The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General audited the Lake Metropolitan Housing Authority’s (Authority) Section 8 Housing Choice Voucher program (program). The Authority was selected for audit based upon a congressional request from the Honorable Steven C. LaTourette. Our objective was to determine whether the Authority administered its program in accordance with HUD’s requirements and its program administrative plan to include determining whether the Authority accurately calculated housing assistance and utility allowance payments and maintained required documentation to support household eligibility. This is the first of three planned audit reports regarding the Authority’s program.

The Authority’s program administration regarding housing assistance payment calculations and documentation to support households’ eligibility for housing assistance was inadequate. Of the 100 files statistically selected for review, 88 did not contain documentation required by HUD and the Authority’s program administrative plan to support more than $801,000 in housing assistance and utility allowance payments. The Authority also incorrectly calculated or issued households’ payments for 86 of the 100 household files, resulting in more than $30,000 in overpayments and more than $4,200 in underpayments for January 2007 through July 2008. Further, the Authority improperly received more than $40,000 in program 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 $255,000 in housing assistance and utility allowances.

We recommend that the Director of HUD’s Cleveland Office of Public Housing require the Authority to provide documentation or reimburse its program more than $836,000 from nonfederal funds for the unsupported payments cited in this audit report, reimburse its program from nonfederal funds for the improper use of more than $71,000 in program funds, and implement adequate procedures and controls to address the finding cited in this audit report to prevent more than $259,000 in program funds from being spent on excessive housing assistance and utility allowance payments.