oversight

The Richmond Redevelopment & Housing Authority, Richmond, Virginia, Did Not Adequately Administer Its Housing Assistance Payments for Its Section 8 Housing Choice Voucher Program

Published by the Department of Housing and Urban Development, Office of Inspector General on 2009-07-10.

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

                                                               Issue Date
                                                                  July 10, 2009
                                                               Audit Report Number
                                                                  2009-PH-1009




TO:        William D. Tamburrino, Director, Baltimore Public Housing Program Hub,
            3BPH


FROM:      John P. Buck, Regional Inspector General for Audit, Philadelphia Region, 3AGA

SUBJECT:   The Richmond Redevelopment and Housing Authority, Richmond, Virginia, Did
            Not Adequately Administer Its Housing Assistance Payments for Its Section 8
            Housing Choice Voucher Program

                                 HIGHLIGHTS

 What We Audited and Why


           We audited the Richmond Redevelopment and Housing Authority’s (Authority)
           administration of its housing assistance payments for its Section 8 Housing
           Choice Voucher program as part of our fiscal year 2009 audit plan. This is the
           last of three reports to be issued on the Authority’s program. The audit objective
           addressed in this report was to determine whether the Authority adequately
           maintained documentation to support housing assistance payments and accurately
           calculated them.


 What We Found

           The Authority did not properly maintain documentation to support housing
           assistance payments and did not always accurately calculate housing assistance
           payments for its Section 8 Housing Choice Voucher program. We identified
           deficiencies in 29 of the 31 files reviewed. The Authority did not maintain
           complete documents required by the U.S. Department of Housing and Urban
           Development (HUD) and its own administrative plan, resulting in unsupported
           housing assistance payments of $70,248. It also inaccurately calculated housing
           assistance payments, resulting in $18,559 in overpayments and $5,452 in
           underpayments.


What We Recommend

           We recommend that the Director of HUD’s Office of Public Housing, Baltimore
           hub, require the Authority to correct the errors in the tenant files identified by the
           audit, provide documentation to support housing assistance payments totaling
           $70,248 or reimburse its program for the payments that it cannot support,
           reimburse its leased housing program $18,559 for the housing assistance and
           utility allowance overpayments, and reimburse applicable tenants $5,452 for the
           housing assistance and utility allowance underpayments.

           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 discussed the audit results with the Authority throughout the audit and at an
           exit conference on June 19, 2009. The Authority provided written comments to
           the report on June 29, 2009. The Authority generally agreed with the report. The
           complete text of the Authority’s response, along with our evaluation of that
           response, can be found in appendix B of this report.




                                              2
                             TABLE OF CONTENTS

Background and Objective                                                             4

Results of Audit
        Finding: The Authority Did Not Adequately Administer Its Section 8 Housing   5
        Assistance Payments in Accordance with HUD Requirements

Scope and Methodology                                                                9

Internal Controls                                                                    10

Appendixes
   A.   Schedule of Questioned Costs and Funds to Be Put to Better Use               12
   B.   Auditee Comments and OIG’s Evaluation                                        13
   C.   Results of Tenant File Reviews                                               19
   D.   Housing Assistance Payment Errors                                            20




                                              3
                     BACKGROUND AND OBJECTIVE

The Richmond Redevelopment and Housing Authority (Authority) was established in 1940 to
provide and preserve quality affordable housing and promote self-sufficiency, homeownership,
and independence for all housing residents. A seven-member board of commissioners governs
the Authority. The Authority’s current chief executive officer is Anthony Scott. Its main
administrative office is located at 901 Chamberlayne Parkway in Richmond, Virginia.

Under the Section 8 Housing Choice Voucher program, the Authority makes rental assistance
payments to landlords on behalf of eligible low-income families. The U.S. Department of
Housing and Urban Development (HUD) compensates the Authority for the cost of
administering the program through administrative fees.

HUD authorized the Authority to provide leased housing assistance payments for 3,191 eligible
households. HUD authorized the Authority the following financial assistance for housing choice
vouchers:

                                                                           Amount
          Authority fiscal year      Annual budget authority              disbursed
                 2007                     $18,991,134                    $18,991,134
                 2008                     $16,637,641                    $16,637,641
                 Total                    $35,628,775                    $35,628,775

The audit objective was to determine whether the Authority properly maintained documentation
to support housing assistance payments and accurately calculated them.




                                              4
                               RESULTS OF AUDIT


Finding: The Authority Did Not Adequately Administer Its Section 8
Housing Assistance Payments in Accordance with HUD Requirements
The Authority did not properly maintain documentation to support housing assistance payments
and did not always accurately calculate housing assistance payments in compliance with HUD
requirements. This condition occurred because the Authority experienced high staff turnover
and did not perform required quality control reviews to ensure that it followed HUD
requirements. As a result, it was unable to support $70,248 in housing assistance payments and
improperly overpaid $18,559 and underpaid $5,452 in housing assistance and utility allowances.




 The Authority Lacked Proper
 Documentation in Its Tenant
 Files and $70,248 in Payments
 Were Unsupported

              The Authority lacked proper documentation to support housing assistance
              payments totaling $70,248 for the period September 2006 through August 2008.
              Our review of 31 tenant files showed that 29 files had at least one of the following
              deficiencies:

                     15 files did not contain evidence that recertifications were completed on
                     time;

                     Five files did not contain evidence of proper selection from the waiting
                     list;

                     Four files did not have proper income verification;

                     Three files did not have a completed citizenship declaration form (HUD
                     Form 214) for the occupants;

                     Three files did not have an Authorization for the Release of
                     Information/Privacy Act Notice (HUD Form 9886);

                     Three files did not have evidence of a rent reasonableness review;

                     Two files did not have a completed request for tenancy approval;

                     Two files did not contain documentation to verify the name, sex, date of
                     birth, disability, and relationship to the head of household;



                                               5
                  One file did not contain a zero-income certification;

                  One file did not contain a lead-based paint certification;

                  One file was not provided for review; and

                  One file did not contain Social Security documentation.
           The files reviewed did not include complete documentation required by HUD and
           were not consistent with HUD requirements and the Authority’s administrative
           plan. Although the majority of the deficiencies were in essence documentation
           issues, there were instances in which the lack of documentation was material and
           resulted in the Authority’s making unsupported housing assistance payments of
           $70,248. We conservatively determined that the Authority made unsupported
           payments of

                  $26,840 for three files for which a rent reasonableness review was not
                  performed,

                  $22,523 for five files for which an annual recertification was not
                  performed,

                  $11,000 for one file that the Authority did not provide to us, and

                  $9,885 for one file for which the Authority did not obtain the Social
                  Security documentation.
           Appendix C of this report shows the detailed results of our tenant file reviews.

The Authority Incorrectly
Calculated Housing Assistance
Payments


           The Authority incorrectly calculated housing assistance, resulting in
           overpayments of $18,559 and underpayments of $5,452 for the period September
           2006 through August 2008. To determine whether the Authority correctly
           calculated the housing assistance, we reviewed 73 annual reexaminations from 31
           tenant files. The Authority incorrectly calculated housing assistance payments in
           19 of the 31 files reviewed. The Authority made these errors because it did not

                  Properly calculate income, payment standards, and deductions (11 files);

                  Properly calculate the utility allowance for one or more certifications (five
                  files); and

                  Properly calculate deductions from the annual income (three files).



                                            6
             Appendix D of this report shows the housing assistance and utility allowance
             payment errors that resulted from the Authority’s incorrect calculations.

The Authority Experienced
High Staff Turnover and
Lacked Adequate Procedures
and Controls


             The Authority’s high turnover of staff and lack of quality control procedures
             contributed significantly to the errors found in nearly every file.

             The Authority Experienced High Staff Turnover

             The Authority experienced a significant turnover of personnel from September
             2006 to March 2009. Specifically, the Authority lost 11 employees including nine
             housing specialists and two housing supervisors. Thus, reexaminations were not
             completed annually as required by HUD and the Authority’s administrative plan.
             The Authority has taken action to help alleviate this problem by hiring a
             contractor to assist it in performing the outstanding reexaminations.

             The Authority Did Not Perform Required Quality Control Reviews of Its
             Staff or Contractor

             The Authority did not perform quality control reviews as required by HUD and its
             administrative plan. Its administrative plan states that an Authority supervisor or
             a qualified person other than the person who performed the work will perform
             supervisory quality control reviews. For fiscal year 2008, the Authority
             completed only 15 of 36 required quality control reviews. Further, the
             administrative plan states that before initial certification and at the completion of
             all reexaminations, the Authority should perform quality control file reviews of 50
             percent of all files to detect program abuse and fraud. The program manager
             stated that the reviews had not been performed because she did not have enough
             staff and the Authority was concentrating on completing the reexaminations.

Conclusion

             The Authority did not adequately administer its leased housing assistance program.
             As a result, it disbursed $70,248 in housing assistance payments without proper
             documentation and incorrectly calculated housing assistance payments, resulting in
             $18,559 in overpayments and $5,452 in underpayments. The Authority needs to
             implement adequate controls and procedures to improve its administration of the
             program and ensure that it complies with HUD requirements and its administrative
             plan.




                                               7
Recommendations



          We recommend that the Director of HUD’s Office of Public Housing, Baltimore
          hub, require the Authority to

          1A.     Correct the errors in the tenant files identified by the audit.

          1B.     Provide documentation to support housing assistance payments totaling
                  $70,248 or reimburse its program from nonfederal funds for the payments
                  it cannot support.

          1C.     Reimburse its program $18,559 from nonfederal funds for the
                  overpayment of housing assistance and utility allowances.

          1D.     Reimburse the applicable tenants $5,452 for the underpayment of housing
                  assistance and utility allowances.

          1E.     Perform and document quality control reviews as required by its
                  administrative plan.

          1F.     Develop and implement procedures to ensure that housing assistance
                  payments are correctly calculated and supported with the required
                  documentation.




                                             8
                         SCOPE AND METHODOLOGY

To accomplish our objective, we reviewed

       Applicable laws; regulations; the Authority’s administrative plan, effective July 1, 2005;
       HUD’s program requirements at 24 CFR [Code of Federal Regulations] Parts 5, 35, and
       982; HUD’s Public and Indian Housing Notices 2004-01 and 2004-18; and HUD’s
       Housing Choice Voucher Guidebook 7420.10G.

       The Authority’s accounting records, annual audited financial statements for 2005 through
       2007, tenant files, computerized databases including housing assistance payment register
       and HUD-50058 (Family Report) data, policies and procedures, board meeting minutes
       from September 2005 to May 2007, organizational chart, and program annual contributions
       contract.

       HUD’s monitoring reports for the Authority.

We also interviewed the Authority’s employees and HUD staff.

To achieve our audit objective, we relied in part on computer-processed data in the Authority’s
database. Although we did not perform a detailed assessment of the reliability of the data, we did
perform a minimal level of testing and found the data to be adequate for our purposes.

We statistically selected 82 of the tenants who received housing assistance payments during our
audit period using a variable statistical sampling method developed by our computer audit
specialist. The sampling criteria used a variable sampling methodology with a 90 percent
confidence level and 10 percent precision. Our universe included 2,840 families that received more
than $29 million in housing assistance payments. We only reviewed 31 of the 82 tenants because of
time constraints and the recurring errors found in 29 of the 31 files reviewed.

We performed our on-site audit work from October 2008 through April 2009 at the Authority’s
Section 8 office located at 918 Chamberlayne Parkway, Richmond, Virginia. The audit covered
the period September 2006 through August 2008 but was expanded when necessary to include
other periods.

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
              objective:

                      Program operations – Policies and procedures that management has
                      implemented to reasonably ensure that a program meets its objectives.

                      Validity and reliability of data – Policies and procedures that management
                      has implemented to reasonably ensure that valid and reliable data are
                      obtained, maintained, and fairly disclosed in reports.

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

              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 Weakness


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



                                               10
The Authority did not establish and implement adequate controls to ensure
that housing assistance payments were accurate and properly supported.




                         11
                                 APPENDIXES


Appendix A

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

          Recommendation                                               Funds to be put
              number             Ineligible 1/        Unsupported 2/   to better use 3/
                  1B                                     $70,248
                  1C              $18,559
                  1D                                                       $5,452



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.

3/   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. The funds to be put to better use in this report represent
     funds that tenants overpaid due to the Authority’s calculation errors.




                                                 12
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation   Auditee Comments




                         13
Comment 1




            14
Comment 2




Comment 3




            15
Comment 4




            16
Comment 5




Comment 6




            17
                         OIG Evaluation of Auditee Comments

Comment 1   We reviewed the additional documentation the Authority provided after the exit
            conference and made revisions to the audit report as appropriate.

Comment 2   Based on an updated housing assistance payment register and other
            documentation the Authority provided after the exit conference, we updated the
            report to show the unsupported amount as $444.

Comment 3   The documentation provided does show that the recertifications were performed;
            however the documentation provided does not provide evidence indicating that
            the tenant was properly selected from the waiting lists, nor verify the Social
            Security numbers for the household. Code of Federal Regulations 982.204 states
            that tenants must be selected from the waiting list and Code of Federal
            Regulations 982.551 also states that tenants must provide documentation to verify
            Social Security numbers.

Comment 4   For recertifications 2006 through 2008, the child support income was not always
            annualized as suggested by the Authority. Thus, the income used in determining
            the housing assistance payments was incorrect which resulted in an overstatement
            of housing assistance payments. Furthermore, the documentation provided did
            not provide evidence supporting that a rent reasonableness review was performed
            as required.

Comment 5   According to Code of Federal Regulations 982, annual income is all amounts
            anticipated to be received during a 12-month period. The documentation
            provided by the Authority indicates the tenant would be receiving unemployment
            for a maximum benefit period of 18 weeks. Thus, the Authority should not have
            annualized the income.

Comment 6   We did not take exception with the housing assistance payments due to errors.
            However, the tenant file reviewed did not provide evidence of a rent
            reasonableness review. The additional documentation provided by the Authority
            does not provide evidence to support that a rent reasonableness review was
            performed as required by HUD regulations.




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      22
      21
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      19
      18
      17
      16
      15
      14
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      11
      10
                                                                                                                                                                Tenant




     Totals 1
            X
                                                                                                                                                    Authority did not provide file
                                                                                                                                                    Recertification not completed




     X
                             X
                             X
                                              X
                                                           X
                                                                                      X
                                                                                                    X
                                                                                                    X
                                                                                                            X
                                                                                                            X
                                                                                                            X
                                                                                                            X
                                                                                                                                        X
                                                                                                                                            X




                                                                             X




     14
                                                                                                                                                               on time
                                                                                                                                                                                                                         Appendix C




     5
                                     X
                                                  X
                                                                 X
                                                                 X
                                                                                                                                 X
                                                                                                                                                    Recertification not performed
                                                                                                                                                      Lead-based paint certificate




     1
                                                                                                    X
                                                                                                                                                               not present
                                                                                                                                                      Incorrect housing assistance




     X
                             X
                             X
                             X
                                              X
                                                           X
                                                                 X
                                                                 X
                                                                 X
                                                                                      X
                                                                                      X
                                                                                      X
                                                                                      X
                                                                                                        X
                                                                                                                     X
                                                                                                                     X
                                                                                                                     X
                                                                                                                                        X
                                                                                                                                            X




     19
                                                                                                                                                                payments
                                                                                                                                                    No evidence of proper selection




     5
                                                           X
                                                                 X
                                                                             X
                                                                                          X
                                                                                                                                        X
                                                                                                                                                          from the waiting list
                                                                                                                                                      Missing rent reasonableness




     3
                   X
                                                                                          X
                                                                                                            X
                                                                                                                                                                  review




     4
                                 X
                                                                         X
                                                                                                                     X
                                                                                                                             X
                                                                                                                                                     Improper income verification
                                                                                                                                                       Missing Authorization for




19
     3
                             X
                                                                     X
                                                                                                                         X
                                                                                                                                                    Release of Information/Privacy
                                                                                                                                                        Act Notice - HUD 9886
                                                                                                                                                    Missing citizenship declaration




     3
     X
                                              X
                                                                                                                                                X



                                                                                                                                                               - Form 214
                                                                                                                                                        Missing Social Security




     1
                                                                             X
                                                                                                                                                             documentation
                                                                                                                                                    Missing documentation (birth
                                                                                                                                                    certificate) to verify the name,




     2
                                                                     X
                                                                                                        X
                                                                                                                                                      sex, date of birth, disability,
                                                                                                                                                    and relationship to the head of
                                                                                                                                                                                        RESULTS OF TENANT FILE REVIEWS




                                                                                                                                                                household
                                                                                                                                                      Missing request for Tenancy




     2
                                                                                          X
                                                                                                                                        X




                                                                                                                                                        Approval - HUD 52517
                                                                                                                                                          Missing zero-income




     1
               X
                                                                                                                                                              certification
                                                                                                                                                         Unsupported housing
                                                                                                                                                             assistance




     $70,248
                   $10,098
                                     $5,122
                                                  $1,896
                                                               $11,000
                                                                $9,354
                                                                $5,707
                                                                             $9,885
                                                                                          $12,867
                                                                                                            $3,875
                                                                                                                                 $444
Appendix D

               HOUSING ASSISTANCE PAYMENT ERRORS


              Housing          Housing            Utility          Utility
                                                                                     Total             Total
             assistance       assistance        allowance        allowance
                                                                                   underpay-         overpay-
             underpay-        overpay-          underpay-        overpay-
Tenant                                                                               ments            ments
               ments            ments             ments            ments
    2                               $365                                                                  $365
    4                               $309                                                                  $309
    7              $172                                                                  $172
    8              $550                                                                  $550
    9                               $201                                                                  $201
   11                               $373                                                                  $373
   13                             $2,686                                                                $2,686
   14                               $725                                                                  $725
   15            $1,852                                                                $1,852
   16              $427                               $198                               $625
   18                             $5,718                                                                $5,718
   19                               $305                                                                  $305
   20                             $4,632                                                                $4,632
   22                               $132                                                                  $132
   24                $81                                                                  $81
   26                                $639           $1,776             $460            $1,776           $1,099
   27              $396                                                                  $396
   28                               $726                                                                  $726
   31                             $1,288                                                                $1,288

Totals           $3,478          $18,099            $1,974             $460            $5,452         $18,559




 To avoid double counting, we did not report questioned costs as both ineligible payments and unsupported costs.


                                                       20