We audited the U.S. Department of Housing and Urban Development’s (HUD) oversight of legal costs at housing agencies participating in the Moving to Work Demonstration program based on (1) congressional concerns, (2) concerns from a previous external audit, and (3) our initiative to focus HUD management’s attention on problem areas on which we and others have reported over the years.  Our audit objective was to determine whether HUD oversight of legal costs at Moving to Work housing agencies was adequate to ensure that the costs were reasonable and necessary.

HUD’s oversight of legal costs at Moving to Work housing agencies was not adequate to ensure that costs were reasonable and necessary.  As part of this audit, we completed three external audits of Moving to Work housing agencies and found that they did not always make payments for outside legal services in compliance with applicable requirements.  Based on our testing, we projected that at least $9.2 million of the $16.5 million that the three agencies paid for outside legal services during the period October 2007 to September 2012 could be unsupported.  HUD did not provide adequate oversight of legal costs because officials did not believe that these costs needed to be monitored since they were small in relation to HUD’s overall budget.  Although total legal costs at Moving to Work agencies declined from 2010 to 2015, the agencies continued to incur relatively higher costs for legal services comparted to non-Moving to Work agencies.

We recommend that the Deputy Assistant Secretary for Public Housing Investments require Moving to Work housing agencies to include a breakdown of their anticipated and actual costs for legal services in their annual plans and reports.