Issue Date September 30, 2010 Audit Report Number 2010-FW-0004 TO: Milan Ozdinec, Deputy Assistant Secretary Office of Public Housing and Voucher Programs, PE //signed// FROM: Gerald R. Kirkland Regional Inspector General for Audit, Fort Worth Region, 6AGA SUBJECT: HUD’s Oversight of the Hurricane Ike Disaster Housing Assistance Program in Texas Needed Improvement HIGHLIGHTS What We Audited and Why We audited the Disaster Housing Assistance Program (DHAP)-Ike as part of our ongoing commitment to the U. S. Department of Housing and Urban Development (HUD) to implement oversight of Disaster Recovery funds to prevent fraud, waste, and abuse. HUD used local public housing agencies (housing agencies) to administer DHAP-Ike rental assistance and provide case management services to families affected by Hurricanes Ike and Gustav. Our audit objective was to determine whether HUD ensured that four housing agencies in Texas1 correctly calculated and paid DHAP-Ike payments to eligible tenants and for eligible units in accordance with program requirements. 1 The four Texas housing agencies that received the most referrals from the Federal Emergency Management Agency (FEMA) are Houston Housing Authority, Harris County Housing Authority, Port Arthur Housing Authority, and Galveston Housing Authority. What We Found HUD did not ensure that the four housing agencies in Texas that received the most assistance followed DHAP-Ike requirements for 51 (75 percent) of the 68 active files reviewed. Further, for 27 (40 percent) of the 68 files reviewed, the housing agencies’ errors affected the payment or tenant/unit eligibility. These errors occurred because HUD relied on its contractors, did not provide standardized file guidance to the housing agencies, and only performed limited monitoring at the housing agencies. Projecting the results of the statistical sample showed that of the 9,817 families assisted by the four housing agencies, at least 6,374 (65 percent) of the families likely had an error in their file and at least 2,920 (30 percent) of the families’ payments or eligibility was affected. What We Recommend We recommend HUD perform additional monitoring of its contractor, provide standardized guidance to the housing agencies, and perform onsite monitoring at the housing agencies. We also recommend that HUD require the four housing agencies to correct the file documentation errors in the 51 identified files and repay or support the 27 questioned payments totaling $48,982. 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 HUD our draft report on August 18, 2010 and held an exit conference with it to discuss the draft on August 31, 2010. We requested HUD’s written comments by September 17, 2010 and HUD provided its response on September 20, 2010. HUD generally agreed with the audit report except for the total number of problem files and the ineligible and unsupported dollar amounts paid. The complete text of the auditee’s response, along with our evaluation of that response, can be found in appendix B of this report. We agree with HUD’s planned actions for recommendations 1D, 1E, 1F, and 1I and will concur with them once HUD enters them into the Audit Resolution and Corrective Action Tracking System. 2 TABLE OF CONTENTS Background and Objective 4 Results of Audit Finding: HUD’s Oversight of Texas Housing Agencies Administering DHAP-Ike 5 Needed Improvement Scope and Methodology 12 Internal Controls 14 Appendixes A. Schedule of Questioned Costs 15 B. Auditee Comments and OIG’s Evaluation 16 C. File Errors by Housing Agency, Type, and Amount 27 3 BACKGROUND AND OBJECTIVE In 2008, Hurricanes Ike and Gustav struck the Gulf Coast of the United States. On September 23, 2008, the U. S. Department of Housing and Urban Development (HUD) and the Federal Emergency Management Agency (FEMA) executed an Interagency Agreement under which HUD acted as the servicing agency of Disaster Housing Assistance Program (DHAP)-Ike. HUD’s Office of Public and Indian Housing began administration of the program effective November 1, 2008. HUD used local public housing agencies (housing agencies) to administer tenant-based rental assistance and provide case management services to affected families. Pursuant to FEMA’s grant authority, HUD provided grants to housing agencies to administer DHAP-Ike. Housing agencies made rental assistance payments for eligible families to landlords for a period not to exceed 17 months, beginning November 2008 and ending no later than March 2010. The DHAP-Ike program has been extended twice to May 27, 2010, and to October 31, 2010. HUD hired a contractor to monitor DHAP-Ike. The contractor’s primary responsibilities included validating data entered by housing agencies into HUD’s computer database, the Disaster Information System (DIS). The contractor also resolved DHAP-Ike complaints and answered inquires for HUD. However, the contractor submitted to HUD inquiries that it could not answer. Further, the contractor collected issues and compiled reports, which it then submitted to HUD. The initial contractor’s term expired in January 2010. HUD entered into another contract with a different contractor, which had staff in place in late April 2010. To be eligible for assistance, a family had to have been displaced by Hurricanes Ike or Gustav and referred to HUD by FEMA. FEMA was solely responsible for determining whether a family was initially eligible to receive assistance. The housing agencies verified a family had been determined eligible by FEMA through DIS. They actively assisted the family in locating an eligible unit. Housing agencies also calculated the monthly rent subsidy, made monthly rent subsidy payments on behalf of the participating families, performed unit inspections to ensure the units met limited housing quality standards, and provided case management services. Further, the housing agencies were responsible for terminating a family’s participation if it failed to comply with the program’s family obligations or was no longer eligible for continued assistance, as well as resolving any appeals of that determination. Initially, there were no income eligibility requirements for DHAP-Ike. However, only families with housing costs that exceeded 30 percent of the family’s monthly income were eligible for continued rental assistance and case management services. Beginning May 1, 2009, families were required to pay a portion of their rent, starting at $50 per month and increasing by an additional $50 each subsequent month, except for families that qualified for an exception on the basis of economic hardship as defined by HUD. This incremental rent transition increase was to prepare the family to assume full responsibility for its housing costs at the end of the program. Our audit objective was to determine whether HUD ensured that four housing agencies in Texas correctly calculated and paid DHAP-Ike payments to eligible tenants and units in accordance with program requirements. 4 RESULTS OF AUDIT Finding: HUD’s Oversight of Texas Housing Agencies Administering DHAP-Ike Needed Improvement HUD did not ensure that the four housing agencies in Texas that received the most assistance followed DHAP-Ike requirements for 51 (75 percent) of the 68 active files reviewed. Further, for 27 (40 percent) of the 68 files reviewed, the housing agencies’ errors affected the payment or tenant/unit eligibility. These errors occurred because HUD relied on its contractors, did not provide standardized file guidance to the housing agencies, and only performed limited monitoring at the housing agencies. Projecting the results of the statistical sample showed that of the 9,817 families assisted by the four housing agencies, at least 6,374 (65 percent) of the families likely had an error in their file and at least 2,920 (30 percent) of the families’ payments or eligibility was affected. Four Texas Housing Agencies Assisted a Majority of the Families As shown in the following graph, of the 27,354 families FEMA determined to be eligible and assigned to HUD in Texas, four Texas housing agencies were assigned a majority of the families seeking DHAP-Ike assistance. As of November 6, 2009, the 9,817 active2 families assigned to these four housing agencies accounted for 80.7 percent of all active families assigned for DHAP-Ike housing assistance in Texas. A statistical sample of 68 files from the 9,817 families was selected and reviewed.3 2 Although 27,354 families applied to FEMA for assistance, HUD only provided DHAP-Ike assistance to 9,817. Those families that received a HUD payment were considered to be “active” families. 3 For more information on the type and selection of the statistical sample, see the Scope and Methodology section. 5 DHAP - Ike assigned families by Texas housing agency Galveston Housing Authority 5,290 (25.02%) 6,844 Harris County Housing Authority (21.72%) 3,541 Houston Housing Authority (20.98%) Port Arthur Housing Authority (12.95%) 5,940 5,739 34 Other Housing Agencies (19.34%) Housing Agencies Made Errors in 51 of the 68 Files Reviewed HUD did not ensure the four Texas housing agencies complied with DHAP-Ike requirements for 51 (75 percent) of the 68 files reviewed. Of the 51 files with errors, the housing agencies made errors in 27 (40 percent) files that affected the payment. For the remaining 24 (35 percent) files, the housing agencies’ files had documentation errors including assistance contracts unsigned by the housing agency, inconsistent information between the housing agency’s tenant file and the DIS database, or missing forms. The review results by housing agency are included in the following graph. 6 Housing agency file review results 30 27 25 24 Correct 20 17 Payment 15 errors 10 11 11 10 Documentation 7 7 errors 5 6 4 5 3 2 1 1 0 Galveston Harris County Houston Port Arthur Totals Housing Housing Housing Housing Authority Authority Authority Authority Four General Types of Payment or Eligibility Errors Existed The housing agencies made errors which affected the payment or tenant/unit eligibility in 27 (40 percent) of the 68 files. The payment errors consisted of four broad categories: Hardship errors – A hardship error included the housing agency’s making some type of error that affected the hardship calculation such as a hardship form not approved, a hardship applied to the wrong month, or an incorrectly calculated hardship. Rent transition errors – Rent transition errors included the housing agency’s not properly following rent transition requirements or making a mathematical error in calculating the statutory decrease in monthly rental payments. Calculation/payments errors – Calculation/payment errors included the housing agency’s overpaying rent due to duplicate payments, making payments before the date of lease, paying the payment standard instead of the lease rent, paying rent in excess of the approved rent reasonableness amount, and/or making calculation errors. 7 Tenant/unit eligibility errors– Tenant/unit eligibility errors included the housing agency’s lacking a lease agreement or not properly determining the unit was eligible for assistance. For these 27 files, the housing agencies’ payment errors resulted in overpayments and underpayments totaling $48,982.4 The following graph shows the breakdown of the payment errors into the four categories by housing agency.5 Payment errors by housing agency and type 12 10 4 Galveston Housing 5 Authority 8 Harris County Housing Authority 6 4 Houston Housing 1 Authority 4 2 1 5 Port Arthur Housing Authority 2 3 3 3 1 0 Hardship errors Rent transition Calculation Eligibility errors errors errors Projecting the Sample Results Indicated Significant Housing Agency Error Rates The housing agencies made some type of error in 51 of the 68 sample files. Further, their errors affected the payment amount in 27 of these files. Projecting the results of the statistical sample showed that of the 9,817 active DHAP-Ike- assisted families, the housing agencies made errors in their files for at least 6,374 (65 percent) of the families. Further, at least 2,920 (30 percent) of the families’ 4 Ineligible overpayments totaled $16,266; unsupported payments totaled $33,516; and amounts underpaid, which are funds to be put to better use, totaled $800 (16,266 + 33,516 – 800=48,982). For complete results, see the table in appendix C. 5 Housing agencies in some instances made more than one type of payment error for a family; therefore, the errors will not total to 27. 8 payments or eligibility were affected.6 A HUD Office of Public and Indian Housing representative stated this was an unacceptable error rate that HUD must correct and that HUD would work with the Office of Inspector General (OIG) to resolve the finding. HUD’s Oversight Needed Improvement HUD’s oversight of its housing agencies and its contractors needed improvement. The housing agencies had significant error rates because HUD relied on its contractors for oversight of the housing agencies and it only performed limited monitoring at the housing agencies. Additionally, HUD’s contractors acted as the onsite liaison and provided guidance to housing agencies. However, from January through April 2010, HUD had no contractor in place when one contract ended and before a new one began. HUD also monitored issues by reviewing frequently asked questions and e-mails from housing agencies. Yet, HUD staff members said they were not aware that the housing agencies needed additional assistance. Further, HUD stated that housing agencies lacked standardization for their files, as each housing agency had a different system for processing and maintaining the files, and they resisted standardization. HUD Had Taken Corrective Action During the audit, HUD allowed the previous contract to expire and replaced the contractor to improve results because it was not completely satisfied with the contractor’s performance. Once HUD was informed of our preliminary results, it took immediate action by providing DHAP-Ike training to its staff, increasing monitoring and site visits at housing agencies, conducting regular group conference calls with all active housing agencies, and implementing a standardized file format for housing agencies. Housing Agencies Made a Few Additional Improper Payments In addition to reviewing tenant files, testing was performed that compared the DHAP-Ike database information to Social Security number information. Testing results revealed 70 instances (less than 1 percent) where the four housing agencies made payments to a deceased family member or to a family member whose Social Security number was invalid.7 Additional testing performed on all 70 families 6 See the Scope and Methodology section for detailed information. 7 The 70 families consisted of 15 families with invalid Social Security numbers and 55 families with Social Security numbers associated with a deceased individual. 9 disclosed that housing agencies only made improper payments in 15 instances (approximately .1 percent). In 12 instances, the housing agencies made ineligible payments totaling $15,327 for deceased family members, and in 3 instances, they made unsupported payments totaling $19,994 for possibly invalid Social Security numbers. For deceased family members, the housing agencies made these improper payments because the landlords and/or families did not notify them of the deceased family member and the housing agencies did not have access to an Enterprise Income Verification (EIV) system report that identified deceased tenants. In addition, the housing agencies made most of the ineligible payments for only a month or two. For the invalid Social Security numbers, a majority of the errors were due to FEMA’s entering the tenant’s date of birth into the system incorrectly. For those few cases with invalid numbers, the housing agencies had to rely on the family to accurately report its information and lacked access to EIV to confirm the reported Social Security numbers. HUD agreed housing agencies need EIV access, but as of July 13, 2010, housing agencies did not have access. Conclusion HUD did not ensure that four Texas housing agencies followed DHAP-Ike requirements for 51 (75 percent) of the 68 active files reviewed. Further, for 27 (40 percent) of the 68 files reviewed, the housing agencies had errors that affected the payment or tenant/unit eligibility. The housing agencies made these errors because HUD relied on its contractors, did not provide standardized file guidance to the housing agencies, and only performed limited monitoring at the housing agencies. Projecting the results of the statistical sample showed that of the 9,817 DHAP-Ike-assisted families, the four housing agencies made material errors for at least 6,374 (65 percent) of the families. Further, at least 2,920 (30 percent) of the families’ payments or eligibility were affected. The housing agencies also made improper payments for a few deceased family members and family members with invalid Social Security numbers because the housing agencies lacked access to EIV, which would identify deceased tenants and confirm reported Social Security numbers. HUD had taken some actions to resolve the finding. Recommendations We recommend that the Deputy Assistant Secretary, Office of Public Housing and Voucher Programs, 1A. Require the housing agencies to repay their DHAP-Ike accounts from non- Federal funds $16,266 in ineligible overpayments. 10 1B. Require the housing agencies to support the unsupported payments or repay their DHAP-Ike accounts from non-Federal funds $33,516 in unsupported costs. 1C. Require the housing agencies to reimburse families for underpaid assistance of $800. 1D Require the housing agencies to correct the file documentation errors in the 24 identified files. 1E. Provide standardized guidance to the housing agencies and perform onsite monitoring at random housing agencies to ensure compliance with the program’s requirements. 1F. Provide increased oversight to ensure the contractor follows the contract requirements. Oversight should include ensuring that the contractor provides training, monitors housing agencies, and performs onsite monitoring reviews that include file reviews. 1G. Require the housing agencies to repay their DHAP-Ike accounts from non- Federal funds $15,327 in ineligible costs for improper payments made to deceased family members. 1H. Require the housing agencies to support or repay their DHAP-Ike accounts from non-Federal funds $19,994 in unsupported costs for improper payments made to a family member with an invalid Social Security number. 1I. Provide the housing agencies with EIV access to allow them to identify deceased tenants and confirm reported Social Security numbers. 11 SCOPE AND METHODOLOGY To accomplish our audit objectives, we Reviewed the Interagency Agreement between FEMA and HUD and the DHAP-Ike grant agreement between HUD and various housing agencies; Reviewed applicable HUD regulations including Office of Public and Indian Housing (PIH) Notice 2008-38, Disaster Housing Assistance Program - Ike (DHAP-Ike) Operating Requirements; PIH Notice 2008-45, Disaster Housing Assistance Program - Ike (DHAP-Ike) Case Management Guidelines; and PIH Notice 2010-22, Consolidated Guidance on Disaster Housing Assistance Program - Ike (DHAP-Ike) and Extension Operating Requirements; Reviewed DHAP-Ike policies, procedures, and prior DHAP audit reports; Reviewed HUD monitoring reports and related correspondence between HUD and housing agencies; and Conducted interviews with HUD, various housing agencies, and contractor staff. We obtained a download of FEMA client assignments to Texas housing agencies from HUD’s DIS database. We assessed the reliability of the DIS database downloads provided by HUD and determined that the computer-processed data in our sample database were generally reliable for the purpose of this audit. Of the 27,354 families FEMA determined to be eligible and assigned to HUD in Texas, four Texas housing agencies (Harris County, Houston, Galveston, and Port Arthur) were assigned a majority of the families seeking DHAP-Ike assistance. As of November 6, 2009, families assigned to these four housing agencies accounted for 80.7 percent of all families that were assigned to Texas housing agencies for possible DHAP-Ike housing assistance. For these four housing agencies, the original database consisted of 20,651 families from the four Texas housing agencies with the largest number of family assignments between November 1, 2008, and December 17, 2009. A statistical selection was made to reach conclusions about the entire population assigned to the four housing agencies based on projections from the sample. Using this method, we selected a statistical random attribute sample of 68 tenant files for review. We selected our sample using a 90 percent confidence level and a 10 percent precision rate. However, the initial sample selection from this database included all families assisted by FEMA, but some had never received DHAP-Ike assistance from HUD. We referred to these as “inactive families.” After reducing the database to exclude inactive families, our universe consisted of 9,817 DHAP-Ike beneficiaries. We replaced inactive families with additional randomly selected active families. We performed detailed testing on the 68 files. We reviewed the client files and assistance payment histories maintained by each of the four housing agencies. Our testing and review included Ensuring the housing agency properly verified the eligibility of program participants in HUD’s DIS system. 12 Ensuring the sample file contained documentation showing that the housing agency provided required elements of the DHAP-Ike program (e.g., an executed case management services agreement and a disaster rent subsidy contract). Determining whether the housing agency ensured the unit met the program’s housing quality standards before being occupied. Verifying the accuracy of rental assistance payments made by the housing agency. We projected the results of the number of errors and payment errors found. We did not project monetary results. The following table contains the projection of our testing, which showed that we are 90 percent confident that Files will have an error Lower limit Upper limit 6,374 8,185 Files will have a payment error Lower limit Upper limit 2,920 4,944 During the database validation, we performed 100 percent testing of the families’ Social Security numbers. Of the of the 9,817 DHAP-Ike assisted families, we identified 70 (less than 1 percent) instances of questionable Social Security numbers, including active beneficiaries whose numbers indicated they were deceased or whose numbers were issued prior to their date of birth. We performed testing on all 70 instances and obtained supporting documentation from the four housing agencies, such as identification and payment records. Based on our testing, we determined the housing agencies improperly paid assistance to only 15 of the 9,817 DHAP-Ike beneficiaries (approximately .1 percent). We performed our fieldwork with HUD between January and July 2010 at our offices in Houston and Fort Worth, TX. We conducted our site work at the Houston Housing Authority, Houston, TX; Harris County Housing Authority, Houston, TX; Galveston Housing Authority, Galveston, TX; and Port Arthur Housing Authority, Port Arthur, TX, between February and June 2010. We expanded our scope as necessary to accomplish the objective. 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. 13 INTERNAL CONTROLS Internal control is a process adopted by those charged with governance and management, designed to provide reasonable assurance about the achievement of the organization’s mission, goals, and objectives with regard to Effectiveness and efficiency of operations, Reliability of financial reporting, and Compliance with applicable laws and regulations. Internal controls comprise the plans, policies, methods, and procedures used to meet the organization’s mission, goals, and objectives. Internal controls 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 control was relevant to our audit objective: Policies and procedures established by HUD to ensure that Texas public housing agencies correctly calculated and paid rental assistance in accordance with DHAP-Ike requirements. We assessed the relevant control identified above. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, the reasonable opportunity to prevent, detect, or correct (1) impairments to effectiveness or efficiency of operations, (2) misstatements in financial or performance information, or (3) violations of laws and regulations on a timely basis. Significant Deficiencies Based on our review, we believe that the following item is a significant deficiency: HUD did not have adequate policies, procedures, and controls in place to effectively monitor the housing agencies administering the program (finding). 14 APPENDIXES Appendix A SCHEDULE OF QUESTIONED COSTS AND FUNDS TO BE PUT TO BETTER USE Recommendation Ineligible 1/ Unsupported 2/ Funds to be put number to better use 3/ 1A $16,266 1B $33,516 1C $800 1G 15,327 1H 19,994 Totals $31,593 $53,510 $800 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 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, it represents the amount of underpayments that should be made to eligible DHAP-Ike families. 15 Appendix B AUDITEE COMMENTS AND OIG’S EVALUATION Ref to OIG Evaluation Auditee Comments Comment 1 16 Ref to OIG Evaluation Auditee Comments 17 Ref to OIG Evaluation Auditee Comments Comment 2 Comment 3 18 Ref to OIG Evaluation Auditee Comments Comment 4 Comment 5 19 Ref to OIG Evaluation Auditee Comments Comment 6 20 Ref to OIG Evaluation Auditee Comments Comment 6 Comment 6 21 Ref to OIG Evaluation Auditee Comments Comment 7 Comment 7 Comment 7 22 Ref to OIG Evaluation Auditee Comments Comment 5 Comment 8 Comment 1 23 Ref to OIG Evaluation Auditee Comments Comment 6 24 OIG Evaluation of Auditee Comments Comment 1 HUD generally agreed with the audit and welcomed recommendations that improve program management and oversight. We acknowledge HUD’s comments and we appreciate its cooperation throughout the audit and its willingness to implement corrective actions. Comment 2 HUD said that two housing agencies had already found the overpayments and addressed them prior to the audit. As HUD did not provide which two cases it was referring to, we are unable to agree. However, one Galveston Housing Authority file had errors including not performing an inspection and paying the lease amount, which was more than the rental standard. Neither error had been detected by the housing agency, but no amounts were reported as ineligible, due to it recovering all assistance amounts as the individual never occupied the unit. Comment 3 HUD also disagreed with OIG questioning payments on two units that did not meet housing quality standards. HUD asserted that one unit with a malfunctioning air conditioner met limited housing quality standards. We disagree. This housing agency stated it performed full housing quality standard inspections, which is allowed per PIH Notice 2008-38; a “PHA may choose to apply additional criteria to this inspection, including the application of the Housing Quality Standards (HQS).” The housing agency performed an inspection at the tenant’s request and found the air conditioning was not working. Thus, the housing agency should have failed the unit and should not have paid assistance from the time that it noted the fail item until the deficiency was corrected. For another unit, HUD said that the housing agency was only required to repay assistance after the unit failed the second inspection. OIG only questioned amounts paid after the unit failed three inspections and the amount paid for one month’s duplicative rent; the housing agency paid assistance twice in February 2009, which was before the unit failed the inspections. Comment 4 HUD stated that one unit identified as ineligible due to the owner leasing a bedroom in her home was eligible. HUD said it had issued a Frequently Answered Question (FAQ #78) that allowed a room, rather than a unit, to be leased, if “the room is rented under a legal lease and otherwise meets all other DHAP-Ike requirements for a rental unit.” We disagree that the FAQ can overrule the DHAP-Ike requirements in HUD PIH Notice 2008-38, which states; “Ineligible Units and Prohibition Against Other Subsidy The following types of housing may not be leased under DHAP-Ike: … A unit occupied by its owner or by a person with interest in the unit …” Comment 5 HUD stated that housing agencies stopped payments for deceased family members within days of their deaths, but in some cases were unable to stop payments. Further, HUD said that subsequent payments after the family members’ deaths were unsupported rather than ineligible. We disagree. For the 12 deceased individuals whose payments we questioned, the housing agencies 25 were only aware that two individuals were deceased when we contacted them. Thus, we question HUD’s assertion that payments were stopped within days of their death. Further, our testing did not question payments until the end of the month following the person’s death; thus, we allowed a minimum of 30 days prior to determining that a payment was ineligible. Comment 6 HUD said that it reviewed the files and reached different conclusions regarding amounts listed as ineligible and unsupported. We do not agree with HUD’s revised amounts. We met with each housing agency and reviewed the files with them, including ineligible and unsupported amounts. The housing agencies agreed with our conclusions and amounts. However, we are willing to review each individual case with HUD as part of the audit resolution process. Comment 7 We agree with HUD’s planned actions and will concur with the management decision once HUD enters it into the Audit Resolution and Corrective Action Tracking System. Comment 8 HUD stated that it did not consider payments for an invalid Social Security number to be unsupported. HUD listed circumstances in which it would consider payments to be supported per DHAP-Ike rules. However, the instances found in two of our file reviews were not one of the circumstances cited by HUD. In these cases, the Social Security number was valid. However, the birth date information provided by the individual did not match the Social Security Administration’s data, which indicates potentially improper payments were made. The third case may be a data entry error, but additional work will need to be performed to ensure the housing agency made supported payments. We will work further with HUD during the management decision process to address these cases. 26 Appendix C FILE ERRORS BY HOUSING AGENCY, TYPE, AND AMOUNT Funds put to Payment Ineligible Unsupported better use Documentation Housing agency error amount amount amount error Galveston X $1,800 Galveston X $690 Galveston X Galveston X 3,978 Galveston X Galveston X 1,250 Galveston X 6,909 Galveston X 1,260 Galveston X Galveston X Galveston X Galveston X 1,065 Galveston X 150 Galveston X Galveston X 0 Galveston X Galveston X 4,650 Harris X Harris X 2,318 Harris X $150 Harris X 77 Harris X Harris X Harris X 866 Harris X Harris X Houston X Houston X Houston X Houston X Houston X 5,100 Houston X 27 Funds put to Payment Ineligible Unsupported better use Documentation Housing agency error amount amount amount error Houston X 250 Houston X 449 Houston X Houston X 6,454 Houston X Houston X 4,140 Houston X Houston X Houston X 2,940 Houston X Houston X Port Arthur X 269 Port Arthur X 750 Port Arthur X 4,005 Port Arthur X Port Arthur X 200 Port Arthur X 50 50 Port Arthur X 312 Port Arthur X 300 150 Totals 27 $16,266 $33,516 $800 24 28
HUD's Oversight of the Hurricane Ike Disaster Housing Assistance Program in Texas Needed Improvement
Published by the Department of Housing and Urban Development, Office of Inspector General on 2010-09-30.
Below is a raw (and likely hideous) rendition of the original report. (PDF)