We audited the Compton Housing Authority’s (Authority) Section 8 program as the result of the Los Angeles Office of Public Housing’s concerns regarding its program administration. Our objective was to determine whether the Authority used Section 8 program funds in accordance with HUD rules and regulations. The Authority did not use Section 8 program funds in accordance with HUD rules and regulations as it did not fully comply with portability procedures and responsibilities. It was not fully reimbursed for housing assistance payments made for its portability tenants. We attribute these deficiencies to the Authority’s lack of procedures and controls for portability accounting. Additionally, there was a lack of tracking and reconciliation between what was paid and what was received. As a result, over the years, the Authority used more than $2.2 million from its net restricted assets account to pay for the shortfall, operated in a deficit situation, and did not have sufficient funds to pay for its portability tenants. Ultimately, these deficiencies put tenants at risk of losing their housing assistance.

We recommend that the Director of the Los Angeles Office of Public Housing require the Authority to (1) implement procedures and controls to track and reconcile portability tenants’ housing assistance paid and received from the respective initial public housing authorities, (2) seek reimbursement of $189,800 from initial housing authorities for unreimbursed housing assistance payments for portability tenants, (3) reimburse $55,854 in overpaid housing assistance to the respective initial housing authorities, (4) and evaluate and reconcile its portability tenant billings and payments for calendar year 2010 after implementation of the procedures and controls.