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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.