Finding: 2023-001
Program Name: Moving to Work (ALN #14.881)
Federal Awarding Agency: Department of Housing and Urban Development
Compliance Requirement: Eligibility
Type of Finding: Material Weakness; Material Noncompliance Qualification
Criteria: Per 24 CFR section 982.516, the Authority must reexamine family income and composition at least once every two years and adjust the tenant rent and housing assistance payment as necessary using the documentation from third party verification.
Condition: Of the 25 Housing Choice Voucher tenant files tested, the annual recertification was not completed for five tenant files and the information from the prior year 50058 was rolled forward without verification of current income. For two additional tenant files, the 50058 was rolled forward without updating as required; however, the income was later recertified.
Cause: During fiscal year 2023, the Authority had employee turnover resulting in a backlog of recertifications. Because payments to landlords on the annual HAP contracts were set to expire, the Authority rolled forward the tenant’s prior year form HUD-50058 Family Report without updating family income and composition.
Effect: The Authority was not in compliance with the eligibility compliance requirements for the year ended June 30, 2023. Failure to perform income recertifications could result in improper housing assistance payments.
Auditor Recommendation: We recommend the Authority perform a review of all tenant files to ensure income has been appropriately recertified and housing assistance payments are accurate.
Questioned Costs: Undeterminable.
Management’s Response: LMHA has implemented a comprehensive plan to resolve the backlog of recertifications that necessitated the roll forward of tenant’s prior year form HUD-50058 family report without updating family income and composition. First and foremost, representing the rolling forward of the tenant’s HUD-50058 as a biennial recertification has been discontinued. Compliance staff has implemented training of Housing Specialists and other staff to assure biennial recertification and use of HUD-50058 Type 2 (“Annual Recertification”) will now be compliant. LMHA has contracted with a vendor to assist with the recertification process. LMHA has also restructured workflows to provide efficiencies and accountability that will promote compliance. LMHA is also working with various HUD departments and personnel to assess noncompliance and how to move forward. In addition to resolving these issues with HUD, LMHA has engaged its Financial Auditor, Cherry Bekaert, to review the Housing Choice Voucher Program for process, compliance, and internal control.
Finding: 2023-002
Program Name: Moving to Work (ALN #14.881)
Federal Awarding Agency: Department of Housing and Urban Development
Compliance Requirement: Special Tests and Provisions
Type of Finding: Material Weakness; Material Noncompliance Qualification
Criteria: Per 24 CFR section 990.280(d), the Authority may only charge centralized maintenance services to Public Housing projects on a fee-for-service approach. Each project must be charged for the actual services received and only to the extent that such amounts are reasonable.
Condition: During our testing of the reasonableness of centralized maintenance costs charged by the COCC, we noted work orders in which excessive hours were charged to public housing including multiple instances of more than 15 hours per day per employee charged as maintenance time.
Cause: Work orders prepared by maintenance staff were not reviewed for reasonableness.
Effect: The Authority was not in compliance with the special tests regarding fees charged for centralized services for the year ended June 30, 2023. After management’s review of all instances of excessive maintenance hours, management reduced fees charged by the COCC to the public housing program by $1.2 million.
Auditor Recommendation: We recommend supervisors review all time charged by maintenance staff on a routine basis. We would also recommend an additional review by the finance department to ensure hours are reasonable prior to posting charges to the Public Housing projects.
Questioned Costs: All costs were corrected and fees were reversed.
Management’s Response: To verify that the hours charged by maintenance staff are reasonable, Central Maintenance supervisors/coordinators will verify the accuracy of the hours recorded to work orders completed. Questionable hours will be reviewed and corrected when appropriate. The report will then be submitted to Financeto be charged to Public Housing development. The Finance Department will perform an additional review for reasonableness prior to posting.
Finding: 2023-003
Program Name: Moving to Work (ALN #14.881)
Federal Awarding Agency: Department of Housing and Urban Development
Compliance Requirement: Special Tests and Provisions
Type of Finding: Material Weakness; Material Noncompliance Qualification
Criteria: The Authority is required to aggregate cost and consumption data from utility invoices for each Operating Fund project. This aggregated data is transferred to form HUD-52722 Calculation of Utilities Expense Level and used to determine the utility portion of the Operating Fund subsidy.
Condition: We selected three projects to test the accuracy of Form HUD-52722 and verify utility invoices supporting utility costs and consumption. The Authority was unable to provide invoices supporting utility consumption and cost for two projects. In addition, water costs were overstated for one project resulting in overstatement of the UEL by $34,200.
Cause: The Authority does not have controls in place to ensure supporting documents are maintained to support all HUD-52722 forms.
Effect: The amounts reported on Form 52722 could not be verified resulting in a potential error in the operating subsidy.
Auditor Recommendation: The Authority should maintain files with all supporting documentation for each HUD-52722.
Questioned Costs: Undeterminable.
Management’s Response: To ensure supporting documents are maintained to support all HUD-52722 forms, all privately managed Mixed-Finance developments will submit utility cost and consumption data to include copies of invoices to LMHA monthly. Utility cost and consumption data to include copies of invoices are already collected by LMHA managed sites.
Finding: 2023-001
Program Name: Moving to Work (ALN #14.881)
Federal Awarding Agency: Department of Housing and Urban Development
Compliance Requirement: Eligibility
Type of Finding: Material Weakness; Material Noncompliance Qualification
Criteria: Per 24 CFR section 982.516, the Authority must reexamine family income and composition at least once every two years and adjust the tenant rent and housing assistance payment as necessary using the documentation from third party verification.
Condition: Of the 25 Housing Choice Voucher tenant files tested, the annual recertification was not completed for five tenant files and the information from the prior year 50058 was rolled forward without verification of current income. For two additional tenant files, the 50058 was rolled forward without updating as required; however, the income was later recertified.
Cause: During fiscal year 2023, the Authority had employee turnover resulting in a backlog of recertifications. Because payments to landlords on the annual HAP contracts were set to expire, the Authority rolled forward the tenant’s prior year form HUD-50058 Family Report without updating family income and composition.
Effect: The Authority was not in compliance with the eligibility compliance requirements for the year ended June 30, 2023. Failure to perform income recertifications could result in improper housing assistance payments.
Auditor Recommendation: We recommend the Authority perform a review of all tenant files to ensure income has been appropriately recertified and housing assistance payments are accurate.
Questioned Costs: Undeterminable.
Management’s Response: LMHA has implemented a comprehensive plan to resolve the backlog of recertifications that necessitated the roll forward of tenant’s prior year form HUD-50058 family report without updating family income and composition. First and foremost, representing the rolling forward of the tenant’s HUD-50058 as a biennial recertification has been discontinued. Compliance staff has implemented training of Housing Specialists and other staff to assure biennial recertification and use of HUD-50058 Type 2 (“Annual Recertification”) will now be compliant. LMHA has contracted with a vendor to assist with the recertification process. LMHA has also restructured workflows to provide efficiencies and accountability that will promote compliance. LMHA is also working with various HUD departments and personnel to assess noncompliance and how to move forward. In addition to resolving these issues with HUD, LMHA has engaged its Financial Auditor, Cherry Bekaert, to review the Housing Choice Voucher Program for process, compliance, and internal control.
Finding: 2023-002
Program Name: Moving to Work (ALN #14.881)
Federal Awarding Agency: Department of Housing and Urban Development
Compliance Requirement: Special Tests and Provisions
Type of Finding: Material Weakness; Material Noncompliance Qualification
Criteria: Per 24 CFR section 990.280(d), the Authority may only charge centralized maintenance services to Public Housing projects on a fee-for-service approach. Each project must be charged for the actual services received and only to the extent that such amounts are reasonable.
Condition: During our testing of the reasonableness of centralized maintenance costs charged by the COCC, we noted work orders in which excessive hours were charged to public housing including multiple instances of more than 15 hours per day per employee charged as maintenance time.
Cause: Work orders prepared by maintenance staff were not reviewed for reasonableness.
Effect: The Authority was not in compliance with the special tests regarding fees charged for centralized services for the year ended June 30, 2023. After management’s review of all instances of excessive maintenance hours, management reduced fees charged by the COCC to the public housing program by $1.2 million.
Auditor Recommendation: We recommend supervisors review all time charged by maintenance staff on a routine basis. We would also recommend an additional review by the finance department to ensure hours are reasonable prior to posting charges to the Public Housing projects.
Questioned Costs: All costs were corrected and fees were reversed.
Management’s Response: To verify that the hours charged by maintenance staff are reasonable, Central Maintenance supervisors/coordinators will verify the accuracy of the hours recorded to work orders completed. Questionable hours will be reviewed and corrected when appropriate. The report will then be submitted to Financeto be charged to Public Housing development. The Finance Department will perform an additional review for reasonableness prior to posting.
Finding: 2023-003
Program Name: Moving to Work (ALN #14.881)
Federal Awarding Agency: Department of Housing and Urban Development
Compliance Requirement: Special Tests and Provisions
Type of Finding: Material Weakness; Material Noncompliance Qualification
Criteria: The Authority is required to aggregate cost and consumption data from utility invoices for each Operating Fund project. This aggregated data is transferred to form HUD-52722 Calculation of Utilities Expense Level and used to determine the utility portion of the Operating Fund subsidy.
Condition: We selected three projects to test the accuracy of Form HUD-52722 and verify utility invoices supporting utility costs and consumption. The Authority was unable to provide invoices supporting utility consumption and cost for two projects. In addition, water costs were overstated for one project resulting in overstatement of the UEL by $34,200.
Cause: The Authority does not have controls in place to ensure supporting documents are maintained to support all HUD-52722 forms.
Effect: The amounts reported on Form 52722 could not be verified resulting in a potential error in the operating subsidy.
Auditor Recommendation: The Authority should maintain files with all supporting documentation for each HUD-52722.
Questioned Costs: Undeterminable.
Management’s Response: To ensure supporting documents are maintained to support all HUD-52722 forms, all privately managed Mixed-Finance developments will submit utility cost and consumption data to include copies of invoices to LMHA monthly. Utility cost and consumption data to include copies of invoices are already collected by LMHA managed sites.
Finding: 2023-001
Program Name: Moving to Work (ALN #14.881)
Federal Awarding Agency: Department of Housing and Urban Development
Compliance Requirement: Eligibility
Type of Finding: Material Weakness; Material Noncompliance Qualification
Criteria: Per 24 CFR section 982.516, the Authority must reexamine family income and composition at least once every two years and adjust the tenant rent and housing assistance payment as necessary using the documentation from third party verification.
Condition: Of the 25 Housing Choice Voucher tenant files tested, the annual recertification was not completed for five tenant files and the information from the prior year 50058 was rolled forward without verification of current income. For two additional tenant files, the 50058 was rolled forward without updating as required; however, the income was later recertified.
Cause: During fiscal year 2023, the Authority had employee turnover resulting in a backlog of recertifications. Because payments to landlords on the annual HAP contracts were set to expire, the Authority rolled forward the tenant’s prior year form HUD-50058 Family Report without updating family income and composition.
Effect: The Authority was not in compliance with the eligibility compliance requirements for the year ended June 30, 2023. Failure to perform income recertifications could result in improper housing assistance payments.
Auditor Recommendation: We recommend the Authority perform a review of all tenant files to ensure income has been appropriately recertified and housing assistance payments are accurate.
Questioned Costs: Undeterminable.
Management’s Response: LMHA has implemented a comprehensive plan to resolve the backlog of recertifications that necessitated the roll forward of tenant’s prior year form HUD-50058 family report without updating family income and composition. First and foremost, representing the rolling forward of the tenant’s HUD-50058 as a biennial recertification has been discontinued. Compliance staff has implemented training of Housing Specialists and other staff to assure biennial recertification and use of HUD-50058 Type 2 (“Annual Recertification”) will now be compliant. LMHA has contracted with a vendor to assist with the recertification process. LMHA has also restructured workflows to provide efficiencies and accountability that will promote compliance. LMHA is also working with various HUD departments and personnel to assess noncompliance and how to move forward. In addition to resolving these issues with HUD, LMHA has engaged its Financial Auditor, Cherry Bekaert, to review the Housing Choice Voucher Program for process, compliance, and internal control.
Finding: 2023-002
Program Name: Moving to Work (ALN #14.881)
Federal Awarding Agency: Department of Housing and Urban Development
Compliance Requirement: Special Tests and Provisions
Type of Finding: Material Weakness; Material Noncompliance Qualification
Criteria: Per 24 CFR section 990.280(d), the Authority may only charge centralized maintenance services to Public Housing projects on a fee-for-service approach. Each project must be charged for the actual services received and only to the extent that such amounts are reasonable.
Condition: During our testing of the reasonableness of centralized maintenance costs charged by the COCC, we noted work orders in which excessive hours were charged to public housing including multiple instances of more than 15 hours per day per employee charged as maintenance time.
Cause: Work orders prepared by maintenance staff were not reviewed for reasonableness.
Effect: The Authority was not in compliance with the special tests regarding fees charged for centralized services for the year ended June 30, 2023. After management’s review of all instances of excessive maintenance hours, management reduced fees charged by the COCC to the public housing program by $1.2 million.
Auditor Recommendation: We recommend supervisors review all time charged by maintenance staff on a routine basis. We would also recommend an additional review by the finance department to ensure hours are reasonable prior to posting charges to the Public Housing projects.
Questioned Costs: All costs were corrected and fees were reversed.
Management’s Response: To verify that the hours charged by maintenance staff are reasonable, Central Maintenance supervisors/coordinators will verify the accuracy of the hours recorded to work orders completed. Questionable hours will be reviewed and corrected when appropriate. The report will then be submitted to Financeto be charged to Public Housing development. The Finance Department will perform an additional review for reasonableness prior to posting.
Finding: 2023-003
Program Name: Moving to Work (ALN #14.881)
Federal Awarding Agency: Department of Housing and Urban Development
Compliance Requirement: Special Tests and Provisions
Type of Finding: Material Weakness; Material Noncompliance Qualification
Criteria: The Authority is required to aggregate cost and consumption data from utility invoices for each Operating Fund project. This aggregated data is transferred to form HUD-52722 Calculation of Utilities Expense Level and used to determine the utility portion of the Operating Fund subsidy.
Condition: We selected three projects to test the accuracy of Form HUD-52722 and verify utility invoices supporting utility costs and consumption. The Authority was unable to provide invoices supporting utility consumption and cost for two projects. In addition, water costs were overstated for one project resulting in overstatement of the UEL by $34,200.
Cause: The Authority does not have controls in place to ensure supporting documents are maintained to support all HUD-52722 forms.
Effect: The amounts reported on Form 52722 could not be verified resulting in a potential error in the operating subsidy.
Auditor Recommendation: The Authority should maintain files with all supporting documentation for each HUD-52722.
Questioned Costs: Undeterminable.
Management’s Response: To ensure supporting documents are maintained to support all HUD-52722 forms, all privately managed Mixed-Finance developments will submit utility cost and consumption data to include copies of invoices to LMHA monthly. Utility cost and consumption data to include copies of invoices are already collected by LMHA managed sites.
Finding: 2023-001
Program Name: Moving to Work (ALN #14.881)
Federal Awarding Agency: Department of Housing and Urban Development
Compliance Requirement: Eligibility
Type of Finding: Material Weakness; Material Noncompliance Qualification
Criteria: Per 24 CFR section 982.516, the Authority must reexamine family income and composition at least once every two years and adjust the tenant rent and housing assistance payment as necessary using the documentation from third party verification.
Condition: Of the 25 Housing Choice Voucher tenant files tested, the annual recertification was not completed for five tenant files and the information from the prior year 50058 was rolled forward without verification of current income. For two additional tenant files, the 50058 was rolled forward without updating as required; however, the income was later recertified.
Cause: During fiscal year 2023, the Authority had employee turnover resulting in a backlog of recertifications. Because payments to landlords on the annual HAP contracts were set to expire, the Authority rolled forward the tenant’s prior year form HUD-50058 Family Report without updating family income and composition.
Effect: The Authority was not in compliance with the eligibility compliance requirements for the year ended June 30, 2023. Failure to perform income recertifications could result in improper housing assistance payments.
Auditor Recommendation: We recommend the Authority perform a review of all tenant files to ensure income has been appropriately recertified and housing assistance payments are accurate.
Questioned Costs: Undeterminable.
Management’s Response: LMHA has implemented a comprehensive plan to resolve the backlog of recertifications that necessitated the roll forward of tenant’s prior year form HUD-50058 family report without updating family income and composition. First and foremost, representing the rolling forward of the tenant’s HUD-50058 as a biennial recertification has been discontinued. Compliance staff has implemented training of Housing Specialists and other staff to assure biennial recertification and use of HUD-50058 Type 2 (“Annual Recertification”) will now be compliant. LMHA has contracted with a vendor to assist with the recertification process. LMHA has also restructured workflows to provide efficiencies and accountability that will promote compliance. LMHA is also working with various HUD departments and personnel to assess noncompliance and how to move forward. In addition to resolving these issues with HUD, LMHA has engaged its Financial Auditor, Cherry Bekaert, to review the Housing Choice Voucher Program for process, compliance, and internal control.
Finding: 2023-002
Program Name: Moving to Work (ALN #14.881)
Federal Awarding Agency: Department of Housing and Urban Development
Compliance Requirement: Special Tests and Provisions
Type of Finding: Material Weakness; Material Noncompliance Qualification
Criteria: Per 24 CFR section 990.280(d), the Authority may only charge centralized maintenance services to Public Housing projects on a fee-for-service approach. Each project must be charged for the actual services received and only to the extent that such amounts are reasonable.
Condition: During our testing of the reasonableness of centralized maintenance costs charged by the COCC, we noted work orders in which excessive hours were charged to public housing including multiple instances of more than 15 hours per day per employee charged as maintenance time.
Cause: Work orders prepared by maintenance staff were not reviewed for reasonableness.
Effect: The Authority was not in compliance with the special tests regarding fees charged for centralized services for the year ended June 30, 2023. After management’s review of all instances of excessive maintenance hours, management reduced fees charged by the COCC to the public housing program by $1.2 million.
Auditor Recommendation: We recommend supervisors review all time charged by maintenance staff on a routine basis. We would also recommend an additional review by the finance department to ensure hours are reasonable prior to posting charges to the Public Housing projects.
Questioned Costs: All costs were corrected and fees were reversed.
Management’s Response: To verify that the hours charged by maintenance staff are reasonable, Central Maintenance supervisors/coordinators will verify the accuracy of the hours recorded to work orders completed. Questionable hours will be reviewed and corrected when appropriate. The report will then be submitted to Financeto be charged to Public Housing development. The Finance Department will perform an additional review for reasonableness prior to posting.
Finding: 2023-003
Program Name: Moving to Work (ALN #14.881)
Federal Awarding Agency: Department of Housing and Urban Development
Compliance Requirement: Special Tests and Provisions
Type of Finding: Material Weakness; Material Noncompliance Qualification
Criteria: The Authority is required to aggregate cost and consumption data from utility invoices for each Operating Fund project. This aggregated data is transferred to form HUD-52722 Calculation of Utilities Expense Level and used to determine the utility portion of the Operating Fund subsidy.
Condition: We selected three projects to test the accuracy of Form HUD-52722 and verify utility invoices supporting utility costs and consumption. The Authority was unable to provide invoices supporting utility consumption and cost for two projects. In addition, water costs were overstated for one project resulting in overstatement of the UEL by $34,200.
Cause: The Authority does not have controls in place to ensure supporting documents are maintained to support all HUD-52722 forms.
Effect: The amounts reported on Form 52722 could not be verified resulting in a potential error in the operating subsidy.
Auditor Recommendation: The Authority should maintain files with all supporting documentation for each HUD-52722.
Questioned Costs: Undeterminable.
Management’s Response: To ensure supporting documents are maintained to support all HUD-52722 forms, all privately managed Mixed-Finance developments will submit utility cost and consumption data to include copies of invoices to LMHA monthly. Utility cost and consumption data to include copies of invoices are already collected by LMHA managed sites.
Finding: 2023-001
Program Name: Moving to Work (ALN #14.881)
Federal Awarding Agency: Department of Housing and Urban Development
Compliance Requirement: Eligibility
Type of Finding: Material Weakness; Material Noncompliance Qualification
Criteria: Per 24 CFR section 982.516, the Authority must reexamine family income and composition at least once every two years and adjust the tenant rent and housing assistance payment as necessary using the documentation from third party verification.
Condition: Of the 25 Housing Choice Voucher tenant files tested, the annual recertification was not completed for five tenant files and the information from the prior year 50058 was rolled forward without verification of current income. For two additional tenant files, the 50058 was rolled forward without updating as required; however, the income was later recertified.
Cause: During fiscal year 2023, the Authority had employee turnover resulting in a backlog of recertifications. Because payments to landlords on the annual HAP contracts were set to expire, the Authority rolled forward the tenant’s prior year form HUD-50058 Family Report without updating family income and composition.
Effect: The Authority was not in compliance with the eligibility compliance requirements for the year ended June 30, 2023. Failure to perform income recertifications could result in improper housing assistance payments.
Auditor Recommendation: We recommend the Authority perform a review of all tenant files to ensure income has been appropriately recertified and housing assistance payments are accurate.
Questioned Costs: Undeterminable.
Management’s Response: LMHA has implemented a comprehensive plan to resolve the backlog of recertifications that necessitated the roll forward of tenant’s prior year form HUD-50058 family report without updating family income and composition. First and foremost, representing the rolling forward of the tenant’s HUD-50058 as a biennial recertification has been discontinued. Compliance staff has implemented training of Housing Specialists and other staff to assure biennial recertification and use of HUD-50058 Type 2 (“Annual Recertification”) will now be compliant. LMHA has contracted with a vendor to assist with the recertification process. LMHA has also restructured workflows to provide efficiencies and accountability that will promote compliance. LMHA is also working with various HUD departments and personnel to assess noncompliance and how to move forward. In addition to resolving these issues with HUD, LMHA has engaged its Financial Auditor, Cherry Bekaert, to review the Housing Choice Voucher Program for process, compliance, and internal control.
Finding: 2023-002
Program Name: Moving to Work (ALN #14.881)
Federal Awarding Agency: Department of Housing and Urban Development
Compliance Requirement: Special Tests and Provisions
Type of Finding: Material Weakness; Material Noncompliance Qualification
Criteria: Per 24 CFR section 990.280(d), the Authority may only charge centralized maintenance services to Public Housing projects on a fee-for-service approach. Each project must be charged for the actual services received and only to the extent that such amounts are reasonable.
Condition: During our testing of the reasonableness of centralized maintenance costs charged by the COCC, we noted work orders in which excessive hours were charged to public housing including multiple instances of more than 15 hours per day per employee charged as maintenance time.
Cause: Work orders prepared by maintenance staff were not reviewed for reasonableness.
Effect: The Authority was not in compliance with the special tests regarding fees charged for centralized services for the year ended June 30, 2023. After management’s review of all instances of excessive maintenance hours, management reduced fees charged by the COCC to the public housing program by $1.2 million.
Auditor Recommendation: We recommend supervisors review all time charged by maintenance staff on a routine basis. We would also recommend an additional review by the finance department to ensure hours are reasonable prior to posting charges to the Public Housing projects.
Questioned Costs: All costs were corrected and fees were reversed.
Management’s Response: To verify that the hours charged by maintenance staff are reasonable, Central Maintenance supervisors/coordinators will verify the accuracy of the hours recorded to work orders completed. Questionable hours will be reviewed and corrected when appropriate. The report will then be submitted to Financeto be charged to Public Housing development. The Finance Department will perform an additional review for reasonableness prior to posting.
Finding: 2023-003
Program Name: Moving to Work (ALN #14.881)
Federal Awarding Agency: Department of Housing and Urban Development
Compliance Requirement: Special Tests and Provisions
Type of Finding: Material Weakness; Material Noncompliance Qualification
Criteria: The Authority is required to aggregate cost and consumption data from utility invoices for each Operating Fund project. This aggregated data is transferred to form HUD-52722 Calculation of Utilities Expense Level and used to determine the utility portion of the Operating Fund subsidy.
Condition: We selected three projects to test the accuracy of Form HUD-52722 and verify utility invoices supporting utility costs and consumption. The Authority was unable to provide invoices supporting utility consumption and cost for two projects. In addition, water costs were overstated for one project resulting in overstatement of the UEL by $34,200.
Cause: The Authority does not have controls in place to ensure supporting documents are maintained to support all HUD-52722 forms.
Effect: The amounts reported on Form 52722 could not be verified resulting in a potential error in the operating subsidy.
Auditor Recommendation: The Authority should maintain files with all supporting documentation for each HUD-52722.
Questioned Costs: Undeterminable.
Management’s Response: To ensure supporting documents are maintained to support all HUD-52722 forms, all privately managed Mixed-Finance developments will submit utility cost and consumption data to include copies of invoices to LMHA monthly. Utility cost and consumption data to include copies of invoices are already collected by LMHA managed sites.
Finding: 2023-001
Program Name: Moving to Work (ALN #14.881)
Federal Awarding Agency: Department of Housing and Urban Development
Compliance Requirement: Eligibility
Type of Finding: Material Weakness; Material Noncompliance Qualification
Criteria: Per 24 CFR section 982.516, the Authority must reexamine family income and composition at least once every two years and adjust the tenant rent and housing assistance payment as necessary using the documentation from third party verification.
Condition: Of the 25 Housing Choice Voucher tenant files tested, the annual recertification was not completed for five tenant files and the information from the prior year 50058 was rolled forward without verification of current income. For two additional tenant files, the 50058 was rolled forward without updating as required; however, the income was later recertified.
Cause: During fiscal year 2023, the Authority had employee turnover resulting in a backlog of recertifications. Because payments to landlords on the annual HAP contracts were set to expire, the Authority rolled forward the tenant’s prior year form HUD-50058 Family Report without updating family income and composition.
Effect: The Authority was not in compliance with the eligibility compliance requirements for the year ended June 30, 2023. Failure to perform income recertifications could result in improper housing assistance payments.
Auditor Recommendation: We recommend the Authority perform a review of all tenant files to ensure income has been appropriately recertified and housing assistance payments are accurate.
Questioned Costs: Undeterminable.
Management’s Response: LMHA has implemented a comprehensive plan to resolve the backlog of recertifications that necessitated the roll forward of tenant’s prior year form HUD-50058 family report without updating family income and composition. First and foremost, representing the rolling forward of the tenant’s HUD-50058 as a biennial recertification has been discontinued. Compliance staff has implemented training of Housing Specialists and other staff to assure biennial recertification and use of HUD-50058 Type 2 (“Annual Recertification”) will now be compliant. LMHA has contracted with a vendor to assist with the recertification process. LMHA has also restructured workflows to provide efficiencies and accountability that will promote compliance. LMHA is also working with various HUD departments and personnel to assess noncompliance and how to move forward. In addition to resolving these issues with HUD, LMHA has engaged its Financial Auditor, Cherry Bekaert, to review the Housing Choice Voucher Program for process, compliance, and internal control.
Finding: 2023-002
Program Name: Moving to Work (ALN #14.881)
Federal Awarding Agency: Department of Housing and Urban Development
Compliance Requirement: Special Tests and Provisions
Type of Finding: Material Weakness; Material Noncompliance Qualification
Criteria: Per 24 CFR section 990.280(d), the Authority may only charge centralized maintenance services to Public Housing projects on a fee-for-service approach. Each project must be charged for the actual services received and only to the extent that such amounts are reasonable.
Condition: During our testing of the reasonableness of centralized maintenance costs charged by the COCC, we noted work orders in which excessive hours were charged to public housing including multiple instances of more than 15 hours per day per employee charged as maintenance time.
Cause: Work orders prepared by maintenance staff were not reviewed for reasonableness.
Effect: The Authority was not in compliance with the special tests regarding fees charged for centralized services for the year ended June 30, 2023. After management’s review of all instances of excessive maintenance hours, management reduced fees charged by the COCC to the public housing program by $1.2 million.
Auditor Recommendation: We recommend supervisors review all time charged by maintenance staff on a routine basis. We would also recommend an additional review by the finance department to ensure hours are reasonable prior to posting charges to the Public Housing projects.
Questioned Costs: All costs were corrected and fees were reversed.
Management’s Response: To verify that the hours charged by maintenance staff are reasonable, Central Maintenance supervisors/coordinators will verify the accuracy of the hours recorded to work orders completed. Questionable hours will be reviewed and corrected when appropriate. The report will then be submitted to Financeto be charged to Public Housing development. The Finance Department will perform an additional review for reasonableness prior to posting.
Finding: 2023-003
Program Name: Moving to Work (ALN #14.881)
Federal Awarding Agency: Department of Housing and Urban Development
Compliance Requirement: Special Tests and Provisions
Type of Finding: Material Weakness; Material Noncompliance Qualification
Criteria: The Authority is required to aggregate cost and consumption data from utility invoices for each Operating Fund project. This aggregated data is transferred to form HUD-52722 Calculation of Utilities Expense Level and used to determine the utility portion of the Operating Fund subsidy.
Condition: We selected three projects to test the accuracy of Form HUD-52722 and verify utility invoices supporting utility costs and consumption. The Authority was unable to provide invoices supporting utility consumption and cost for two projects. In addition, water costs were overstated for one project resulting in overstatement of the UEL by $34,200.
Cause: The Authority does not have controls in place to ensure supporting documents are maintained to support all HUD-52722 forms.
Effect: The amounts reported on Form 52722 could not be verified resulting in a potential error in the operating subsidy.
Auditor Recommendation: The Authority should maintain files with all supporting documentation for each HUD-52722.
Questioned Costs: Undeterminable.
Management’s Response: To ensure supporting documents are maintained to support all HUD-52722 forms, all privately managed Mixed-Finance developments will submit utility cost and consumption data to include copies of invoices to LMHA monthly. Utility cost and consumption data to include copies of invoices are already collected by LMHA managed sites.