Federal Reports

We reviewed the three recommendations presented in our 2016 management advisory titled Office of Aviation Services’ Maintenance System Presents a Threat to Public Health and Safety to verify whether the Office of Aviation Services had implemented them.We confirmed that Recommendation 1 has been implemented, but Recommendations 2 and 3 have not. We ask that the Office of Financial Management reopen Recommendations 2 and 3 for resolution and tracking.

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USITC Management and Performance Challenges

We audited the Texas General Land Office’s Community Development Block Grant Disaster Recovery (CDBG-DR) grant that it used to rehabilitate or reconstruct 125 homes affected by Hurricane Ike in 2008. Texas General Land Office contracted with the Deep East Texas Council of Governments, in Jasper, TX, to operate its program. We reviewed Texas General Land Office and its subrecipient as part of our annual audit plan to review CDBG-DR programs. Our objective was to determine whether Texas General Land Office administered its CDBG-DR program in accordance with U.S. Department of Housing and Urban Development (HUD) requirements; specifically, whether it ensured that its subrecipient met its contract requirements.We found that the Texas General Land Office generally administered its CDBG-DR program in accordance with HUD requirements. However, it did not ensure that its subrecipient administered its CDBG-DR grant in a prudent and cost-effective manner. In addition, Texas General Land Office’s affordability period for its disaster program did not appear to be reasonable based on those of its other disaster programs that its subrecipient administered and the government’s substantial CDBG-DR grant fund investment. These conditions occurred because Texas General Land Office did not establish consistent guidelines to protect the significant government investment. As a result, Texas General Land Office and its subrecipient did not effectively use government funds or assist as many homeowners as they could have. In addition, the government investment benefited a relatively small number of low- and moderate-income persons for a short time. Further, Texas General Land Office and its subrecipient placed participants at risk of incurring increased property tax bills that they may not be able to afford. We recommend that the Director of the Office of Block Grant Assistance require Texas General Land Office to (1) implement appropriate controls, including limits for reconstruction and rehabilitation costs, to ensure that it uses limited government resources in a more economical and efficient manner; (2) evaluate whether its program would benefit from a longer affordability period; and (3) ensure that tax burden implications are adequately addressed, as part of the determination of whether to replace homes.

We audited the Taylor Housing Commission’s Housing Choice Voucher Program based on our analysis of risk factors relating to public housing agencies in Region 5’s jurisdiction (States of Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin). Our audit objective was to determine whether the Commission complied with the U.S. Department of Housing and Urban Development’s (HUD) and its own requirements regarding the administration of its program. Specifically, we wanted to determine whether the Commission correctly calculated and paid housing assistance and utility allowances.The Commission did not always comply with HUD’s and its own requirements for its program household files. Specifically, it did not always correctly calculate or maintain documentation to support its calculations of housing assistance payments, and pay housing assistance and utility allowances for its program households. As a result, it (1) overpaid more than $21,000, (2) underpaid nearly $2,000, and (3) was unable to support nearly $21,000 in housing assistance.We recommend that the Director of HUD’s Detroit Office of Public Housing require the Commission to (1) reimburse its program, the households, or landlords from non-Federal funds for ineligible housing assistance payments and underpayment of housing assistance and utility allowances, as applicable, (2) support or reimburse its program or households for unsupported housing assistance payments, and (3) implement adequate procedures and controls to address the findings cited in this audit report.

We audited the Palm Beach County Housing Authority in West Palm Beach, FL, based on concerns raised by news articles stating that the Authority dismissed its former executive director because of financial misconduct and ethical violations. The concerns included bonuses paid and payments for contracted services. Our audit objective was to determine whether the Authority spent U.S. Department of Housing and Urban Development (HUD) funds for eligible program purposes and sufficiently supported its expenditures, focusing specifically on executive and employee compensation and expenditures for contract services. The audit is consistent with our strategic goal to ensure the integrity of and accountability for program funds.The Authority did not support and spend HUD funds in accordance with Federal regulations. It did not ensure that Sections 8 and 9 funds were not used to pay for executive compensation exceeding the salary limit. The excess payment was caused by the Authority’s improper classification of funds from two accounts as non-Sections 8 and 9 and then using those funds to pay for executive compensation. In addition, expenditures to one contractor were not eligible. The ineligible payment was caused by the Authority’s not having written policies and procedures to prevent such payments from occurring. These deficiencies resulted in $67,377 in questioned costs.We recommend that the Director of HUD’s Miami Office of Public Housing require the Authority to (1) reimburse its program for the $62,377 from non-Federal funds, (2) reimburse the U.S. Treasury $5,000 from non-Federal funds for the ineligible payments made, and (3) develop and implement written policies and procedures to ensure that Sections 8 and 9 funds are not used to pay for excess executive compensation and to provide detailed guidance to its staff on the payment review process.