Recent OIG Audits Show Importance of Training in Section 8 Requirements

The HUD Office of Inspector General (OIG) recently conducted two management agent audits that illustrate the importance of Section 8 training for management agents. In both cases, OIG recommended a significant repayment of assistance by the project owners due to management errors by the agents. A review of both audits is instructive for agents who manage Section 8 properties.

HUD Audit 2019-CH-1003

This was an audit of Lake View Towers in Chicago, IL. This 500 unit project contains 395 Section 8 units for which HUD made assistance payments. For the period covered by the audit, HUD provided the owner approximately $8.5 million in Section 8 housing assistance payments.

The purpose of the audit was to determine whether the management agent correctly calculated and paid housing assistance, obtained and maintained required eligibility documentation, and administered the waiting list in accordance with HUD’s and its own requirements.

The audit found that the management agent did not always administer the program in accordance with applicable requirements. The primary issue identified by the audit was that housing assistance payments were not always correctly calculated or supported. In conducting the audit, 120 certifications were reviewed to determine whether housing assistance payments were correctly determined for the period November 2016 – October 2018.  Of the 120 files reviewed, 66 had unsupported or incorrectly calculated housing assistance.

Auditors also determined that the property staff did not understand program requirements. For example, the staff was unaware that:

  • Annual income is the amount of income anticipated to be received by the household from all sources during the 12-month period following admission or annual recertification, which includes tips and overtime income;
  • All adult tenants with zero income must self-certify that they do not have income;
  • Tenants must provide the most recent four to six consecutive paystubs to support income;
  • EIV income reports must be checked during recertifications for unreported or underreported income; and
  • Tax returns used to support income must be complete and final.

The audit found that although the project’s assistant manager and occupancy specialist were responsible for performing household certifications, they received no training on HUD program requirements until 2017, and HUD found errors for the period after the training occurred.

Based on the audit findings, HUD paid nearly $57,000 in ineligible assistance and more than $399,000 in unsupported housing assistance. The audit also found that housing assistance may have been unjustly denied or delayed for eligible applicants on the project’s waiting list.

OIG auditors recommended that the Chicago Office of Multifamily Housing Programs require the project owner to reimburse HUD for the ineligible housing assistance payments; reimburse appropriate households for any underpaid housing assistance; support or reimburse HUD for the unsupported housing assistance payments; conduct required criminal record background checks; update its waiting lists to include required notations; and implement adequate policies, procedures, and controls to address the issues found by the audit.

HUD Audit 2019 – PH – 1003

The second audit involved multiple projects and was an audit of PK Management, LLC, a Birmingham, AL management company. The audit was initiated following media coverage of conditions at Essex Village, a Section 8 community in Richmond, VA. and the fact that there had been a prior audit of the company but HUD. The objective of the audit was to determine whether PK Management assisted eligible tenants and maintained documentation to support the housing assistance payments it received for residents of the sites it managed in the Philadelphia region.

Six projects in PA and VA were audited and OIG found that the management company did not always maintain documentation to show that it assisted eligible tenants and supported the housing assistance payments it received for residents. Of the 60 tenant files reviewed (ten per property), OIG found that 23 did not contain required tenant eligibility documentation. The missing tenant eligibility documentation included (1) background checks for drugs and violent criminal activity; (2) Citizenship Declaration forms; (3) authorizations for release of information and Privacy Act notices; (4) copies of Social Security numbers; (5) third-party verifications; and (6) proof of disability {when required for project eligibility}.

27 of the 60 files lacked other types of required documentation, including (1) family composition; (2) proof of proper selection from the waiting list; (3) disclosure of lead-based paint certification to tenants; and (4) unit inspections {move-in/move-out/annual}.

The primary reason for these management failures, according to the auditors, was that PK Management did not have adequate controls to ensure that it maintained documentation to show that tenants were eligible for assistance and that housing assistance payments were supported. As a result, the audit could not support $497,762 in housing assistance payments.

The audit recommended that HUD require PK Management to provide documentation to support housing assistance payments it received totaling $497,762 or reimburse HUD from non-project funds for any amount that cannot be supported and implement controls to ensure that documentation showing tenant eligibility is in place going forward.


These two audits show the importance of training for staff of management companies charged with the management of Section 8 and other HUD-assisted properties. Failure to properly document resident eligibility for program participation can lead to HUD demanding repayment of unsupported subsidy, and as outlined in these two audits, the required repayments can be substantial.