The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General audited the Lake Metropolitan Housing Authority’s (Authority) Section 8 Housing Choice Voucher program (program). The Authority was selected for audit based upon a congressional request from the Honorable Steven C. LaTourette. Our objective was to determine whether the Authority administered its program in accordance with HUD’s requirements and its program administrative plan and policies. The objective includes determining whether the Authority followed its procurement policy when obtaining contracted services for its program, adequately monitored zero-income households, and adequately administered its family self-sufficiency program. This is the third of three audit reports on the Authority’s program.
The Authority’s program administration regarding its program procurement and zero-income households was inadequate, but it generally complied with the family self-sufficiency program requirements. It failed to follow its procurement and ethical policies regarding possible conflicts of interest when obtaining contracted services for its program. We identified deficiencies in all 13 contractual agreements reviewed. As a result, full and open competition was hindered, and the Authority paid more than $64,000 in unsupported contract expenses and more than $3,000 in inappropriate contract expenses.
Further, the Authority failed to comply with its program administrative plan regarding zero-income household reviews. Of the 58 zero-income households reviewed, 29 had either excluded or unreported income that affected their housing assistance payments. As a result, the Authority overpaid housing assistance and utility allowances totaling more than $36,000 for households that were required to meet their rental obligations. It generally complied with the family self-sufficiency program requirements. However, of the 32 participants with escrow balances reviewed, 20 contained errors in one or more of the escrow credit applications, resulting in more than $14,000 in escrow credit overpayments and more than $3,000 in escrow credit underpayments.
We recommend that the Director of HUD’s Cleveland Office of Public Housing require the Authority to (1) provide documentation or reimburse its program more than $64,000 from non-Federal funds for the unsupported payments cited in this audit report; (2) reimburse its program from non-Federal funds for the improper use of more than $68,000 in program funds; and (3) implement adequate procedures and controls to address the findings cited in this audit report to prevent more than $19,000 in program funds from being spent on excessive escrow credits, housing assistance and utility allowance payments, and contract payments.