We audited the Housing Authority of the County of Marin's (Authority) Section 8 funds transfer and public housing program (program) tenant rent calculations. Our objectives were to determine (1) whether the transfer of Section 8 operating reserve funds to the public housing program in fiscal year 2006 was made in compliance with HUD regulations and (2) whether the Authority calculated public housing tenant rents in accordance with HUD requirements. We found that the Authority's transfer of Section 8 operating reserve funds to the public housing program in fiscal year 2006 was made using pre-2004 funds, which was in compliance with HUD regulations. However, the Authority did not calculate public housing tenant rents in accordance with HUD requirements. Of the 71 files we reviewed, the Authority incorrectly calculated tenant rents for 35 (49 percent) of the households. From January through December 2007, it overcharged program residents $3,811 and undercharged program residents $25,638 in tenant rents.

We recommend that HUD require the Authority to (1) reimburse its program residents $3,811 for overcharged tenant rents, (2) establish and implement procedures and controls to ensure that tenant rents are calculated in accordance with HUD requirements, and (3) provide appropriate training to Authority staff to ensure that they understand how to calculate tenant rents correctly. These procedures and controls should help prevent tenant rent miscalculations in the future. We also recommend that HUD perform a review of the Authority's tenant files within six months after the issuance of this audit report to ensure that tenant rents are calculated correctly.