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PK Management, LLC, Did Not Ensure Adequate Accountability and Administration of Its Multifamily Projects

We audited PK Management, LLC, a management agent of four apartment complexes in the Birmingham, AL, metropolitan area.  We initiated the review based on a request from the U.S. Department of Housing and Urban Development’s (HUD) Birmingham Office of Multifamily Housing Programs.  Our audit objective was to determine whether the Section 8 housing assistance payments made to PK Management for the four multifamily complexes were eligible and supported by properly executed HUD tenant eligibility forms.

PK Management received inappropriate and unsupported housing assistance payments for tenants who lacked properly executed and documented tenant eligibility forms.  Specifically, the tenant eligibility forms were not properly signed or dated by tenants or PK Management staff.  Also, housing assistance payments were made for three unoccupied units, and tenant eligibility documents were missing from tenant files.  These conditions occurred because PK Management did not (1) have adequate procedures and controls, (2) provide adequate oversight, and (3) adequately train its property managers to ensure that they properly prepared the required HUD forms and supported tenants’ eligibility for housing assistance payments.  As a result, HUD paid more than $216,000 in inappropriate housing assistance and more than $218,000 in unsupported housing assistance.  Further, PK Management could not provide reasonable assurance that it used HUD funds effectively and efficiently or to fully benefit program participants.

We recommend that HUD require PK Management to (1) reimburse $216,749 in ineligible costs from non-Federal funds, (2) support or reimburse $218,676 from non-Federal funds, and (3) develop and implement procedures and controls to ensure compliance with requirements.  We also recommend that HUD take appropriate administrative action against the PK Management officials.