oversight

The City of Baldwin Park Housing Authority, Baldwin Park, California, Did Not Always Determine Housing Assistance Payments Correctly and Did Not Always Complete Reexaminations in a Timely Manner

Published by the Department of Housing and Urban Development, Office of Inspector General on 2009-07-23.

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

                                                                    Issue Date
                                                                                 July 23, 2009
                                                                    Audit Report Number
                                                                             2009-LA-1012




TO:         K.J. Brockington, Director, Los Angeles Office of Public Housing, 9DPH



FROM:       Joan S. Hobbs, Regional Inspector General for Audit, Region IX, 9DGA

SUBJECT: The City of Baldwin Park Housing Authority, Baldwin Park, California, Did Not
         Always Determine Housing Assistance Payments Correctly and Did Not Always
         Complete Reexaminations in a Timely Manner


                                     HIGHLIGHTS

 What We Audited and Why

      We audited the City of Baldwin Park Housing Authority’s (Authority) Housing Choice
      Voucher program. We conducted the audit because the Authority received a “near
      troubled” status and scores of zero on five Section Eight Management Assessment
      Program indicators for fiscal year 2007. The objective was to determine whether the
      Authority determined housing assistance payments correctly and completed annual
      reexaminations in a timely manner.

 What We Found
      The Authority did not determine housing assistance payments correctly in 29 of the 60
      tenant files reviewed. Based on our statistical sample, we estimate that over the next year,
      the Authority will overpay more than $24,000 and underpay more than $13,000 in housing
      assistance. In addition, the Authority did not complete annual reexaminations in a timely
      manner for 52 of the 60 tenant files reviewed. Based on our statistical sample, we estimate
      that over the next year, the Authority will overpay more than $8,000 in housing assistance.
What We Recommend


     We recommend that the Director of the U.S. Department of Housing and Urban
     Development’s (HUD) Los Angeles Office of Public Housing require the Authority to
     reimburse its program $19,166 from nonfederal funds for the overpayment of housing
     assistance and implement quality control procedures to ensure that $49,163 in housing
     assistance will be funds put to better use in the future.

     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 Authority the draft report on June 26, 2009, and held an exit conference
     with auditee officials on July 8, 2009. The Authority provided written comments on July
     15, 2009. It generally agreed with the audit findings, but disagreed that repayment of
     funds was warranted.

     The complete text of the auditee’s response, along with our evaluation of that response,
     can be found in appendix B of this report. The Authority’s response also included two
     attachments related to one tenant’s eligibility and housing assistance payment registers,
     which are available upon request.




                                              2
                             TABLE OF CONTENTS

Background and Objectives                                                      4

Results of Audit
        Finding 1: The Authority Did Not Always Determine Housing Assistance   5
                   Payments Correctly

        Finding 2: The Authority Did Not Always Complete Reexaminations in a   8
                   Timely Manner

Scope and Methodology                                                          10

Internal Controls                                                              12

Appendixes

   A.   Schedule of Questioned Costs and Funds to Be Put to Better Use         14
   B.   Auditee Comments and OIG’s Evaluation                                  15
   C.   Schedule of Tenant Calculation Errors                                  20
   D.   Schedule of Delinquent Annual Reexaminations                           22
   E.   Schedule of Uncorrected Housing Assistance Overpayments                25
   F.   Criteria                                                               26




                                              3
                         BACKGROUND AND OBJECTIVES

The City of Baldwin Park Housing Authority (Authority) provides a wide range of services to
improve the quality of life for low- to moderate-income residents and neighborhoods employing
the Section 8 Housing Choice Voucher program; public housing; home improvement loan/grant
program rehabilitation loan program; first-time home buyer program; housing set-aside funds;
and Community Development Block Grant/HOME Investment Partnerships Program funding.

The Section 8 Housing Choice Voucher program is a federally funded rental program that assists
very low-income families, elderly, and disabled households. Decent, safe, and sanitary housing
units are provided to households through rental vouchers. Housing choice vouchers are
administered locally by public housing agencies. The agencies receive federal funds from the
U.S. Department of Housing and Urban Development (HUD) to administer the voucher program.
A housing subsidy is paid to the landlord directly by the agency on behalf of the participating
family. The family then pays the difference between the actual rent charged by the landlord and
the amount subsidized by the program. Active participants can find their own housing, which
includes single-family homes, town houses, and apartments. Further, participants are able to
select any housing that meets the requirements of the program and is not limited to units located
in subsidized housing projects.

As of fiscal year 2008, the Authority had 715 active clients participating in the Section 8
program and 3,309 applicants on the waiting list. For fiscal years 2008 and 2007, the Authority
disbursed annual Section 8 funds of approximately $4.8 million1 and $5.7 million, respectively.

The objective of the audit was to determine whether the Authority determined housing assistance
payments correctly and completed annual reexaminations in a timely manner.




1
 HUD reduced the Authority’s authorized Section 8 funds for fiscal year 2008 because the Authority had not spent
at least 95 percent of its fiscal year 2007 funds.


                                                        4
                                 RESULTS OF AUDIT

Finding 1: The Authority Did Not Always Determine Housing
           Assistance Payments Correctly
The Authority did not determine housing assistance payments correctly in 29 of the 60 tenant
files reviewed. The problem occurred because the Authority did not have written internal control
procedures in place to ensure that housing assistance was correctly determined. In addition, the
staff performing the determinations did not fully understand all pertinent requirements. As a
result, the Authority overpaid $16,073 and underpaid $3,855 in housing assistance due to
calculation errors. Based on our statistical sample, we estimate that over the next year, the
Authority will overpay more than $24,000 and underpay more than $13,000 in housing
assistance.



 The Authority Incorrectly
 Determined Housing Assistance
 Payments in 29 of 60 Files


       We statistically selected and reviewed 60 Housing Choice Voucher program tenant files
       from a universe of 746 households receiving housing assistance payments between July 1,
       2006, and June 30, 2008. In 29 of the files, the Authority did not correctly determine
       housing assistance payments. The following errors were identified:

              Tenant income calculation (11 files)
              Erroneous inclusion/deduction of medical insurance (11 files)
              Incorrect payment standards (five files)
              Incorrect utility allowance used (one file)
              Tenant ineligible (one file)

       Each of these problems resulted in either over- or underpayments of housing assistance by
       the Authority. Details of the deficiencies found are discussed below. Appendix C
       documents the deficiencies in housing assistance payments related to each tenant file.

       Incorrect Income Calculation
       In 11 of the 60 tenant files reviewed, the Authority did not calculate the tenant’s income
       correctly, such as overestimating tenants’ income, and, therefore, incorrectly determined the
       housing assistance payment amount. Overall, the miscalculation of income resulted in an
       overpayment of assistance of $5,677 and an underpayment of $716.




                                                 5
     Erroneous Inclusion/Deduction of Medical Insurance
     In 11 of the 60 tenant files reviewed, the Authority erroneously included medical insurance
     premiums in income and improperly deducted medical insurance premiums to calculate
     adjusted annual income, which resulted in housing assistance overpayments of $524 and
     underpayments of $1,723.

     Incorrect Payment Standard
     In 5 of the 60 tenant files reviewed, the Authority used the wrong payment standard to
     calculate the housing assistance payment. This error resulted in underpayments of housing
     assistance for all five tenant files amounting to $1,520.

     Incorrect Utility Allowance
     For one tenant, the Authority used the wrong utility allowance, which caused an
     underpayment of housing assistance of $21 for November and December 2006 and January
     2007. In January 2007, there was a change in ownership, and the Authority terminated the
     housing assistance contract. However, although the new owner did not execute a new
     housing assistance contract with the Authority, the Authority continued to provide the tenant
     with a utility allowance with no housing assistance contract in place. Therefore, the
     Authority made housing assistance overpayments of $148.

     Tenant Ineligible
     For one tenant, the Authority incorrectly determined housing assistance for the audit period
     July 1, 2006, to February 1, 2008. It improperly contracted with the tenant’s owner and
     made housing assistance payments for a unit that was determined ineligible to receive
     housing assistance. The Authority should have identified that the tenant’s unit was not a
     legal dwelling at the outset of the contract, but it continued to make housing assistance
     overpayments totaling $9,724.

     In addition, the tenant was not an eligible program participant because she was a relative of
     the owner. The tenant would have been eligible for assistance if she required a reasonable
     accommodation due to a disability. The tenant had claimed disability on her application
     form, making her eligible to receive rental assistance, even though she is related to the
     owner. However, the Authority did not claim the tenant’s disability status when calculating
     the housing assistance payment. Therefore, we concluded the tenant must not have had a
     disability, and therefore, was not eligible for assistance.

Conclusion


     The Authority did not correctly determine housing assistance in 29 of 60 files reviewed.
     The problem occurred because the Authority did not have written internal control
     procedures in place to ensure that housing assistance was correctly determined. The
     Authority relied on its Administrative Plan for guidance, however, it did not detail the
     operational procedures needed to properly administer the program. In addition, the staff
     performing the determinations were either new or temporary staff that did not fully
     understand all the pertinent requirements. Consequently, the Authority overpaid $16,073 in



                                               6
    housing assistance (ineligible) and underpaid $3,855 in housing assistance (funds to be put
    to better use).

    Based on our statistical sample, we estimate over the next year the Authority could
    realize savings of $24,112 in overpayments and $13,015 in underpayments by
    implementing procedures that would ensure correctness and accuracy of housing
    assistance. Our methodology is explained in the Scope and Methodology section of this
    report. The Authority could put these funds to better use if proper procedures and
    controls are put in place to ensure the accuracy and correctness of housing assistance.

Recommendations

    We recommend that the Director of the Los Angeles Office of Public Housing require the
    Authority to

       1A.    Reimburse the program $16,073 from nonfederal funds for the overpayment of
              housing assistance.

       1B.    Reimburse the appropriate tenants $3,855 from program funds for the
              underpayment of housing assistance.

       1C.    Provide staff training to ensure that they fully understand all requirements
              related to determining housing assistance.

       1D.    Implement internal control procedures to ensure the correctness of future
              housing assistance payments. Such procedures will ensure that $37,127
              ($24,112 plus $13,015) in housing assistance funds isare used correctly in the
              future.




                                              7
Finding 2: The Authority Did Not Always Complete Reexaminations in
           a Timely Manner
The Authority did not complete annual reexaminations in a timely manner for 52 of the 60 tenant
files reviewed. The problem occurred because the Authority did not have enough staff to
complete the large volume of reexaminations. Quality control procedures were also not followed
on a consistent basis to monitor the workload and ensure that reexaminations were completed.
As a result of the untimely reexaminations, in 15 of the 52 late reexaminations, the Authority
overpaid housing assistance totaling $3,093, which was not retroactively corrected by the
Authority. Based on our statistical sample, the Authority overpaid more than $8,000 in housing
assistance.


 Reexaminations Were Not
 Always Completed in a Timely
 Manner

       In 52 of 60 tenant files reviewed, the Authority did not complete annual reexaminations in a
       timely manner. The reexaminations were completed from one to five months after the
       stated anniversary date (see appendix D).

 Other Deficiencies That
 Affected the Timely Completion
 of the Reexaminations


       The reviews of tenants’ annual reexaminations also identified various other deficiencies
       that affected the timely completion of the reexaminations (see appendix C).

              In 23 files, reexamination procedures were not performed within 90 days in
              advance of the anniversary date, as required by chapter 11-I.B of the Authority’s
              administrative plan.
              In 12 files, the tenant’s anniversary date on the Form HUD-50058 did not equal
              the tenant effective date.
              In 18 files, the Authority did not complete the reexamination in sufficient time to
              give the tenant 30 days’ notice of the rent increase.




                                                8
Late Annual Reexamination
Resulted in Housing Assistance
Overpayments

     Of 60 tenant files reviewed, 52 contained late reexaminations. The Authority made proper
     adjustments or corrections to 37 of those tenant files. However, the remaining 15 files
     contained annual reexaminations that were performed late, and the housing assistance
     overpayments were not retroactively corrected by the Authority. As a result, the Authority
     overpaid housing assistance in the amount of $3,093. Appendix E details the overpayments
     for each of the 15 tenant files.

Conclusion



     The Authority did not complete reexaminations in a timely manner for 52 of the 60 tenant
     files reviewed. The problem occurred because the Authority did not have enough staff to
     complete the large volume of reexaminations. It only had two permanent staff members,
     and periodically temporary staff, to complete nearly 800 vouchers within our audit period,
     which was not enough staff to complete the volume of annual reexaminations that needed to
     be performed. The Authority also did not follow quality control procedures on a consistent
     basis, which contributed to the untimely reexaminations. As a result, the Authority overpaid
     housing assistance totaling $3,093. Based on our statistical sample, we estimate that the
     Authority will overpay $8,181 in housing assistance over the next year. Our methodology is
     explained in the Scope and Methodology section of this report.

Recommendations



     We recommend that the Director of the Los Angeles Office of Public Housing require the
     Authority to

        2A. Reimburse the program $3,093 from nonfederal funds for the overpayment of
            housing assistance (appendix D).

        2B. Ensure that quality control procedures are consistently followed to monitor the
            workload and ensure that tenant reexaminations are completed in a timely
            manner. Such procedures will ensure that overpayments of $8,181 in housing
            assistance will be put to better use in the future.

        2C. Ensure control procedures are followed consistently to make sure changes in the
            tenants’ rent and housing assistance payments are appropriately corrected by the
            Authority in the event of late tenant reexaminations.




                                              9
                        SCOPE AND METHODOLOGY

We performed on-site audit work at the Authority, located in Baldwin Park, California, between
October 2008 and May 2009. Our audit generally covered the period July 1, 2006, through June
30, 2008.

To accomplish our audit objectives, we reviewed

       Applicable laws, regulations, the Authority’s program administrative plan, HUD’s
       program requirements at 24 CFR (Code of Federal Regulations) Parts 5 and 982, and
       HUD’s Housing Choice Voucher Guidebook 7420.10.
       The Authority’s accounting records, annual audited financial statements for 2007,
       policies and procedures, board meeting minutes, organization chart, tenant databases, and
       HUD’s files for the Authority.
       Authority tenant files.

We also interviewed the Authority’s employees and supervisors, HUD staff, and program
officials.

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.

Purpose of the Sampling
The objective of the audit was to determine whether the Authority determined rental and housing
assistance payments correctly and completed reexaminations on a timely basis. In support of this
objective, we used a statistical sampling plan for the Authority’s universe, which would allow
statistical projections for the amount of Section 8 housing assistance payments paid to Housing
Choice Voucher program participants whose rent/housing assistance payments were calculated
incorrectly or not supported by proper documentation. The projected monetary benefits are
detailed below.

Since statistical sampling was used, it allowed for monetary projections to be determined based
on the questioned costs (appendix A) found during our review of tenant files. The projection
was performed at the end of our fieldwork after reviewing 60 individual files.

Housing Assistance Calculation Errors
After analyzing housing assistance payments, we identified a universe of 746 households
receiving assistance. The housing assistance payments totaled $10,003,325 during the period
July 1, 2006, through June 30, 2008. We performed a random, stratified, physical unit sample,
which suggested a sample size of 76, assuming a desired precision of $250,000 and minimum
desired confidence of 70 percent.



                                               10
Audit Projection Basis
We used a statistical sampling program to obtain the randomized sample. From the universe of
746 households, we stratified the first 347 lower dollar items as the first sampling stratum. The
remaining 399 were considered a higher dollar sampling stratum.

By selecting two strata, more homogenous items were grouped together, improving the statistical
accuracy of the final projection beyond the assumptions used to determine the sample size of 76.
From the universe of 746 households, we sorted in increasing dollar value and stratified the first
347 individuals as a lower dollar housing assistance files, representing more recent enrollees and
those receiving less assistance. This process allowed an evaluation of the housing assistance
payment, as well as providing more tenant files with recent eligibility decisions. For the audit
phase, the remaining 399 individuals represented more established and higher dollar housing
assistance files.

Projected Monetary Benefits
We reviewed 30 files from the low-dollar stratum and 30 files from the high-dollar stratum.
Based on the statistical analysis of the results, using difference estimation methodology, the
actual results provide 90 percent confidence that the monetary benefits are at least those amounts
discussed below.

Overpayment and Underpayment of Housing Assistance Due to Inaccuracies
The Authority did not correctly determine housing assistance in 29 of 60 files reviewed. We
identified $16,073 in housing assistance overpayments and $3,855 in housing assistance
underpayments. Based on our statistical sample, we determined housing assistance
overpayments of approximately $48,224 for the two years sampled to produce the projected
monetary benefit for one year of $24,112. In addition, we determined housing assistance
underpayments of approximately $26,030 for the two years sampled to produce the projected
monetary benefit for one year of $13,015. If the Authority follows our recommendation to
implement internal control procedures, it will ensure that $37,127 ($24,112 plus $13,015) in
housing assistance funds is used correctly in the future.

Overpayment of Housing Assistance Due to Late Reexaminations
Of the 52 tenant files containing late reexaminations, we determined that 15 of those files
contained late reexaminations that were not properly corrected by the Authority. We identified
$3,093 in housing assistance overpayments not corrected by the Authority. The Authority did
not make the proper adjustment to the housing assistance payment register for reexaminations
that were completed late. Based on our statistical sample, we determined housing assistance
overpayments totaling $16,362 for the two years sampled to produce the projected monetary
benefit for one year of $8,181.




                                                11
                              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 objective:

              Policies and procedures that management has implemented to reasonably ensure
              that a program meets its objectives to detect misuse, failure, or errors.

              Policies and procedures that management has implemented to reasonably ensure
              that reliable data are obtained and that housing assistance payments are correct
              and timely.

              Policies and procedures that management has implemented to reasonably ensure
              that resource use is consistent with laws and regulations.

              Policies and procedures that management has implemented to reasonably ensure
              that resources are safeguarded against waste, loss, and misuse.

       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.




                                                12
Significant Weaknesses


     Based on our review, we believe that the following items are significant weaknesses:

            The Authority did not have written internal control procedures in place to ensure
            that housing assistance was correctly determined and that the staff fully
            understood the requirements. The Authority relied on its Administrative Plan for
            guidance, however, it did not detail the operational procedures needed to properly
            administer the program. (finding 1).

            The Authority did not always follow quality control procedures on a consistent
            basis to monitor the workload and ensure that reexaminations were completed in a
            timely basis. (finding 2).




                                             13
                                     APPENDIXES

Appendix A

               SCHEDULE OF QUESTIONED COSTS
              AND FUNDS TO BE PUT TO BETTER USE

          Recommendation                      Ineligible 1/               Funds to be put
              number                                                      to better use 2/
                 1A                                $ 16,073
                 1B                                                            $    3,855
                 1D                                                                37,127
                 2A                                  3,093
                 2B                                                                 8,181

                Total                              $ 19,166                     $ 49,163


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. In this instance, the Authority overpaid housing assistance.

2/   Recommendations that funds be put to better use are estimates of amounts that could be
     used more efficiently if an Office of Inspector General (OIG) recommendation is
     implemented. These amounts include reductions in outlays, deobligation of funds,
     withdrawal of interest, costs not incurred by implementing recommended improvements,
     avoidance of unnecessary expenditures noted in preaward reviews, and any other savings
     that are specifically identified. In this instance, if the Authority implements our
     recommendations, it will ensure that tenants are reimbursed for personal funds they should
     not have expended; ensure housing assistance funds is used correctly in the future; and
     cease program costs for the overpayment of housing assistance to ensure they will be put
     to better use in the future. Once the Authority successfully improves its controls, this will
     be a recurring benefit.




                                              14
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation   Auditee Comments




Comment 1




                         15
Comment 2


Comment 3




Comment 4




Comment 1




            16
Comment 2



Comment 5


Comment 6




            17
                            OIG Evaluation of Auditee Comments

Comment 1: Since the Authority was responsible for the errors that led to the housing
           assistance overpayments, we believe it is appropriate for the Authority to repay
           such overpayments. The Authority can work with HUD on identifying any
           available nonfederal funds that can be used or other alternatives if no nonfederal
           funds are available.

Comment 2: We commend the Authority for taking steps to implement the recommendations
           and ensure the staff obtains the needed training. This will help ensure that
           housing assistance is determined correctly in the future.

Comment 3: We evaluated the documentation provided, but concluded that it was inadequate to
           change our position on this tenant. The Authority asserted that the client has
           claimed disability since the initial port-in from a prior housing authority and that
           supplemental security income received for the tenant is for disability. However,
           as acknowledged by the Authority, the disability status was not used in
           calculating the housing assistance payments, and instead, recorded the tenant
           under an elderly status. While we agree that this would not affect the housing
           assistance payment amount, it does affect the tenant’s eligibility for the program,
           since she is a relative of the unit’s owner. Further, the tenant file documentation
           did not provide any details on the tenant’s disability and what reasonable
           accommodation was needed to justify why it was necessary for the tenant to live
           with a relative. Without this information, we contend that the tenant was not
           eligible for housing assistance. Further, regardless of the disability status, the unit
           is still considered ineligible under housing quality standards. The unit is
           considered a guesthouse and not a legal unit, under City ordinances. Therefore,
           the $9,724 in housing assistance paid out during our audit period is ineligible and
           should be repaid.

Comment 4: We commend the Authority for taking measures to develop and implement
           internal control procedures. The development and implementation of such
           controls will help ensure future housing assistance payments are completed
           correctly.

Comment 5: We commend the Authority for taking steps to ensure that reexaminations will be
           completed timely in the future.




                                               18
Comment 6: We evaluated the documentation and concluded that it did not adequately support
           that the retroactive adjustments were indeed made, so we did not make any
           changes to the report. The housing assistance registers do show proper
           adjustments for tenants involving rent increases on reexaminations that were
           completed late. These adjustment payments, however, do not appear to amend
           the housing assistance payments made to the owner. If these adjustments were
           made to amend the owner’s portion of the housing assistance, then such
           adjustments do not appear in the register. If the Authority has additional
           documentation supporting the adjustments, it can provide them to HUD during the
           audit resolution process.




                                           19
Appendix C

          SCHEDULE OF TENANT CALCULATION ERRORS




                                                                          of medical insurance
                                                                          inclusion/deduction




                                                                                                 Tenant ineligible to
                                  Incorrect payment
               Incorrect income




                                                      Incorrect utility




                                                                                                                                            underpayments
                                                                                                  receive housing




                                                                                                                            overpayments
                                                                                                                            Total housing



                                                                                                                                             Total housing
                  calculation




                                                                               Erroneous
                                                         allowance




                                                                                                     assistance



                                                                                                                              assistance



                                                                                                                                              assistance
                                                                               in income
                                      standard

 Tenants*

    S2                               X                                                                                                      $      (12)

    S6           X                                                                                                      $         636

    S8           X                                                                                                      $         402       $    (364)

    S9           X                                                                                                      $         358       $    (159)

    S11          X                                                                                                      $      2,200

    S13          X                                                                                                      $         422

    S14          X                                                                                                                          $      (35)

    S16          X                                                                                                      $         711       $          -
    S17                                                                        X                                                            $    (153)

    S19                                                                                                X                $      9,724        $          -
    S21                                                                        X                                                            $    (117)
    S29                                                                        X                                                            $    (315)
    S30                                                                        X                                                            $    (205)
    S31                                                                        X                                        $         114       $    (102)

    S34                                                   X                                                             $         148       $      (21)
    S36                                                                        X                                        $         264       $      (18)

* Under the “Tenants” column above, the “S” identifies the Section 8 tenant that was sampled in
sequential order for the audit.




                                                                          20
                 S59
                 S58
                         S57
                         S54
                                 S53
                                 S51
                                         S50
                                                S49
                                                S48
                                                         S45
                                                         S43
                                                                     S41
                                                                     S40




     Total
                                                                                 Tenants*




                             X
                                  X
                                                     X
                                                                 X
                                                                                            Incorrect income




     11
                                                                                               calculation




     5
                     X
                                         X
                                                                     X
                                                                     X                Incorrect payment
                                                                                          standard

                                                                                            Incorrect utility




     1
                                                                                               allowance


                                                                                       Erroneous




21
                 X
                         X
                                                X
                                                         X
                                                                     X




     11
                                                                                  inclusion/deduction
                                                                                  of medical insurance
                                                                                       in income

                                                                                     Tenant ineligible to




     1
                                                                                      receive housing
                                                                                         assistance
                                                         $
                                                         $




                                                $




                                                                                             Total housing

     $ 16,073
                                                                                               assistance
                                                32
                                                         114
                                                         948




                                                                                             overpayments
                 $
                         $
                                                $
                                                         $




                 $
                         $
                                  $
                                         $
                                                $




                                                                                             Total housing
                                                                                              assistance
     $ (3,855)
                                                                     $ (1,314)




                  (49)
                          (70)
                                  (54)
                                         (20)
                                                 (34)




                 (204)
                         (180)
                                                (162)
                                                         (142)
                                                                     $ (125)




                                                                                            underpayments
Appendix D

SCHEDULE OF DELINQUENT ANNUAL REEXAMINATIONS


                                                    Date reexamination Days
Tenants       Effective date    Anniversary date         completed     late
  S1      December 20, 2007    December 20, 2007    February 12, 2008    54
  S2      April 1, 2008        April 1, 2008        June 25, 2008        85
  S4      May 1, 2006          May 1, 2006          June 27, 2006        57
  S5      April 1, 2007        April 1, 2007        May 17, 2007         46
          April 1, 2008        April 1, 2008        April 17, 2008       16
  S6      February 1, 2007     February 1, 2007     March 28, 2007       55
          February 1, 2008     February 1, 2008     March 20, 2008       48
 S7       June 1, 2008         June 1, 2008         July 9, 2008         38
 S8       January 1, 2007      January 1, 2007      January 30, 2007     29
 S9       July 1, 2007         July 1, 2007         July 30, 2007        29
 S10      November 1, 2006     November 1, 2006     February 28, 2007   119
 S13      February 1, 2007     February 1, 2007     March 29, 2007       56
          February 1, 2008     February 1, 2008     May 19, 2008        108
 S14      April 19, 2007       April 19, 2007       May 30, 2007         41
          April 1, 2008        April 1, 2008        June 24, 2008        84
 S15      May 15, 2006         May 15, 2006         June 27, 2006        43
 S16      January 1, 2007      January 1, 2007      March 16, 2007       74
          January 1, 2008      January 1, 2008      April 14, 2008      104
 S17      October 1, 2007      October 1, 2007      March 1, 2008       152
 S20      April 1, 2008        April 1, 2008        July 1, 2008         91
 S21      June 1, 2007         April 1, 2007        May 23, 2007         52
          April 1, 2008        April 1, 2008        April 16, 2008       15
 S22      April 27, 2007       April 27, 2007       May 30, 2007         33
          April 1, 2008        April 1, 2008        April 17, 2008       16
 S23      October 26, 2007     October 26, 2007     January 22, 2008     88
 S24      February 1, 2007     February 1, 2007     March 7, 2007        34
          February 1, 2008     February 1, 2008     April 14, 2008       73
 S26      November 22, 2005    November 22, 2005    April 13, 2006      142
 S27      September 25, 2007   September 25, 2007   November 14, 2007    50
 S29      October 1, 2006      September 1, 2006    September 19, 2006   18
          September 1, 2007    September 1, 2007    September 5, 2007     4




                                        22
                                                 Date reexamination Days
Tenants     Effective date    Anniversary date        completed     late
  S30   June 1, 2007         April 1, 2007       May 23, 2007         52
        May 1, 2008          April 1, 2008       April 18, 2008       17
  S31   January 1, 2007      January 1, 2007     February 12, 2007    42
  S32   November 1, 2006     November 1, 2006    January 29, 2007     89
        November 1, 2007     November 1, 2007    March 20, 2008      140
  S33   April 1, 2008        December 1, 2007    February 21, 2008    82
  S35   March 1, 2007        March 1, 2007       April 25, 2007       55
        August 1, 2008       March 1, 2008       June 12, 2008       103
  S36   January 1, 2007      January 1, 2007     February 28, 2007    58
        January 1, 2008      January 1, 2008     May 13, 2008        133
  S37   January 1, 2007      January 1, 2007     February 28, 2007    58
        January 1, 2008      January 1, 2008     April 11, 2008      101
  S38   March 1, 2007        March 1, 2007       April 25, 2007       55
        March 1, 2008        March 1, 2008       June 6, 2008         97
  S39   August 1, 2007       August 1, 2007      August 27, 2007      26
  S40   September 1, 2007    September 1, 2007   November 8, 2007     68
  S41   January 1, 2007      January 1, 2007     February 28, 2007    58
  S42   January 1, 2007      January 1, 2007     February 22, 2007    52
  S43   January 1, 2007      January 1, 2007     February 22, 2007    52
        January 1, 2008      January 1, 2008     February 5, 2008     35
  S44   September 1, 2007    September 1, 2007   September 21, 2007   20
  S45   January 1, 2007      January 1, 2007     January 12, 2007     11
        January 1, 2008      January 1, 2008     February 25, 2008    55
  S46   April 1, 2007        April 1, 2007       April 30, 2007       29
        April 1, 2008        April 1, 2008       April 16, 2008       15
  S47   December 1, 2006     October 1, 2006     November 14, 2006    44
  S48   June 1, 2007         June 1, 2007        October 12, 2007    133
        June 1, 2008         June 1, 2008        July 15, 2008        44
  S49   September 1, 2006    September 1, 2006   November 7, 2006     67
  S50   January 1, 2007      January 1, 2007     January 18, 2007     17
        January 1, 2008      January 1, 2008     May 27, 2008        147
  S51   December 1, 2006     December 1, 2006    February 2, 2007     63
        December 1, 2007     December 1, 2007    April 14, 2008      135
  S52   February 1, 2007     October 1, 2006     February 1, 2007    123
        October 1, 2007      October 1, 2007     January 7, 2008      98




                                      23
                                                   Date reexamination Days
Tenants       Effective date    Anniversary date        completed     late
  S53     November 1, 2006     November 1, 2006    November 28, 2006    27
  S54     January 1, 2008      January 1, 2008     May 16, 2008        136
  S55     September 1, 2007    July 1, 2007        July 24, 2007        23
  S56     October 1, 2006      October 1, 2006     January 18, 2007    109
          October 1, 2007      October 1, 2007     December 13, 2007    73
 S57      April 1, 2007        April 1, 2007       April 26, 2007       25
 S58      August 1, 2007       August 1, 2007      August 28, 2007      27
 S59      July 1, 2007         July 1, 2007        July 17, 2007        16
 S60      March 1, 2007        March 1, 2007       April 2, 2007        32




                                        24
   Appendix E

         SCHEDULE OF UNCORRECTED HOUSING ASSISTANCE
                       OVERPAYMENTS


                                                A                                        B                A*B

                                            Difference
                                                 in        Correct     Incorrect    Difference in
                                             effective    assistance   assistance     housing       Total housing
Tenant       Correct         Incorrect       dates (in      (most        (prior      assistance      assistance
sample    effective date   effective date    months)       recent)      amount)       amounts       overpayment
 S10     Nov. 1, 2006      Feb. 1, 2007         3             $ 791       $ 827           $ (36)      $   (108)
 S16     Jan. 1, 2007      Apr.1, 2007          3                195         350           (155)          (465)
         Jan. 1, 2008      June 1, 2008         5                179         274            (95)          (475)
 S21     Apr. 1, 2007      June 1, 2007         2                469         482            (13)           (26)
 S29     Sept. 1, 2006     Oct. 1, 2006         1                390         401            (11)           (11)
 S31     Jan. 1, 2007      Mar. 1, 2007         2                665         691            (26)           (52)
 S33     Dec. 1, 2007      Apr. 1, 2008         4              1,458       1,490            (32)          (128)
 S35     Mar. 1, 2008      July 1, 2008         4                382         655           (273)        (1,092)
 S37     Jan. 1, 2007      Apr. 1, 2007         3                593         596             (3)            (9)
         Jan. 1, 2008      May 1, 2008          4                634         640             (6)           (24)
 S41     Jan. 1, 2007      Apr. 1, 2007         3                659         672            (13)           (39)
 S45     Jan. 1, 2007      Feb. 1, 2007         1                696         717            (21)           (21)
 S47     Oct. 1, 2006      Dec. 1, 2006         2                579         586             (7)           (14)
 S49     Sept. 1, 2006     Dec. 1, 2006         3                613         633            (20)           (60)
 S51     Dec. 1, 2006      Mar. 1, 2007         3                613         614             (1)            (3)
 S52     Oct. 1, 2006      Feb. 1, 2007         4                888         952            (64)          (256)
 S55     July 1, 2007      Sept. 1, 2007        2                569         724           (155)          (310)
Total                                                                                                 $ (3,093)




                                                         25
Appendix F

                                       CRITERIA


The following sections of the Code of Federal Regulations and Housing Choice Voucher Guide
Book apply to housing assistance payment calculations (finding 1) and timeliness of annual
reexaminations (finding 2):

          24 CFR 982.503(a)(1): The Housing Authority must adopt a payment standard
          schedule that establishes voucher payment standard amounts for each fair market rent
          area in the Housing Authority jurisdiction. For each fair market rent area, the Public
          Housing Authority must establish payment standard amounts for each “unit size.”
          Unit size is measured by number of bedrooms.

          24 CFR 982.505: How to calculate housing assistance payments. (4) Increase in the
          payment standard amount during the housing assistance contract term. If the payment
          standard amount is increased during the term of the housing assistance contract, the
          increased payment standard amount shall be used to calculate the monthly housing
          assistance payment for the family beginning at the effective date of the family’s first
          regular reexamination on or after the effective date of the increase in the payment
          standard amount.

          24 CFR 982.516(a)(1): (a) Housing Authority responsibility for reexamination and
          verification. (1) The Housing Authority must conduct a reexamination of family
          income and composition at least annually.

          24 CFR 982.517(b)(4): The utility allowance schedule must be prepared and
          submitted in accordance with HUD requirements on the form prescribed by HUD.

          24 CFR 5.611(3)(i): Adjusted income means annual income of the members of the
          family residing or intending to reside in the dwelling unit, after making: (3) The sum
          of the following, to the extent the sum exceeds three percent of annual income: (i)
          unreimbursed medical expenses of any elderly family or disabled family.

          24 CFR 985.3(j)(2): Annual reexaminations. This indicator shows whether the
          Housing Authority completes a reexamination for each participating family at least
          every 12 months. (24 CFR 5.617). (2) HUD verification method: Multifamily
          Tenant Characteristic System report--Shows percent of reexaminations that are more
          than 2 months overdue. The 2-month allowance is provided only to accommodate a
          possible lag in the Housing Authority’s electronic reporting of the annual
          reexamination on Form HUD-50058 and to allow the processing of the data into the
          report. The 2-month allowance provided here for rating purposes does not mean that
          any delay in completing annual reexaminations is permitted.



                                              26
24 CFR 516(d)(2): Effective date of reexamination. (2) At the effective date of a
regular or interim reexamination, the Authority must make appropriate adjustments in
the housing assistance payment. (For a voucher tenancy, the housing assistance
payment shall be calculated in accordance with Sec. 982.505. For a certificate
tenancy, the housing assistance payment shall be calculated in accordance with Sec.
982.518.)

Chapter 5, Housing Choice Voucher Guidebook: Once the Housing Authority knows
and verifies all sources of income are known and verified, the Housing Authority
must convert reported income to an annual figure. Convert periodic wages to annual
income using the following:

   a. Multiply hourly wages by the number of hours worked per year (2080 hours
      for full-time employment with a 40 hour work week and no overtime).
   b. Multiply weekly wages by 52.
   c. Multiply bi-weekly wages (paid every other week) by 26.
   d. Multiply semi-monthly wages (paid twice each month) by 24.
   e. Multiply monthly wages by 12.

Chapter 7.3, Housing Choice Voucher Guidebook:
Prior to the effective date of any new fair market rents, the Housing Authority must
review its payment standard schedule and amend it as needed to ensure that the
payment standards remain within the basic range (90 percent to 110 percent of the
new fair market rent). If the fair market rent increases, the Housing Authority must
be sure that the payment standards for each unit size are at least 90 percent of the new
fair market rent. Similarly, if the fair market rent decreases, the Housing Authority
must be sure that the payment standards are not more than 110 percent of the new fair
market rent.

Chapter 8.9, Housing Choice Voucher Guidebook, Leases Between Relatives:
The Housing Authority must not approve the tenancy if the owner of the unit is the
parent, child, grandparent, grandchild, sister, or brother of any member of the assisted
family, unless approving the tenancy would provide reasonable accommodation for a
family member who is a person with disabilities. This restriction only applies at the
time the family initially receives housing choice voucher assistance for occupancy of
a particular unit, but does not apply to a unit currently under an assisted lease.

Chapter 12.4, Housing Choice Voucher Guidebook:
The Housing Authority should initiate reexamination procedures 90 to 120 days
before the date reexamination results are to take effect. This allows the Housing
Authority ample time to obtain all required verifications and provide reasonable
advance notice to both the family and the property owner of any change in the family
share and housing assistance.




                                     27