oversight

The Hopewell Redevelopment and Housing Authority, Hopewell, VA, Generally Used Housing Choice Voucher and Public Housing Program Funds in Accordance With Applicable Requirements

Published by the Department of Housing and Urban Development, Office of Inspector General on 2014-02-04.

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

OFFICE OF AUDIT
REGION 3
PHILADELPHIA, PA




    Hopewell Redevelopment and Housing Authority,
                    Hopewell, VA

                Housing Choice Voucher and
               Public Housing Program Funds




2014-PH-1002                2             FEBRUARY 4, 2014
                                                        Issue Date: February 4, 2014

                                                        Audit Report Number: 2014-PH-1002




TO:            Catherine D. Lamberg, Acting Director, Office of Public Housing, Richmond
               Field Office, 3FPH
               //signed//
FROM:          David E. Kasperowicz, Regional Inspector General for Audit, Philadelphia
               Region, 3AGA


SUBJECT:       The Hopewell Redevelopment and Housing Authority, Hopewell, VA, Generally
               Used Housing Choice Voucher and Public Housing Program Funds in
               Accordance With Applicable Requirements


    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 Hopewell Redevelopment and
Housing Authority’s use of Housing Choice Voucher and public housing program funds.

    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
215-430-6730.
                                           February 4, 2014
                                           The Hopewell Redevelopment and Housing Authority,
                                           Hopewell, VA, Generally Used Housing Choice Voucher
                                           and Public Housing Program Funds in Accordance With
                                           Applicable Requirements


Highlights
Audit Report 2014-PH-1002


 What We Audited and Why                    What We Found

We audited the Hopewell                    The Authority generally used its Housing Choice
Redevelopment and Housing                  Voucher and public housing program funds related to
Authority’s use of U.S. Department of      the allegations in the complaint in accordance with
Housing and Urban Development              applicable requirements. It accurately calculated
(HUD) Housing Choice Voucher and           housing assistance payments, rents, and utility
public housing program funds. We           allowances and ensured that new program participants
audited the Authority because we           were selected from the waiting list as required. The
received a complaint alleging that the     Authority generally used its credit cards for Authority-
Authority (1) improperly calculated        related expenses, properly paid for repairs, and
tenant rents and utility allowances, (2)   properly accounted for employee time worked, and its
improperly managed the program             payment for an employee’s cell phone expenses was
waiting list, (3) used credit cards for    reasonable. The allegations in the complaint did not
personal transactions, (4) made            have merit.
duplicate payments for repairs, (5)
improperly recorded time worked for an
employee, and (6) paid for an
employee’s personal cell phone
expenses. Our audit objective was to
determine whether the Authority used
Housing Choice Voucher and public
housing program funds related to the
allegations in the complaint in
accordance with applicable
requirements.


 What We Recommend

This report contains no
recommendations.
                           TABLE OF CONTENTS

Background and Objective                                                        3

Results of Audit
      Finding: The Authority Generally Used Housing Choice Voucher and
      Public Housing Program Funds in Accordance With Applicable Requirements   4

Scope and Methodology                                                           7

Internal Controls                                                               9


Appendix
A.    Auditee Comments                                                          11




                                          2
                      BACKGROUND AND OBJECTIVE
The Hopewell Redevelopment and Housing Authority was established on February 6, 1940. The
purpose of the Authority is to promote adequate, safe, and affordable housing and to enhance
residents’ quality of life, promoting economic opportunity and a suitable living environment free
from discrimination.

The Authority is governed by a seven-member board of commissioners appointed by the
Hopewell City Council. The board members serve in the same capacity as directors of a
corporation. They are authorized to establish policies and procedures for the Authority. The
board 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 350 East Poythress
Street, Hopewell, VA.

The Housing Choice Voucher program is the Federal Government’s major program for assisting
very low-income families, the elderly, and the disabled in obtaining 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.

The public and Indian housing programs were established to provide decent and safe rental
housing for eligible low-income families, the elderly, and persons with disabilities. The U.S.
Department of Housing and Urban Development (HUD) provides funds to local housing agencies
that manage the housing for low-income residents at rents they can afford.

HUD authorized the Authority the following financial assistance for its Housing Choice Voucher
and public housing programs for fiscal years 2011 through 2013:

                        Housing Choice Voucher            Public housing program
       Fiscal year
                       program authorized funds              authorized funds
          2013                $1,774,717                         $1,808,941
          2012                 1,931,854                          1,810,699
          2011                 2,435,435                          1,814,826
          Total               $6,142,006                         $5,434,466

Our audit objective was to determine whether the Authority used its Housing Choice Voucher
and public housing program funds related to the allegations in the complaint in accordance with
applicable requirements.




                                                3
                                RESULTS OF AUDIT


Finding: The Authority Generally Used Housing Choice Voucher and
Public Housing Program Funds in Accordance With Applicable
Requirements
The Authority generally used its Housing Choice Voucher and public housing program funds
related to the allegations in the complaint in accordance with applicable requirements. It
accurately calculated housing assistance payments, rents, and utility allowances and ensured that
new program participants were selected from the waiting list and met eligibility requirements as
required. The Authority used its credit cards for Authority-related expenses, properly paid for
repairs, and properly accounted for employee time worked, and its payment for an employee’s
cell phone expenses was reasonable. The allegations in the complaint did not have merit.



 The Authority Ensured That
 Housing Assistance Payments
 Were Accurately Calculated


               The Authority accurately calculated housing assistance payments. We reviewed
               housing assistance payment calculations for payments totaling $9,004 for 14
               tenants for the period November 2011 through April 2013 to determine whether
               housing assistance payments, rents, disability allowances, and utility allowances
               were accurately calculated. The Authority accurately calculated the housing
               assistance payments, rents, disability allowances, and utility allowances and
               maintained appropriate documentation to support the payments for these 14 tenants.

 The Authority Ensured That
 Tenants Met Eligibility and
 Followed Waiting List
 Requirements

               The Authority ensured that new participants in its Housing Choice Voucher
               program were eligible for assistance and selected from its waiting list. Between
               November 2011 and April 2013, the Authority enrolled 41 new participants in its
               Housing Choice Voucher program. We reviewed the files for 5 of the 41 new
               participants. We reviewed eligibility documentation, such as intake applications,
               Social Security documentation, income documentation, and other supporting
               documents, and verified that the families met eligibility requirements. We also
               verified that the Authority properly selected these tenants from its waiting list.



                                                4
The Authority Used Its Credit
Card for Official Business

            The Authority properly used its credit card for Authority-related expenses. We
            reviewed 36 credit card purchases totaling $9,586 charged to the Authority’s
            public housing program that were made during the period April 2012 through
            April 2013 to determine whether the purchases were authorized and reasonable.
            The purchases consisted of gasoline for the Authority-owned vehicle, lodging,
            and other official Authority-related activities. We reviewed voucher request
            forms, approvals of requests, receipts, and other documentation supporting the
            credit card expenditures. We did not find any indication that the credit card was
            being used for personal use. The Authority properly used public housing program
            funds to pay for these purchases.

The Authority Properly Paid
for Roof, Heating, and Air
Conditioning Repairs


            The Authority properly used public housing funds for the repair of a roof and a
            heating and air conditioning system. It awarded 23 contracts totaling $743,524 to
            9 vendors between April 2012 and April 2013. We reviewed two contracts with a
            vendor totaling $222,249 for the repair of a roof and a heating and air
            conditioning system of an Authority-owned public housing development. We
            reviewed the Authority’s public housing plan, request for proposals, bid
            tabulation sheets, and other procurement documentation used to support the
            selection of the vendor. We also reviewed the invoices and other documentation
            to ensure that the repair costs were adequately supported and properly approved.
            The Authority properly used its public housing program funds for these repairs.

The Authority Properly
Accounted for Employee Time
Worked

            The Authority ensured that its director of finance accurately recorded time
            worked. The complaint alleged that the director of finance was paid for time not
            worked. We reviewed the employee’s approved work schedule, timesheets for
            the 6-month period from January to June 2013, and other related documentation.
            The Authority’s executive director approved the director of finance to work an
            alternate work schedule in August 2012, which allowed the employee to
            occasionally work from home. The employee worked part of the day in the office
            and the remainder of the day at home. The timesheets reviewed showed the hours
            worked, and they were approved by the executive director. The timesheets also
            showed that the employee used personal leave for hours not worked.




                                            5
The Authority’s Payment for an
Employee’s Cell Phone Charges
Was Reasonable

             The Authority’s reimbursement to its director of public housing from public
             housing funds for cell phone charges was reasonable. In August 2012, the
             Authority’s executive director authorized the director of public housing to be paid
             $75 per month for using her personal cell phone for Authority business. The
             executive director wanted the ability to have access to his directors of finance and
             public housing at any time. He authorized the Authority to provide a cell phone
             to the director of finance. The executive director also approved the director of
             public housing’s request to be reimbursed for the use of her phone in lieu of
             having the Authority provide one. We reviewed the cell phone documentation the
             Authority used to determine the monthly reimbursement amount and determined
             that it was reasonable and supported the reimbursement.

Conclusion

             The allegations in the complaint did not have merit. The Authority generally used
             its Housing Choice Voucher and public housing program funds related to the
             allegations in the complaint in accordance with applicable requirements. It
             accurately calculated housing assistance payments, rents, and utility allowances
             and ensured that new program participants were selected from the waiting list and
             met eligibility requirements as required. The Authority used its credit cards for
             Authority-related expenses, properly paid for repairs, and properly accounted for
             employee time worked, and its payment for an employee’s cell phone expenses
             was reasonable.




                                              6
                         SCOPE AND METHODOLOGY

We conducted the audit from May through October 2013 at the Authority’s office located at 350
East Poythress Street, Hopewell, VA, and our offices in Philadelphia and Pittsburgh, PA. The
audit covered the period April 2012 through April 2013.

To achieve our objective, we reviewed

   •   Applicable HUD guidance at 24 CFR (Code of Federal Regulations) Parts 982, 985, and
       85 and other directives that govern the program.

   •   The Authority’s public housing plan and other written policies and procedures.

   •   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.

Between November 2011 and April 2013, the Authority made housing assistance payments
totaling $3.6 million for 379 tenants. Using a stratified random sampling method, we selected for
review a sample of 85 housing assistance payments valued at $47,024 to determine whether the
housing assistance payments, rents, disability allowances, and utility allowances were accurately
calculated. We reviewed the first 14 payments totaling $9,004 and found that the Authority
generally calculated the payments accurately and maintained appropriate documentation to support
the payments. We did not review additional sample payments since the review of the first 14
payments disclosed no significant problems.

Between November 2011 and April 2013, the Authority enrolled 41 new participants in its
Housing Choice Voucher program. We nonstatistically selected files for five of the seven new
participants enrolled between February and April 2013 to determine whether eligibility and waiting
list requirements were met.

Between April 2012 and April 2013, the Authority used its credit cards for 286 transactions
totaling $40,444. We nonstatistically selected and reviewed 36 credit card purchases totaling
$9,586, representing generally larger dollar value purchases that were made during the period
April 2012 through April 2013, to determine whether the purchases were authorized and
reasonable. The purchases consisted of gasoline for the Authority-owned vehicle, lodging, and
other official Authority-related activities. We reviewed voucher request forms, approvals of
requests, receipts, and other documentation supporting the credit card expenditures.

Between April 2012 and April 2013, the Authority awarded 23 contracts totaling $743,524 to 9
vendors. The Authority paid the contractors for various services, such as roof repair, fence
repair, and other repairs, needed for its public housing developments. We selected for review
two contracts with a vendor totaling $222,249 (30 percent of the total) for the repair of a roof and
a heating and air conditioning system of an Authority-owned public housing development.


                                                 7
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(s). We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objective.




                                                 8
                              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.




                                                 9
We evaluated internal controls related to the audit objective in accordance with
generally accepted government auditing standards. Our evaluation of internal
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.




                                 10
                 APPENDIX

Appendix A

             AUDITEE COMMENTS




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