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.
Recommendations
Public and Indian Housing
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Status2019-CH-1001-001-AOpenClosedClosed on August 07, 2019
Certify, along with the owners, that the applicable housing quality standards violations have been corrected for the 78 units cited in this finding.
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Status2019-CH-1001-001-BOpenClosed$153,222.00Questioned 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 February 06, 2023Reimburse its program $153,222 from non-Federal funds for the housing assistance paid for the 50 units that materially failed to meet HUD’s housing quality standards and its own requirements.
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Status2019-CH-1001-001-COpenClosed$15,796.00Questioned 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 February 06, 2023Reimburse its program $15,796 from non-Federal funds for administrative fees earned for the 50 units that materially failed to meet HUD’s housing quality standards and its own requirements.
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Status2019-CH-1001-001-DOpenClosedClosed on July 09, 2019
Ensure that its staff is properly trained and familiar with HUD’s and its own requirements regarding housing quality standards inspections.
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Status2019-CH-1001-001-EOpenClosed$1,236,000.00Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
Closed on October 16, 2019Implement adequate procedures and controls to ensure that all units meet HUD’s housing quality standards and its own requirements to prevent $1,236,000 in program funds from being spent on units that do not comply with HUD’s requirements over the next year. The procedures should include but not be limited to ensuring that inspectors are properly trained and familiar with HUD’s and the Authority’s requirements and that they consistently conduct accurate and complete inspections and reinspections.
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Status2019-CH-1001-002-AOpenClosed$93,651.00Questioned 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 January 04, 2021Support or reimburse its program $93,651 from non-Federal funds for the missing required eligibility documentation.
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Status2019-CH-1001-002-BOpenClosed$76.00Questioned 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 27, 2019Reimburse its program $76 from non-Federal funds for the overpayment of housing assistance due to inappropriate calculations of housing assistance.
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Status2019-CH-1001-002-COpenClosed$2,193.00Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
Closed on July 09, 2019Reimburse the appropriate households $2,193 from program funds for the underpayment of housing assistance due to inappropriate calculations.
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Status2019-CH-1001-002-DOpenClosed$9,870.00Questioned 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 February 06, 2023Reimburse its program $9,870 ($7,663 $2,207) from non-Federal funds for the administrative fees it inappropriately earned for the missing required eligibility documentation and inappropriate calculations of housing assistance.
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Status2019-CH-1001-002-EOpenClosedClosed on July 17, 2019
Implement adequate procedures and controls to ensure that the required documentation to support household eligibility is obtained and maintained and housing assistance payments are appropriately calculated.
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Status2019-CH-1001-002-FOpenClosedClosed on July 09, 2019
Review the utility allowance schedules to ensure that all applicable utilities are provided to the households and that the utility allowances are based on the lower of the voucher size or unit size in accordance with HUD’s requirements.