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We audited the Housing Authority of the City of Evansville’s Rental Assistance Demonstration Program (RAD) conversion based on the activities included in our 2018 annual audit plan and our analysis of the housing agencies participating in RAD in Region 5’s jurisdiction (States of Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin).  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 for the units converted under the program.

The Authority did not follow HUD’s and its own requirements for the units converted under RAD.  Specifically, it (1) did not ensure that units complied with HUD’s housing quality standards before it entered into a housing assistance payments contract, (2) 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, and (3) did not apply the correct contract rents for the converted units.  As a result, the Authority could not support the eligibility of more than $1 million in housing assistance payments to the entities and more than $10,000 in program funds paid to a contractor for housing quality standards inspection services.  Further, the application of incorrect rents led to the underpayment of housing assistance payments to the entities, so these funds were not available for the administration of the Authority’s Project-Based Voucher program.

We recommend that the Director of HUD’s Indianapolis Office of Public Housing require the Authority to (1) support that units met HUD’s housing quality standards or reimburse its program more than $1 million for the initial inspections of converted units that did not ensure compliance with the standards, (2) seek retroactive approval or reimburse its program more than $10,000 in program funds paid to contractors for unsupported housing quality standards inspection services completed by contractors that were not approved by HUD, and (3) implement adequate procedures and controls to address the findings cited in this audit report.

Recommendations

Key Details
(mouse over or click items for details)
  Open
  Closed
Funds Put to Better Use
Funds Put to Better Use

Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.

Questioned Costs
Questioned Costs

Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.

Sensitive
Sensitive

Sensitive information refers to information that could have a damaging import if released to the public and, therefore, must be restricted from public disclosure.

Priority
Priority

We believe these open recommendations, if implemented, will have the greatest impact on helping HUD achieve its mission to create strong, sustainable, inclusive communities and quality affordable homes for all.

Public and Indian Housing

  •   2018-CH-1003-001-A
    $1,206,046.00

    Closed on May 22, 2019

    Support that the converted units met HUD’s housing quality standards or reimburse its program $1,206,046 from non-Federal funds ($1,053,618 in housing assistance payments $152,428 in administrative fees).

  •   2018-CH-1003-001-B
    $10,124.00

    Closed on May 20, 2019

    Seek retroactive approval or reimburse its program $10,124 for program funds paid to the contractor not approved by HUD for the housing quality standards inspections for units owned by entities substantially controlled by the Authority.

  •   2018-CH-1003-001-C

    Closed on April 19, 2019

    Implement adequate procedures and controls to ensure that the Authority complies with HUD’s conflict-of-interest requirements, including but not limited to ensuring that (1) its staff is appropriately trained and familiar with HUD’s requirements for units owned by entities it substantially controls and (2) future contracts to perform housing quality standards inspections for program units owned by entities substantially controlled by the Authority are with a HUD-approved independent third party.

  •   2018-CH-1003-001-D

    Closed on April 08, 2019

    Implement adequate procedures and controls, including but not limited to providing guidance to its program staff on how to apply the correct contract rents and developing an effective quality control process.