oversight

The Housing Opportunities Commission of Montgomery County, Kensington, MD, Did Not Always Ensure That Its Program Units Met Housing Quality Standards

Published by the Department of Housing and Urban Development, Office of Inspector General on 2016-09-29.

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

    Housing Opportunities Commission
         of Montgomery County,
            Kensington, MD
                  Housing Choice Voucher Program




Office of Audit, Region 3          Audit Report Number: 2016-PH-1008
Philadelphia, PA                                   September 29, 2016
To:            Christine Jenkins, Director, Office of Public Housing, District of Columbia Field
               Office, 3GPH
               //signed//
From:          David E. Kasperowicz, Regional Inspector General for Audit, Philadelphia
               Region, 3AGA
Subject:       The Housing Opportunities Commission of Montgomery County, Kensington,
               MD, Did Not Always Ensure That Its Program Units Met Housing Quality
               Standards




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 Opportunities Commission of
Montgomery County’s 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
215-430-6734.
                   Audit Report Number: 2016-PH-1008
                   Date: September 29, 2016

                   The Housing Opportunities Commission of Montgomery County,
                   Kensington, MD, Did Not Always Ensure That Its Program Units Met
                   Housing Quality Standards



Highlights

What We Audited and Why
We audited the Housing Opportunities Commission of Montgomery County’s Housing Choice
Voucher program because (1) it had a large program receiving more than $82 million in fiscal
year 2015, (2) it had the second largest number of housing choice vouchers of non-Moving to
Work housing agencies within the jurisdiction of the Philadelphia region, and (3) we had not
audited its program. Our audit objective was to determine whether the Commission ensured that
its Housing Choice Voucher program units met the U.S. Department of Housing and Urban
Development’s (HUD) housing quality standards.

What We Found
The Commission did not always conduct adequate inspections to ensure that its program units
met housing quality standards. Of 75 program units inspected, 56 did not meet HUD’s housing
quality standards. Further, 15 of the 56 were in material noncompliance with housing quality
standards. The Commission disbursed $44,584 in housing assistance payments and received
$303 in administrative fees for these 15 units. We estimate that over the next year, if the
Commission does not implement adequate procedures to ensure that its program units meet
housing quality standards, HUD will pay more than $7.5 million in housing assistance for units
that materially fail to meet those standards.

What We Recommend
We recommend that HUD require the Commission to (1) reimburse its program $44,887 from
non-Federal funds for the 15 units that materially failed to meet HUD’s housing quality
standards and (2) implement procedures and controls to ensure that program units meet housing
quality standards.
Table of Contents
Background and Objective......................................................................................3
Results of Audit ........................................................................................................................ 4
          Finding: Housing Quality Standards Inspections Were Inadequate .......................... 4

Scope and Methodology .........................................................................................14

Internal Controls ....................................................................................................16

Appendixes ..............................................................................................................17
          A. Schedule of Questioned Costs and Funds To Be Put to Better Use ...................... 17

          B. Auditee Comments and OIG’s Evaluation ............................................................. 18




                                                                    2
Background and Objective
In 1966, the Montgomery County Council activated the Housing Authority of Montgomery
County. In 1974, the State and County enacted parallel legislation that established a broader
housing mission for the County and restructured the Housing Authority of Montgomery County
into the Housing Opportunities Commission of Montgomery County. The Commission is an
independent agency and component unit of Montgomery County, MD. The Commission
operates as a public housing agency, a housing finance agency, and a housing developer. Its
Housing Choice Voucher program consists of the operation of housing units that are managed
and maintained by private landlords. It provides decent and affordable housing to low-income
families, seniors, and the disabled through Federal housing assistance contributions. The
Commission is governed by a board of commissioners consisting of seven members. Its main
office is located at 10400 Detrick Avenue, Kensington, MD.
Under the Housing Choice Voucher program, the U.S. Department of Housing and Urban
Development (HUD) authorized the Commission to provide leased housing assistance payments
to 7,044 and 7,050 eligible households in fiscal years 2014 and 2015, respectively. HUD
authorized the Commission the following financial assistance for housing choice vouchers for
fiscal years 2014 and 2015.

                              Year           Annual budget authority
                              2014                  $83,293,444
                              2015                   82,140,820

HUD regulations at 24 CFR (Code of Federal Regulations) 982.405(a) require public housing
agencies to perform unit inspections before the initial move-in and at least annually. The agency
must inspect the unit leased to the family before the term of the lease, at least annually during
assisted occupancy, and at other times as needed to determine whether the unit meets housing
quality standards.

In August 2013, the Commission hired a contractor to perform housing quality standards
inspections for its Housing Choice Voucher program. The contract was for a 1-year period with
an option to renew the contract for up to three additional 1-year periods. The contractor
provided four inspectors to conduct inspections of the Commission’s Housing Choice Voucher
program units.
Our audit objective was to determine whether the Commission ensured that its Housing Choice
Voucher program units met HUD’s housing quality standards.




                                                3
Results of Audit
Finding: Housing Quality Standards Inspections Were Inadequate
The Commission did not always conduct adequate inspections to enforce HUD’s housing quality
standards. Of 75 program housing units inspected, 56 did not meet HUD’s housing quality
standards, and 15 materially failed to meet HUD’s standards. The Commission’s contracted
inspectors did not identify or report 108 violations that existed at the 15 units when they
conducted their inspections. Also, contrary to requirements, the Commission inspected program
units that it owned. These conditions occurred because the Commission did not implement
procedures and controls to ensure that program units met housing quality standards. Its
contracted inspectors did not thoroughly inspect units and it did not properly administer its
quality control inspection program. In addition, the Commission believed that having its
inspectors inspect the program units that it owned complied with requirements. As a result, it
disbursed $44,584 in housing assistance payments and received $303 in administrative fees for
the 15 units that materially failed to meet HUD’s housing quality standards. Unless the
Commission improves its inspection program and ensures that all units meet housing quality
standards, we estimate that it will pay more than $7.5 million in housing assistance for units that
materially fail to meet housing quality standards over the next year.

Housing Units Did Not Always Meet HUD’s Housing Quality Standards
We statistically selected 75 units from a universe of 866 program units that passed a
Commission-administered housing quality standards inspection between December 1, 2015, and
February 29, 2016. The 75 units were selected to determine whether the Commission ensured
that the units in its Housing Choice Voucher program met housing quality standards. We
inspected the 75 units between April 25 and May 11, 2016.

Of the 75 housing units inspected, 56 (75 percent) had 405 housing quality standards violations,
including 89 violations that needed to be corrected within 24 hours because they posed a serious
threat to the safety of the tenants. Additionally, 15 of the 56 units (27 percent) were in material
noncompliance with housing quality standards because they had 108 violations that predated the
Commission’s last inspection. These violations were not identified by the Commission’s
contracted inspectors, creating unsafe living conditions. HUD regulations at 24 CFR 982.401
require that all program housing meet housing quality standards performance requirements, both
at commencement of the assisted occupancy and throughout the assisted tenancy. The following
table categorizes the 405 housing quality standards violations in the 56 units that failed our
inspections.




                                                 4
          Seq.                                      Number of           Number of          Percentage of
                          Key aspect 1
          no.                                       violations            units               units 2
                       Illumination and
            1                                            110                  38                   51
                           electricity
            2      Structure and materials                91                  36                   48
            3         Space and security                  50                  24                   32
            4      Site and neighborhood                  37                  23                   31
            5                Access                       26                  18                   24
            6         Interior air quality                24                  17                   23
            7          Sanitary facilities                21                  13                   17
                    Food preparation and
            8                                             19                  15                   20
                      refuse disposal
            9          Smoke detectors                    17                  11                   15
           10       Thermal environment                    6                   6                   8
           11         Sanitary condition                   4                   4                   5

                              Total                      405


During the audit, we provided our inspection results to the Commission, its contractor, and the
Director of HUD’s Office of Public Housing, District of Columbia field office.

The following photographs illustrate some of the violations we noted while conducting housing
quality standards inspections in the 15 units that materially failed to meet HUD standards.




1
    Regulations at 24 CFR 982.401 categorize housing quality standards performance and acceptability criteria into
    13 key aspects. Only 11 key aspects are listed in the table because we identified no violations related to the key
    aspects of water supply and lead-based paint.
2
    This is the percentage of the 75 sample units that we determined had the identified violations. For example, the
    38 units that had illumination and security violations were 51 percent of the 75 sample units inspected.
                                                           5
Inspection #3: Mold or mildew was located in the bedroom ceiling above the closet. The
Commission did not identify this violation during its December 31, 2015, inspection.




Inspection #7: The vent on the hot water heater had a negative slope, which prohibited
gases from venting properly. The Commission did not identify this violation during its
December 16, 2015, inspection.




                                            6
Inspection #37: An electrical cord ran along the floor to the shower to provide power to
a refrigerator, and the cord was wrapped around the shower head. The Commission did not
identify this violation during its December 15, 2015, inspection.




Inspection #44: An extension cord ran from the outlet to the sump pump to provide
power. The electrical connection should be weather proof and properly installed. The
Commission did not identify this violation during its December 23, 2015, inspection.




                                           7
Inspection #48: The light globe in a bedroom was partially filled with water. The
Commission did not identify this violation during its December 16, 2015, inspection.




Inspection #56: The motion light was not properly installed and had exposed wiring. This
 light was located in a garage that the tenant used as a play room. The Commission did not
identify this violation during its February 25, 2016, inspection.




                                            8
Inspection #58: Mold or mildew was located in the shower on the second floor. The
Commission did not identify this violation during its January 26, 2016, inspection.




Inspection #58: The toilet was missing, and there was an open sewer pipe. The Commission
did not identify this violation during its January 26, 2016, inspection.




                                           9
          Inspection #64: The upper window sash fell. The Commission did not identify this
          violation during its February 1, 2016, inspection.




          Inspection #70: The temperature and pressure relief valve on the hot water heater was
          touching the wall and could not be opened, which could result in an explosion. The
          Commission did not identify this violation during its February 12, 2016, inspection.

The Commission Improperly Inspected Units That It Owned
Contrary to requirements, the Commission inspected program units that it owned. Of the 7,050
units participating in its program, it owned 980 of them. Section 10.8 of HUD’s Housing Choice
Voucher Guidebook 7420.10G prohibits the Commission from inspecting units that it owns,

                                                    10
including units owned by an entity that it controls substantially. The Commission must obtain
the services of an independent entity, approved by HUD, to perform these housing quality
standards inspections. Contrary to these requirements, the Commission inspected program units
that it owned with its contracted inspectors without obtaining and documenting HUD approval of
the contractor as an independent entity. This problem occurred because the Commission
believed that having contracted inspectors inspect the units that it owned complied with
requirements.

The Commission’s Housing Quality Standards Inspection Process Was Not Effective
Although HUD regulations at 24 CFR 982.401 and the Commission’s administrative plan
required the Commission to ensure that its program units met housing quality standards, it did
not always meet those standards. The Commission’s inspection process was not effective
because (1) its inspectors did not thoroughly inspect units, and (2) it did not properly administer
its quality control program.

   •   The Commission’s inspectors did not thoroughly inspect units and missed some
       violations during their inspections. They did not identify unsecured junction boxes, a
       missing cover on a junction box, missing railings, a broken glass patio door, missing
       receptacle covers, a missing smoke detector, and a basement bedroom window that was
       screwed shut. The inspectors explained that they inspected up to 15 units in an 8-hour
       workday and had a difficult time completing thorough inspections due to the large
       number of inspections that the Commission needed to have conducted. The
       Commission’s inspection data for the period December 1, 2015, to February 29, 2016,
       showed that the inspectors conducted 14 inspections per day on average.

   •   The Commission did not properly administer its quality control inspection program.
       Regulations at 24 CFR 982.405(b) required the Commission to conduct quality control
       housing quality standards inspections. The Commission’s administrative plan required it
       to perform quality control inspections on the number of units required for sampling by
       the Section 8 Management Assessment Program (SEMAP) annually to maintain the
       Commission’s required standards and ensure consistency in the Commission’s program.
       SEMAP required the Commission to perform quality control inspections on 53 units
       during fiscal year 2015. The Commission provided documentation showing that it
       completed quality control inspections on 53 units. However, the documentation showed
       that 23 of the 53 inspections were not acceptable quality control inspections.
       Specifically, 16 inspections were special inspections, 6 were conducted by a Commission
       employee on units that the Commission owned, and 1 was an initial unit inspection.

       According to chapter 10, section E, of the Commission’s administrative plan, special
       inspections focused only on specific issues or violations that were reported by the tenant,
       owner, or a third party, such a neighbor or public official. That was the case for the 16
       inspections questioned. As discussed above, HUD prohibits the Commission from
       inspecting units that it owns. That was the case for the 6 inspections questioned. Lastly,
       an initial unit inspection is not a quality control inspection. A quality control inspection
       is a reinspection of a unit focused on evaluating the performance of the inspector and an

                                                 11
       initial inspection is conducted for all units before the lease and the housing assistance
       payments contract are executed. That was the case for the 1 inspection questioned.
       Therefore, the Commission conducted only 30 quality control inspections for 2015, rather
       than the 53 inspections it was required to conduct.

       The Commission did not use the results of its quality control inspections to improve its
       program. The Commission’s administrative plan stated that the purpose of quality
       control inspections was to determine that each inspector conducted accurate and complete
       inspections and ensure consistency among inspectors in the application of the housing
       quality standards. Also, section 10.9 of HUD’s Housing Choice Voucher Guidebook
       states that the results of the quality control inspections should be provided as feedback on
       inspectors’ work, which can be used to determine whether individual performance or
       general housing quality standards training issues need to be addressed. Although the
       Commission asserted that it used the results of its quality control inspections to improve
       its housing quality standards inspection program, it provided no documentation to support
       its assertion.

Conclusion
The Commission’s program participants were subjected to housing quality standards violations
that created unsafe living conditions during their tenancy. The Commission did not properly use
its program funds when it inspected and passed program units that did not meet HUD’s housing
quality standards. In accordance with 24 CFR 982.152(d), HUD is permitted to reduce or offset
program administrative fees paid to a public housing agency if it fails to perform its
administrative responsibilities correctly or adequately, such as not enforcing HUD’s housing
quality standards. The Commission disbursed $44,584 in housing assistance payments and
received $303 in program administrative fees for 15 units that materially failed to meet HUD’s
housing quality standards. If the Commission develops and implements controls to ensure that
all units meet housing quality standards and reduces the number of inspections conducted each
day, we estimate that more than $7.5 million in future housing assistance payments will be spent
for units that are decent, safe, and sanitary. Our methodology for this estimate is explained in the
Scope and Methodology section of this report.

Recommendations
We recommend that the Director of HUD’s Office of Public Housing, District of Columbia field
office, direct the Commission to

       1A.     Certify, along with the owners of the 56 units cited in the finding, that the
               applicable housing quality standards violations have been corrected.

       1B.     Reimburse its program $44,887 from non-Federal funds ($44,584 for housing
               assistance payments and $303 in associated administrative fees) for the 15 units
               that materially failed to meet HUD’s housing quality standards.

       1C.     Submit a request for approval of an independent entity to perform housing quality
               standards inspections of units that it owns.

                                                12
1D.   Develop and implement procedures to ensure that the required number of quality
      control inspections are conducted and that the results of those inspections are used
      to improve the effectiveness of its housing quality standards inspections.

1E.   Develop and implement procedures and controls to ensure that program units
      meet housing quality standards, thereby ensuring that an estimated $7,576,867 in
      program funds is spent for units that are decent, safe, and sanitary.

1F.   Evaluate its inspection contract to ensure that it provides sufficient resources to
      the inspectors that will result in thorough unit inspections.




                                       13
Scope and Methodology
We conducted the audit from November 2015 through August 2016 at the Commission’s offices
located at 10400 Detrick Avenue, Kensington, MD, and 231 East Deer Park Drive, Gaithersburg,
MD, and our offices located in Philadelphia, PA, and Richmond, VA. The audit covered the
period November 2014 through October 2015 but was expanded when necessary.
To accomplish our objective, we reviewed
   •   Applicable laws, regulations, the Commission’s administrative plan, HUD’s program
       requirements at 24 CFR Part 982, HUD’s Housing Choice Voucher Guidebook
       7420.10G, and other guidance.

   •   The Commission’s inspection reports; computerized databases, including housing quality
       standards inspections, housing quality control inspections, housing assistance payments,
       and tenant data; annual audited financial statements for fiscal years 2014 and 2015;
       policies and procedures; contract for inspection services; and organizational chart.

   •   HUD’s monitoring report for the Commission.

We also interviewed the Commission’s employees, contracted inspectors, HUD staff, and
program households.

To achieve our audit objective, we relied in part on computer-processed data from the
Commission’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 statistically selected 75 program units to inspect from a universe of 866 program units that
passed a Commission-administered housing quality standards inspection between December 1,
2015, and February 29, 2016. These inspections were conducted by one of the Commission’s
four contracted inspectors. We selected a sample size of 75 units to inspect based on a 1-sided
95 percent confidence interval and a simulated error rate ranging from 15 to 50 percent. We
inspected the 75 units between April 25 and May 11, 2016, to determine whether the
Commission’s program units met housing quality standards. We used statistical sampling
because each sampling unit was selected without bias from the audit population, thereby
allowing the results to be projected to the population. A Commission employee, either a rental
market analyst, quality assurance specialist, or program coordinator, accompanied us on 71 of
the 75 inspections.

We determined that 15 of the 75 units (20 percent) materially failed to meet HUD’s housing
quality standards. We determined that these units were in material noncompliance because they
had 108 violations that existed before the Commission’s last inspection, which created unsafe

                                               14
living conditions. All units were ranked according to the severity of the violations, and we used
auditor’s judgment to determine the material cutoff.

We estimate, with a 1-sided confidence level of 95 percent, that at least 12.3 percent of the 866
units were in material noncompliance with housing quality standards. By averaging the housing
assistance payments made for substandard housing across all 866 units that passed a Commission
inspection and deducting for a statistical margin of error, we estimate, with a 1-sided confidence
interval of 95 percent, that the amount of monthly housing assistance payment dollars spent on
substandard housing passed by the Commission during the sample period was $153 per unit. We
projected the results to the universe by multiplying the $153 per unit monthly housing assistance
payment for substandard housing by 4,115 (the total number of vouchers that the Commission
had leased up as of February 2016), yielding a total of $631,406 3 per month. Multiplying the
monthly amount of $631,406 by 12 months yields an annual total of more than $7.5 million in
housing assistance payments for substandard housing that passed a Commission inspection. This
amount is presented solely to demonstrate the annual amount of program funds that could be put
to better use on decent, safe, and sanitary housing if the Commission implements our
recommendations. While these benefits would recur indefinitely, we were conservative in our
approach and included only the initial year in our estimate.

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.




3
    The actual calculation includes cents, $153.44 multiplied by 4,115 equals $631,405.60.
                                                        15
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:

•   Effectiveness and efficiency of program operations – Policies and procedures that
    management has implement 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 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.
Significant Deficiency
Based on our review, we believe that the following item is a significant deficiency:

•   The Commission did not implement procedures and controls, including an effective quality
    control process, to ensure that program units met housing quality standards.




                                                  16
Appendixes

Appendix A


           Schedule of Questioned Costs and Funds To Be Put to Better Use
                Recommendation                     Funds to be put
                                    Ineligible 1/  to better use 2/
                     number
                          1B              $44,887
                          1E                                $7,576,867


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/   Recommendations that funds be put to better use are estimates of amounts that could be
     used more efficiently if an Office of Inspector General (OIG) recommendation is
     implemented. These amounts include reductions in outlays, deobligation of funds,
     withdrawal of interest, costs not incurred by implementing recommended improvements,
     avoidance of unnecessary expenditures noted in preaward reviews, and any other savings
     that are specifically identified. In this instance, if the Commission implements our
     recommendations, it will stop incurring program costs for units that are not decent, safe,
     and sanitary and, instead, will spend those funds for units that meet HUD’s standards,
     thereby putting more than $7.5 million in program funds to better use. Once the
     Commission successfully improves its controls, this will be a recurring benefit. Our
     estimates reflect only the initial year of this benefit.




                                             17
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




                              18
             Auditee Comments and OIG’s Evaluation




Ref to OIG    Auditee Comments
Evaluation




Comment 1




Comment 2



Comment 3




Comment 4




                              19
             Auditee Comments and OIG’s Evaluation




Ref to OIG    Auditee Comments
Evaluation




Comment 5




Comment 6




                              20
             Auditee Comments and OIG’s Evaluation




Ref to OIG    Auditee Comments
Evaluation




                              21
             Auditee Comments and OIG’s Evaluation




Ref to OIG    Auditee Comments
Evaluation




                              22
                         OIG Evaluation of Auditee Comments


Comment 1   The Commission stated that it will work with field office staff to develop a
            corrective action plan in response to this recommendation. This action meets the
            intent of our recommendation. As part of the audit resolution process, HUD will
            evaluate the Commission’s corrective actions to ensure that they satisfy the
            recommendation.

Comment 2   The Commission stated that it will work with field office staff to develop a
            corrective action plan in response to this recommendation. This action meets the
            intent of our recommendation. However, as part of the audit resolution process,
            HUD will need to execute a repayment agreement with the Commission to
            reimburse its program from non-Federal funds for the units that materially failed
            to meet HUD’s housing quality standards. Also, after a subsequent review of our
            workpapers as part of our internal quality control process, we determined that the
            amount of administrative fees that the Commission received for the 15 units that
            materially failed was $303 rather than $363 that was reported in the draft report.
            Therefore, we corrected the amounts in the final audit report and, as a result, the
            Commission needs to reimburse its program $44,887 ($44,584 for housing
            assistance payments and $303 in associated administrative fees).

Comment 3   The Commission stated that it currently procures inspection services from an
            independent entity. In addition, it stated that it issued a request for proposal on
            July 29, 2016, for a new inspection vendor and the request for proposal makes
            clear that the entity selected must be approved by HUD before issuing a contract.
            These actions meet the intent of our recommendation. However, as part of the
            audit resolution process, HUD will evaluate the Commission’s corrective actions
            to ensure that they satisfy the recommendation.

            In its response, the Commission included the wording for recommendation 1C
            from the draft report that we issued to it before the audit exit conference rather
            than the wording for the recommendation from the final report. Consistent with
            our audit process, we discussed the draft audit report with the Commission and
            HUD during the exit conference on August 22, 2016, to get feedback on the
            finding and recommendations. Based on discussion with the Commission and
            HUD during the exit conference, and with HUD after the exit conference, we
            revised the wording of recommendation 1C and provided an updated draft report
            to the Commission for comment on August 24, 2016. The Commission sent us its
            response on August 26, 2016, but it did not include the revised wording for
            recommendation 1C. We contacted the Commission and offered it the
            opportunity to revise its response but it declined the offer.

Comment 4   The Commission stated that the problems with quality control inspections were
            the consequence of staffing changes. It further stated that it will redouble efforts

                                             23
            to track quality control inspections on a running basis with regular internal
            reporting to its compliance team and oversample in order to ensure that it meets
            required inspection numbers. These actions meet the intent of our
            recommendation. However, as part of the audit resolution process, HUD will
            evaluate the Commission’s corrective actions to ensure that they satisfy the
            recommendation.

Comment 5   The Commission stated that it has initiated a number of activities to address the
            recommendation. It stated that it submitted a request to HUD in May 2016
            proposing to use the Montgomery County, MD, Housing and Building
            Maintenance Standards (Chapter 26, Montgomery County Code) as an alternative
            inspection method. It stated that the county inspection code is more stringent than
            both the current housing quality standards and the uniform physical condition
            standards. It further stated that it began providing training on the new inspection
            standard to its inspectors in April 2016 and it will continue training once it
            receives final approval from HUD to implement the alternative standard. These
            actions meet the intent of our recommendation. However, as part of the audit
            resolution process, HUD will evaluate the Commission’s corrective actions to
            ensure that they satisfy the recommendation.

Comment 6   The Commission stated that it issued a request for proposal soliciting bids from
            qualified contractors to conduct housing quality standards inspections. It further
            stated that the capacity of potential contractors will be part of the evaluation
            criteria. This action meets the intent of our recommendation. However, as part of
            the audit resolution process, HUD will evaluate the Commission’s corrective
            actions to ensure that they satisfy the recommendation.




                                            24