Housing Agency Fails to Document Inspections

Audit Date: November 23, 2009
Audit Categories
  • Investigation
Controller: Alan Butkovitz

Executive Summary

For Immediate Release:
November 23, 2009

Contact: Harvey Rice

Housing Agency Fails to Document Inspections
Butkovitz’ City’s Single Audit finds $4.4 million spent
without documenting required inspections


PHILADELPHIA – City Controller Alan Butkovitz today released the City’s FY08 Single Audit of Federal Financial Assistance that found the Office of Supportive Housing (OSH) failed to provide documentation for inspections for $4.4 million in housing assistance funds.

Federal regulations require all housing units be physically inspected at least annually to ensure housing quality standards are met before any assistance is provided. OSH receives the funding for the Shelter Plus Care Program from the U.S. Department of Housing and Urban Development.

“Because OSH’s programs are funded with federal monies, they are required to meet all federal regulations before these funds can be distributed,” said Butkovitz. “Inspections are required to ensure that all housing units are safe and habitable for tenants and their families. Without adequate documentation that inspections were conducted, there’s no way of knowing if the inspections actually took place.”

The Shelter Plus Care Program, which includes more than 900 housing units located throughout Philadelphia, provides subsidized permanent housing and supportive services to homeless adults, including those with children. Each unit is required to be inspected at least once annually during the grant period.

“Inspections should be conducted at least once a year, if not more depending on the conditions of the housing unit,” said Butkovitz. “Failure to conduct inspections allows for program participants to be housed in units that do not meet housing quality standards.”

“OSH management must develop an adequate system for tracking all program housing units that require inspections and ensure that the units are inspected annually.”

Along with undocumented housing inspections, the Single Audit found the Department of Human Services (DHS) overstated $2.6 million for the cost of space that houses the Children and Youth Program. DHS violated a state code by using the fair market value instead of the lower actual amount in their calculation of rental cost for office space in a city owned building.

The Pennsylvania code states that the amount of rent charged for agency-owned buildings should be the lesser of the fair rental value of the space or the actual cost of principal and interest incurred, according to Butkovitz.

“Because DHS is reimbursed a percentage of the expenditures it reports to the Pennsylvania Department of Public Welfare (DPW), reporting of the unallowable cost resulted in an excess reimbursement of $2 million,” he said.

The audit also found certain city departments did not obtain subrecipient audit reports representing $63.5 million in FY08 federal and state DPW funding. Federal Guidelines and the DPW Single Audit Supplement requires city departments to ensure their subrecipients are appropriately audited in accordance with Government Auditing Standards.

“Without subrecipients providing audit reports, there’s no assurance that federal and state funds are spent in compliance with the laws, regulations and provisions of contracts or grant agreements,” said Butkovitz.