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					 Chapter 4.
Verifications




                1
      Chapter 4. Section 1.
           Overview

            Learning Objective
Apply HUD requirements and standards for
     effective verification techniques

                                           2
                  Overview
• The issue of verification cuts across all
  occupancy areas.
• All information in tenant family’s file must
  be verified and properly documented
• PHAs need to establish detailed
  verification procedures within the Admin
  Plan (or separately) for management
  control purposes


                                                 3
                   Overview
• Each PHA should ensure that staff
  interviewers are trained to explain the
  following points during face-to-face
  interviews or over the phone if necessary:
  – The types of information that the PHA will
    verify
  – The methods of verification, including
    computer matching, that the PHA will use



                                                 4
                      Overview
• PHAs share the responsibility for documentation
  and verification of income information with
  families
• To fulfill their responsibilities, families must:
  –   Complete all necessary paperwork
  –   Sign all required release forms
  –   Be responsive to PHA requests
  –   Provide requested items and documents in a timely
      manner
• PHAs must follow-up with third party sources
                                                          5
                      Overview
• Verifications are essential to high quality
  administration
• Verifications ensure that the income information
  provided by families and used by PHAs to
  determine eligibility and rent subsidy amounts is
  correct
• PHAs must take measures to ensure that each
  regulatory and policy item that needs to be
  verified is, in fact, verified consistently by all staff
  members

                                                         6
                   Overview
• Learning Activity 4-1:
• Minimum Rent Verification

• Page 4-3

• Instructions: review the shaded area from the
  policy on page 4-4 and answer questions 1a-c
  about that item on page 4-5. Take the others
  home for yourself or staff to complete.

                                                  7
Chapter 4. Section 2.
Verification Policies




                        8
              Regulatory Verification
                  Requirement
• The regulatory requirement is stated below.
• The PHA must obtain and document in the family file
  third party verification of the following factors, or must
  document in the file why third party verification was not
  available:

   –   Reported family annual income
   –   The value of assets
   –   Expenses related to deductions from annual income
   –   Other factors that affect the determination of adjusted
       income

                                                                 9
         Hierarchy of Verification
                Methods
• HUD has established a hierarchy of five
  verification levels.
• Using this hierarchy, PHAs should develop
  and adopt verification policies to guide
  staff in determining what qualifies as
  adequate verification for specific items that
  affect the determination of income and
  rent.
  – Policies must be consistent with the
    regulatory requirements.
                                              10
         Hierarchy of Verification
                Methods
• On following pages, you will find two
  samples:
  – General verification policy that follows HUD’s
    hierarchy (page 4-9)
  – Policy that applies specifically to the
    verification of assets (page 4-11)




                                                     11
                  Release Forms
• Before requesting any verifications, PHAs must obtain
  signed consent forms from family members authorizing
  release of information.
   – One such consent form must be consistent with 24
     CFR 5.230 regulations
   – PHAs must also use other consent forms to request
     verification of information not covered by this form
      • Because of privacy act issues, PHAs are advised to use
        specific, rather than generic, consent forms




                                                                 12
      Authorization for Release of
  Information/ Privacy Act Statement
           (form HUD-9886)

• Form 9886 must be signed by:
  – All adult family members (18 years of age +)
  – Head & spouse, regardless of age
• Form can be used between regular
  reexams to verify unreported income
  – Valid for 15 months from date of signature

                                                   13
      Authorization for Release of
  Information/ Privacy Act Statement
           (form HUD-9886)

• HUD-9886 may be used only for:
  – Wage & unemployment compensation from SWICAs
  – Salary and wages from current/former employers
  – Unearned income from financial institutions

• Form 9886 (page 4-15)


                                                     14
 Chapter 4. Section 3.
Recommended Levels of
     Verification




                         15
         Recommended Levels of
              Verification
• Highest
  – Up-front income verification (UIV) – to become
    mandatory when HUD’s UIV system is available
• High
  – Written 3rd party – mandatory when UIV is not
    available or sufficient
• Medium
  – Third party oral – mandatory if written 3rd party is not
    available
• Medium-low
  – Document review - to be used on provisional basis or
    in situations where UIV and third-party verification are
    unavailable
• Low
                                                               16
  – Tenant declaration – to be used only as a last resort
     Upfront Income Verification
• What is it?
  – The verification of income, before or during a
    reexamination, through an independent
    source that systematically and uniformly
    maintains income information in computerized
    form for a large number of individuals.




                                                 17
        Recommended Levels of
             Verification
• Because UIV is particularly useful in
  identifying undisclosed income, HUD
  believes that it offers the best opportunity
  for making the biggest impact on reducing
  the excess rental assistance subsidies in
  the QC Study.



                                             18
        Recommended Levels of
             Verification
• UIV opportunities to reduce errors:
  – $900 million per year (over $2 million dollars
    per day) – and UIV is particularly useful in
    identifying this income
  – HUD estimates that 50% of the errors
    associated with earned income could be
    reduced by using UIV techniques.
  – Reducing that number is a major challenge
    and opportunity for the housing industry,
    including HUD.

                                                     19
       Recommended Levels of
            Verification
• HUD maintains a website devoted to UIV,
  and links to many current UIV resources
  are posted on this website.

• See Appendix A, page A-1, for address.




                                            20
       Recommended Levels of
            Verification
 Current UIV resources include the following:
  Social Security (SS) and Supplemental Security
  Income (SSI) information accessed via a secure Internet
  facility (TASS)
  State Wage Information Collection Agencies (SWICAs)
  State TANF systems
  Credit Bureau Association (CBA) credit reports
  Internal Revenue Service (IRS) letter 1722
  Private sector databases (e.g. The Work Number)
  See Useful Website Addresses in References

                                                      21
       Recommended Levels of
            Verification
• PHAs may execute UIV agreements, such
  as SWICA agreements and agreements
  with TANF agencies, independent of HUD.
  – PHAs may execute UIV agreements with
    SWICAs only in states where HUD has not
    already executed such agreements.




                                              22
      Use of UIV for Verification
• When UIV does not differ substantially
  from participant-provided documents,
  PHAs may use UIV to satisfy their
  regulatory obligation to obtain third-party
  verification.
  – PHAs are not required to obtain additional
    third-party verification from employers.
  – PHA will need to define “differ substantially.”
     • HUD suggests $200 or more per month as
       reasonable guideline

                                                      23
      Use of UIV for Verification
• When UIV differs substantially from
  participant-provided documents, third-
  party verification is still required. For
  example:
  – Participant discloses an employer that is not
    represented in the UIV system.
  – UIV reveals employer or other income source
    that participant did not disclose.
  – The income amounts on UIV and participant-
    provided documents differ substantially.
                                                24
     Use of UIV to Project Income
• PHAs can also use UIV to project income.

 However, since UIV information is not up-
 to-date, PHAs may need to use it along
 with participant-provided documents, such
 as pay stubs or SS/SSI award letters when
 making their income projections.


                                         25
     Use of UIV to Project Income
• UIV and pay stubs are complementary
  sources of information.
  – UIV satisfies the third-party obligation; pay
    stubs do not.
  – UIV reveals undisclosed income; pay stubs do
    not.
  – Pay stubs provide hours worked and rate of
    pay; UIV does not.
  – Pay stubs are current; UIV is dated (usually 3-
    5 months old.)
                                                 26
      Upfront Income Verification:
       Projecting Annual Income
• HUD has established criteria for what
  constitutes a substantial difference in
  cases where UIV data differs from tenant-
  provided and/or other verified income.
• HUD defines a substantial difference as
  $200 or more per month.
• UIV may alleviate the need for 3rd party
  verification if not a substantial difference.
                                                  27
         UIV Income Data is Not
          Substantially Different
• If UIV income data is less than current
  tenant-provided documentation, use
  tenant-provided documents to calculate
  anticipated annual income.




                                            28
          UIV Income Data is Not
           Substantially Different
• If UIV income data is more than current tenant-
  provided documentation, use UIV to calculate
  anticipated annual income unless the tenant
  provides documentation of a change in
  circumstances.
• Upon receipt of acceptable tenant-provided
  documentation of a change in circumstances,
  use tenant-provided documents to calculate
  anticipated annual income.

                                                29
           UIV Income Data is
          Substantially Different
• Request written 3rd party verification from
  the discrepant income source.
• Review historical income data for patterns
  of employment, paid benefits, and/or
  receipts of other income, if you can not
  readily anticipate income, i.e. seasonal
  employment, etc.


                                            30
           UIV Income Data is
          Substantially Different
• Analyze all data (UIV data, 3rd party
  verification and other
  documents/information provided by the
  family) and attempt to resolve the income
  discrepancy.
• Use the most current verified income data
  (and historical income data if appropriate)
  to calculate anticipated annual income.

                                            31
      Upfront Income Verification
      Projecting Annual Income
• HUD recommends that tenant-provided
  documents should be dated within the last
  60 days of the PHA interview date.
• PHA may average amounts
  received/earned, if unable to anticipate
  annual income using current information
  due to historical fluctuations in income.


                                          32
       Upfront Income Verification
       Projecting Annual Income
• If the tenant disputes UIV SS/SSI benefit
  data, request the tenant to provide current,
  original SSA notice or benefit letter within
  10 business days of PHA interview date.
• Tenant may contact SSA at 1-(800) 772-
  1213 or visit their local SSA office.



                                             33
      Upfront Income Verification
       Resources for Historical
             Income Data
• Social Security Earnings Statement,
  request via mail or online at www.ssa.gov
• Two years of earnings may be obtained
  from UIV System or Local State Wage
  Information Collection Agency (SWICA)
• Last eight (8) amounts of SS benefits paid
  to a participant may be obtained from the
  TASS or UIV system
                                           34
                   Use of TASS
• PHAs should use UIV routinely to verify SS and
  SSI income information.
  – In its initial round of RIM reviews, HUD did not make
    failure to use TASS to obtain UIV of SS and SSI
    income a finding.
  – Field offices were instructed to note on their RIM
    reports that such failure will be a finding next time if
    there is no other third-party verification of SS and SSI
    income (from a local SSA office) in a participant’s file.
  – UIV from TASS is far superior to third party
    verification because PHAs often fail to ask for
    information on all family members, including children.
                                                            35
              HUD’s UIV System

• Background and Rationale: PIH is developing
  UIV to provide PHAs with a single source for
  obtaining verification of wages, unemployment
  and social security benefits
• HUD has invested millions of dollars in this
  system to assist in the reduction of subsidy
  payments for unreported income
• Goal is to achieve reduction of subsidy errors:
  •30 percent by FY 2004
  •50 percent by FY 2005

                                                    36
             HUD’s UIV System

• Background and Rationale: HUD has
  been negotiating cooperative agreements
  with SWICAs nationwide
  •Computer matching enables HUD to receive wages
  and unemployment compensation on ongoing basis
  through a computer matching operation for disclosure
  to PHAs
  •PIH anticipates having more than 40 cooperative
  agreements executed by midyear 2004

                                                         37
          HUD’s UIV System
• The UIV system will contain:
  – Wage and unemployment information from
    SWICAs across the nation
  – Social security benefits from the Social
    Security Administration (SSA)




                                               38
               HUD’s UIV System

• All housing program participants whose SSNs
  are transmitted to PIC will be matched on a
  quarterly basis with UIV data
  •Will allow HUD to provide most recent income
  information from SWICAs and SSA
  •Wages and social security benefits are largest
  unreported income components
     •Therefore, UIV is best tool for PHAs to identify potential
     wage and benefit underreporting



                                                                   39
         PHA Responsibilities
• While UIV will be excellent tool, PHAs will
  be responsible to:
  – Compare UIV information with tenant-
    provided information
  – Resolve income discrepancies promptly to
    determine accurate tenant rents




                                                40
         PHA Responsibilities
• In addition, PHAs will be responsible for:
  – Maintaining a current form HUD-9886 in each
    applicant’s and participant’s file
  – Restricting access to UIV data to employees
    have a recognized need to know for valid
    administration reasons
  – Ensuring UIV data is stored in secure places



                                               41
        PHA Responsibilities
• HUD plans to provide guidance to PHAs to
  ensure they implement appropriate
  physical, technical and administrative
  safeguards in their business operations.




                                         42
            PHA Responsibilities
• Safeguards will include:
  – ED certification re security plan
  – Appointment of a security coordinator
  – User agreements signed by all PHA users
  – Physical security of tenant information (files, offices,
    etc.)
  – UIV system security
      • Updating of user IDs quarterly
      • Monitoring of system usage
  – Training for staff

                                                               43
          HUD’s UIV System
• How the system will work:
  – To log onto UIV system, an authorized user
    will enter PIC ID and password (p. 4-23)
     • PHAs may request additional PIC IDs and
       passwords




                                                 44
Page 4-23
            System Preview (Screens subject to
                         modification)


              Log in screen: UIV uses PIC
              User ID and Password




                                                 45
          HUD’s UIV System
• How the system will work:
  – The starting point for the user will be the
    welcome page (p. 4-24)




                                              46
Page 4-24




   Welcome
   Page




             47
           HUD’s UIV System
• How the system will work:
  – The user will then search income records by
    household information (any of the following)
    • Head of household’s SSN
    • Head of household’s last name
    • Head of household’s date of birth




                                                   48
Page 4-25

            Household Search Screen




                                      49
           HUD’s UIV System
• How the system will work:
  – The search may bring up more than one
    name; the user will pick the correct person




                                                  50
Page 4-26

            Head of Household Screen




                                       51
           HUD’s UIV System
• How the system will work:
  – The next screen will display the household
    summary and income record status for the
    family (p. 4-27)




                                                 52
Page 4-27   Household Income Summary Screen




                                              53
           HUD’s UIV System
• How the system will work:
  – The user will then arrive at the household
    income details screen (p. 4-29)
     • Household summary table
     • Head of household identifier
     • Member selection list
     • Wage and benefits table
     • Access to income data for 4 most recent
       quarters
                                                 54
Page 4-29


 Household
 Income Detail
 Screen
 • Wage Data
 • Social Security
 • Unemployment
 Compensation




                     55
           HUD’s UIV System
• UIV system will also contain an “exceeds
  threshold reports”
  – Based on 2 mathematical comparisons
    • Third party (SWICA and SSA) tenant household
      quarterly income data will be compared with PIC
      50058 projected income data
    • The difference will be compared to an established
      threshold



                                                      56
          HUD’s UIV System
– The results of the report may be used to:
   • Identify individual households with suspect income
     reporting
   • Generate metrics that may be used in measuring
     the effectiveness of income error reduction efforts
     achieved with the UIV system
– The report will be a critical tool in pursuing
  undisclosed income.



                                                       57
           HUD’s UIV System
• Generating an exceeds threshold report
  – Click on “Get Report” (p. 4-31)




                                           58
      Threshold Report – Critical Tool for
Page 4-31
          Pursuing Undisclosed Income




                  Set Threshold of
                  discrepancy % between
                  Household 50058 income
                  vs. UIV Income from wage
                  & SSA match                59
           HUD’s UIV System
• PHA Exceeds Threshold Report (p. 4-32)
  – If discrepancy between family’s reported data
    and UIV data equals or exceeds the
    established threshold, the family’s name will
    be listed on the report.
  – To obtain more information, the user will click
    on the SSN of the family’s head of household.



                                                  60
           HUD’s UIV System
• Head of Household’s Information Screen
  will display detailed information (p. 4-33)
  – Using Exceeds Threshold reports, PHAs will
    be able to follow up with families to ensure
    that income has been correctly reported and
    calculated.
  – Where underreporting has occurred, PHAs
    will need to take appropriate action (entering
    into repayment agreements)

                                                     61
Page 4-33




            Household level
            detail of threshold
            report
                                  62
          HUD’s UIV System
• Field offices will also be able to view
  exceeds threshold reports.
• HUD will be using these reports to monitor
  and follow up with PHAs to ensure that
  discrepancies are being addressed. (p. 4-
  34)



                                           63
Field
Office
Level
Report of
PHA
Threshold
Statistics



             HUD will be
             following up
             regularly,
             using this
             report 64
            HUD’s UIV System
• When HUD’s UIV system is fully operational:
  – PHAs will be required to use it.
  – HUD will intensely monitor whether PHAs are using it.
     • Monthly usage rates will be reviewed at all levels
       of HUD
     • Discrepancy rates will be reviewed closely to
       determine whether PHAs with rates higher than the
       norm are using UIV to reduce undisclosed income
  – The system will be linked to a hotline set up
    by HUD’s IG to receive and process
    complaints of fraud, waste and abuse
                                                       65
          HUD’s UIV System
• One caveat: A federal statute governing
  computer matching requires that before an
  adverse action can be taken by a PHA
  using UIV, a participant must be given
  notice and opportunity to address the
  discrepancy

• See “Up-Front Verification Orientation” on
  page 4-67
                                               66
           HUD’s UIV System
• Learning Activity 4-2:
• UIV Case Study 1
• Group Activity – Family data conflicts with
  UIV

• Page 4-37



                                                67
           HUD’s UIV System
• Learning Activity 4-3:
• UIV Case Study 2

• Page 4-40




                              68
       Third Party Verification
• Third-party verification is obtained
  independently from information sources
  identified by families
  – The sources may have income information or
    expense information




                                             69
        Third Party Verification
• Written
  – Documents must be supplied directly to
    independent sources by PHAs and returned
    directly to PHAs from the independent
    sources (not hand carried by family)
  – PHAs may mail, fax, or email verification
    requests to independent sources
  – HUD strongly encourages PHAs to make at
    least two attempts to obtain third-party written
    verification

                                                   70
         Third Party Verification
• Oral
  – PHAs contact the independent sources by
    telephone or in-person

  – Third-party oral verification may be used
    when requests for written verification have not
    been returned within a reasonable time – e.g.
    10 business days


                                                  71
           Document Review
• PHA reviews original documents provided
  by family as verification of a given income
  or expense item

• Document viewed may be used when third
  party verification cannot be obtained



                                            72
           Document Review
• Acceptable documents:
  – Consecutive and original pay stubs
  – SSA award letters
  – Bank statements
  – TANF award letters
  – Other official and authentic documents from
    federal, state or local agencies



                                                  73
              Document Review
• To be acceptable for this method of verification,
  documents must be original and authentic
• PHA must:
  – Make and retain copy of document in file
  – Note in the file that the original has been received,
    reviewed and copied
• Documents should be as current as possible
  (e.g. dated within 60 days of the family’s
  interview)

                                                            74
          Tenant Declaration
• An applicant or participant submits an
  affidavit or notarized statement to certify
  income or expenses that s/he has reported

• This method should be used as a last
  resort when no other verification method is
  possible


                                            75
       Levels of Verification of
               Income
• See Levels of Verification Chart
  (page 4-45)




                                     76
Chapter 4. Section 4.
Verification Standards




                         77
        Verification Standards
• PHAs should establish time frames for
  receipt of third-party verification before
  accepting documents provided by families
  – Following up after a specified number of days
    or weeks and then waiting for another
    specified number of days or weeks before
    accepting documents

• See Sample Verification Monitoring Form
  (page 4-50)
                                                78
        Documenting the Absence of
          Third-Party Verification
•    There are 4 acceptable reasons for not having
     third-party verification of an income or expense
     item in a family’s file:
    1. Staff has made efforts to obtain 3rd party in
       accordance with their policy and independent
       source has not responded;* or
    2. Independent source that has been asked to provide
       written third-party verification doesn’t have the
       capability of sending such verification directly to
       PHA or of facilitating oral third party verification*; or

    * When third-party verification is requested and not
       received (1 and 2 above), a family’s file should
       contain documentation of PHA efforts
                                                               79
     Documenting the Absence of
       Third-Party Verification
• Documentation should include the
  following information:
  – Dates/time of the initial request and all follow-
    ups
  – Names of the company and the person to
    whom the request was sent
  – Notation that no response was received



                                                    80
        Documenting the Absence of
          Third-Party Verification
    3. It is not cost-effective or reasonable to obtain third
       party verification*

    4. The income or expense item to be verified is an
       insignificant amount that would have minimal impact
       on TTP AND the PHA is able to verify through
       original documents provided by family*

*    When third-party verification is not attempted
     (3 and 4 above), a family’s file should contain
     documentation of the reasoning used to justify
     the decision
                                                                81
     Documenting the Absence of
       Third-Party Verification
• All file notations made by staff should be:
  – Complete         Limited to facts
  – Dated            Signed or initialed




                                                82
          Third-Party Verification
            Not Cost-Effective
• Example:
  – Ms. Lee reports a savings account with a
    balance of $1,000 earning 1.25% interest.
    Bank statements provided to PHA. Bank
    charges $10 fee for third-party verification.
    Staff time for processing a third-party
    verification is estimated at $9.

• Is this cost effective?
                                                    83
          Third-Party Verification
            Not Cost-Effective
• Reasoning:
• 3rd party costs   Document review $
  – $10 bank fee         $0
  – $9 admin time
• Interest: $1000 x .0125 = $12.50
• Answer: No – but document your
  reasoning!
• And - PHA must verify with review of
  family-supplied documents
                                         84
     Documenting the Absence of
       Third-Party Verification
• See Exception to Third Party Verification
  Chart (page 4-53)




                                              85
         What Must Be Verified
–   Income, assets and asset income
–   Divested assets
–   Income exclusions
–   Allowances and deductions
–   Family composition
–   Social security numbers
–   Citizenship or eligible immigration status



                                                 86
      Verifying Annual Income
• PHAs need a thorough understanding of
  what constitutes income
• PHAs should not make assumptions about
  whether someone may or may not have a
  particular type of income
  – For example, family without children may be
    receiving back child support payments



                                                  87
      Verifying Annual Income
• To properly verify annual income, PHA
  staff must first:
  – Have a thorough data-gathering form
    • Forms that gather data about annual income
      should ask the right questions
  – Know how to conduct a thorough interview
    • The initial interview is critical; it lays the
      groundwork for future interviews for interim and
      annual reexaminations



                                                         88
            Verifying Income
              Exclusions
• All exclusions and excluded amounts
  associated with family members should
  be:
  – Declared by the family, and
  – Reported by the PHA in field 7e of the 50058




                                                   89
            Verifying Income
              Exclusions
• PHAs need to obtain verification for an
  income exclusion, if, without that
  verification, they would not be able to
  determine whether or not the income is to
  be excluded (982.516)




                                              90
              Verifying Income
                Exclusions
• The type of verification needed for
  exclusions may differ:
  – Example 1: Payments received under a
    Federal Work Study Program
     • The PHA would have to, at minimum, verify the
       source of that income
  – Example 2: Wages of a child under 18
     • Verify age - verification of amount is not necessary
       for wages

                                                          91
             Verifying Income
               Exclusions
• There are also situations where it would
  be necessary to obtain third-party
  verification of both the source and the
  amount of the income in order to calculate
  properly. For example;
  – Mandatory earned income disallowance
  – The exclusion of incremental earnings and
    benefits resulting from participation in a
    qualifying state or local training program
                                                 92
                   Summary
• The PHA is the final judge of what
  constitutes adequate and credible
  verification and documentation
• If there is doubt about the reliability of the
  information received, staff should pursue
  additional information
• PHA staff are not required to accept
  information simply because it is offered.
                                                   93
               Verification

• Go over the remainder of the chapter with
  the staff in your office to be sure they
  understand verifying deductions.




                                              94
          Learning Objective
• Apply HUD requirements and standards
  for effective verification techniques




                                          95

				
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Description: Projected Income Statement Sample document sample