We conducted a review of the Chicago Housing Authority’s payments for outside legal services in conjunction with an ongoing internal audit of the U.S. Department of Housing and Urban Development’s (HUD) oversight of public housing agencies’ expenditures for outside legal services. Our review objective was to determine whether the Authority made payments for outside legal services in compliance with applicable requirements.
We found that the Authority did not always make payments for outside legal services in compliance with applicable requirements. It paid for legal services that were not within contract terms and did not always maintain adequate documentation to support payments for legal services. These problems occurred because the Authority lacked controls to ensure that it adequately verified invoices before payment and followed Federal requirements, contract terms, and its own internal record retention policies. As a result, it made $503,744 in unsupported payments for outside legal services.
We recommend that the Director of HUD’s Chicago Office of Public Housing require the Authority to (1) provide documentation to support the $503,744 in unsupported payments identified by the review or reimburse the applicable programs from non-Federal funds for any costs that it cannot support; and (2) develop and implement controls to ensure that invoices for legal services are adequately verified and ensure that its payments for outside legal services are made in accordance with the terms of the related contracts and other applicable requirements.