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SCOPE AND METHODOLOGY
We performed the audit from September 2006 through March 2007 at the Authority located in
Newport News, Virginia. The audit was performed in accordance with generally accepted
government auditing standards.
The audit covered transactions representative of operations current at the time of the audit and
included the period January 2004 through March 2006. We expanded the scope of the audit as
necessary. We reviewed applicable regulations and guidance and discussed operations with
management and staff personnel at the Authority.
To determine whether the Authority carried out its operations in accordance with applicable
HUD requirements, we reviewed
• Applicable laws; regulations; the Authority’s program administrative plan, effective January
23, 2004; HUD program requirements at 24 CFR [Code of Federal Regulations] Parts 5, 35,
982, and 984; and HUD’s Housing Choice Voucher Guidebook 7420.10.
• The Authority’s accounting records, annual audited financial statements for 2004 and 2005,
general ledgers, checks, tenant files, computerized databases, policies and procedures, board
meeting minutes since January 2004, organizational chart, and its program’s annual
contributions contract.
• HUD’s files for the Authority.
During the audit, we assessed the reliability of computer-processed data relevant to our audit by
comparing the data to hard-copy information. We found the computer-processed data were
sufficiently reliable to meet our audit objectives.
We statistically selected 66 of the Authority’s program units to inspect using a statistical
sampling method developed by our computer audit specialist from the housing assistance
payment check register, which indicated that 1,882 tenants were under lease from August 1 to
August 31, 2006. The 66 units were selected to determine whether the Authority ensured that the
program units met housing quality standards. The sampling criteria used a 90 percent confidence
level, 50 percent estimated error rate, and precision of plus or minus 10 percent.
The sampling results determined that 28 of 66 units (42 percent) materially failed to meet HUD’s
housing quality standards. Materially failed units were those units in which the identified
violation was identified the last time the Authority conducted its inspection. Materiality was
determined by using multiple material violations that predated the Authority’s last inspection but
were not identified by Authority’s inspector, had material 24-hour health and safety violations
that predated the Authority’s last inspection, or were on the last inspection report and the
material violation had not been corrected at the time of our inspection.
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