Audit ferrets out Philadelphia Housing Authority skims, negligence

The Philadelphia Housing Authority (PHA) released its 2014 audit in a vacuum of fanfare, last week. It shows that city workers pocketed Section 8 funds on top of triple-digit salaries and that thousands of dollars in subsidized tenants’ rent goes unaccounted for every year.

According to McGladrey LLP, the firm PHA hired to perform the audit, several of the Authority’s top-paid executives were compensated in sums exceeding

$155,500 during fiscal year 2014. Their salaries were charged to Section 8 and Section 9 funds… [T]here was no apparent monitoring to ensure that the funds used to pay excess salaries above the $155,550 limit were sourced from funds other than Section 8 and Section 9 grants.

Specifically, the audit questions $79,555 in PHA executive pay diverted from federal coffers during the audit period. Though McGladrey didn’t name these executives, see here for an excerpt of HUD’s most recently released PHA executive compensation data.

According to a 2011 report by the HUD’s Office of the Inspector General, the Authority violated regulations by paying two firms $185,00 to lobby on their behalf between 2006 and 2012. Former PHA Executive Director Carl R. Greene was fined $75,000 for the indiscretion. A separate 2011 audit found the Authority could not

adequately support $4.5 million that it paid to outside attorneys during the period April 2007 to August 2010, virtually the entire amount we reviewed, raising questions about the propriety of the remaining $26 million in payments that we did not review.

Returning to the most recent report, McGladrey found PHA’s oversight of the Housing Choice Voucher (HCV) program severely lacking. The HCV program uses government money to help low-income tenants pay part of their rent to private landlords.

Reviewing 60 HCV tenant files, McGladrey auditors found that more than a third were missing important information. They questioned $3,109 in per-month rent charged to three units during the audit period due to “lack of documentation of reasonable rent determination.”

The Authority subsidized 19,457 HCV units in Philadelphia in 2013, according to HUD data. If McGladrey’s 60 unit sample size is representative at the municipal level, more than $12 million in subsidized HCV contract rent goes unaccounted for each year.

It’s worth noting how these audits are funded. PHA paid McGladrey “for a one-year base period in an amount not to exceed $282,063.00” to do the audit, and offered “four one-year option periods thereafter” should the Authority choose to subsequently rehire them. The pay grade increases with each “thereafter” year.

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