We audited the Housing Authority of the County of Lake, IL’s Housing Choice Voucher Program based on the activities included in our 2018 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 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 appropriately manage its Family Self-Sufficiency program. As a result, HUD and the Authority lacked assurance that program participants benefited from the program and made progress toward self-sufficiency and more than $445,000 in coordinator grant funds was used appropriately. In addition, (1) participants’ escrow accounts were overfunded, (2) graduation disbursements were unsupported, (3) ineligible escrow disbursements were paid, and (4) participants’ escrow accounts were underfunded.
The Authority also did not always correctly calculate and support housing assistance payments. As a result, it overpaid nearly $17,000, underpaid nearly $4,000, and was unable to support nearly $19,000 in housing assistance. If the Authority does not correct its certification process, it could overpay nearly $352,000 in housing assistance over the next year.
The Authority did not always ensure that program funds were used for eligible expenses and inappropriately charged fees to its Project-Based Voucher Program developments. It also did not properly allocate expenses and lacked support that rent charged to its program was reasonable. As a result, the Authority inappropriately used nearly $14,000 in program funds and earned nearly $9,200 in fees. In addition, nearly $4,100 in expenses was unsupported, and nearly $43,000 was not available for its program.
We recommend that the Director of HUD’s Chicago Office of Public and Indian Housing require the Authority to (1) support or reimburse its program for the unsupported escrows, unearned coordinator grant funds, housing assistance payment calculations, and expenditures; (2) reimburse its programs from non-Federal funds for the ineligible escrow disbursements, housing assistance payment calculations, and expenses; and (3) implement adequate procedures and controls to address the findings cited in this audit report.
Recommendations
Public and Indian Housing
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Status2018-CH-1007-001-AOpenClosed$78,786.00Funds 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 May 15, 2019Transfer $78,786 ($22,601 $56,185) from its Family Self-Sufficiency account to its Housing Choice Voucher Program account for the overfunded and forfeited escrows.
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Status2018-CH-1007-001-BOpenClosed$120,067.00Questioned 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 May 15, 2019Support or reimburse its Housing Choice Voucher Program $120,067 from non-Federal funds for unsupported graduation disbursements.
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Status2018-CH-1007-001-COpenClosed$12,460.00Questioned 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 May 15, 2019Reimburse its Housing Choice Voucher Program $12,460 from non-Federal funds for the ineligible disbursements.
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Status2018-CH-1007-001-DOpenClosed$3,801.00Funds 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 September 27, 2019Transfer $3,801 from its Housing Choice Voucher Program account to its Family Self-Sufficiency account for the underfunded escrows.
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Status2018-CH-1007-001-EOpenClosed$547.00Funds 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 September 27, 2019Reimburse one participant, $547 from its Family Self-Sufficiency program for the underpaid graduation payment.
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Status2018-CH-1007-001-FOpenClosedClosed on December 03, 2019
Implement procedures and controls to ensure that documentation required by HUD and the Authority’s own action plan is correctly completed, documented, and updated.
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Status2018-CH-1007-001-GOpenClosedClosed on September 27, 2019
Ensure that its staff is appropriately trained and familiar with HUD’s requirements and its program action plan regarding the administration of its program to ensure that (1) participants’ individual training and services plans are complete and contain appropriate goals to assist the family in achieving self-sufficiency, (2) participants are notified of their escrow account balances at least annually, and (3) contracts of participation are complete and accurate.
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Status2018-CH-1007-001-HOpenClosedClosed on December 03, 2019
Ensure that its newly created policies and procedures include a process for ensuring that (1) escrow balances are correctly calculated and disbursed, (2) escrow accounts and disbursements are fully supported, and (3) forfeited escrow account funds are returned to the Housing Choice Voucher Program as required.
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Status2018-CH-1007-001-IOpenClosed$445,122.00Questioned 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 26, 2019Determine the amount of the $445,122 in coordinator grant funds that were appropriately earned by the Authority for meeting requirements and paid to the coordinators while performing duties of the Family Self-Sufficiency program. The funds that are determined to be unearned should be reimbursed to HUD from non-Federal funds.
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Status2018-CH-1007-002-AOpenClosed$20,795.00Questioned 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 26, 2019Reimburse its program $20,450 from non-Federal funds ($10,331 $10,119 in associated administrative fees) for the overpayment of housing assistance due to inappropriate calculations of housing assistance.
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Status2018-CH-1007-002-BOpenClosed$3,590.00Funds 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 February 10, 2020Reimburse the appropriate households $3,590 from program funds for the underpayment of housing assistance due to inappropriate calculations.
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Status2018-CH-1007-002-COpenClosed$18,638.00Questioned 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 May 15, 2019Support or reimburse its program $18,638 from non-Federal funds for the unsupported payments of housing assistance cited in this finding.
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Status2018-CH-1007-002-DOpenClosed$6,367.00Questioned 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 December 03, 2019Enter into repayment agreements to pursue collection from the applicable households or reimburse its program $6,367 from non-Federal funds for the overpayment of housing assistance due to unreported or underreported income
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Status2018-CH-1007-002-EOpenClosed$453,999.00Funds 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 September 27, 2019Implement adequate procedures and controls to ensure that housing assistance payments are appropriately calculated and supported and that repayment agreements are created to recover overpaid housing assistance when unreported income is discovered during the examination process to ensure that $453,999 ($351,060 $102,939) in program funds is appropriately used for future payments.
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Status2018-CH-1007-003-AOpenClosed$3,117.00Questioned 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 17, 2019Reimburse its program $3,117 from non-Federal funds for the ineligible program expenditures.
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Status2018-CH-1007-003-BOpenClosed$4,070.00Questioned 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 17, 2019Support or reimburse its program $4,070 from non-Federal funds for the unsupported program expenditures.
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Status2018-CH-1007-003-COpenClosed$9,170.00Questioned 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 December 20, 2018Reimburse $9,170 from non-Federal funds to the owners of the Project-Based Voucher developments it inappropriately charged for the normal cost of doing business to administer the Project-Based Voucher contracts.
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Status2018-CH-1007-003-DOpenClosed$10,861.00Questioned 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 17, 2019Reimburse the Housing Choice Voucher Program $10,861 from its various programs for the bank service charges inappropriately charged to its Program.
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Status2018-CH-1007-003-EOpenClosed$1,848.00Funds 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 November 18, 2019Determine the appropriate allocations of the bank service charges and reimburse its Housing Choice Voucher Program from the various programs to ensure that $1,848 is available for appropriate program use.
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Status2018-CH-1007-003-FOpenClosedClosed on September 19, 2019
Ensure that its staff is appropriately trained and familiar with HUD’s expenditure and allocation requirements.
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Status2018-CH-1007-003-GOpenClosedClosed on September 17, 2019
Develop and implement adequate procedures and controls to ensure that program expenditures are for eligible and supported program costs and that costs are appropriately allocated to its various programs as required.
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Status2018-CH-1007-003-HOpenClosed$5,770.00Questioned 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 10, 2020Review the Authority’s Project-Based Voucher contracts, determine the total amount to be reimbursed to the project owners, and require the Authority to (1) remove all inappropriate language from its contracts, (2) issue amended contracts as necessary, and (3) reimburse the inappropriate charges to the applicable project owners from non-Federal funds.
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Status2018-CH-1007-003-IOpenClosedClosed on December 03, 2019
Determine any remaining amounts for bank service charges inappropriately charged to the Housing Choice Voucher Program and ensure that the various programs reimburse the Program as appropriate for all bank service charges not appropriately allocated.
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Status2018-CH-1007-003-JOpenClosedClosed on December 03, 2019
Determine whether the rent charged to the Housing Choice Voucher Program for the Family Self-Sufficiency program office space in the Authority’s main office and in its public housing property is appropriate and reasonable.
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Status2018-CH-1007-003-KOpenClosed$40,656.00Funds 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 December 13, 2019Require the Authority to reimburse its Housing Choice Voucher Program from non-Federal funds for any amounts determined not to be reasonable to ensure that $40,656 in program funds is available for appropriate program use.
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Status2018-CH-1007-003-LOpenClosedClosed on December 03, 2019
Require the Authority to allocate any rents determined to be reasonable between its Housing Choice Voucher Program and Public Housing Family Self-Sufficiency program and require the Authority to reimburse its Housing Choice Voucher Program from its public housing program any amounts that should have been allocated among the programs.