We audited the Housing Authority of the City Long Beach’s Housing Choice Voucher Program based on a referral from the U.S. Department of Housing and Urban Development’s (HUD) Los Angeles Office of Public Housing due to concerns regarding its financial activity control weaknesses. The objective of the audit was to determine whether the Authority administered its Housing Choice Voucher Program in accordance with Program requirements, with an emphasis on its financial transactions, cost and payroll allocations, contracting, and procurement.
The Authority did not follow Program requirements under 2 CFR (Code of Federal Regulations) 200 and 24 CFR 982 in administering its Housing Choice Voucher Program. It did not adequately support or perform overhead allocations, follow procurement requirements, or ensure that costs were eligible. As a result, HUD had no assurance that Housing Choice Voucher Program funds totaling more than $2.4 million were appropriately used for the operation of the Program. In addition $5,648 was not used for eligible Program expenses.
We recommend that the Director of the Los Angeles Office of Public Housing require the Authority to (1) develop and implement a HUD-approved cost allocation plan(s), (2) support the reasonableness of more than $1.9 million in overhead allocations[1] or repay the Housing Choice Voucher Program from non-Federal funds, (3) determine how much of the general operating costs applied to the Housing Choice Voucher Program and repay potential overcharges (estimated at $50,947) to the Program from non-Federal funds, (4) support or repay $25,827 in personnel expenses and $64,150 for accounting services that applied to other programs from non-Federal funds, (5) support the reasonableness of the $340,701 Casterline and $33,415 Genesis contract amounts or repay the Program from non-Federal funds, (6) implement additional written procurement and contracting policies and procedures, and (7) repay the Housing Choice Voucher Program for $5,648 in unallowable expenses from non-Federal funds.
[1] The Authority reimbursed $183,251 to the Housing Choice Voucher program, but did not adequately indicate to which of the questioned costs it was applicable. Offsets to the questioned costs may be applied once a correct allocation and reconciliation is performed.
Recommendations
Public and Indian Housing
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Status2020-LA-1002-001-AOpenClosedClosed on March 10, 2022
Develop and implement a HUD-approved cost allocation plan(s) that appropriately represents the benefit received by the Authority from the City’s HHS department and allocates overhead and operating costs to all programs managed by the Authority.
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Status2020-LA-1002-001-BOpenClosed$1,965,990.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on July 13, 2022Support the eligibility of the $1,965,990 in overhead allocations through the application of a HUD-approved allocation plan (including offsetting the amount by applicable reimbursements) or repay the Housing Choice Voucher Program from non-Federal funds.
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Status2020-LA-1002-001-COpenClosed$50,947.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on July 13, 2022Determine the appropriate amount of general operating costs totaling $2,544,266 that applied to the Housing Choice Voucher Program in accordance with a HUD-approved cost allocation plan (including offsetting the amount by applicable reimbursements) and repay overcharges (estimated at $50,947) to the Program from the other applicable programs as appropriate or from non-Federal funds.
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Status2020-LA-1002-001-DOpenClosed$25,827.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on July 13, 2022Support the eligibility of the $25,827 in personnel expenses from SPC (including offsetting the amount by applicable reimbursements) or repay its Housing Choice Voucher Program from the other applicable programs as appropriate or from non-Federal funds.
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Status2020-LA-1002-001-EOpenClosed$64,150.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on July 13, 2022Support the eligibility of the $64,150 for accounting services charged to the Housing Choice Voucher Program that applied to other Authority programs (including offsetting the amount by applicable reimbursements) or repay the Program from the other applicable programs as appropriate or from non-Federal funds.
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Status2020-LA-1002-002-AOpenClosed$340,701.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on August 23, 2022Support the reasonableness of the $340,701 Casterline contracts or repay the Housing Choice Voucher Program any amount that cannot be supported using non-Federal funds.
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Status2020-LA-1002-002-BOpenClosed$33,415.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on July 22, 2022Support the reasonableness of the $33,415 Genesis contract or repay any amount that cannot be supported from non-Federal funds.
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Status2020-LA-1002-002-COpenClosedClosed on August 24, 2021
Establish and implement additional procedures and controls to ensure that City personnel responsible for administering procurement on the Authority’s behalf follow procurement and contracting requirements and maintain applicable supporting documentation in accordance with HUD requirements.
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Status2020-LA-1002-003-AOpenClosed$5,648.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on September 30, 2020Repay the Housing Choice Voucher Program $5,648 from non-Federal funds for the unallowable expenses.
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Status2020-LA-1002-003-BOpenClosedClosed on December 29, 2020
Develop and implement procedures and controls to ensure that ineligible food costs are not charged to the Program.