oversight

Kier Paid or Recorded Ineligible Costs and Did Not Properly Compute Subsidies

Published by the Department of Housing and Urban Development, Office of Inspector General on 2009-12-18.

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

                                                                  Issue Date
                                                                        December 18, 2009
                                                                  Audit Report Number
                                                                           2010-DE-1001




TO:         Marcie D. LaPorte, Director, HUD Denver Multifamily Hub, 8AHML

            //signed//
FROM:       Ronald J. Hosking, Regional Inspector General for Audit, 8AGA

SUBJECT: Kier Paid or Recorded Ineligible Costs and Did Not Properly Compute Subsidies


                                    HIGHLIGHTS

 What We Audited and Why

             We audited Kier Property Management and Real Estate, LLC (Kier), because it
             took over as the management agent for 17 multifamily properties in Colorado and
             one in Wyoming in July 2008. Kier had not managed properties in Colorado
             before, so there were concerns about Kier’s administrative capacity to properly
             manage all of the properties. Our audit objective was to determine whether Kier
             properly accounted for property and management agent costs and properly
             accomplished its occupancy functions.

 What We Found
             Kier recorded more than $2 million in notes payable in the properties’ books for
             notes that did not properly restrict repayment of the principal to surplus cash.
             Kier also used property funds for $64,800 in ineligible setup fees. Additionally,
             Kier did not always correctly compute subsidies or determine tenant eligibility.

 What We Recommend

             We recommend that HUD require Kier to work with the owner to ensure that the
             notes restrict principal payments to surplus cash and to repay the $64,800 in setup
             fees from nonfederal funds. We also recommend that HUD require Kier to (1)
           work with HUD to recover identified overpayments of Section 8 housing
           assistance subsidies, (2) correct the rent miscalculations identified in the report,
           and (3) develop procedures to consistently communicate changes to the policies
           and procedures to ensure accurate and consistent rent calculations and related
           occupancy procedures.

           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 discussion draft of the audit report to Kier on September 16,
           2009, and requested comments by September 26, 2009. After the exit conference
           on September 23, 2009, Kier officials provided additional documentation that we
           reviewed, and changed the audit report accordingly. We provided the final draft
           of the audit report to Kier on November 20, 2009, and requested comments by
           November 30, 2009. Kier requested an extension to December 2, 2009. Kier
           provided the written response on December 2, 2009. Kier officials generally
           disagreed with the findings because they did not think Kier should be responsible
           for the identified deficiencies. However, Kier officials basically agreed to
           cooperate with HUD in resolving the recommendations.

           The complete text of the auditee’s response, along with our evaluation of that
           response, can be found in appendix B of this report.




                                             2
                            TABLE OF CONTENTS

Background and Objective                                                            4

Results of Audit
      Finding 1: Kier Recorded Notes Payable Based on Notes That Did Not Properly   5
                 Restrict Principal Payments
      Finding 2: Kier Used Property Funds for Ineligible Costs                      7
      Finding 3: Kier Did Not Accurately or Consistently Complete Occupancy         8
                 Functions

Scope and Methodology                                                               12

Internal Controls                                                                   13

Appendixes
   A. Schedule of Questioned Costs and Funds to Be Put to Better Use                15
   B. Auditee Comments and OIG’s Evaluation                                         16
   C. Schedule of Occupancy Deficiencies                                            21




                                             3
                       BACKGROUND AND OBJECTIVE

The Kier family founded the Kier Company in 1957 as a single-family home construction
company. In 2005, the family established Kier Property Management and Real Estate, LLC
(Kier), to manage multifamily properties and to conduct real estate business.

The owner for each of the 18 properties managed by Kier is a partnership consisting of a general
partner and two limited partners. For all of the properties, the general partner is American
Housing Preservation Corporation, and one of the limited partners is Boston Capital Tax Credit
Fund XVIII, LP. The second limited partner is a unique entity for each of the properties. The
name of each entity is based on the initials of the property name. For example, the partnership
entity for Halcyon House Apartments is HH Housing, LP. This term is used as the owner name
on the contracts with the U.S. Department of Housing and Urban Development (HUD) and Kier.

On July 1, 2008, Kier contracted with the owner to be the management agent for the 18
properties included in this audit. The owner of the properties dismissed the prior management
agent, which was responsible for the properties for the first year and a half of the audit period.
Kier had direct responsibility for only the last six months. However, as the management agent,
Kier is responsible for correcting existing problems with the occupancy and accounting
functions.

Kier and the owner signed form HUD-9839-B, “Project Owner’s/Management Agent’s
Certification for Multifamily Housing Projects for Identity-of-Interest or Independent
Management Agents” (agreement), for each of the properties. The effective date of each
agreement was July 1, 2008, and the term of each agreement was five years.

All of the Colorado properties’ mortgages are insured under Section 542(c) of the Housing and
Community Development Act of 1992, which established a program of risk-sharing with
qualified state and local housing finance agencies, and receive HUD Section 8 housing
assistance.

Kier’s mission is to enhance the economic value of client assets through efficient and compliant
operational processes; careful cost management control; and quality customer service to
residents, tenants, and owners.

The objective of our audit was to determine whether Kier properly accounted for property and
management agent costs and properly accomplished its occupancy functions.




                                                 4
                                 RESULTS OF AUDIT

Finding 1: Kier Recorded Notes Payable Based on Notes That Did Not
           Properly Restrict Principal Payments
Kier recorded notes payable in the properties’ books for notes that did not properly restrict
payment of the principal to surplus cash. This condition occurred because Kier was required by
the owner to record the notes payable in the properties' books even though the notes did not
contain needed restrictions. As a result, the properties could lose the benefit of more than $2
million.


 Kier Recorded Notes Payable in
 the Books of Account for Notes
 That Did Not Properly Restrict
 Principal Payments

              Kier management recorded notes payable in the books of 18 properties to reflect
              the amount of fees paid by the owner for terminating the management agreements
              with the previous management agent. The owner of the 18 properties entered into
              secondary management agreements with the prior management agent but
              terminated the agreements effective June 30, 2008. The agreements required the
              owner to pay buyout fees for early termination of each agreement. HUD
              requirements do not allow for buyout fees; therefore, HUD funds cannot be used
              for these amounts.

              The general partner of the owner entity paid the fees, and then the owner
              instructed Kier to record “notes payable – general partner” in the books of
              account for each property for the amount of the buyout fee. The owner
              established promissory notes and allonges that restricted the payment of the
              interest accrued on the notes to surplus cash. However, these documents did not
              similarly restrict the payment of principal. These actions increased the potential
              of improper use of HUD funds to pay the principal amounts. The total amount of
              these notes payable for the 18 properties was more than $2 million.

                    Property         Note payable           Property           Note payable
                Aspen Meadows             $206,092   Helios Station                 $63,632
                Halcyon House             $400,313   Asbury Park                    $92,124
                Park Terrace              $101,621   Squire Village                $104,946
                Hilltop Apartments         $61,733   Tamarin Apartments            $127,264
                Kearney Plaza             $112,069   Clifton Family Housing        $100,672
                Tiffany Square             $66,956   Meadows Townhouses             $99,247
                Sheridan Gardens           $75,029   Dawson Square                  $90,225
                Courthouse Square         $136,287   Sunrise Manor                  $78,828
                Cheyenne Station           $94,973   Canon Club                     $37,989
                                                                       Total     $2,050,000

                                                5
The Owner Required Kier to
Record Notes Payable Based on
Inadequate Promissory Notes

           Kier followed the owner’s instructions to record the notes payable in the books of
           account for each of the properties. The promissory notes were inadequate
           because they did not restrict the payment of principal to surplus cash. The owner
           had the right to establish secondary agreements but had to pay unallowable costs
           from surplus cash or ownership funds.


The Properties May Lose the
Full Benefit of the HUD Funds

           The 18 properties could lose the benefit of more than $2 million if the agent pays
           off the notes payable with funds restricted by HUD. The funds should be used to
           make improvements on the properties and for other items that would improve the
           residents’ living environment.

Recommendation

           We recommend that the Director of HUD’s Denver Office of Multifamily
           Housing

           1A.    Require Kier to work with the owner to ensure that the promissory notes
                  restrict principal payments to surplus cash.




                                            6
Finding 2: Kier Used Property Funds for Ineligible Costs
Kier used property funds for ineligible setup fees. Kier officials mistakenly believed that HUD
had approved the fees. As a result, the properties lost the benefit of more than $64,000.


 Kier Incurred Ineligible Setup
 Fees

              Kier and the owner of the properties negotiated, for each property, a management
              agreement in addition to the management agreement required by HUD. This
              agreement provided for a setup fee of $50 per unit for all of the properties. HUD
              Handbook 4381.5, REV-2, The Management Agent Handbook, does not allow for
              setup fees. It allows for special management fees if a project has special needs or
              problems. The functions listed for the setup fee in Kier’s management agreement do
              not meet the special fee requirements and are regular management activities that
              should be paid from the management fee.

              The owner had the right to establish secondary agreements but should have paid the
              setup fees from ownership funds. For the 1,296 units included in the management
              agreements, Kier paid itself $64,800 from property funds for the ineligible setup
              fees.

 Kier Believed That HUD Had
 Approved the Setup Fees

              Kier believed that HUD had approved the secondary management agreements that
              contained the setup fees. However, a multifamily official stated that HUD was
              not a party to the additional management agreements and did not approve the fees.


 The Properties Lost the Full
 Benefit of the HUD Funds

              The 18 properties lost the benefit of $64,800 paid for the ineligible setup fees.
              The funds should have been available to make improvements on the properties
              and for other items that would improve the residents’ living environment.

 Recommendation

              We recommend that the Director of HUD’s Denver Office of Multifamily
              Housing

              2A.     Require Kier to repay the $64,800 in setup fees from nonfederal funds.

                                                7
Finding 3: Kier Did Not Accurately or Consistently Complete
           Occupancy Functions
Kier did not always correctly compute subsidies, determine tenant eligibility, or correct
deficiencies that existed when it became management agent. This condition occurred because
Kier did not effectively communicate its policies and procedures to its site staff. Consequently,
HUD paid excess subsidies on at least 13 units.



 Kier Did Not Properly
 Complete Occupancy
 Procedures

               Kier did not always correctly compute subsidies or determine tenant eligibility as
               required by HUD Handbook 4350.3, Occupancy Requirements of Subsidized
               Multifamily Housing Programs. It also did not always correct deficiencies
               existing when it became the management agent.

               We reviewed five tenant files for each of the eight properties reviewed. Of the 40
               files reviewed, we identified 15 deficiencies in 13 tenant files. The problems
               identified included the following:

                          Deficiency              Number of                 Impact
                                                  occurrences
                  Cotenant counted as live-            1          Potential of at least 11
                  in aide                                         years of unreported
                                                                  income
                  Income reported but not              5          Overpayment of subsidies
                  included in rent calculation
                  Indications of unreported            5          Overpayment of subsidies
                  income
                  Tenant eligibility not               3          Possibility of subsidies
                  properly determined                             paid for ineligible tenants
                  Allowance given for which            1          Overpayment of subsidies
                  the tenant was not eligible
                    (see appendix C for additional information)

               Of the 13 tenant files
                   • three were for tenants that had moved in after Kier became management
                      agent;
                   • three were existing tenants, but the deficiency occurred in a recertification
                      done during Kier’s management;

                                                 8
               •   six were for existing tenants for which a recertification was done during
                   Kier’s management, but the deficiency was not identified; and
               •   one was an existing tenant for which a recertification was not required
                   between the time Kier became management agent and the end of our audit
                   period.

            The most significant deficiency was that a cotenant was inappropriately
            considered a live-in aide, resulting in the potential of at least 11 years of
            unreported income for this person and the corresponding overpayment of
            subsidies.

            For five of the tenant files reviewed, we identified reported income that the site
            manager did not use in the rent calculations. For example, one resident’s
            verification showed wages and tips. The site manager used both for the June
            2008 interim recertification. However, for the September 2008 annual
            recertification, the site manager used only the wages. This error resulted in
            overpaid subsidies of $326 per month.

            Five tenant files contained indications of unreported income. For example, for the
            July 2008 move-in, one tenant reported only state assistance. For the 2009
            interim recertification, the resident reported only Social Security income. The
            Social Security verification showed a payment summary for January 2007 through
            January 2009. There was no verification that the state assistance had been
            terminated. Therefore, there was the possibility of unreported income for two rent
            calculations.

            Three tenant files contained indications that the residents may have been
            ineligible for Section 8 assistance. For example, one resident was determined to
            be ineligible but was allowed to move into the property. This error resulted in an
            overpayment of more than $18,000 in subsidies from the August 2006 move-in
            until the end of our audit period in December 2008.

            One resident was given an elderly/disabled allowance although he was 48 years
            old with no reported disability. This error resulted in a $10 per month
            overpayment of subsidies since the October 2008 move-in.


Kier Did Not Consistently
Communicate Changes to
Policies and Procedures

            Kier corporate officials maintained one set of policies for all of their properties,
            which they posted on their Web site. They frequently made changes to these
            policies but did not effectively communicate the changes to the site staff.
            Additionally, Kier Denver regional office employees did not always provide
            consistent information to site employees. This condition led to site managers at

                                              9
            various properties using different procedures. Site managers said that they were
            not certain about the policies and procedures, which were constantly changing.

HUD Paid Excess Rent
Subsidies


            HUD paid excess subsidies for at least 13 units. For some of the units, we were
            unable to compute the amounts of the overpayments because the tenant files did
            not contain sufficient information. For example, for one unit, the tenant file did
            not contain verifications of employment for the cotenant, which was
            inappropriately considered a live-in aide for at least 11 years.

Evaluation of Additional
Documents

            After the September 23, 2009, exit conference with Kier officials, they provided a
            written response and documentation addressing the reported deficiencies. In their
            written response, Kier officials disagreed with 10 of the 13 units questioned in the
            report. Their main argument was that they should not be accountable for what
            happened under the prior management. However, we believe that while they were
            not responsible for the processes by which the prior recertifications were done,
            they were responsible for correcting deficiencies existing when Kier became the
            management agent. We added clarifying information to the finding.

            The response to the deficiency noted for one unit was sufficient to resolve the
            deficiency and we have adjusted the report accordingly. Responses to two other
            deficiencies indicated they were taking corrective actions. Finally, the responses
            to the remaining deficiencies did not sufficiently address the issues and we
            continue to question those deficiencies.

Recommendations

            We recommend that the Director of HUD’s Denver Office of Multifamily
            Housing

            3A.    Require Kier to work with HUD to recover the $19,710 identified above
                   for overpayment of Section 8 housing assistance subsidies.

            3B.    Require Kier to correct the other rent miscalculations identified in the
                   report and recover any additional overpayment of Section 8 housing
                   assistance subsidies that cannot be supported.




                                             10
3C.   Require Kier to develop procedures to consistently communicate changes
      to the policies and procedures to ensure accurate and consistent rent
      calculations and related occupancy procedures.

3D.   Provide technical assistance to Kier to ensure that its management and
      staff comply with the occupancy requirements.




                              11
                         SCOPE AND METHODOLOGY

Our review period covered January 1, 2007, through December 31, 2008. We expanded this period
as necessary. We performed our on-site review at the Kier regional and corporate offices from
February through June 2009.

To accomplish our audit objective, we reviewed Kier and HUD criteria. We selected 8 of 18
properties for review. We selected properties throughout the Denver area that provided a cross-
section of property sizes and locations. We reviewed five tenant files from each of eight properties
to establish the effectiveness of the occupancy procedures. We selected tenant files that provided a
cross-section of the units in each property. The selected sample was not intended to be
representative of all properties’ units. We visited the eight properties to gain an understanding of
the occupancy operations and general physical condition. We reviewed accounting records for all
18 properties maintained by Kier to gain an understanding of the control structure and for
indications of inappropriate costs. We interviewed Kier and HUD personnel.

We used computer-generated data and lists only to obtain background information on the entity and
the HUD-assisted multifamily properties but did not rely on the data.

The Kier corporate headquarters is located at 3710 Quincy Avenue, Ogden, Utah. The Kier
Denver regional office is located at 7950 East Prentice Avenue, Suite 102, Greenwood Village,
Colorado.

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.




                                                 12
                              INTERNAL CONTROLS

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

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

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



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

              •       Controls over recording of property financial transactions.
              •       Controls over the disbursement of property funds.
              •       Controls over the occupancy functions.

              We assessed the relevant controls identified above.

              A significant weakness exists if management controls do not provide reasonable
              assurance that the process for planning, organizing, directing, and controlling
              program operations will meet the organization’s objectives.


 Significant Weaknesses


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

              •       Kier did not have adequate controls to ensure that only eligible notes payable
                      were recorded in the properties’ books (finding 1).
              •       Kier did not have adequate controls to ensure that property funds were used
                      only for eligible expenses (finding 2).
              •       Kier did not have adequate controls to ensure correct computations of
                      subsidies or determination of tenant eligibility (finding 3).


                                                13
Separate Communication of
Minor Deficiencies
                Minor internal control and compliance issues were reported to the auditee in
                a separate memorandum, dated December 18, 2009.




                                         14
                                      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                               $2,050,000
                                 2A                $64,800
                                 3A                $19,710

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, Kier received $64,800 in ineligible setup fees
     and $19,710 in overpayment of Section 8 housing assistance subsidies.

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, the owner paid $2,050,000 to buy out the
     prior management agent’s contracts. The owner then required Kier to record these costs
     as notes payable. The buyouts were ineligible costs. The notes payable need to be
     removed from the books of account to ensure that the properties’ funds are not used for
     ineligible costs and to ensure that the residents realize the benefits that can be provided
     with these funds.




                                              15
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation   Auditee Comments




Comment 1




                         16
Comment 2




            17
Comment 3




Comment 4




            18
19
                         OIG Evaluation of Auditee Comments


Comment 1   The audit report does not hold Kier responsible for the acts of the prior
            management agent, but it does assert that Kier should have corrected problems
            created by the prior management agent. In the Property Management Agreement
            between Kier and the owner for each property, Kier’s obligations include renting,
            leasing, operating, and managing the project in compliance with HUD
            requirements. Nothing in the Agreement absolved Kier from the responsibility of
            correcting existing problems. Therefore, it remains our position that Kier should
            have resolved all existing problems.

Comment 2   In the Property Management Agreement between Kier and the owner for each
            property, Kier’s obligations included collecting and disbursing all funds and
            maintaining accurate accounting records in compliance with HUD requirements.
            The owner gave Kier full authority over the control of funds. Therefore, Kier is
            responsible to ensure that all disbursements, including the disbursements to the
            owner to clear notes payable, are in compliance with HUD requirements.

Comment 3   As stated in Finding 2, the set up fee, as defined in the Property Management
            Agreement between the Kier and the owner for each property, does not meet the
            HUD Handbook requirements for special or add on fees. Therefore, the set up fee
            is not an eligible HUD expense and consequently should not have been included
            on the form HUD-9839-B Project Owner’s/Management Agent’s Certification for
            Multifamily Housing Projects for Identity-of-Interest or Independent Management
            Agents. The accounting records clearly show that Kier received $64,800 in
            ineligible fees, so these funds were not available to the properties for operating
            expenses.

Comment 4   Finding 3 addresses 13 deficiencies we found in the 40 tenant files we reviewed.
            We reviewed the additional documentation provided by Kier and still consider
            these to be valid deficiencies. Kier recognized that site employees were resistant
            and frustrated, and therefore, should have made more efforts to ensure that all
            tenant certifications were accurate.




                                            20
Appendix C

                SCHEDULE OF OCCUPANCY DEFICIENCIES



                  Unit                                                                                   Determined
  Property       number                 Deficiency                                Impact                  amount
Halcyon House     1508    Cotenant as live-in aide. The            Potential of at least 11 years of
                          cotenant was listed as a live-in aide    unreported income and overpaid
                          for at least 11 years. He did not        subsidies. His 1999 income was
                          meet the live-in aide requirement        $12,000. Annual income data were
                          that he would not live in the unit if    not obtained.
                          he did not provide care.                                                       (1)
Hilltop Apts.    L-105    Ineligible tenant. The tenant            Inappropriate subsidy payments of
                          selection criteria form indicated that   more than $18,119 from Sept. 2006
                          the applicant did not have enough        through Dec. 2008.
                          points to be eligible. Someone other
                          than the site manager decided that
                          she could move in.
                                                                                                               $18,199
Hilltop Apts.    L-203    Indications of unreported income.        Possible unreported income with
                          Some Feb. 2008 interim                   the corresponding subsidy
                          recertification documents showed         overpayments.
                          employment, but others showed
                          zero income. Documents showed
                          change of employment, but
                          employment termination was not
                          verified.                                                                      (1)
Tiffany Square     4      Indications of unreported income         Overpayment of subsidies.
                          and ineligible tenant. Family
                          composition changed several times
                          with no indication that eligibility
                          was determined when the head of
                          household changed. Income
                          changed from one recertification to
                          the next without adequate
                          documentation of the various
                          changes.
                                                                                                         (1)
Tiffany Square     7      Income reported but not used. At         Overpayment of subsidy of $39 per
                          the Aug. 15, 2008, move-in, child        month. First month prorated
                          support was reported by the resident     overpayment $21, plus 4 months at
                          but was not included in the income       $39 per month = $177
                          calculation.                                                                           $177
Tiffany Square     19     Income reported but not used.            Overpaid subsidies were $1,304 for
                          Income verification included tips,       Sept. 2008 through Dec. 2008.
                          which were not used in the rent
                          calculation.                                                                          $1,304
                                                                     (1) File data insufficient to determine amount



                                                     21
                  Unit                                                                                   Determined
   Property      number                 Deficiency                             Impact                     amount
Tiffany Square     43     Income reported but not used.            Overpayment of subsidies.
                          Different income was reported in
                          each certification/recertification
                          packet. Income termination was not
                          verified. Documentation was
                          insufficient to determine what
                          income should be included in each
                          rent calculation.                                                              (1)
Tiffany Square     51     Income reported but not used. Child      Overpayment of subsidies.
                          support was reported by the resident
                          at move-in, but a dollar amount was
                          not given, and it was not included in
                          the income calculation. One
                          document showed employment
                          income, but there was no
                          documentation to verify this.
                                                                                                         (1)
Sheridan          A206    Indications of unreported income.        Overpayment of subsidies.
Gardens                   Supplemental Security Income was
                          deleted from the Sept. 2008
                          recertification, but there was no
                          explanation for the deletion or
                          verification that the income source
                          had been discontinued. Therefore,
                          there was not sufficient
                          documentation to determine whether
                          the income source had been
                          terminated.                                                                    (1)
Park Terrace      A101    Indications of unreported income.        Potential overpayment of subsidies.
                          At the July 2008 move-in, state
                          assistance was the only income
                          reported. At the Feb. 2009 interim
                          recertification, Social Security was
                          reported. The Social Security
                          statement showed a total for Jan.
                          2007 through Jan. 2009 but lacked
                          sufficient information to determine
                          how much applied to the occupancy
                          period. The Social Security was
                          used as income but not the state
                          assistance. There was no
                          verification that the state assistance
                          had been terminated.                                                           (1)
                                                                     (1) File data insufficient to determine amount




                                                     22
                Unit                                                                                   Determined
   Property    number                 Deficiency                               Impact                   amount
Park Terrace    B203    Indications of unreported income.       Potential overpayment for
                        A tenant file document showed           subsidies for income reported but
                        $12,000 in income, but it was not       not included in the rent calculation
                        shown in any rent calculation or        and possible overstatement of
                        explained. Another document stated      family members.
                        that a family member was also listed
                        as a family member for an Adams
                        County Housing Authority unit but
                        did not determine where the family
                        member actually resided.
                                                                                                       (1)
Park Terrace   DG04     Income reported but not used and        Potential overpayment for
                        potential ineligible resident. The      subsidies for income reported but
                        head of household changed without       not used, potential unreported
                        evidence of eligibility determination   income, and possible ineligible
                        on new head. Divorce documents          family members.
                        showed that the first head started
                        employment in May 2007, but
                        move-in documents showed the
                        head unemployed as of June 2007.
                        Employment termination was not
                        verified. The July 2008
                        recertification did not include the
                        $800 per month child support used
                        in other recertifications but did not
                        include verification that the
                        payments had been terminated.
                                                                                                       (1)
Park Terrace    E102    Inappropriate allowance. An             Overpayment of subsidies of $10
                        elderly/disabled allowance was          per month since Oct. 2008 for the
                        given, but the resident was 48 years    amount of the allowance.
                        old and not disabled.                                                                   $30
                                                                                               Total
                                                                                                             $19,710
                                                                  (1) File data insufficient to determine amount




                                                  23