oversight

The Westmoreland County Housing Authority, Greensburg, PA, Did Not Properly Manage Its Housing Choice Voucher Waiting List and Select Applicants as Required

Published by the Department of Housing and Urban Development, Office of Inspector General on 2016-01-13.

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

    The Westmoreland County Housing
        Authority, Greensburg, PA
                  Housing Choice Voucher Program




Office of Audit, Region 3          Audit Report Number: 2016-PH-1001
Philadelphia, PA                                     January 13, 2016
To:            Jacqueline A. Molinaro-Thompson, Director, Office of Public Housing,
               Pittsburgh Field Office, 3EPH
               //signed//
From:          David E. Kasperowicz, Regional Inspector General for Audit, Philadelphia
               Region, 3AGA
Subject:       The Westmoreland County Housing Authority, Greensburg, PA, Did Not Properly
               Manage Its Housing Choice Voucher Waiting List and Select Applicants as
               Required




Attached is the U.S. Department of Housing and Urban Development (HUD), Office of Inspector
General’s (OIG) results of our review of the Westmoreland County Housing Authority’s
Housing Choice Voucher program. This is the first of two reports to be issued on the Authority.
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.
                     Audit Report Number: 2016-PH-1001
                     Date: January 13, 2016

                     The Westmoreland County Housing Authority, Greensburg, PA, Did Not
                     Properly Manage Its Housing Choice Voucher Waiting List and Select
                     Applicants as Required



Highlights
What We Audited and Why
We audited the Westmoreland County Housing Authority’s Housing Choice Voucher program.
We selected the Authority for audit because the U.S. Department of Housing and Urban
Development (HUD) authorized it more than $8.7 million in program funding per year for fiscal
years 2013 and 2014 and we had not audited its program. Our audit objective was to determine
whether the Authority managed its waiting list and selected families in accordance with
requirements and whether program property owners and Authority employees participating in the
program were eligible for assistance. This is the first of two reports to be issued on the
Authority’s program.

What We Found
The Authority did not always ensure that its waiting list was accurate and updated or that it
selected applicants from the waiting list appropriately. These conditions existed because the
Authority failed to follow policies and procedures established in its administrative plan. As a
result, applicants were not treated fairly and consistently in accordance with program
requirements.
A data match analysis showed that the Authority was providing program assistance to 11
households that were also property owners in the program. Documentation showed that the
Authority properly provided assistance to those households before they purchased their homes
through the Authority’s Homeownership Program. The data match also showed it was providing
program assistance to two of its employees. The Authority properly provided assistance to these
participants before hiring them as employees.

What We Recommend
We recommend that HUD require the Authority to (1) review and update its waiting list to
correct the errors identified by the audit, (2) establish and maintain project-based waiting lists as
required by its administrative plan, and (3) develop and implement controls to ensure that it
follows the policies and procedures in its administrative plan for updating its waiting list and
selecting applicants from it. We also recommend that the Director of HUD’s Pittsburgh Office
of Public Housing provide technical assistance to the Authority to ensure that it properly
manages its waiting list and selects applicants in accordance with applicable requirements.
Table of Contents
Background and Objective......................................................................................3

Results of Audit ........................................................................................................4
         Finding: The Authority Did Not Properly Manage Its Waiting List and Select
         Participants in Accordance With Requirements ........................................................... 4

Scope and Methodology ...........................................................................................6

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

Appendix ...................................................................................................................9
         A. Auditee Comments and OIG’s Evaluation ............................................................... 9




                                                              2
Background and Objective
The Westmoreland County Housing Authority was incorporated in 1940, as a public corporation
of the Commonwealth of Pennsylvania, to provide safe, sanitary, and affordable housing for
every low-income or elderly family and to operate the housing programs in accordance with
Federal legislation. The Authority is governed by a board of commissioners consisting of five
members. The board appoints an executive director to manage the day-to-day operations of the
Authority. Its Housing Choice Voucher program office is located at 154 South Greengate Road,
Greensburg, PA.

Under the Section 8 Housing Choice Voucher program, the U.S. Department of Housing and
Urban Development (HUD) authorized the Authority to provide tenant-based leased housing
assistance payments to 1,804 eligible households in fiscal years 2013 and 2014. HUD authorized
the Authority the following financial assistance for housing choice vouchers for fiscal years 2013
and 2014:

                             Year             Annual budget authority
                             2013                   $8,789,299
                             2014                   $9,073,225

Regulations at 24 CFR (Code of Federal Regulations) 982.54(c) require the Authority to
administer its program in accordance with its administrative plan.

Our audit objective was to determine whether the Authority managed its waiting list and selected
families in accordance with requirements and whether program property owners and Authority
employees participating in the program were eligible for assistance.




                                                3
Results of Audit

Finding: The Authority Did Not Properly Manage Its Waiting List
and Select Applicants in Accordance With Requirements
The Authority did not always ensure that its waiting list was accurate and updated or that it
selected applicants from the waiting list appropriately. These conditions existed because the
Authority failed to follow policies and procedures established in its administrative plan. As a
result, applicants were not treated fairly and consistently in accordance with program
requirements. We also found that program property owners and Authority employees
participating in the Housing Choice Voucher program were eligible for assistance.

The Authority Did Not Always Ensure That Its Waiting List Was Accurate and Updated
The Authority’s September 2014 tenant-based waiting list contained 33 errors. The errors
included incorrect codes; for example, an applicant was shown as “housed” when the applicant
had withdrawn from the program. Another applicant’s information showed that the applicant
was participating in both the Housing Choice Voucher program and the Authority’s public
housing program. The waiting list also included 119 applicants for the Authority’s project-based
voucher assistance. HUD’s Housing Choice Voucher Guidebook 7420.10G states that the
waiting lists should be updated and current. Section 4-II.F of the Authority’s administrative plan
requires it to update its waiting list every 24 months. Section 17-VI.C of the administrative plan
requires the Authority to establish and manage separate waiting lists for individual projects or
buildings that receive project-based assistance. The Authority agreed to update its waiting list,
correct the errors identified during the audit, and maintain project-based waiting lists by location
as required. It explained that although it had not updated its waiting list since 2011 because its
staff fell behind in performing the task, it had begun updating the waiting list in May 2014,
before the audit started. The Authority agreed that it had not established the project-based
waiting lists as required.

The Authority Did Not Always Select Applicants in Order
Contrary to requirements, the Authority did not always select applicants in accordance with its
admission policy. HUD regulations at 24 CFR (Code of Federal Regulations) 982.204(a) require
public housing agencies to select participants from the waiting list in accordance with admission
policies contained in their administrative plans. Section 4-III.C of the Authority’s administrative
plan requires it to select applicants who meet local preference requirements on a first-come, first-
served basis according to the date and time that the Authority received their complete
applications. For 41 applicants reviewed, the Authority did not select 15 from the waiting list in
order. The Authority served 95 applicants who had applied for assistance after these 15 applied.
As a result, the 15 applicants who submitted their applications before the other applicants waited
longer to be served. The Authority stated that it selected applicants correctly. However, it did
not provide documentation to show that its selection and intake of the 95 applicants before the 15
applicants was appropriate.



                                                  4
Program Property Owners and Authority Employees Participating in the Program Were
Eligible For Assistance
The Authority provided assistance to 11 program property owners and 2 of its employees. We
reviewed the relevant tenant and loan files, conducted public data searches, and determined that
the property owners and employees were eligible for assistance. The property owners were
assisted families participating in the Authority’s Homeownership Program. Under this program,
eligible families purchase a home and use the Authority’s monthly assistance payments toward
the mortgage to ease the transition from rental housing to home ownership. One of the two
employees was receiving assistance and later participated in the Authority’s maintenance
assistant training program. In this 1-year training program, the program participants obtain job
skills and knowledge with the goal of being employed by the Authority as a maintenance worker.
The other person was receiving assistance, and the Authority later hired the person as a
caseworker.

Conclusion
The Authority did not always ensure that its waiting list was accurate and updated or that it
selected applicants from the waiting list in order of their applications. These conditions occurred
because the Authority failed to follow policies and procedures established in its administrative
plan. As a result, applicants were not treated fairly and consistently in accordance with program
requirements.

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

       1A.     Review and update its waiting list to correct the errors identified by the audit.

       1B.     Establish and maintain project-based waiting lists by location as required by its
               administrative plan.

       1C.     Develop and implement controls to ensure that it follows the policies and
               procedures in its administrative plan for updating its waiting list and selecting
               applicants from it.

We also recommend that the Director of HUD’s Pittsburgh Office of Public Housing

       1D.     Provide technical assistance to the Authority to ensure that it properly manages its
               waiting list and selects applicants in accordance with applicable requirements.




                                                  5
Scope and Methodology
We conducted the audit from September 2014 through October 2015 at the Authority’s office
located at 154 South Greengate Road, Greensburg, PA, and our office located in Pittsburgh, PA.
The audit covered the period October 2013 to September 2014 but was expanded when
necessary.

To accomplish our objective, we reviewed

       •   Applicable laws, regulations, the Authority’s administrative plan, HUD’s program
           requirements at 24 CFR Part 982, HUD’s Housing Choice Voucher Guidebook
           7420.10 G, and other guidance.

       •   The Authority’s home ownership files and tenant data, waiting lists, board meeting
           minutes and resolutions, participant application files, annual audited financial statements
           for fiscal years 2013 and 2014, and other program records.

       •    HUD’s monitoring reports for the Authority.

We also interviewed Authority employees and HUD staff.

To achieve our audit objective, we relied in part on computer-processed data from the Authority’s
computer system. 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 obtained and analyzed the Authority’s automated Housing Choice Voucher program waiting
list as of September 2014. The waiting list indicated that 3,616 applicants had applied for
program assistance and they were categorized as housed, active, and withdrawn. However, we
found that 119 of the 3,616 applicants had applied for project-based assistance rather than tenant-
based Housing Choice Voucher program assistance, which was the focus of this audit. To
determine whether the Authority processed applications in order, we sorted the waiting list to
show only those tenant-based applicants categorized as housed or active and who claimed a local
preference, which resulted in a total of 157 applicants (46 housed, 111 active). A local
preference was used by the Authority to select families that were homeless, veterans, and victims
of disasters, among others. We used a nonstatistical sample design because the Authority’s
process for selecting applicants was based on the date and time that it received individual
applications. Although this approach did not allow us to make a projection to the population, it
was sufficient to meet the audit objective. We selected 41 applicants (30 active, 11 housed) with
application dates between October 1, 2013, and May 20, 2014. For the active applicants, we
selected 30 that had applied earlier, and for the housed applicants, we selected 11 of the more
recently housed applicants. We compared the application dates to the application and interview
dates of all 157 local preference applicants to determine whether the Authority selected
applicants in order.


                                                  6
For the period October 1, 2013, to September 30, 2014, we compared the Social Security
numbers for the Authority’s 143 employees, 4,400 program participants, and 1,032 program
property owners to identify potential problems. Specifically, we compared the Social Security
numbers of the Authority’s employees to those of the program participants and the program
property owners. We also compared the Social Security numbers of the program participants to
those of the program property owners. We found that 13 Social Security numbers were
associated with 11 participants who were also owners of the program property and 2 participants
who were also Authority employees.

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.




                                                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:

•   Effectiveness and efficiency of program operations – Policies and procedures that
    management has implemented to reasonably ensure that a program meets its objectives.
•   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 applicable laws and regulations – Policies and procedures that management
    has implemented to reasonably ensure that program participants comply with program 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.
Significant Deficiency
Based on our review, we believe that the following item is a significant deficiency:

•    The Authority lacked controls to ensure that it properly maintained its waiting list and selected
    applicants from the waiting list in order.




                                                   8
Appendix A
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




Comment 1




                               9
             Auditee Comments and OIG’s Evaluation




Ref to OIG    Auditee Comments
Evaluation




Comment 2




Comment 3




                               10
                          OIG Evaluation of Auditee Comments


Comment 1   The Authority stated that it had administrative controls in place and it moved
            applicants to local preference lists based on its verification of the local preference
            and not the original application date. The Authority’s comment refers to our
            cause statement in the first paragraph on page 4 of the audit report that states,
            “these conditions existed because the Authority failed to follow policies and
            procedures established in its administrative plan.” This statement applies to all of
            the conditions that we identified: that the Authority did not always ensure that its
            waiting list was 1) accurate, 2) updated and 3) that it selected applicants from the
            waiting list in order of their applications. The Authority had policies and
            procedures, however, it lacked controls to ensure that its staff followed them.
            Regarding the movement of applicants to local preference lists, the Authority’s
            administrative plan required it to select local preference applicants on a first
            come, first serve basis according to the date and time their application was
            received. We understood this to mean the date and time that the applicant was
            placed on the local preference list. For 15 applicants, we found evidence in the
            Authority’s files that they were qualified to be placed on the local preference list
            before the date that the Authority placed them on the list. As a result, the
            Authority served 95 applicants who were placed on the local preference list after
            these 15 applicants were qualified to be placed on the list.
Comment 2   The Authority stated that it corrected the errors in the waiting list identified by the
            audit, purged its waiting list, and established separate project-based waiting lists
            by location. However, the Authority did not provide us documentation to show
            that it corrected the errors. It provided us an updated waiting list after the exit
            conference. We reviewed the updated waiting list and it showed that the
            Authority contacted applicants that had applied between 2009 and 2012 to ensure
            data was accurate. However, it also showed that the Authority had not contacted
            applicants that applied for assistance in 2013 and 2014. Documentation the
            Authority provided at the exit conference showed that it plans to continue
            updating its waiting list in 2016. The Authority also provided us copies of the
            project-based waiting lists that it established, however, it also needs to show that
            it maintains them over time. Therefore, as part of the audit resolution process,
            HUD will need to evaluate and verify the Authority’s corrective actions related to
            these audit issues.
Comment 3   The Authority stated that it believed that transferring applicants to the local
            preference list based on the date it verified the local preference, not the date and
            time of their original application, was in accordance with HUD regulations. It
            also stated that, contrary to the suggestion of the auditors, placement of an
            applicant to the local preference list based on the time and date of the original
            application would adversely impact those on the local preference list who already
            provided local preference verification. The auditors did not suggest that the
            Authority should place applicants on the local preference list based on the date


                                               11
and time of their original application. As discussed in comment 1, the Authority’s
administrative plan required it to select local preference applicants on a first
come, first serve basis according to the date and time their application was
received. For 15 applicants, we found that they were qualified to be placed on the
local preference list before the date that the Authority placed them on the list.




                                 12