FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
EQUAL OPPORTUNITY AND FAIR HOUSING
The waiting lists at some housing developments were not properly maintained as
required by the Department of Housing and Urban Development (HUD). HUD requires certain
developments to have "waiting lists" to ensure applicants are processed on a
first come, first served basis. This finding has been repeated since 1995.
We noted 3 of 20 medium-risk developments, as determined by the Authority, were not
in compliance with the respective development’s Tenant Selection Plan. We found:
According to Authority officials, management may lack the adequate knowledge of waiting
list requirements or are negligent in implementing procedures sufficient to ensure
compliance with those requirements. The Authority requires developments to submit plans
for approval and has a policy in place that defines actions to be taken in the event of
noncompliance. In addition, the Authority holds training classes throughout the year to
instruct management about waiting list procedures.
In response to our prior year’s recommendations, Authority officials stated that a
standardized waiting list form was distributed to all developments, but due to the size
and complexity of each development's waiting list it is difficult to assess the waiting
list compliance during field visits.
We recommended the Authority continue to review the results and effectiveness of
training classes on proper compliance with waiting list procedures, hold professional
seminars on an annual basis and distribute policies detailing remedial actions to be taken
to foster adherence to compliance requirements. (Finding 1, pages 15-17)
Authority officials stated they would continue to review the results and effectiveness
of the training classes on proper compliance with waiting list requirements and adjust the
content as necessary to address specific areas contributing to continuing instances of
noncompliance. In addition, the Authority will hold professional update seminars for its
staff on an as needed basis, as changes in federal regulations and Authority staff
turnover dictate. The Authority, however, does not believe that it needs to distribute the
remedial action policy to management companies, as they are aware of the policy in their
contract and the Authority has been successful in working with these companies to correct
deficiencies without the threat of termination of their contracts. (For previous Authority
responses, see Digest footnote #1.)
NEED TO IMPLEMENT SYSTEM RECONCILIATION PROCEDURES
The Authority has not yet implemented periodic reconciliation procedures for data
output processed by individual systems versus amounts recorded in the general ledger.
The Authority completed an implementation of four new computer application systems
during fiscal year 2000. The upgraded general ledger system, the single family program
system (AMOS), the investment system (CAMRA) and the multifamily, HOME and affordable
trust fund loan programs billing and receivable system (Benedict). The systems are not
integrated in the sense of simultaneously recording a single transaction within each of
the individual systems and within the general ledger.
Authority officials stated that these systems do not interface with each other due to
the fact that the operational and reporting features inherent in the individual systems
were not available to the Authority in an integrated system at the time of implementation.
This results in the need to create interfaces between the three new operational systems
and the new general ledger system either electronically or manually in order to record
transactions accurately, completely and consistently throughout the accounting system.
During the course of the our audit and during post system implementation work performed
by the internal auditors, we noted that the Authority had not implemented procedures to
periodically reconcile the data output produced by the individual systems to the general
ledger. Although Authority management expressed a strong commitment to initiate
reconciliation procedures they have not assigned specific project ownership and or
planning and accountability responsibility for a "reconciliation project" to
resolve the underlying internal audit findings reported.
We recommended that the Authority assign a project leader (or committee) with planning
and reporting responsibilities for implementing reconciliation procedures between the
Authority’s operational systems and its general ledger. (Finding 2, pages 18-19)
The Authority concurred with our recommendation and has established a committee to
address the linkage and reporting issues of the CAMRA system and expects to establish
similar committees for the AMOS and Benedict systems in the near future.
AUDITORS’ OPINION
Our auditors state the Authority’s financial statements as of and for the
year ended June 30, 2000 are fairly presented in all material respects.
___________________________________
WILLIAM G. HOLLAND, Auditor General
WGH:JAF:pp
SPECIAL ASSISTANT AUDITORS
Arthur Andersen LLP were our special assistant auditors for this audit.
DIGEST FOOTNOTES
#1 EQUAL OPPORTUNITY AND FAIR HOUSING - Previous Authority Responses
1999: "Authority officials stated they review all of the Tenant Selection
Plans for compliance with Authority and HUD guidelines. The Plans are designed to be
flexible and incorporate the developments’ marketing needs. The development of
standard procedures would result in the loss of this desired flexibility. The Authority
agreed with our recommendation to prepare a standardized waiting list form.
1998: "The Authority stated that they cannot do enough monitoring to ensure
complete compliance with the procedures because the application of the Tenant Selection
Plan procedures are not within the direct control of the Authority."
1997: "Standardized tenant selection plan models have been created for the
respective programs monitored by the Authority. However, the differences among program
requirements make it difficult, if not impossible, to develop universal policies,
procedures, and forms.
The Housing Management Officers have been instructed to place greater emphasis on the
waiting list during site visits. The frequency of these site visits is reviewed annually.
All developments are visited a minimum of two times per year.
Effective January 1, 1998, management site staff will be required to attend Authority
training sessions on a periodic basis. The curriculum of these training sessions has been
expanded to place greater emphasis on waiting list procedures."
1996: "Each development’s Tenant Selection Plan contains specific
requirements and procedures with regard to maintaining waiting lists and processing tenant
applications. As a part of its ongoing management training, the Authority will train
management staff in following these procedures. Compliance with these procedures will be
tested as a part of the Authority’s ongoing monitoring of management
performance."
1995: "The Illinois Housing Development Authority is the state’s Housing
Finance Authority. It acts as a PHA only for Moderate Rehabilitation developments.
It was not indicated in the Finding what type of Section 8 the property was that treated
federal preference applicants in a manner inconsistent with their development’s
Tenant Selection Plan. However, in its capacity as mortgagee and contract administrator,
the Authority will place greater emphasis and detail on the tenant selection process
(including the waiting list procedures) during its annual inspections. The Authority will
more closely review the management staff’s application and tenant selection process,
comparing it to their Tenant Selection Plan. Should a discrepancy between the plan and the
actual implementation of site procedures be determined, the Authority will direct
management to come into compliance with their approved Plan.
When Change 24 of the HUD Handbook Regulations 4350.3 was received by the Authority, it
requested that all of the developments in the Authority’s portfolio submit revised
Tenant Selection Plans for compliance. Models were provided for guidance depending on the
type of subsidy program the development was receiving. The Authority anticipates that many
of the developments are now better trained in the tenant selection process because of this
action. The Authority has had many discussion with various agents and management staff on
this subject. It will also review the possibility of incorporating the tenant selection
process more fully into its bimonthly training for new managers and their site staff.
