INTRODUCTION
These reports present our financial and compliance audit of the Illinois
Housing Development Authority. Our audit was performed in accordance with the Single Audit
Act and OMB Circular A-133.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
WAITING LIST EXCEPTIONS
The Department of Housing and Urban Development (HUD) requires certain developments
to have "waiting lists" to ensure applicants are processed on a first come,
first served basis. In addition to the HUD requirements, the Illinois Housing Development
Authority (Authority) imposes additional waiting list procedures on the developments to be
included in their Tenant Selection Plan (Plan). This finding has been repeated since
1995.
We reviewed waiting lists at 20 developments and found 5 were not in compliance
with the respective development’s Plan. The exceptions noted below are related to the
Authority’s requirements rather than HUD’s requirements. We found:
According to Authority officials, development 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 their 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 development management about waiting list
procedures.
Authority officials indicated they review the Plans in force at existing developments
and, if deficiencies are discovered, development management is required to address and
remedy the deficiencies according to the Authority’s established policy.
We recommended the Authority continue to review the results and effectiveness of
training classes on proper compliance with waiting list requirements, and stress those
areas where Plan deficiencies continuously exist. We also recommended the Authority
distribute on an annual basis to all management companies in charge of monitoring
developments the policy detailing actions to be taken by the Authority for non-adherence
to Plan waiting list 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
their content as necessary. (For previous Authority responses, see Digest footnote #1.)
SYSTEM RECONCILIATION PROCEDURES
The Authority has not 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 because
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 records.
The Authority has not yet implemented procedures to reconcile data output produced by
their individual operating systems versus amounts recorded in its general ledger.
Authority management has acknowledged the importance of developing and implementing
reconciling procedures. Various committees were established during fiscal year 2001 to
oversee and assist in completing the reconciliation project for each individual operating
system. Authority management has also retained a consultant to assist in the preparation
of a Request for Proposal that will further assist the Authority with its planning and
reporting responsibilities relating to the reconciliation project.
We recommended the Authority assign a project leader (or committee) with planning and
oversight responsibilities for the entire project. These responsibilities would include
defining the overall project scope, determining participation levels of various Authority
personnel, addressing the recommendations of the Request for Proposal and working with the
external professional firm contracted to assist the Authority in this matter. (Finding 2,
pages 18-19)
Authority officials concurred with our recommendation and indicated they are in the
process of preparing a Request For Proposal for outside consulting to assist in the
planning and reporting responsibilities relating to the reconciliation project.
OTHER FINDINGS
The remaining findings are less significant and are reportedly being given
attention by the Authority. We will review the Authority’s progress toward the
implementation of our recommendations in our next audit.
Mr. Peter Dwars, Executive Director, provided the responses to our recommendations on
March 7, 2002.
AUDITORS’ OPINION
Our auditors state the Authority’s financial statements as of and for the
year ended June 30, 2001 are fairly presented in all material respects.
___________________________________
WILLIAM G. HOLLAND, Auditor General
WGH:RPU:pp
SPECIAL ASSISTANT AUDITORS
Arthur Andersen LLP were our special assistant auditors for this audit.
DIGEST FOOTNOTES
#1 WAITING LIST EXCEPTIONS - Previous Authority Responses
2000: "The Authority will continue to review the results and effectiveness
of the training classes on proper compliance with waiting list requirements and adjust
their content, as necessary, to specifically address those deficiencies contributing to
continuing instances of noncompliance… The Authority does not believe it needs to
distribute the policy detailing remedial actions to be taken to foster adherence to
compliance requirements, …the Authority has been successful in working with these
companies to correct deficiencies without needing to threaten termination of the
contract."
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 discussions 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.
