Audit 10381

Significant Deficiency 2023-003 Eligibility Federal Program – U.S. Department of Housing and Urban Development AL #14.871 Grant Award No. – MN107-Housing Choice Voucher Federal Award Year – 2023 Criteria or Specific Requirement – The Authority must determine income eligibility and calculate the tenant’s rent payment and housing assistance payment using the documentation from third party verification in accordance with 24 CFR Part 5 Subpart F (24 CFR section 5.601 et seq.) (24 CFR sections 982.201, 982.515, and 982.516). Condition – During our review of tenant files, one tenant’s verified income was incorrectly calculated and entered into the rent determination worksheet, resulting in the tenant’s rent and HAP portion to be miscalculated. The error noted remained undetected after completion of a quality control worksheet, which functions as the Authority’s primary internal review process to ensure an annual certification, at minimum, was performed and appropriate tenant information is documented. Context – We reviewed a sample of 13 of the Authority's 125 tenant files for compliance with program eligibility requirements. Effect – Tenants may not be provided the proper housing assistance in accordance with their income and eligibility factors. Cause – Lack of controls and oversight during the year. Repeat Finding – This is not a repeat finding. Recommendation – We recommend the Authority follow its policy and ensure its staff members are properly trained on calculating and applying the proper assistance to tenants receiving vouchers. We also emphasize performing a quality review over its tenant files to ensure all income and eligibility factors are properly determined. Views of Responsible Officials and Planned Corrective Actions – The Authority recognizes the detection failure and will determine the best steps to implement in order to create a more robust and effective review process.

Significant Deficiency 2023-004 Special Tests and Provisions: Rent Reasonableness Federal Program – U.S. Department of Housing and Urban Development AL #14.871 Grant Award No. – MN107-Housing Choice Voucher Federal Award Year – 2023 Criteria or Specific Requirement – The Authority must maintain records to document the basis for the determination that rent to owner is a reasonable rent (initially and during the term of the HAP contract) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). Condition – We tested compliance with the Authority’s rent reasonableness forms in 13 tenant files and found that one tenant did not have a rent reasonableness form for an increase in rent. The rent was deemed reasonable by the Authority once noted by the auditors. The error noted remained undetected after completion of a quality control worksheet, which functions as the Authority’s primary internal review process to ensure an annual certification, at minimum, was performed and appropriate tenant information is documented. Questioned Costs – None. Context – We reviewed a sample of 13 of the Authority's 125 tenant files for rent reasonableness requirements. Effect – Housing assistance payments could have been paid to a tenant where rent was not considered reasonable. Cause – Upon change in rent during the term of HAP contracts, the tenant file did not contain documentation comparing the rent of like-kind units. Repeat Finding – This is not a repeat finding. Recommendation – We recommend the Authority conduct a second part review of the file to ensure all appropriate documents are included. Views of Responsible Officials and Planned Corrective Actions – The Authority will have a checklist on annual certifications to ensure all appropriate documents are included in each tenant file.

Significant Deficiency 2023-003 Eligibility Federal Program – U.S. Department of Housing and Urban Development AL #14.871 Grant Award No. – MN107-Housing Choice Voucher Federal Award Year – 2023 Criteria or Specific Requirement – The Authority must determine income eligibility and calculate the tenant’s rent payment and housing assistance payment using the documentation from third party verification in accordance with 24 CFR Part 5 Subpart F (24 CFR section 5.601 et seq.) (24 CFR sections 982.201, 982.515, and 982.516). Condition – During our review of tenant files, one tenant’s verified income was incorrectly calculated and entered into the rent determination worksheet, resulting in the tenant’s rent and HAP portion to be miscalculated. The error noted remained undetected after completion of a quality control worksheet, which functions as the Authority’s primary internal review process to ensure an annual certification, at minimum, was performed and appropriate tenant information is documented. Context – We reviewed a sample of 13 of the Authority's 125 tenant files for compliance with program eligibility requirements. Effect – Tenants may not be provided the proper housing assistance in accordance with their income and eligibility factors. Cause – Lack of controls and oversight during the year. Repeat Finding – This is not a repeat finding. Recommendation – We recommend the Authority follow its policy and ensure its staff members are properly trained on calculating and applying the proper assistance to tenants receiving vouchers. We also emphasize performing a quality review over its tenant files to ensure all income and eligibility factors are properly determined. Views of Responsible Officials and Planned Corrective Actions – The Authority recognizes the detection failure and will determine the best steps to implement in order to create a more robust and effective review process.

Significant Deficiency 2023-004 Special Tests and Provisions: Rent Reasonableness Federal Program – U.S. Department of Housing and Urban Development AL #14.871 Grant Award No. – MN107-Housing Choice Voucher Federal Award Year – 2023 Criteria or Specific Requirement – The Authority must maintain records to document the basis for the determination that rent to owner is a reasonable rent (initially and during the term of the HAP contract) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). Condition – We tested compliance with the Authority’s rent reasonableness forms in 13 tenant files and found that one tenant did not have a rent reasonableness form for an increase in rent. The rent was deemed reasonable by the Authority once noted by the auditors. The error noted remained undetected after completion of a quality control worksheet, which functions as the Authority’s primary internal review process to ensure an annual certification, at minimum, was performed and appropriate tenant information is documented. Questioned Costs – None. Context – We reviewed a sample of 13 of the Authority's 125 tenant files for rent reasonableness requirements. Effect – Housing assistance payments could have been paid to a tenant where rent was not considered reasonable. Cause – Upon change in rent during the term of HAP contracts, the tenant file did not contain documentation comparing the rent of like-kind units. Repeat Finding – This is not a repeat finding. Recommendation – We recommend the Authority conduct a second part review of the file to ensure all appropriate documents are included. Views of Responsible Officials and Planned Corrective Actions – The Authority will have a checklist on annual certifications to ensure all appropriate documents are included in each tenant file.