oversight

The New York City Housing Authority, New York, NY, Did Not Always Administer Its Section 8 Housing Choice Voucher Program in Accordance With Regulations

Published by the Department of Housing and Urban Development, Office of Inspector General on 2014-05-01.

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

OFFICE OF AUDIT
REGION 2
NEW YORK-NEW JERSEY




               New York City Housing Authority
                       New York, NY

        Section 8 Housing Choice Voucher Program




2014-NY-1002                                     MAY 1, 2014
                                                        Issue Date: May 1, 2014

                                                        Audit Report Number: 2014-NY-1002


TO:          Luigi D’Ancona
             Director, Office of Public and Indian Housing, New York, 2APH

             //SIGNED//
FROM:        Edgar Moore
             Regional Inspector General for Audit, New York-New Jersey Region, 2AGA

SUBJECT: The New York City Housing Authority, New York, NY, Did Not Always
         Administer Its Section 8 Housing Choice Voucher Program in Accordance
         With 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 New York City Housing Authority,
New York, NY’s Section 8 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 8M, 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
(212) 264-4174.
                                            May 1, 2014
                                            The New York City Housing Authority, New York, NY,
                                            Did Not Always Administer Its Section 8 Housing Choice
                                            Voucher Program in Accordance With Regulations



Highlights
Audit Report 2014-NY-1002


 What We Audited and Why                     What We Found

We audited the New York City Housing        The Authority did not always administer its Section 8
Authority’s administration of its Section   Housing Choice Voucher program in accordance with
8 Housing Choice Voucher program.           HUD regulations and did not execute or maintain
We selected the Authority based on          documentation to support eligibility. Specifically,
indicators from the U.S. Department of      Authority officials did not document whether rent
Housing and Urban Development’s             reasonableness determinations for 34.7 percent of the
(HUD) monitoring reports. The               sample of 115 cases were performed to properly ensure
objectives of the audit were to determine   that rents paid for assisted units were reasonable in
whether the Authority administered its      relation to rents for comparable units. Therefore,
Section 8 Housing Choice Voucher            Authority officials could not assure HUD that at least 5
program in accordance with HUD              percent of the $87.1 million, or more than $4.3 million,
regulations and made housing assistance     in administrative fees received was reasonable.
payments for eligible program
participants. This report is the first of   In addition, officials did not always maintain (1)
two reports on the Authority’s              executed housing assistance payments contracts, (2)
administration of its Section 8 Housing     executed lease agreements, and (3) documents to
Choice Voucher program.                     support the sources of tenant income for
                                            recertification. These conditions occurred because
                                            Authority officials did not provide adequate oversight
 What We Recommend
                                            to ensure that staff responsible for reviewing tenant
                                            case files verified that documents were maintained in
We recommend that the Director of           accordance with HUD requirements. As a result, the
HUD’s New York Office of Public             Authority could not assure HUD that $24,009 in
Housing require Authority officials to      housing assistance payments was disbursed and
(1) strengthen controls to ensure that      adequately supported in accordance with HUD
rent reasonableness determinations are      regulations.
performed and documented and repay
more than $4.3 million in unreasonable
administrative fees from non-Federal
funds, and (2) provide justification for
the $24,009 in Section 8 Housing
Choice Voucher program funds related
to tenant files that did not contain HUD-
required support. Any costs determined
to be ineligible should be repaid with
non-Federal funds.
                           TABLE OF CONTENTS

Background and Objectives                                                        3

Results of Audit

      Finding 1: Authority Officials Did Not Document That Rent
                 Reasonableness Determinations Were Always Performed             4
      Finding 2: The Authority Did Not Always Administer Its Section 8 Housing
                 Choice Voucher Program in Accordance With Regulations           7

Scope and Methodology                                                            9

Internal Controls                                                                11

Appendixes
A.    Schedule of Questioned Costs                                               13
B.    Auditee Comments and OIG’s Evaluation                                      14
C.    Schedule of Missing Documentation                                          21




                                           2
                         BACKGROUND AND OBJECTIVES
The United States Housing Act of 1937 established the Federal framework for government-
owned affordable housing and was amended by the Quality Housing and Work Responsibility
Act of 1998. The U.S. Department of Housing and Urban Development (HUD) provides
funding for rent subsidies for tenants eligible for the Section 8 Housing Choice Voucher
program.

The New York City Housing Authority was created in 1934 and provides public housing for low-
and moderate-income residents throughout the five boroughs of New York City. It is the largest
public housing authority in the United States. The Authority is governed by a board of directors,
which oversees the activities of the Authority. The board chairman is appointed by the mayor.
The board meets to vote on contracts, resolutions, policies, motions, rules, and regulations. The
Authority administers a Section 8 Housing Choice Voucher program, which it refers to as the
citywide Section 8 Leased Housing Program.

As of January 1, 2013, the Authority’s Section 8 Housing Choice Voucher program consisted of
92,561 rented units, of which 1,749 were portability vouchers located outside New York City.
Additionally, the program includes 225,000 residents in Section 8 units and 31,436 participating
private landlords.

The table below shows the funding authorized by HUD and disbursed by the Authority for fiscal
years 2007 through 2013.

                     Fiscal year             Funds authorized          Funds disbursed

                         2013                      $936,142,788          $936,142,788 1
                         2012                      $991,054,505            $953,333,730
                         2011                    $1,006,907,317         $ 1,006,907,317
                         2010                    $1,008,253,419         $ 1,008,253,419
                         2009                      $772,324,616            $772,324,616
                         2008                      $730,311,059            $730,311,059
                         2007                      $801,518,276            $801,518,276

This report is the first of two reports on the Authority’s administration of its Section 8 Housing
Choice Voucher program.

The objectives of the audit were to determine whether the Authority administered its Section 8
Housing Choice Voucher program in accordance with HUD regulations and made housing
assistance payments for eligible program participants.




1
  The amount authorized for fiscal year 2013 is as of December 21, 2013. Authorized amounts for fiscal years 2007
through 2012 consist of calendar months January through December.
                                                        3
                                      RESULTS OF AUDIT

Finding 1: Authority Officials Did Not Document That Rent
           Reasonableness Determinations Were Always Performed
Authority officials did not document that rent reasonableness determinations were always
performed to ensure that rents paid for assisted units were reasonable in relation to rents charged
for comparable units. Specifically, a review of 115 statistically selected tenant files disclosed
that 49 did not contain documentation showing that rent reasonableness determinations had been
conducted. This condition occurred because Authority officials failed to establish adequate
controls to ensure that rent reasonableness determination reviews were documented. Based on
the results of our sample, we estimated that $1.16 billion2 in housing assistance payments
disbursed may not have been supported by confirmation of HUD-required rent reasonableness
determinations.


    Rent Reasonableness
    Determinations Were Not
    Documented in Tenant Files

                 Authority officials did not document whether rent reasonableness determinations
                 were always conducted. Regulations at 24 CFR (Code of Federal Regulations)
                 982.507(b) require that public housing authorities determine whether rents
                 charged by owners and landlords to Housing Choice Voucher program
                 participants are reasonable. The Authority’s administrative plan requires the
                 Authority to determine whether rents charged are reasonable in relation to rental
                 values in the private market. Specifically, in conducting rent reasonableness
                 determinations, an authority must determine whether rent to the landlord is
                 reasonable to ensure that subsidized rents do not exceed rental values in the
                 private market. HUD requires that the rent reasonableness determinations be
                 documented for each case in the tenant file and be based on the evaluation of the
                 following nine factors:

                      •    Location,
                      •    Quality,
                      •    Size,
                      •    Unit type,
                      •    Age of the contract unit,
                      •    Amenities,
                      •    Housing services,




2
  This amount represents an estimate of housing assistance payments projected over a 47-month period based on the
results of our statistical sample.
                                                       4
                 •   Maintenance provided by the owners, and
                 •   Utilities to be provided by the owner in accordance with the lease.

             The Authority used computerized systems to assist in administering the Section 8
             Housing Choice Voucher program. The systems, called Siebal and the Universal
             Content Management system, were used to update tenant recertification
             information. The Authority’s procedures included performing a rent
             reasonableness determination at the initial lease of an apartment and at the lease
             renewal. The Authority used a rent reasonableness database to compare the unit
             being reviewed and print a rent certification report, which listed comparables and
             was to be documented in the tenant file. However, there was no evidence that
             responsible staff conducted the rent reasonableness determination in 49 of the 115
             tenant case files reviewed.

             Based on the results of our sample testing of 49 files out of 115 tenant case files
             reviewed, we projected that at least 34.7 percent or 1.45 million payments made
             monthly to tenants were disbursed during our audit period, December 1, 2007, to
             November 30, 2011, may not be supported by the HUD-required rent
             reasonableness determinations. This equates to $1.16 billion in disbursed housing
             assistance payments. This condition occurred because Authority officials did not
             establish controls to ensure that staff documented rent reasonableness
             determinations. Further, based on the results of our sample, we projected that at
             least $1.16 billion in disbursed housing assistance payments may have been made
             for units without evidence that a rent reasonableness determination was
             performed. As a result, HUD had no assurance that housing assistance payments
             complied with HUD requirements regarding rent reasonableness determinations.

             Further, the Authority earned approximately $87.1 million in administrative fees
             per year; however, officials did not ensure that rent reasonableness determinations
             were conducted and documented in 34.7 percent of the cases tested. As a result,
             the administrative fee earned by the Authority did not appear to be reasonable.
             Based on our sample results, we projected that 32,128 tenant files did not contain
             HUD-required rent reasonableness determinations and the administrative fee
             collected by the Authority for these units would have been $30 million.
             Therefore, we conservatively estimated that Authority officials could not assure
             HUD that at least 5 percent of the $87.1 million in administrative fees, or
             $4,355,000, was reasonable.

Conclusion

             The weaknesses discussed above occurred because authority officials failed to
             establish adequate controls to ensure that rent reasonableness determinations were
             documented. As a result, HUD lacked assurance that reasonable rents were paid
             for assisted units. In accordance with 24 CFR 982.152(d), HUD is permitted to
             reduce or offset any program administrative fees paid to a public housing
             authority if it fails to perform its administrative responsibilities correctly. Our

                                             5
          review disclosed that 49 of the 115 tenant files reviewed did not contain evidence
          of a rent reasonableness test; therefore, we considered 5 percent of its
          administrative fee received for 1 year to be a reasonable amount that should be
          repaid to HUD from non-Federal funds.

Recommendations

          We recommend that the Director of HUD’s New York Office of Public and
          Indian Housing instruct Authority officials to

          1A. Repay HUD from non-Federal funds at least 5 percent of the administrative
              fees received for one year, or $4.3 million.

          1B. Strengthen controls to ensure that rent reasonableness determinations are
              always documented to show compliance with the Authority’s policies and
              HUD requirements.




                                          6
Finding 2: The Authority Did Not Always Administer Its Section 8
           Housing Choice Voucher Program in Accordance With
           Regulations
In 31 of the 115 tenant files reviewed, Authority officials did not maintain one or more of the
following documents: executed housing assistance payments contracts, executed lease
agreements, and documents to support the sources of tenant income for recertification. These
deficiencies occurred because Authority officials did not provide adequate oversight to ensure
that staff responsible for reviewing tenants’ case files complied with HUD requirements. As a
result, Authority officials could not assure HUD that housing assistance payments were
disbursed in accordance with HUD rules and regulations for eligible program participants.
Therefore, we considered that at least $627 million may not have been supported by HUD-
required documentation.



    Authority Officials Did Not
    Maintain HUD-Required
    Documents in Tenant Files

                  Authority officials did not ensure that tenant case files included executed housing
                  assistance payments contracts, executed lease agreements, and documents to
                  support the sources of tenant income for recertification as required by HUD
                  regulations. 3 The housing assistance payments contract is executed between the
                  authority and the owner or landlord. It defines the tenant information, lease
                  terms, monthly rent, and housing assistance payment to be made by the authority
                  to the landlord. A lease agreement is required to be executed between the
                  landlord or owner and the tenant. This agreement grants the use or occupancy of
                  the property during a specified period in exchange for a specified rent. Sources of
                  tenant income include third-party verification of annually reported family income,
                  the value of assets, expenses related to deductions from annual income, and other
                  factors that affect the determination of adjusted income. 4 This issue was also
                  identified in the Authority’s A-133 Single Audit, dated December 31, 2010,
                  which indicated that the Authority lacked documentation to support tenant
                  eligibility, including tenant applications, third-party verifications, and lease
                  agreements, in noncompliance with HUD regulations.

                  Our review of 115 tenant files disclosed that the Authority lacked HUD required
                  documentation for 31 or 20.13 percent of housing assistance payments it made

3
  Regulations at 24 CFR 982.158(e) require that the Authority keep a copy of the executed lease and housing
assistance payments contract during the term of each assisted lease and for 3 years thereafter.
4
  Regulations at 24 CFR 982.516(2) require that the Authority obtain and document in the tenant files third-party
verification source documents for tenant income.




                                                         7
             within the audit period of December 1, 2007 through November 30, 2011 (see
             appendix C). Therefore, we estimated that at least 20 percent, or 843,000, of its
             housing assistance payments within the audit period may not have been supported
             with HUD-required documentation. Further, at least $627 million in housing
             assistance payments disbursed may not have been adequately supported with
             HUD-required documents. As a result, Authority officials could not assure HUD
             that housing assistance payments disbursed during the period complied with HUD
             requirements.

Conclusion

             The weaknesses discussed above occurred because Authority officials failed to
             provide adequate oversight to ensure that staff responsible for reviewing tenant
             case files verified that the documents obtained complied with HUD requirements.
             As a result, they could not assure HUD that housing assistance payments
             amounting to $24,009, related to the tenants whose files were missing one or more
             of the required documentation, were disbursed in accordance with HUD
             regulations. Further, potentially more than $627 million in disbursed housing
             assistance payments may not have been supported.

Recommendations

             We recommend that the Director of HUD’s New York Office of Public and
             Indian Housing instruct Authority officials to

             2A.   Provide documentation to support the $24,009 in disbursed housing
                   assistance payments associated with the tenant case files missing (1)
                   executed housing assistance payments contracts, (2) lease agreements, and
                   (3) source documentation to support tenant income. Any costs determined
                   to be ineligible should be reimbursed from non-Federal funds.

             2B.   Strengthen controls over the oversight of staff responsible for tenant case
                   file reviews to ensure that all tenant case files include (1) housing
                   assistance payments contracts; (2) executed lease agreements and lease
                   amendments; and (3) third-party verification of reported family annual
                   income, the value of assets, expenses related to deductions from annual
                   income, and other factors that affect the determination of adjusted income.




                                             8
                        SCOPE AND METHODOLOGY

Our review generally covered the period December 1, 2007, through November 30, 2011, and
was extended as needed. We performed our fieldwork from November 2012 through May 2013
at the Authority’s offices located at 90 Church Street, New York, NY.

To accomplish our audit objectives, we

   •   Reviewed applicable laws, regulations, HUD handbooks, HUD notices, and the
       Authority’s policies and procedures.

   •   Obtained an understanding of the Authority’s financial and administrative controls.

   •   Interviewed HUD field office and Authority officials.

   •   Reviewed the Authority’s financial and management data in the Federal Audit Clearing
       House and HUD’s Public and Indian Housing Information Center system and Line of
       Credit Control System.

   •   Reviewed the Authority’s HUD-approved annual contributions contract for fiscal year
       2010.

   •   Evaluated internal controls and reviewed computer controls to identify potential
       weaknesses related to our objectives. We relied in part on computer-processed data
       primarily for obtaining background information on the Authority’s Section 8 Housing
       Choice Voucher program. We performed a minimal level of testing and found the data to
       be adequate for our purposes.

   •   Reviewed records of the Authority’s board minutes, independent public auditor’s reports,
       and written HUD monitoring reviews of the Authority’s Section 8 Housing Choice
       Voucher program.

We obtained monthly housing assistance payment data from the Authority covering a period of
47 months. We statistically selected a sample of 115 monthly payments from the Authority’s
housing assistance payment data for the period December 1, 2007, to November 30, 2011. The
universe included more than $4.19 million in monthly payments, which amounted to $3.57
billion in housing assistance payments made to 112,424 recipients during the 47-month period.

Our sampling method was variable with a projected one-sided 95 percent confidence interval.
The sample results support an estimate that the Authority may have disbursed housing assistance
payments for participants, for whom files were incomplete because they were missing rent
reasonableness determinations, housing assistance payments contracts, lease agreements, and
tenant income source documentation. Thus, our results were applied to the $4.19 million in
monthly housing assistance payments in the sample universe.



                                              9
Rent reasonableness not documented: Based on 49 occurrences in our weighted, stratified
sample, at least 34.71 percent, or 1.45 million housing assistance payments within the audit
period, were not supported by the HUD-required rent reasonableness determination. Therefore,
at least $1.16 billion in housing assistant payments disbursed during the audit period may not
have been supported by HUD-required rent reasonable determination documentation.

Payments not supported with HUD-required documents: Based on 31 occurrences in our
weighted, stratified sample, at least 20.13 percent, or 843,000 housing assistance payments
within the audit period, were missing at least one of the required HUD documents: housing
assistance payments contract, lease agreement, or income documentation. Therefore, at least
$627 million in housing assistance payments disbursed during the audit period may not have
been supported by one of the required documents, including an executed housing assistance
payments contract, lease agreement, or tenant income documentation, as required by HUD
regulations.

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(s). We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objectives.




                                               10
                              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
               objectives:

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

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

               •      Safeguarding of resources - Policies and procedures that management has
                      implemented to reasonably ensure that resources are safeguarded against
                      waste, loss, and misuse.

               •      Reliability and validity 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.

               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.




                                                 11
Significant Deficiencies

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

                •   Authority officials did not have adequate controls over compliance with laws
                    and regulations when they did not provide evidence that required rent
                    reasonableness determinations were documented and that the required
                    housing assistance payments contracts, lease agreements, and tenant income
                    data were maintained in tenant files (see findings 1 and 2).

                •   Authority officials did not have adequate controls over program operations
                    when they did not provide adequate oversight of staff responsible for
                    ensuring that tenant case files were complete and consistent with HUD
                    regulations (see finding 2).




                                              12
                                   APPENDIXES

Appendix A

               SCHEDULE OF QUESTIONED COSTS


                 Recommendation       Unsupported 1/    Unreasonable or
                     number                              unnecessary 2/
                       1A                                     $4,355,000
                       2A                 $24,009
                      Total               $24,009              $4,355,000



1/   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.

2/   Unreasonable or unnecessary costs are those costs not generally recognized as ordinary,
     prudent, relevant, or necessary within established practices. Unreasonable costs exceed
     the costs that would be incurred by a prudent person in conducting a competitive
     business.




                                            13
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation   Auditee Comments




Comment 1




                           14
Ref to OIG Evaluation   Auditee Comments




Comment 2




Comment 3




                           15
Ref to OIG Evaluation   Auditee Comments




Comment 3




                           16
Ref to OIG Evaluation   Auditee Comments




Comment 4




Comment 5




Comment 6




Comment 1




                           17
Ref to OIG Evaluation   Auditee Comments




Comment 1




                           18
                          OIG Evaluation of Auditee Comments

Comment 1   The actions taken by Authority officials are responsive to our recommendations.

Comment 2   Authority officials disagreed with finding 1, contending that cases cited in the
            finding were based, in part, on a rent reasonableness determination policy that
            the Authority is no longer using. Further, officials contend that for 3 out of 49
            cases cited in the finding, two cases did contain the documentation in the file,
            and one case did not require the rent reasonable determination because the tenant
            ported out; therefore, the finding should be reduced to 46 cases. It is true that
            HUD’s 2008 monitoring report determined that the Authority’s rent
            reasonableness procedures were inconsistent with HUD requirements for which
            in response, Authority officials secured a vendor to provide the market rent
            comparables. However, contrary to the officials claim that in 2009 the rent
            reasonableness solution was fully implemented, our review of the tenant cases
            files reviewed found that there was no documentation to exhibit that rent
            reasonableness determinations were performed for the audit period of December
            2007 to November 2011, in 49 out of 115 cases reviewed. In response to
            Authority officials’ additional claims of supporting documentation, HUD will
            have to determine the sufficiency of such documentation during the audit
            resolution process.

Comment 3   Authority officials disagree that 31 out of the 115 tenant files reviewed did not
            maintain one or more of the required documents, claiming that they reviewed the
            files and found that some support was available in tenant files. Authority
            officials provided documentation for review and requested that the finding be
            modified. Also, the officials acknowledged that the missing documentation was
            a result of a back file conversion process, which began in 2009 that converted
            files from hardcopy to electronic record. We have reviewed the documentation
            provided subsequent to the onsite audit work and determined that it was not
            sufficient to modify the finding. For example, we had noted that an executed
            lease agreement was not on file for the period tested of November 2010.
            Authority officials subsequently provided an expired lease for the period
            February 1, 2009 to January 31, 2010, and claim that the tenant was on a month
            to month lease at that point in time and did not require an executed lease.
            However, we found no evidence in the tenant file to suggest that the tenant was
            on a month to month lease. In another example, Authority officials provided a
            payment change notification form indicating no lease renewal and also provided
            a lease agreement, beginning in September 1986, without a signature page.
            Thus, the documentation provided subsequent to the audit work was found to be
            insufficient to modify the finding as we cannot determine eligibility. Officials
            are reminded that unsupported costs are those cost charged to a HUD financed
            program or activity and eligibility cannot be determined at time of audit,
            requiring a decision by HUD program officials. As such, additional documents
            will be needed for HUD to make a determination during the audit resolution
            process.

Comment 4   Authority officials disagree with recommendation 1A to repay from non-Federal


                                              19
            funds at least 5 percent of the administrative fees received for one year, or $4.3
            million, contending that rent reasonableness determinations were conducted in
            accordance with policies and procedures in place at the time. Further, officials
            request reconsideration of any reimbursement of administrative fees, or a
            reduction in the reimbursement amount based on corrective actions taken. Our
            review found that the rent reasonableness determinations were not documented
            in accordance with HUD requirements and the new procedures established by
            the Authority officials, which require the rent reasonableness determinations to
            be documented in the tenant file. Further, the administrative fee collected did
            not appear to be reasonable. In accordance with 24 CFR 982.152 (d), HUD is
            permitted to reduce or offset any program administrative fees paid to a public
            housing authority if it fails to perform its administrative responsibilities
            correctly. The audit identified errors throughout the test period of December 1,
            2007 to November 30, 2011, which consisted of 47 months. Thus, the
            reimbursement calculation of $4.3 million in administrative fees received for
            one year is already conservative considering that our sample results indicates
            that the Authority collected over $30 million in administrative fees for the units
            with no documented rent reasonableness determination in the files. Thus,
            reconsideration is not necessary.

Comment 5   Authority officials indicated that they are already in compliance with determining
            rent reasonableness, since they implemented an interface to ensure that all rent
            reasonableness certifications are automatically uploaded and stored in their
            system. While we commend the officials for taking steps to implement corrective
            actions to address this recommendation, HUD will need to determine the
            sufficiency of the enhancements made to ensure compliance with regulations.

Comment 6   Authority officials indicated that they have experienced issues with missing
            documents in their back file conversion (see comment 3 above) and they will
            continue to work to retrieve those records. Therefore, they request consideration
            of any reimbursement of HAP based on the corrective action already taken.
            During the audit resolution process, HUD will take the officials request for
            consideration.




                                               20
Appendix C

       SCHEDULE OF MISSING DOCUMENTATION
                     Missing                          Monthly
                     housing               Missing    housing
                    assistance              tenant   assistance
          Sample    payments     Missing   income     payment
         item no.    contract     lease    support    amount
             1                      X                    $988.00
             2                      X                    $648.23
             3                      X        X           $796.77
             4                      X                    $229.68
             5                      X                  $1,501.00
             6                      X                    $697.47
             7                               X         $1,107.45
             8          X          X                     $408.55
             9          X                    X         $1,012.59
            10                     X                     $582.82
            11          X                                $426.51
            12          X          X                     $309.68
            13          X                                $505.56
            14                     X                   $1,097.00
            15          X                    X           $822.83
            16          X          X                     $834.84
            17                               X           $957.50
            18          X          X                     $735.84
            19                     X                     $931.25
            20          X                                $442.59
            21                     X                     $893.01
            22                     X         X            $89.00
            23                     X                     $803.35
            24                     X                     $803.35
            25                               X         $1,300.21
            26          X          X                     $784.13
            27          X          X         X           $573.00
            28          X          X         X         $1,127.00
            29                               X           $911.90
            30                     X                     $840.88
            30
            31                               X           $847.00
           Total       12          21        11       $24,008.99




                                     21