The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General audited the DuPage Housing Authority’s (Authority) Section 8 Project-Based Voucher program (program). The audit was part of the activities in our fiscal year 2009 annual audit plan. We selected the Authority based on our internal audit survey of HUD’s oversight of the program and our analysis of risk factors relating to the housing authorities in Region V’s jurisdiction. Our objective was to determine whether the Authority effectively administered its program in accordance with the HUD requirements and its administrative plan. This is the first of two audit reports on the Authority’s program.

The Authority’s program administration regarding documentation of households’ eligibility and housing assistance and utility allowance payment calculations was inadequate. The Authority did not ensure that its household files contained the required documentation to support households’ admission to and continued assistance on the program. All of the 41 files statistically selected for review were missing support documentation required by HUD and the Authority’s administrative plan to support more than $400,000 in housing assistance and utility allowance payments and associated administrative fees.

In addition, the Authority did not effectively manage its housing assistance calculation and payment process in accordance with HUD requirements and its administrative plan, resulting in more than $4,000 in overpayments, and nearly $2,000 in underpayments for the period July 1, 2007, through March 31, 2009. Further, the Authority improperly received more than $6,000 in administrative fees for the households with incorrect and unsupported housing assistance payments. Based on our statistical sample, we estimate that over the next year, the Authority will overpay nearly $6,000 and underpay nearly $1,000 in housing assistance and utility allowances due to calculation errors.

We recommend that the Director of HUD’s Chicago Office of Public Housing require the Authority to reimburse its program from nonfederal funds for the improper use of more than $10,000 in program funds, provide documentation or reimburse its program more than $400,000, and implement adequate procedures and controls to address the finding cited in this audit report. These procedures and controls should help to ensure that more than $8,000 in program funds is spent on program administration that meets HUD’s requirements over the next year.