After the assessment of the audit of the section 8 program of the Multifamily project at the Beverly Place apartments, it is evident that there was fraud among the managers of the apartment as well as the owner. The Beverly place falsely gave out housing assistance payment vouchers for units with either tenant who did not exist or tenants who had relocated out of their subsidized units. This was the case as the Department of Housing, and Urban Development had earlier on come by a complaint that a former Beverly Place tenant had been denied assistance at a different apartment because the tenant was already listed at Beverly place. This was not the case as the tenant had already moved out of Beverly Place two years earlier. Some tenants were never housed in the stated units or had already moved out though these managers never raised issues while the HUD continued to pay subsidies for them, amounting to $574,930. Beverly Place owner had also invoiced HUD for tenants who had a questionable or false income. The tenants who were offered assistance at the apartment often claimed cash contributions, which required third-party verification as stated by the HUD handbook. This was not the case as the tenants reported that they had no idea of the contributor or did not receive any money from the latter. Both had also denied consenting to the notarized statement and affidavits for verification processes. Since no authentic income documents were provided by any tenant, $150,082 was unsupported.
The managers also deceived the tenants, HUD, and even the apartment owner. These managers used the previous tenant identifications and applications to apply for the project’s assistance. Since most of the tenants were unable to speak or comprehend English, they did not know that they were supposed to get help or rather the amount which they were designated. This allowed the managers to manipulate the tenants to pay cash for rent deposited in their bank accounts instead of the required project account.
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This was a problem of internal controls since the problem lay with the governance and the management of the apartments. An internal control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, the reasonable opportunity to avert, detect, or correct false statements in financial or performance data as well as the inability to effectiveness or efficiency of operations (Lalic et al.). The apartment owner did not have enough controls positioned to ensure that it implements its project’s program following rules and regulations of the HUD, including accurate monthly billings to HUD.
The contract administrator was the one responsible for checking. The HUD had procured a contract administrator who was to review the program operations. The HUD also relied on the contact administrator to notice and check occupancy errors and unlawful activities. The apartment owner was also responsible for checking. His work was to ensure that the project was administered following the HUD requirements.
Presence of a court document. The owner provided documents from the court, which stated that the involved individuals had been sentenced and accounted for the damages to HUD. Questioned costs documents. This document was provided to the owner after the exit conference. It detailed the questioned costs, which did not duplicate the court-ordered restitution. Documents acquired by the investigators. These files contained proof of the income earned verification. A document was also sent to the Office of Inspector General. The owner believed that this document would provide the necessary documentation of the 18 tenants questioned in the report.
Work Cited
Lalic, Srđan, et al. “Internal Control and Problems of Modern Management in The International Environment.” Research Journal of Agricultural Science , vol. 43, no. 3, 2011, pp. 406–414.
