We audited the Menard County Housing Authority’s Housing Choice Voucher program based on the activities included in our 2017 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 complied with the U.S. Department of Housing and Urban Development’s (HUD) and its own requirements regarding the administration of its program.
The Authority did not comply with HUD’s conflict-of-interest requirements. Specifically, it failed to obtain the services of a HUD-approved independent third party to perform housing quality standards inspections for units owned by entities it substantially controlled. As a result, it paid nearly $303,000 in housing assistance for ineligible units and could not support the eligibility of nearly $340,000 in housing assistance payments to the entities. In addition, it inappropriately paid nearly $8,000 in program funds and could not support the eligibility of more than $18,000 in program funds paid to a contractor for housing quality standards inspection services.
The Authority failed to comply with HUD’s and its own requirements for its program household files. Specifically, it did not correctly calculate housing assistance payments and ensure that households resided in affordable units. It also failed to issue appropriate voucher sizes based on family composition and appropriately apply payment standards and utility allowances for its program households. As a result, it (1) overpaid nearly $103,000, (2) underpaid nearly $9,000, and (3) lacked support for nearly $3,000 in housing assistance. In addition, the Authority’s program households contributed nearly $3,200 in excess rental payments.
We recommend that the Director of HUD’s Chicago Office of Public and Indian Housing require the Authority to (1) reimburse its program nearly $415,000 from non-Federal funds for the ineligible payments; (2) seek retroactive approval or reimburse its program nearly $361,000 from non-Federal funds for the inappropriate, overpaid, and unsupported payments; (3) reimburse its program households nearly $12,000 from non-Federal funds; and (4) implement adequate procedures and controls to address the findings cited in this audit report.
Recommendations
Public and Indian Housing
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Status2017-CH-1007-001-AOpenClosed$373,860.00Questioned 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 11, 2023Reimburse its program $373,860 ($302,638 in ineligible housing assistance payments $63,643 in associated administrative fees $7,579 in program funds paid to the contractor) from non-Federal funds for the inappropriate payments cited in this finding.
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Status2017-CH-1007-001-BOpenClosed$358,237.00Questioned 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 11, 2023Seek retroactive approval or reimburse its program $358,237 ($339,908 in housing assistance payments $18,329 in program funds paid to the contractor) for the housing quality standards inspections of units owned by entities substantially controlled by the Authority, completed by contractors that were not approved by HUD.
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Status2017-CH-1007-001-COpenClosedClosed on April 16, 2019
Implement adequate procedures and controls to ensure that the Authority complies with HUD’s requirements for program conflicts of interest, including but not limited to ensuring that (1) its staff does not complete inspections for units owned by entities substantially controlled by the Authority, (2) its staff is appropriately trained and familiar with HUD’s requirements for units owned by entities it substantially controls, and (3) future contracts to perform housing quality standards inspections for program units owned by entities substantially controlled by the Authority are with a HUD-approved independent third party.
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Status2017-CH-1007-002-AOpenClosed$163,316.00Questioned 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 06, 2023Reimburse its program $163,316 from non-Federal funds ($29,074 in housing assistance due to calculation errors 74,957 due to inappropriate voucher sizes, payment standards, and utility allowances $18,141 $41,144 in administrative fees) for the inappropriate payments cited in this finding.
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Status2017-CH-1007-002-BOpenClosed$9,280.00Funds 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 $9,280 ($2,588 in housing assistance underpayments due to calculation errors $6,692 due to inappropriate voucher sizes, payment standards, and utility allowances) from program funds for the inappropriate underpayments cited in this finding.
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Status2017-CH-1007-002-COpenClosed$2,533.00Questioned 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, 2019Support or reimburse its program $2,533 from non-Federal funds for the unsupported payments of housing assistance cited in this finding.
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Status2017-CH-1007-002-DOpenClosed$470.00Questioned 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, 2019Pursue collection from the applicable households or reimburse its program $470 from non-Federal funds for the overpayment of housing assistance due to unreported or underreported income.
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Status2017-CH-1007-002-EOpenClosed$3,178.00Questioned 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 November 26, 2018Reimburse the appropriate households $3,178 from non-Federal funds for the rent amount paid in excess of 40 percent of the adjusted monthly income for the units that were not affordable.
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Status2017-CH-1007-002-FOpenClosedClosed on March 11, 2019
For the five household’s residing in units that were not affordable, renegotiate the rent to the owners or require the households to move into units that are affordable.
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Status2017-CH-1007-002-GOpenClosed$108,214.00Funds 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 March 06, 2019Implement adequate procedures and controls to ensure that (1) housing assistance payments are appropriately calculated and supported, (2) households reside in units that are affordable, and (3) repayment agreements are created to recover overpaid housing assistance when unreported income is discovered during the examination process to ensure that $108,214 ($103,841 in potential overpayments $4,373 in potential underpayments of housing assistance) in program funds is appropriately used for future payments.
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Status2017-CH-1007-002-HOpenClosedClosed on March 07, 2019
Evaluate its quality control process to ensure that calculation, voucher size, payment standard, and utility allowance errors are identified and appropriately corrected.
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Status2017-CH-1007-002-IOpenClosedClosed on March 07, 2019
Ensure that its staff is properly trained and familiar with HUD’s and its own requirements regarding program housing assistance calculations, applying appropriate voucher sizes, and when to apply changes to households’ payment standards and utility allowances.
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Status2017-CH-1007-002-JOpenClosedClosed on March 06, 2019
Review all of the remaining program household files to determine whether appropriate voucher sizes were provided and payment standards and utility allowances were applied and updated appropriately. The Authority should conduct special recertifications for the households with vouchers that do not comply with HUD’s requirements and the Authority’s administrative plan, issue the appropriate voucher sizes, and apply updated payment standards and utility allowances as appropriate.
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Status2017-CH-1007-002-KOpenClosedClosed on August 30, 2019
Restrict the Authority from administering other HUD-funded programs until it substantially improves its program administration to ensure compliance with applicable requirements based on the findings cited in this audit report, absent sufficient documentation provided by the Authority.