Issue Date
August 12, 2009
Audit Report Number
2009-PH-1012
TO: Dennis G. Bellingtier, Director, Office of Public Housing, Pennsylvania State
Office, 3APH
FROM: John P. Buck, Regional Inspector General for Audit, Philadelphia Region, 3AGA
SUBJECT: The Housing Authority of the City of York, Pennsylvania, Did Not Ensure
That Its Section 8 Housing Choice Voucher Program Units Met Housing Quality
Standards
HIGHLIGHTS
What We Audited and Why
We audited the Housing Authority of the City of York’s (Authority)
administration of its housing quality standards inspection program for its
Section 8 Housing Choice Voucher program as part of our fiscal year 2009 audit
plan. The audit objective was to determine whether the Authority ensured that its
program units met the U.S. Department of Housing and Urban Development’s
(HUD) housing quality standards.
What We Found
The Authority did not ensure that its program units met housing quality standards
as required. Of 61 program units statistically selected for inspection, 44 did not
meet HUD’s housing quality standards. Moreover, 23 of the 44 units were in
material noncompliance with housing quality standards. The Authority spent
$24,357 in program and administrative funds for these 23 units. We estimate that
over the next year if the Authority does not implement adequate procedures and
controls to ensure that its program units meet housing quality standards, HUD
will pay more than $587,000 in housing assistance on units that materially fail to
meet HUD’s housing quality standards.
What We Recommend
We recommend that HUD require the Authority to ensure that housing units
inspected during the audit are repaired to meet HUD’s housing quality standards,
reimburse its program from nonfederal funds for the improper use of $24,357 in
program and administrative funds for units that materially failed to meet HUD’s
housing quality standards, and implement adequate procedures and controls to
ensure that in the future, program units meet housing quality standards to prevent
an estimated $587,000 from being spent annually on units that materially fail to
meet HUD’s housing quality standards.
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 a draft audit report to the Authority and HUD officials on July 20,
2009. We discussed the audit results with the Authority and HUD officials
throughout the audit and at an exit conference on July 24, 2009. The Authority
provided written comments to our draft report on July 27, 2009. The Authority
agreed with the audit report. The complete text of the Authority’s response can
be found in appendix B of this report.
2
TABLE OF CONTENTS
Background and Objective 4
Results of Audit
Finding: Controls over Housing Quality Standards Were Inadequate 5
Scope and Methodology 14
Internal Controls 16
Appendixes
A. Schedule of Questioned Costs and Funds to Be Put to Better Use 18
B. Auditee Comments 19
3
BACKGROUND AND OBJECTIVE
The Housing Authority of the City of York (Authority) was established in February 1949 under
the Housing Authority Law of the Commonwealth of Pennsylvania. The Authority is governed
by a five-member board of commissioners. The current executive director is Ms. Debbie
Loucks. The Authority’s main administrative office is located at 31 South Broad Street, York,
Pennsylvania.
Under the Section 8 Housing Choice Voucher program, the U.S. Department of Housing and
Urban Development (HUD) authorized the Authority to provide leased housing assistance
payments to 1,452 eligible households. HUD authorized the Authority the following financial
assistance for housing choice vouchers for fiscal years 2006 through 2008:
Number of
Authority vouchers Annual budget
fiscal year authorized authority
2006 1,452 $6,474,263
2007 1,452 $5,944,029
2008 1,452 $5,723,241
Total $18,141,533
HUD regulations at 24 CFR [Code of Federal Regulations] 982.405(a) require public housing
authorities to perform unit inspections before the initial move-in and at least annually. The
authority must inspect the unit leased to the family before the term of the lease, at least annually
during assisted occupancy, and at other times as needed to determine whether the unit meets
housing quality standards.
Our audit objective was to determine whether the Authority ensured that its program units met
HUD’s housing quality standards.
4
RESULTS OF AUDIT
Finding: Controls over Housing Quality Standards Were Inadequate
The Authority did not adequately enforce HUD’s housing quality standards. Of 61 program
housing units selected for inspection, 44 did not meet HUD’s housing quality standards, and 23
materially failed to meet housing quality standards. The Authority’s inspectors did not observe
or report 326 violations, which existed at the units when they conducted their inspections. This
occurred because the Authority did not ensure that its housing inspectors had sufficient
knowledge of housing quality standards and did not implement an effective quality control
program for its inspection process. As a result, the Authority spent $24,357 in program and
administrative funds for 23 units that materially failed to meet HUD’s housing quality standards.
Unless the Authority implements adequate procedures and controls to ensure that its program
units meet housing quality standards, we estimated that it will pay more than $587,000 in
housing assistance for units that materially fail to meet housing quality standards over the next
year.
Housing Units Did Not Meet
HUD’s Housing Quality
Standards
We statistically selected 61 units from unit inspections passed by the Authority’s
inspectors during the period September 1, 2008, to March 6, 2009. The 61 units
were selected to determine whether the Authority ensured that the units in its
program met housing quality standards. We inspected the selected units between
March 31 and April 9, 2009.
Of the 61 units inspected, 44 (72 percent) had 499 housing quality standards
violations. Additionally, 23 of the 44 units (52 percent) were considered to be in
material noncompliance since they had numerous violations that predated the
Authority’s last inspection and were not identified by the Authority’s inspectors,
creating unsafe living conditions. Of the 44 units with housing quality standards
violations, four units had violations that were noted on the Authority's previous
inspection report, and the Authority later passed the units. However, during our
inspection, it was determined that the violations had not been corrected. The 23
units had 326 violations (including 5 violations identified by the Authority but not
corrected) that existed before the Authority’s last inspection. HUD regulations at
24 CFR 982.401 require that all program housing meet HUD’s housing quality
standards at the beginning of the assisted occupancy and throughout the tenancy.
The following table categorizes the 499 housing quality standards violations in
the 44 units that failed the housing quality standards inspections.
5
Category of violations Number Number
of of
violations Units
Electrical 123 32
Condition of doors 69 27
Stairs, rail, and deck 65 29
Windows 62 18
Other potentially hazardous 32 17
features
Exterior surfaces 23 18
Interior floors 22 14
Other interior hazards 18 11
Site and neighborhood 18 11
conditions
Roof and gutters 16 10
Tub, shower, sink, toilet 16 11
Kitchen appliances 8 6
Smoke detectors 8 7
Evidence of infestation 6 6
Lead-based paint 5 4
Wall condition 5 5
Ceiling condition 3 3
Total 499
We presented our inspection results to the Authority and to the Director of HUD’s
Pennsylvania State Office of Public Housing during the audit.
Housing Quality Standards
Violations Were Identified
The following pictures illustrate some of the violations we noted while
conducting housing quality standards inspections at the Authority’s leased
housing units.
6
Inspection 7070001: Wire connections were made outside of a junction box. This violation
was not identified during the Authority’s September 8, 2008, inspection.
Inspection 7079008: Ceramic light fixture was not secured to ceiling light box exposing the
wires. This violation was not identified during the Authority’s December 5, 2008, inspection.
7
Inspection 7400022: There was an exposed “hot” wire. This violation was not identified during
the Authority’s November 6, 2008, inspection.
Inspection 7280010: There were a missing handrail and missing railing along the stairs to the
basement. These violations were not identified during the Authority’s January 29, 2009,
inspection.
8
Inspection 3120118: The handrail does not extend the full length of the main stairs to the unit.
This violation was not identified during the Authority’s January 26, 2009, inspection.
Inspection 7200002: There were damaged cement steps leading to the front door that can cause
a tripping hazard. This violation was not identified during the Authority’s February 9, 2009,
inspection.
9
Inspection 3120118: Stair treads leading to the second floor were damaged and can cause a
tripping hazard. This violation was not identified during the Authority’s January 26, 2009,
inspection.
The Authority Did Not Have
Adequate Procedures and
Controls over Its Inspections
Although HUD regulations at 24 CFR 982.401 and the Authority’s administrative
plan required the Authority to ensure that its program units met housing quality
standards, it failed to do so because the Authority’s inspectors, including the
quality control inspector, were unaware that some deficiencies were violations of
housing quality standards and sometimes relied on statements made by owners to
determine compliance with the standards. In addition, although the Authority has
a quality control program for its inspections, it did not document that it used the
results of the quality control inspections as a training tool to give feedback to its
inspectors on the quality of their inspections.
The Authority’s Inspectors Did Not Have Sufficient Knowledge and
Sometimes Relied on Statements Made by Owners
The Authority’s housing inspectors did not have sufficient knowledge of housing
quality standards. The Authority did not ensure that its three housing inspectors
were equipped with the knowledge they needed to perform complete inspections
to assess compliance with HUD’s housing quality standards. As a result, the
inspectors overlooked violations. The Authority’s inspectors stated that they
10
simply overlooked some violations that we identified because they were unaware
that the deficiencies were violations of the standards. For example, the inspectors
stated that in some instances they examined electrical wiring to ensure that the
connections were clean, but if the connections were made outside of a junction
box they did not identify the deficiency as a violation. Also, the inspectors have
relied on statements made by the owners to assess the safety of electrical wiring.
The inspectors stated that rely on the statements of the owners to determine
whether or not a wiring system is “hot” because they do not have the tools to test
the electrical system to verify the owners’ statements. As a result electrical
violations were undetected. The Authority needs to provide its inspectors the
knowledge and tools they need to perform adequate inspections.
The Authority’s Quality Control Program Was Ineffective
The Authority did not implement an effective quality control program to ensure
that inspections were adequately performed to assess compliance with HUD’s
housing quality standards. The Authority’s administrative plan sufficiently
covered policies and procedural guidelines for conducting housing quality
inspections as required by HUD regulations at 24 CFR 982.54(d). However, the
Authority’s quality control inspector did not have sufficient knowledge to
determine whether the Authority’s inspectors were conducting adequate housing
quality inspections to assess compliance with HUD’s standards. The quality
control inspector stated that she would not have identified some violations that we
identified such as electrical connections made outside of a junction box because
she was not aware it was a violation. Without this knowledge, the quality control
inspector cannot ensure that inspected units meet HUD’s housing quality
standards. To illustrate, the Authority performed 148 quality control inspections
from October 1, 2007, through September 31, 2008. Of the 148 inspections, the
quality control inspector passed 125 units and failed 23. Included in the 125
inspections were two units that failed our inspection. The quality control
inspections did not identify violations such as a missing handrail, a broken
junction box cover, and an unsecured fuse box cover.
Also, the Authority did not use the results of its quality control inspections to give
inspectors feedback on their performance. The Authority’s administrative plan
states that the purpose of quality control inspections is to determine that each
inspector conducts accurate and complete inspections and to ensure that there is
consistency among inspectors in the application of the housing quality standards.
Also, HUD’s Housing Choice Voucher Guidebook 7420.10G states that the
results of the quality control inspections should be provided as feedback on
inspectors’ work, which can be used to determine whether individual performance
or general housing quality standards training issues need to be addressed. The
Authority stated that the results of the quality control inspections were discussed
with the inspectors, however, the Authority did not provide any documentation to
demonstrate that it used the results to improve its inspection program and identify
11
training issues that need to be addressed. The Authority needs to provide its
quality control inspector the knowledge and tools needed to perform adequate
inspections, and use the results of its quality control inspections to provide
feedback to inspectors to improve the program.
Conclusion
The Authority’s program participants were subjected to numerous housing quality
standards violations which created unsafe living conditions, and the Authority did
not properly use its program funds when it failed to ensure that its program units
met HUD’s housing quality standards as required. In accordance with HUD
regulations at 24 CFR 982.152(d), HUD is permitted to reduce or offset any
program administrative fees paid to a public housing authority if it fails to
perform its administrative responsibilities correctly or adequately, such as not
enforcing HUD’s housing quality standards. The Authority disbursed $21,407 in
housing assistance payments to owners and received $2,950 in program
administrative fees for the 23 units that materially failed to meet HUD’s housing
quality standards. If the Authority provides its inspectors the knowledge and tools
they need to perform adequate inspections, and implements an effective quality
control program, we estimate that more than $587,000 in future housing assistance
payments will be spent for units that are decent, safe, and sanitary. Our
methodology for this estimate is explained in the Scope and Methodology section
of this report.
Recommendations
We recommend that the Director of HUD’s Pennsylvania State Office of Public
Housing require the Authority to
1A. Certify, along with the owners of the 44 units cited in this finding, that the
applicable housing quality standards violations have been corrected.
1B. Reimburse its program $24,357 from nonfederal funds ($21,407 for
housing assistance payments and $2,950 in associated administrative fees)
for the 23 units that materially failed to meet HUD’s housing quality
standards.
1C. Develop and implement controls to ensure that program units meet
housing quality standards, inspectors are provided the knowledge and
tools to perform adequate inspections, and the results of quality control
inspections are used to provide feedback to inspectors to improve the
12
inspection program, thereby ensuring that $587,496 in program funds is
expended only for units that are decent, safe, and sanitary.
13
SCOPE AND METHODOLOGY
To accomplish our objective, we reviewed
Applicable laws; regulations; the Authority’s administrative plan; HUD’s program
requirements at 24 CFR Part 982; and HUD’s Housing Choice Voucher Guidebook
7420.10G.
The Authority’s inspection reports, computerized databases including housing quality
standards inspection data and housing assistance payment data, accounting records, annual
audited financial statements for 2005 and 2006, tenant files, policies and procedures, board
meeting minutes, and organizational chart.
HUD’s monitoring reports for the Authority.
We also interviewed the Authority’s employees, HUD staff, and program households.
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 61 of the Authority’s program units to inspect from a universe of 558 units
that passed the Authority’s housing quality standards inspections between September 1, 2008, and
March 6, 2009. We selected the sample using the U.S. Army Audit Agency Statistical Sampling
System software. We selected 61 units to determine whether the Authority’s program units met
housing quality standards. The sampling criteria used a 90 percent confidence level, 50 percent
estimated error rate, and precision of plus or minus 10 percent.
Our sampling results determined that 23 of 61 units (38 percent) materially failed to meet HUD’s
housing quality standards. We determined that the 23 units were in material noncompliance
because they had 326 violations that existed before the Authority’s last inspection creating
unsafe living conditions. All units were ranked, and we used auditors’ judgment to determine
the material cutoff line.
Based upon a sample size of 61 from a total population of 558 units, an estimate of 38 percent
(23 units) of the sample population materially failed housing quality standards inspections. The
sampling error is plus or minus 9.63 percent. There is a 90 percent confidence that the frequency
of occurrence of program units materially failing housing quality standards inspections lays
between 28.07 and 47.34 percent of the population. This equates to an occurrence of between
156 and 264 units of the 558 units in the population. We used the most conservative number,
which is the lower limit or 156 units.
We analyzed the Authority’s automated housing assistance payment register for the period
October 1, 2006, through September 30, 2008, and estimated that the average annual housing
14
assistance payment per household was $3,766. Using the lower limit of the estimate of the
number of units and the estimated average annual housing assistance payment, we estimate that
the Authority will spend $587,496 (156 units times $3,766 – the estimated average annual
housing assistance payment) annually for units that are in material noncompliance with HUD’s
housing quality standards.
This estimate is presented solely to demonstrate the annual amount of program funds that could
be put to better use on decent, safe, and sanitary housing if the Authority implements our
recommendations. While these benefits would recur indefinitely, we were conservative in our
approach and only included the initial year in our estimate.
We performed our on-site audit work from December 2008 through July 2009 at the Authority’s
main administrative office located at 31 South Broad Street, York, Pennsylvania. The audit
covered the period October 2006 through March 2009 but was expanded when necessary to
include other periods.
We performed our 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.
15
INTERNAL CONTROLS
Internal control is an integral component of an organization’s management that provides
reasonable assurance that the following objectives are being 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 the following internal controls were relevant to our 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:
16
The Authority lacked sufficient procedures and controls to ensure that unit
inspections complied with HUD regulations and that program units met
minimum housing quality standards.
Separate Communication of
Minor Deficiencies
Minor internal control and compliance issues were reported to the Authority by a
separate letter dated July 23, 2009.
17
APPENDIXES
Appendix A
SCHEDULE OF QUESTIONED COSTS
AND FUNDS TO BE PUT TO BETTER USE
Recommendation Funds to be put
number Ineligible 1/ to better use 2/
1B $24,357
1C $587,496
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/ 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. This includes reductions in outlays, deobligation of funds, withdrawal of
interest subsidy costs not incurred by implementing recommended improvements,
avoidance of unnecessary expenditures noted in preaward reviews, and any other savings
which are specifically identified. In this instance, if the Authority implements our
recommendations, it will cease to incur program costs for units that are not decent, safe,
and sanitary and, instead, will expend those funds for units that meet HUD’s standards,
thereby putting approximately $587,000 in program funds to better use. Once the
Authority successfully improves its controls, this will be a recurring benefit. Our
estimate reflects only the initial year of this benefit.
18
Appendix B
AUDITEE COMMENTS
19
The Housing Authority of the City of York, Pennsylvania, Did Not Ensure That Its Section 8 Housing Choice Voucher Program Units Met Housing Quality Standards
Published by the Department of Housing and Urban Development, Office of Inspector General on 2009-08-12.
Below is a raw (and likely hideous) rendition of the original report. (PDF)