The City of New York Office of the Comptroller
Bureau of Financial Audit

Follow-Up Audit Report on the Section 8 Housing Choice Voucher Program of the Department of Housing Preservation and Development

FS09-105F
July 30, 2009

AUDIT REPORT IN BRIEF

Download the Complete Audit Report (pdf 189 kb)

This follow-up audit determined whether the Department of Housing Preservation and Development (HPD) implemented the five recommendations made in a previous audit entitled Audit Report on the Section 8 Housing Choice Voucher Program of the Department of Housing Preservation and Development, (FN04-060A) issued October 17, 2005.

The previous audit determined whether HPD properly accounted for the Section 8 funds that it received from U.S. Department of Housing and Urban Development (HUD) for the Section 8 Housing Choice Voucher Program (HCV Program) and appropriately disbursed funds to landlords on behalf of eligible families in accordance with HUD and HPD guidelines.  The audit found that HPD properly accounted for the Section 8 funds received from HUD and generally disbursed funds to landlords appropriately.  In addition, payments to landlords were generally made in accordance with HUD and HPD guidelines.

However, in some instances, the audit disclosed that HPD files lacked the required documentation and as a result it could not be determined whether families were eligible for benefits, whether landlords received appropriate payments, and whether required annual inspections and re-certifications were conducted, as required by HPD guidelines. 

 HPD made excessive Housing Assistance Payments (HAP) to landlords totaling $11,141, for seven client cases, and $195,434 in questionable payments to landlords for 42 client cases that lacked required documents, preventing the auditors from determining the appropriateness of these payments.  Thus, that audit estimated that $5,525,493 of $101,900,572 paid to landlords was questionable.

Audit Findings and Conclusions

The current follow-up audit disclosed that of the five recommendations made in the previous audit, HPD has implemented two and partially implemented three.  We found that of the 25 files reviewed, 12 files lacked 16 required documents (HPD subsequently submitted 8 documents for 8 files), and our review of HPD’s HAP Register Payment History Reports determined that payments are being made to four cases of the 25 files reviewed that lacked proper documentation, which indicates a lack of internal controls. The previous audit estimated that $5,525,493 was questionable due to a lack of required documentation. For comparative purposes, we now estimate that some $3.9 million paid to landlords could be in question due to lack of proper documentation.   In addition, HPD was able to recoup only $1,122 of the total $11,141 in incorrect HAP payments found previously. 

Audit Recommendations

To address the issues that still exist, we recommend that HPD should:

• Ensure that all necessary documents are included in the files, specifically those related to HAP contracts, and that it adheres to all applicable HUD and HPD regulations and guidelines.

• Determine whether the four files for which payments were made despite the lack of proper documentation are eligible for Section 8 subsidies, and if necessary, begin recoupment procedures.