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Report Fraud, Waste and Abuse
September 28, 2016
  • Public and Indian Housing
2016-CH-1007
2016-CH-1007.pdf

We audited the Housing Authority of the City of Rock Island, IL’s Housing Choice Voucher program based on the activities included in our 2016 annual audit plan and our analysis of risk factors related to the public housing agencies in Region 5’s jurisdiction.  Our audit objective was to determine whether the Authority administered its program in accordance with the U.S. Department of Housing and Urban Development’s (HUD) requirements.

The Authority did not always administer its program in accordance with HUD’s requirements.  Specifically, it did not comply with HUD’s conflict-of-interest requirements when it did not obtain the services of an independent third party to perform housing quality standards inspections and rent reasonableness determinations for units it substantially controlled.  As a result, the Authority inappropriately (1) paid nearly $454,000 in housing assistance to the entities and (2) earned nearly $44,000 in administrative fees.  Further, HUD lacked assurance that the Authority acted in the best interests of its program households.

In addition, the Authority did not appropriately manage its Family Self-Sufficiency program when it did not ensure that (1) required documentation to determine participants’ admission to and continued participation in the program was obtained and maintained and (2) program participants were connected to resources and supportive services.  It also did not ensure that participants’ (1) escrow accounts were correctly calculated and recorded and (2) escrow account disbursements were fully supported.  As a result, HUD and the Authority lacked assurance that (1) program participants benefited from the program or had made progress toward self-sufficiency and (2) more than $141,000 in program funds was used appropriately.

We recommend that the Acting Director of HUD’s Chicago Office of Public Housing require the Authority to (1) reimburse its program more than $507,000 from non-Federal funds for the ineligible housing assistance paid to the entities and the inappropriate escrow disbursements, (2) support or reimburse its program more than $130,000 from non-Federal funds for the unsupported coordinator grant funds and escrow payments, (3) transfer more than $2,100 to or from its program account for the underfunded and overfunded escrows, and (4) implement adequate procedures and controls to address the findings cited in this audit report.