oversight

The Housing Authority of Fort Worth, Fort Worth, TX, Generally Complied With HUD Regulations When Administering Its Housing Choice Voucher Program and Financial Transactions

Published by the Department of Housing and Urban Development, Office of Inspector General on 2016-05-24.

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

       Housing Authority of Fort Worth
              Fort Worth, TX
                  Housing Choice Voucher Program




Office of Audit, Region 6         Audit Report Number: 2016-FW-1002
Fort Worth, TX                                          May 24, 2016
To:            Regenia Hawkins, Director, Office of Public Housing, 6APH

               //signed//
From:          Tracey Carney, CPA
               Acting Regional Inspector General for Audit, Fort Worth Region, 6AGA
Subject:       The Housing Authority of Fort Worth, Fort Worth, TX, Generally Complied With
               HUD Regulations When Administering Its Housing Choice Voucher Program and
               Financial Transactions

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 Housing Authority of Fort Worth’s Housing
Choice Voucher program and financial transactions.

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
(817) 978-9309.
                    Audit Report Number: 2016-FW-1002
                    Date: May 24, 2016

                    The Housing Authority of Fort Worth, Fort Worth, TX, Generally Complied
                    With HUD Regulations When Administering Its Housing Choice Voucher
                    Program and Financial Transactions



Highlights

What We Audited and Why
In accordance with our audit plan to review public housing programs, we reviewed the Housing
Authority of Fort Worth, TX. Our objectives were to determine whether the Authority (1)
properly administered its U.S. Department of Housing and Urban Development (HUD) Housing
Choice Voucher program and (2) properly used HUD funds and resources for a related entity,
FW Hunter Plaza, LP.

What We Found
With minor exceptions, the Authority generally followed HUD’s requirements and properly
administered its voucher program. The minor deficiencies included (1) incorrect participant
subsidy calculations, (2) incomplete records, and (3) a mistake in administering its waiting list.
Generally, the Authority properly (1) documented and supported its determination of tenant
eligibility and calculation of payments, (2) administered its waiting list, and (3) calculated and
reported its net restricted assets. Further, the Authority generally ensured that its properties and
units were in decent, safe, and sanitary condition. However, owners that accepted voucher
participants did not adequately maintain two properties, and one tenant did not follow
housekeeping requirements for her unit. These conditions occurred because the Authority did
not keep proper records or follow its own policies and procedures and owners and tenants did not
meet requirements. These deficiencies resulted in ineligible costs of $651 and unsupported costs
of $156 and allowing some tenants to live in substandard condition.

Based upon what was reviewed, the Authority properly used HUD funds and resources for a
related entity, FW Hunter Plaza, LP, including funds in its interfund transactions.

What We Recommend
We recommend that the Director, Office of Public Housing, Fort Worth, TX, require the
Authority to support or repay its voucher program $807 from non-Federal funds for
overpayments on behalf of program participants.
Table of Contents
Background and Objectives ....................................................................................4

Results of Audit ........................................................................................................5
         Finding: The Authority Generally Complied With Housing Choice Voucher
         Program Requirements .................................................................................................... 5

Scope and Methodology ...........................................................................................7

Internal Controls ......................................................................................................8

Appendixes ................................................................................................................9
         A. Schedule of Questioned Costs .................................................................................... 9

         B. Auditee Comments and OIG’s Evaluation ............................................................. 10




                                                                 3
Background and Objectives
The Housing Authority of Fort Worth, TX, is a public entity created by the City of Fort Worth in
1938 in accordance with State law. A board of commissioners, composed of five members
chosen by the mayor of Fort Worth, governs the Authority. The board selects a president and
chief executive officer to direct the activities of the Authority. The U.S. Department of Housing
and Urban Development (HUD) funds and oversees the expenditures of the Authority’s HUD-
funded programs. The main goal of the Authority is to provide fair, acceptable, quality,
affordable, and accessible housing that mixes low- and moderate-income individuals and
families with the greater community. Another goal is to create financial opportunities for these
individuals and families to become self-sufficient.

The Authority managed 5,443 housing choice vouchers. HUD’s Housing Choice Voucher
program helps low-income participants afford decent, safe, and sanitary housing in the private
market. The Authority directly pays landlords and owners on behalf of participants. Table 1
shows the Authority’s voucher funding during the scope period.

                              Table 1: Housing Choice Voucher funding

                               Year                Authorized             Disbursed

                               2014              $33,048,768            $31,048,186
                               2015               27,555,391             24,078,698

                              Totals             $60,604,159            $55,126,884


In addition to managing the voucher program, the Authority had 45 related entities and
properties that it reported on its financial statements. In September 2014, the Authority
converted its Hunter Plaza Apartments property to HUD’s Rental Assistance Demonstration
program and formed a new related entity, FW Hunter Plaza, LP. 1 The Authority completed the
rehabilitation and conversion in February 2016.

Our objectives were to determine whether the Authority (1) properly managed its voucher
program and (2) properly used HUD funds and resources for a related entity, FW Hunter Plaza,
LP.




1
    The Rental Assistance Demonstration program allows public housing agencies to convert properties funded
    under the public housing program to long-term project-based rental assistance contracts to preserve and improve
    these properties, through access to private debt and equity, to address immediate and long-term capital needs.


                                                         4
Results of Audit

Finding: The Authority Generally Complied With Housing Choice
Voucher Program Requirements

With minor exceptions, the Authority generally followed HUD’s requirements and properly
administered its voucher program. The minor deficiencies included (1) incorrect participant
subsidy calculations, (2) incomplete records, and (3) an error in maintaining its waiting list.
Usually, it properly (1) documented and supported its determination of tenant eligibility and
calculation of payments, (2) administered its waiting list, and (3) calculated and reported its net
restricted assets. Further, the Authority generally ensured that its properties and units were in
decent, safe, and sanitary condition. However, owners did not adequately maintain two
properties, and one tenant did not follow housekeeping requirements for her unit. 2 These
conditions occurred because the Authority did not keep proper records or follow its own policies
and procedures and owners and tenants did not fulfill their requirements. These deficiencies
resulted in ineligible costs of $651 and unsupported costs of $156 and allowing some tenants to
live in substandard conditions.

The Authority’s Voucher Program Tenant Files Were Generally Compliant
Generally, the Authority’s voucher tenant files complied with requirements and its administrative
plan. The Authority’s files supported the tenant’s eligibility and calculation of payments with
minor exceptions. Deficiencies identified included an untimely recertification, a tenant disability
misclassification, and four tenant files with incomplete records. For example, the Authority did
not process one tenant’s annual reexamination in a timely manner, which would have resulted in
a $591 decrease in her subsidy. Instead, the Authority improperly allowed the tenant a 1-month
hardship exception, 3 allowing her subsidy to remain at the higher amount. This condition
occurred because the Authority did not appropriately interpret and apply its own requirements.
These deficiencies resulted in the Authority’s overpaying $807 in rent.

The Authority Generally Managed Its Waiting List in Accordance With Requirements
Generally, the Authority managed its voucher program waiting list in accordance with
requirements and its administrative plan. A sample of draws for 1 month included participants
selected in order from the waiting list with the exception of those pulled earlier as an identified
preference. 4 The Authority’s administrative plan identified Shelter Plus Care participants as a
preference. One Shelter Plus Care participant pulled from the waiting list indicated that she was


2
    The Authority corrected the items; therefore, no recommendations were made.
3
    The Authority’s administrative plan allows for hardship exceptions to aid tenants when their portion of the rent
    increases and there are errors at annual recertification. According to the plan, the Authority should not
    retroactively charge the tenant when this occurs.
4
    All individuals pulled because of an identified preference were Shelter Plus Care participants. HUD funds
    Shelter Plus Care to assist homeless disabled persons.


                                                          5
not ready to transition into a unit. 5 According to the Authority, this individual should have
remained on the waiting list until her name reached the top, but she did not. The Authority stated
that it had corrected this error.

The Authority Calculated and Reported Its Net Restricted Assets Correctly
The Authority correctly calculated and reported its net restricted assets balance. The Authority’s
financial statements reflected a balance of $276,789 as of December 2014. The Authority’s
records verified the balance shown in the financial statements.

The Authority’s Voucher Program Properties and Units Were Generally Decent, Safe, and
Sanitary
Generally, the properties and units were in decent, safe, and sanitary condition with some
exceptions. The Authority ensured that the owners corrected all deficiencies identified in its
inspection reports for sample units. However, our site visits identified additional deficiencies.
Two of the nine properties and one of the units visited did not seem to be in decent, safe and
sanitary condition. For example, one property experienced fire damage in one of its units, which
spread to a common balcony area near an Authority tenant’s unit. The landlord failed to correct
the deficiency in a timely manner. As a result, the Authority planned to relocate current tenants
at this property, and future tenants would not be approved for tenancy due to safety concerns.
The Authority addressed all of these issues during the audit fieldwork.

Conclusion
The Authority generally administered its voucher program in accordance with requirements.
However, minor deficiencies included (1) incorrect participant subsidy calculations, (2)
incomplete records, and (3) an error in maintaining its waiting list. Further, two owners and one
tenant did not adequately follow requirements for decent, safe, and sanitary housing. These
deficiencies resulted in incorrect payments of $807.

Recommendations
We recommend that the Director, Office of Public Housing, Fort Worth, TX, require the
Authority to

1A.       Repay its Section 8 Housing Choice Voucher program $651 from non-Federal funds for
          overpayments on behalf of program participants.

1B.       Support or repay its Section 8 Housing Choice Voucher program $156 from non-Federal
          funds for overpayments on behalf of program participants.




5
      Shelter Plus Care participants receive additional social services not available to voucher program participants.


                                                            6
Scope and Methodology
Our scope generally covered the Authority’s voucher program and financial transactions from
January 1, 2014, through August 31, 2015. We performed the audit from September 2015 to
March 2016 at the Authority’s and our offices in Fort Worth, TX. To meet the audit objectives,
we performed the following:

   •   Reviewed and obtained an understanding of relevant laws and program regulations, the
       Authority’s policies and procedures, prior Office of Inspector General (OIG) audits and
       audit resolution activities, and form HUD-50058 (Family Report) guidelines.
   •   Reviewed and analyzed the Authority’s 2014 audited financial statements and
       administrative and financial operations activities, including its net restricted assets.
   •   Interviewed applicable HUD and agency officials.
   •   Reviewed and analyzed the Authority’s contract, financial transactions, and relationship
       with its related entity, Hunter Plaza.
   •   Identified and reviewed a nonrepresentative sample of unusual or large balances for
       Hunter Plaza based on statistical analysis to identify outlier transactions of the
       Authority’s general ledger.
   •   Compared the Authority’s voucher data from the Inventory Management System of
       HUD’s Office of Public and Indian Housing Information Center, which included 5,535
       participant records, to Enterprise Income Verification system data to determine the extent
       and impact of deceased tenants, invalid Social Security numbers, income discrepancies,
       and overhoused households.
   •   Reviewed the Authority’s property inspection reports. We selected and visited a
       nonrepresentative sample of 10 of the Authority’s voucher program units to ensure that
       landlords had corrected previously identified deficiencies.
   •   Reviewed 10 nonrepresentative samples selected from the voucher program tenant files
       and a 1 month nonrepresentative sample of applicants from its waiting list to determine
       compliance with requirements.
   •   Gained an understanding of functions and processes and performed external inspections
       of the nine additional voucher program complexes owned by the Authority.
   •   Conducted a data reliability assessment using U.S. Government Accountability Office
       guidelines in the publication GAO-03-273G, Assessing the Reliability of Computer-
       Processed Data. We determined that the data were sufficiently reliable for meeting the
       audit objectives.

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.




                                                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 objectives:
•   Program operations – Policies and procedures in place to reasonably ensure that the program
    met its objectives.
•   Compliance with laws and regulations – Policies and procedures in place to reasonably
    ensure that resource use was 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 objectives 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.




                                                  8
Appendixes

Appendix A


                           Schedule of Questioned Costs
                 Recommendation
                                    Ineligible 1/  Unsupported 2/
                     number
                         1A                    $651

                         1B                                        $156

                       Totals                  $651                $156


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.




                                              9
Appendix B
                         Auditee Comments and OIG’s Evaluation

The Authority chose not to provide written comments as it agreed with the report with a minor
change.




                                               10