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We audited the Housing Authority of the City of North Chicago’s Housing Choice Voucher Program based on our analysis of risk factors related to the public housing agencies in Region 5’s jurisdiction and the activities included in our 2018 annual audit plan.  Our audit objective was to determine whether the Authority appropriately managed its program in accordance with the U.S. Department of Housing and Urban Development’s (HUD) and its own requirements.  


The Authority did not adequately enforce HUD’s housing quality standards and its own requirements.  Specifically, it failed to ensure that 78 program units, including 50 that materially failed, complied with HUD’s housing quality standards and its program administrative plan.  As a result, more than $153,000 in program funds was spent on units that were not decent, safe, and sanitary.  Based on our statistical sample, we estimate that over the next year, the Authority will pay more than $1.2 million in housing assistance for units with material housing quality standards violations.


The Authority did not always comply with HUD’s and its own requirements for its program household files.  It did not obtain and maintain required eligibility documentation and correctly calculate housing assistance and utility allowances.  As a result, it lacked support for nearly $94,000, overpaid nearly $80, and underpaid nearly $2,200 in housing assistance. 


We recommend that the Director of HUD’s Chicago Office of Public Housing require the Authority to (1) certify that the applicable housing quality standards violations have been corrected for the 78 units cited, (2) reimburse its program from non-Federal funds for the 50 units that materially failed to meet HUD’s and its own requirements and for the household files with inappropriate calculations of housing assistance, (3) support or reimburse its program for the household files with missing documentation, (4) reimburse its program households from program funds for the underpayment of housing assistance, and (5) implement adequate procedures and controls to address the findings cited in this audit report.