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We audited the Housing Authority of the City of Anderson’s Housing Choice Voucher program based on the activities included in our 2016 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 administered its program in accordance with HUD’s and its own requirements.

The Authority did not always administer its program in accordance with HUD’s and its own requirements.  Specifically, it did not comply with HUD’s conflict-of-interest requirements when it failed to obtain the services of an independent third party to perform housing quality standards inspections and rent reasonableness determinations for units owned by entities it substantially controlled.  As a result, the Authority inappropriately (1) paid more than $645,000 in housing assistance to the entities and (2) earned nearly $62,000 in administrative fees.  Further, HUD lacked assurance that the Authority acted in the best interests of its program households.

In addition, the Authority did not always ensure that (1) required eligibility documentation was obtained and maintained, (2) housing assistance was appropriately supported and paid, and (3) program funds were properly supported and used for eligible expenditures.  It also did not ensure that (1) utility reimbursements were provided to program households, (2) program households and landlords were not charged for administrative services related to the normal costs of business, (3) households were properly admitted from its waiting list, and (4) exigent housing quality standards deficiencies were corrected within 24 hours.  As a result, HUD lacked assurance that the Authority properly managed its program.

We recommend that the Director of HUD’s Indianapolis Office of Public Housing require the Authority to (1) reimburse its program more than $700,000 from non-Federal funds for the ineligible housing assistance paid to the entities and the inappropriate program expenditures, (2) support or reimburse its program more than $9,000 from non-Federal funds for the unsupported payments, (3) reimburse the appropriate households and landlords nearly $8,000 for the underpayment of utility reimbursements and inappropriate administrative service fees, and (4) implement adequate procedures and controls to address the findings cited in this audit report.