Audit Report on the Department of Housing Preservation and Development’s Procedures for the Verification of Section 8 Housing Choice Voucher Program Participant-Reported Information

EXECUTIVE SUMMARY

This audit examined whether the Department of Housing Preservation and Development’s (HPD) procedures for verifying Section 8 Housing Choice Voucher Program participant-reported information during the annual recertification process were adequate and sufficient to meet federal Department of Housing and Urban Development (HUD) program requirements. The audit covered all participants who were active as of July 1, 2013. HPD provides housing subsidies to more than 32,400 families by paying a portion of the program participants’ rents to their private landlords. Through Section 8, HPD subsidizes the rent for qualified low-income families. The families then pay the differences between the actual rents charged by the landlords and the amount subsidized by the Section 8 program. During Fiscal Year 2013, HPD received approximately $423 million in subsidies from the federal government through HUD for the operation of the Section 8 program.

Federal regulations established by HUD require Public Housing Agencies (PHA), like HPD, to conduct initial certifications and subsequent recertifications of family income and composition every year. Through the annual recertifications, HPD is required to determine that participants continue to be eligible and recalculate the current amounts of the subsidies to which they are entitled. Under the recertification requirements, participants must accurately report their most current information regarding changes in family composition, income, assets, and other factors used by HPD to determine the amount of Section 8 rental subsidies that will be paid on their behalf.

As part of the recertification process, HPD case managers review and analyze the information received from participants. Pursuant to HUD requirements, case managers validate participant income information through HUD’s Enterprise Income Verification system (EIV), a web-based computer system that contains employment and income information about individuals who participate in HUD’s rental assistance programs. EIV also verifies participants’ social security numbers and determines if participants owe outstanding debt to any PHA. In addition, HUD requires HPD to periodically utilize different reports to verify the information they receive, including the Deceased Tenants Report, which is used to identify deceased participants; the Multiple Subsidy Report, which is used to identify participants who may be receiving subsidies in more than one location; and the Failed Verification Report, which is used to identify participants whose personal identifiers, such as social security numbers, do not match the Social Security Administration (SSA) database.

Audit Findings and Conclusions

HPD’s existing procedures generally meet HUD’s requirements for verifying participant-reported information and appropriately utilized HUD’s Deceased Tenants Report, Multiple Subsidy Report, and the Failed Verification Report. Further, in a sample of 25 case files we reviewed closely, we did not identify any instance where HPD recertified a participant without obtaining the required documentation to verify reported income or without validating the information through EIV in accordance with its existing procedures.

HUD does not require HPD to conduct additional verifications beyond those it presently conducts. However, HUD’s guidebook states that, “PHAs are ultimately responsible for ensuring that the right people receive the right amount of subsidy, and they must maintain a high degree of accuracy in administering the housing choice voucher program.” Accordingly, we looked at additional sources of assets, income and family composition data and matched it against all HPD Section 8 participants as of July 1, 2013 to determine if there were participants who may have omitted information during recertification. Based on our data matches, we identified discrepancies in records potentially related to 829 participants. The information we found potentially related to Section 8 participants’ assets and income was not in HPD’s database, and may have affected the participants’ entitlement to benefits. To maintain program integrity, HPD should consider implementing, in whole or in part, procedures such as those we employed to ensure that it considers all available information related to Section 8 eligibility during recertification, and to use additional data to verify self-reported information on property ownership and marriage.

Audit Recommendations

This report makes a total of five recommendations to HPD, including:

• Determine whether those participants we identified in this audit as possibly having failed to report ownership of real property or marriages have, as a result, received Section 8 benefits to which they were not entitled, whether they are currently entitled to any benefits, and if so, in what amounts.
• Take any appropriate action under the Section 8 program against those participants who have omitted information and/or made false statements to HPD in connection with the program.
• Refer any Section 8 participants who appear to have made material omissions or false statements to HPD in connection with their recertifications to the New York City Department of Investigation.
• Consider employing additional procedures to verify assets and income, including but not limited to the data matches we performed, to improve its verification of participant-reported information.

HPD Response

In its response to the draft report, HPD officials did not dispute the report’s findings and stated that HPD has already taken actions related to the Comptroller’s recommendations, and will continue to monitor their impact. The full text of HPD’s response is included as an addendum to the report.