   A. Schedule of Questioned Costs                                           11
   B. Auditee Comments and OIG’s Evaluation                                  12




                                            3
                     BACKGROUND AND OBJECTIVES

The Housing Authority of the City of El Paso (Authority) was established in 1938 to provide
safe, decent, and sanitary housing for assisted families at or below 80 percent of median income.
The Authority is governed by a five-member board of commissioners appointed by the mayor of
El Paso with one member representing the residents of the Authority. The Authority’s executive
director reports to the board of commissioners. The Authority has a budgeted staff of 450 in 10
major divisions. It is located at 5300 East Paisano Drive, El Paso, Texas.

The Authority administers more than 5,000 vouchers annually, pursuant to an annual
contributions contract with the U. S. Department of Housing and Urban Development (HUD).
Under the Housing Choice Voucher program (program), HUD pays rental subsidies so that
eligible families can afford decent, safe, and sanitary housing. For calendar year 2008 the
Authority received more than $24 million in program funding and more than $2 million in
administrative funding.

Our objective was to determine whether the Authority properly administered its program.
Specifically, we wanted to determine whether the Authority properly verified and calculated
tenant income and eligibility.




                                                4
                                 RESULTS OF AUDIT

Finding: The Authority Administered Its Program in Accordance with
Requirements
The Authority properly administered its program and adequately verified tenant income and
eligibility. In all but a few instances, the Authority verified tenant income when performing
reexaminations. In most instances, it identified all unreported tenant income. It did not identify
all unreported income because it did not always use EIV reports to recalculate tenant income in
prior periods. In 2 of the 22 randomly selected files, the Authority did not use EIV, resulting in
$2,841 in overpayments. In another case, it may have overpaid $3,147.



 EIV Not Always Used


               Overall, the Authority used the EIV system and properly verified tenant income.
               In all but a few instances, it verified tenant income when performing
               reexaminations. In the majority of 22 tenant files reviewed, the Authority
               considered the income information contained in the EIV system when calculating
               tenant income. However, in 2 of the 22 randomly selected files, it did not use
               EIV, resulting in $2,841 in overpayments. In another case, it may have overpaid
               $3,147. Specifically,

               Case No. 1 – An EIV report generated for the 2008 examination showed $18,573
               in wages for 2006. However, the tenant reported only $3,523 in wages for that
               year. The notes in the tenant’s file indicated that the tenant was going to go to the
               Social Security office to report that her identity had been stolen. However, there
               was no documentation in the file showing that the tenant took steps to report
               identity theft or that the Authority implemented a repayment agreement.
               Recalculation of the voucher, including the $18,573 in wages, resulted in an
               overpayment of $1,953 in housing assistance from January through July 2007.

               Case No. 2 – An EIV report generated for a 2009 examination showed $6,170 in
               wages for 2008 that was not reported by the tenant. The notes in the tenant’s file
               indicated that the tenant would need to set up a repayment agreement if she did
               not provide proof of her income. However, the file did not document if the tenant
               provided proof of her income or entered into a repayment agreement. The tenant
               reported $0 income for 2008. Recalculation of the voucher, including the $6,170
               in wages, resulted in an overpayment of $888 in housing assistance from February
               through September 2008.




                                                 5
                  Case No. 3 – An EIV report generated for the 2009 examination reflected wages
                  for both 2007 and 2008 that had not been reported by the tenant. The tenant did
                  not report wages for either of those years. Recalculation of the voucher, including
                  the income, resulted in a possible overpayment of $3,147 in housing assistance
                  ($1,845 from April 2007 through March 2008 and $1,302 from March through
                  September 2008).1

                  According to HUD regulations,2 the Authority “must establish procedures that are
                  appropriate and necessary to assure that income data provided by the applicant or
                  participant families is complete and accurate.” Further, the Authority’s
                  administrative plan stated that tenant income will be verified using the best source
                  available. Neither of these documents specifically required the use of HUD’s EIV
                  system. However, the EIV reports were included in the tenant files and reflected
                  income not reported by the tenants.

                  In reviewing the tenant files, there were five instances in which the tenant’s file
                  contained indications of identity theft, which explained the higher income
                  reported in EIV. However, only four of these files contained documentation
                  reflecting steps taken by the tenants to report their identity as having been stolen.
                  The documentation provided by the tenants included police reports and reports
                  filed with the Social Security Administration reflecting the employers and income
                  that was not earned by the tenant. In the other instance, the only indication of
                  identity theft was notes made by the Authority in the file stating that the tenant’s
                  identity had been stolen. The Authority may want to assist families that have
                  been victimized by identity theft by aiding in reporting and providing supporting
                  documentation of the crime to other authorities.


    Conclusion


                  Overall, the Authority did a good job in verifying tenant income and eligibility.
                  The majority of the time, the Authority used the EIV system to ensure that tenant
                  income was reported correctly and accurately. However, we found three
                  instances in which EIV reflected income that was not reported by the tenant,
                  resulting in $5,988 in potential housing assistance overpayments.




1
     According to the Authority, this issue will be addressed when the tenant comes in for the 2009 annual
     reexamination. Therefore, this amount will be considered unsupported until the completion of the 2009
     reexamination.
2
     24 CFR 982


                                                        6
Recommendations



          We recommend that the Director of the Fort Worth Office of Public and Indian
          Housing require the Authority to:

          1A. Collect from the tenants and repay its program $2,841 for the two
              overpayments.

          1B. Support or collect from the tenant and repay its program $3,147 for the one
              overpayment.




                                           7
                           SCOPE AND METHODOLOGY

Our objective was to determine whether the Authority properly administered its program.
Specifically, we wanted to determine whether the Authority properly verified and calculated
tenant income and eligibility. Our audit scope was January 1, 2007, to September 30, 2008. We
performed our work from October 2008 to March 2009. To accomplish the objective, we

        Interviewed Authority and HUD staff,
        Analyzed information from HUD and Authority systems,
        Sampled tenant files, and
        Used computer audit techniques to analyze electronic program data.

Data Analysis and Sample Selection

During the audit, we obtained and analyzed data obtained from HUD’s PIC (PIH Information
Center) and electronic data files from the Authority in order to determine the universe and select
a sample of files for review. Our analysis of PIC included:

         Review of HUD’s EIV system to determine households that potentially underreported
         income by at least 5 percent. This analysis resulted in 475 households with potential
         for unreported income.
         Review of PIC to determine households that were potentially overhoused. This analysis
         resulted in 191 potentially overhoused tenants.
         Review of PIC also revealed one tenant who was deceased. It appeared that the housing
         assistance was still being paid for this individual.

Our analysis of electronic data file provided by the Authority included:

        Review and validation of the Social Security numbers within its voucher data. Results of
        this analysis resulted in 275 households who were identified with an alternate
        identification number (“H” number).

Initially, we selected six files to review to confirm the data and the extent of potential issues.
Based upon the initial results, we selected an additional 30 files for review. The sample was a
representative, non-statistical sample of files3 and included 20 files to review for income
verification purposes and 10 files to review for an alternate identification number for the head of
household.

Also, we analyzed the Authority’s financial data to determine whether the Authority’s general
ledger, bank account, and voucher data were properly recorded. Using Audit Command
Language software and other computer-assisted audit techniques, we analyzed the files to


3
    We used RAT-STATS, a program developed by the Department of Health and Human Services, to select the
    sample.


                                                    8
determine whether there were errors or omissions in the data. We found no material or
significant differences in the data.

We conducted the audit in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and conclusions based on our audit
objective. We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objective.




                                               9
                              INTERNAL CONTROLS

Internal control is an integral component of an organization’s management that provides
reasonable assurance that the following controls are achieved:

         Program operations,
         Relevance and reliability of information,
         Compliance with applicable laws and regulations, and
         Safeguarding of assets and resources.

Internal controls relate to management’s plans, methods, and procedures used to meet its
mission, goals, and objectives. They include the processes and procedures for planning,
organizing, directing, and controlling program operations as well as the systems for measuring,
reporting, and monitoring program performance.



 Relevant Internal Controls
              We determined that the following internal controls were relevant to our audit
              objectives:

                  Procedures used to verify tenant income and eligibility.

              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


              Our review did not reveal significant weaknesses in the controls over the verification
              procedures for tenant income or tenant eligibility.




                                               10
                                         APPENDIXES

Appendix A

                   SCHEDULE OF QUESTIONED COSTS




                   Recommendation             Ineligible 1/            Unsupported 2/
                       number

                           1A                     $2,841
                           1B                                             $3,147




1/   Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity that the auditor
     believes are not allowable by law; contract; or federal, state, or local policies or regulations.

2/   Unsupported costs are those costs charged to a HUD-financed or HUD-insured program or activity when
     we cannot determine eligibility at the time of the audit. Unsupported costs require a decision by HUD
     program officials. This decision, in addition to obtaining supporting documentation, might involve a legal
     interpretation or clarification of departmental policies and procedures.




                                                    11
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation   Auditee Comments




Comment 1




Comment 2




                         12
Comment 3




            13
                         OIG Evaluation of Auditee Comments

Comment 1   We appreciate the assistance and cooperation that you and your staff extended to
            my staff.

Comment 2   The Authority will need to work with HUD to resolve the repayment of funds.

Comment 3   We agree with the Authority’s action to seek repayment agreements for Cases 2
            and 3. As stated in the body of the report, for Case 1, the Authority should have
            addressed the additional income for 2006 reflected on the EIV report generated in
            2008, and we maintain the overpayment of HAP of $1,953.




                                            14