oversight

The Blair County Housing Authority Generally Followed HUD's Housing Choice Voucher Program Regulations

Published by the Department of Housing and Urban Development, Office of Inspector General on 2013-06-27.

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

OFFICE OF AUDIT
REGION 3
PHILADELPHIA,
   –––        PA




               Blair County Housing Authority
                      Hollidaysburg, PA

               Housing Choice Voucher Program




2013-PH-1004                            JUNE 27, 2013
                                                        Issue Date: June 27, 2013

                                                        Audit Report Number: 2013-PH-1004




TO:            Jacqueline A. Molinaro-Thompson, Director, Office of Public Housing,
                 Pittsburgh Field Office, 3EPHI
               //signed//
FROM:          John P. Buck, Regional Inspector General for Audit, Philadelphia Region, 3AGA


SUBJECT:       The Blair County Housing Authority Generally Followed HUD’s Housing Choice
               Voucher Program Regulations


    Attached is the U.S. Department of Housing and Urban Development (HUD), Office of
Inspector General’s (OIG) final results of our review of the Blair County Housing Authority’s
administration of its Housing Choice Voucher program.

    HUD Handbook 2000.06, REV-4, sets specific timeframes for management decisions on
recommended corrective actions. For each recommendation without a management decision,
please respond and provide status reports in accordance with the HUD Handbook. Please furnish
us copies of any correspondence or directives issued because of the audit.

    The Inspector General Act, Title 5 United States Code, section 8L, requires that OIG post its
publicly available reports on the OIG Web site. Accordingly, this report will be posted at
http://www.hudoig.gov.

   If you have any questions or comments about this report, please do not hesitate to call me at
215-430-6729.
                                              June 27, 2013
                                              The Blair County Housing Authority Generally Followed
                                              HUD’s Housing Choice Voucher Program Regulations




Highlights
Audit Report 2013-PH-1004


 What We Audited and Why                       What We Found

We audited the Blair County Housing           The Authority generally followed HUD’s Housing
Authority’s Housing Choice Voucher            Choice Voucher program regulations. It accurately
program. We selected the Authority            calculated housing assistance payments and disability
due to a citizen’s complaint alleging         allowances. It also ensured that tenants met eligibility
that the Authority (1) did not properly       requirements and were properly selected from its
calculate housing assistance payments,        waiting list. However, the Authority’s utility
(2) did not allow tenants to receive          allowance schedule was inadequate as the complaint
disability allowances, and (3) used           alleged. Additionally, the Authority did not have
outdated utility allowance schedules.         signed leases for all of its housing units as required.
Our audit objective was to determine
whether the Authority accurately
calculated housing assistance payments,
disability allowances, and utility
allowances in accordance with U.S.
Department of Housing and Urban
Development (HUD) regulations.

 What We Recommend

We recommend that HUD require the
Authority to (1) revise its utility
allowance schedule to ensure that utility
allowances are current and determined
according to the size and unit type; (2)
if applicable, correct the utility
allowances calculated for all program
participants; (3) obtain signed leases for
all program participants; and (4)
develop and implement controls to
ensure that it annually reviews its utility
allowance schedule and obtains copies
of signed leases.
                          TABLE OF CONTENTS

Background and Objective                                               3

Results of Audit
      Finding: The Authority Generally Followed HUD’s Housing Choice
      Voucher Program Regulations                                      4

Scope and Methodology                                                  7

Internal Controls                                                      8

Appendix
A.    Auditee Comments and OIG’s Evaluation                            10




                                          2
                       BACKGROUND AND OBJECTIVE
The Housing Authority of Blair County was created by the Blair County Commissioners and
incorporated in 1969 under the Commonwealth of Pennsylvania’s Housing Authorities Law of
1937, P.L. 955. The purpose of the Authority is to engage in the development, acquisition, and
administration of housing and similar programs for low- and moderate-income residents in Blair
County, PA.

The Authority is governed by a five-member board of directors appointed by the elected county
commissioners for staggered 5-year terms of office. The board of directors in turn employs an
executive director, who hires a staff to administer the day-to-day operations of the Authority.
The Authority’s main administrative office is located at 1407 Blair Street Village, Hollidaysburg,
PA.

The U.S. Department of Housing and Urban Development (HUD) entered into an annual
contributions contract with the Authority in 1998 for its Housing Choice Voucher program. The
Housing Choice Voucher program is the Federal Government’s major program for assisting very
low-income families, the elderly, and the disabled in affording decent, safe, and sanitary housing
in the private market. Since housing assistance is provided on behalf of the family or individual,
participants are able to find their own housing, including single-family homes, town houses, and
apartments.

HUD authorized the Authority the following financial assistance for its Housing Choice Voucher
program for fiscal years 2010 through 2012:

                                   Number of vouchers
            Fiscal year                                            Authorized funds
                                      authorized
               2010                      420                           $1,489,008
               2011                      420                            1,564,950
               2012                      420                            1,285,692
               Total                                                   $4,339,650

Our audit objective was to determine whether the Authority accurately calculated housing
assistance payments, disability allowances, and utility allowances in accordance with HUD
regulations.




                                                3
                                 RESULTS OF AUDIT


Finding: The Authority Generally Followed HUD’s Housing Choice
Voucher Program Regulations

The Authority accurately calculated housing assistance and disability allowance payments and
properly selected eligible tenants from its waiting list. However, it used an outdated utility
allowance schedule and did not calculate allowances by unit size and type as required.
Additionally, the Authority did not have copies of signed leases for all of its assisted housing.
This condition occurred because the Authority disregarded HUD regulations covering utility
allowances and unit leases. As a result, there was no assurance that utility allowance payments
were accurate or that the Authority or the tenants were aware of their rent terms.




 The Authority Ensured That
 Housing Assistance Payments
 Were Accurately Calculated


               The Authority accurately calculated housing assistance payments. We
               statistically selected and reviewed the files of 20 tenants who received housing
               assistance payments totaling $62,511 to determine whether housing assistance
               payments, disability allowances, and utility allowances were accurately
               calculated. We reviewed each tenant’s form HUD-50058 worksheet, income
               documentation, disability allowance calculations, utility allowances, and other
               program documentation. Based on the documentation reviewed, the Authority
               accurately calculated housing assistance payments and disability allowances.
               However, although the housing assistance payments and disability allowances
               were accurately calculated, the Authority used an inadequate utility allowance
               schedule to determine utility allowances.

 The Authority Ensured That
 Tenants Met Eligibility and
 Waiting List Requirements


               We randomly selected six tenants who recently enrolled in the Housing Choice
               Voucher program. We reviewed eligibility documentation such as intake
               applications, Social Security documentation, income documentation, and other
               supporting documents to determine whether the newly enrolled tenants met
               eligibility requirements. Additionally, we reviewed the Authority’s waiting list to
               ensure that the tenants were properly selected from the waiting list. The



                                                 4
            Authority ensured that the tenants were eligible and were selected from its waiting
            list as required.

The Authority’s Utility
Allowance Schedule Was
Inadequate


            For the 20 tenant files reviewed, the Authority used an inadequate utility
            allowance schedule. Regulations at 24 CFR (Code of Federal Regulations)
            982.517(b)(1) state that the utility allowance schedule must be determined based
            on the typical cost of utilities paid by households that occupy housing of similar
            size and in the same locality. The Authority determined tenants’ utility
            allowances ranging from $0 to $126 per month. However, the Authority used one
            standard utility allowance schedule regardless of the type of housing unit being
            assisted. For the 20 tenant files reviewed, the housing units were manufactured
            homes, row homes, semidetached and single-family homes. Although the
            Authority was aware of this, it used one standard utility allowance schedule
            regardless of the unit type and did not follow HUD regulations. Further, the
            utility schedule had not been updated since June 2000 and there was an increased
            risk that the utility allowances paid were inaccurate.

The Authority Did Not
Maintain Copies of Unit Leases


            The Authority did not maintain copies of signed leases for all of its housing units.
            Of the 20 tenant files reviewed, 11 did not contain current leases. Additionally, of
            the six tenants who were recently enrolled, five of the tenant files did not contain
            leases as required. Regulations at 24 CFR 982.308(b)(1) require that the tenant
            and the owner enter into a written lease for the unit. The lease must be executed
            by the owner and the tenant. The lease ensures that the tenant is bound by the
            terms of the lease and may enforce the terms of the lease against the owner.
            Without maintaining a copy of the written lease as required, neither the Authority
            nor the tenant may have been aware of the terms of the lease for the assisted
            housing unit.

The Authority Disregarded
Pertinent HUD Regulations


            The Authority disregarded HUD regulations governing utility allowance
            schedules and unit leases. The Authority stated it was aware of the regulations
            but that it believed that the utility allowances that were used were similar to those
            of other housing authorities within its jurisdiction. However, it could not provide
            documentation supporting its explanation. The Authority explained that although


                                              5
             the signed leases were not located in the tenant file, it was in process of obtaining
             the signed leases as required. The Authority needs to ensure that regulations
             governing utility allowance schedules and leases are followed.

Conclusion

             The Authority generally followed HUD’s Housing Choice Voucher program
             regulations. It ensured that housing assistance payments and disability
             allowances were accurately calculated. It also ensured that newly enrolled tenants
             met eligibility and waiting list requirements. However, the Authority’s utility
             allowance schedule was inadequate. Without revising the utility allowance
             schedule and ensuring that the utility allowances were based on the size of the
             unit, there was an increased risk that utility allowances were not current, which
             could potentially change the amount of the housing assistance payments due to
             tenants. If the Authority does not obtain signed leases as required, there is no
             assurance that the Authority or the tenants are aware of the terms of the lease.

Recommendations

             We recommend that the Director of HUD’s Pittsburgh Office of Public Housing
             require the Authority to

             1A.    Revise its utility allowance schedule to ensure that utility allowances are
                    current and determined according to the unit size and type as required.

             1B.    Based on the outcome of recommendation 1A, recalculate and correct
                    utility allowances for all program participants.

             1C.    Obtain and maintain signed leases for all program participants.

             1D.    Develop and implement controls to ensure that it annually reviews its
                    utility allowance schedules and obtains copies of signed leases.




                                               6
                             SCOPE AND METHODOLOGY

We conducted the audit from December 2012 through May 2013 at the Authority’s office located
at 1407 Blair Street Village, Hollidaysburg, PA, and our office in Philadelphia, PA. The audit
covered the period November 2011 through November 2012.

To achieve our objective, we reviewed

    •    Applicable HUD guidance at 24 CFR Part 982 and other directives that govern the
         program.

    •    The Authority’s housing assistance payment register, accounting records, tenant files, board
         minutes, and other program records.

We conducted interviews with responsible Authority employees and HUD staff.

During the audit period, the Authority made housing assistance payments totaling $1.3 million
for 440 tenants. 1 Using a variable statistical sampling method, we selected 68 housing assistance
payments valued at $211,696. We reviewed 20 of the 68 payments to determine whether the
housing assistance payments, disability allowances, and utility allowances were accurately
calculated. The 20 housing assistance payments totaled $62,511. The statistical sampling plan
developed had a 95 percent confidence interval with a precision level of $35.92.

We also randomly selected six newly enrolled tenants to determine whether eligibility and waiting
list requirements were met.

To achieve our audit objective, we relied in part on computer-processed data in the Authority’s
database. We used the computer-processed data to select a sample of client files for review.
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 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 finding and
conclusions based on our audit objective.




1
 The Authority was able to assist 440 tenants because some of the tenants did not stay in the program the entire
year; thus the issuance of 420 vouchers overlapped.


                                                         7
                              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 controls were relevant to our audit
               objective:

               •   Program operations – Policies and procedures that management has
                   implemented to reasonably ensure that it calculates housing assistance
                   payments correctly and properly maintains documentation in its tenant files.

               •   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 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.

               We evaluated internal controls related to the audit objective in accordance with
               generally accepted government auditing standards. Our evaluation of internal


                                                 8
controls was not designed to provide assurance regarding the effectiveness of the
internal control structure as a whole. Accordingly, we do not express an opinion on
the effectiveness of the Authority’s internal control.




                                 9
Appendix A

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation   Auditee Comments




Comment 1




                         10
Comment 2


            Comment 2




               11
                         OIG Evaluation of Auditee Comments

Comment 1   The Authority’s administrative plan and HUD’s Housing Choice Voucher
            program regulations required it to annually review its utility allowance schedule
            and adjust allowances when applicable. We believe that the Authority did in fact
            disregard the requirement because the Authority informed us that it was aware of
            the requirement to review and update the schedules every year but the audit
            evidence showed it had not done so for 13 years.

Comment 2   We clarified the audit report to state that the Authority did not maintain copies of
            signed leases for all of its housing units.




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