SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Housing Authority of Asotin County
January 1, 2023 through December 31, 2023
2023-001 The Housing Authority had inadequate internal controls for ensuring compliance with Housing Quality Standards enforcement requirements of its Housing Voucher Cluster program.
Assistance Listing Number and Title: 14.871 – Section 8 Housing Choice Vouchers
Federal Grantor Name: U.S. Department of Housing and Urban Development
Federal Award/Contract Number: WA017AFR123
Pass-through Entity Name: N/A
Pass-through Award/Contract Number: N/A
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Description of Condition
The Housing Authority received $1,541,725 in 2023 under the Housing Voucher Cluster program, which includes the Section 8 Housing Choice Vouchers program (HCVP). The HCVP provides rental assistance to help low-income families afford decent, safe and sanitary rental housing through Housing Authority Payment (HAP) contracts.
Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls.
The Housing Authority must inspect units leased to families at least every two years to determine if they meet federal Housing Quality Standards (HQS) requirements. For units under HAP contracts that fail to meet HQS requirements, the Housing Authority must require owners to correct any cited life-threatening HQS deficiencies within 24 hours of notification of the failed inspection. Owners must correct cited non-life-threatening HQS deficiencies within 30 calendar days of notification or within a specified Housing Authority-approved extension. If owners do not correct cited deficiencies within the specified correction period, the Housing Authority must stop assistance payments by the first of the month after the correction period ends or must terminate the HAP contract. The Housing Authority must keep documentation demonstrating compliance with HQS enforcement requirements.
Our audit found the Housing Authority’s internal controls were ineffective for ensuring compliance with the program’s HQS enforcement requirements. Although the Housing Authority had internal controls for requiring owners to correct HQS deficiencies within 30 calendar days of notification of failed inspections, it did not establish effective controls for requiring owners to correct cited life-threatening HQS deficiencies within 24 hours of notification, as the program requires.
We consider this internal control deficiency to be a material weakness that led to material noncompliance.
Cause of Condition
Although the Housing Authority provides housing inspection training to staff, those responsible for conducting the HQS inspections did not understand and follow established policies and procedures for identifying certain inspection failures as life-threatening and ensuring owners corrected them within 24 hours of notification. Additionally, during monitoring of the program, Housing Authority staff did not identify that inspectors did not separately cite life-threatening deficiencies and follow up with owners as required to ensure owners corrected deficiencies within the correction period.
Effect of Condition
Using statistical sampling, we tested eight failed inspections and found seven with HQS deficiencies defined as life-threatening in the Housing Authority’s policy. The Housing Authority did not have documentation demonstrating it followed up and required the owners to correct the deficiencies within 24 hours of notification. Additionally, it did not comply with the requirement to terminate the HAP contract or stop the HAP for five owners who did not correct deficiencies within the correction period. The Housing Authority reinspected the units within 30 days to verify whether the owners corrected the deficiencies and stopped the HAP for two owners.
We expanded testing and found that 55 out of 72 failed inspections in 2023 had life-threatening deficiencies that the Housing Authority did not follow up on and require the owners to correct within 24 hours of notification as required. Because the Housing Authority did not follow up on HQS deficiencies within the required correction period, it cannot demonstrate that the housing units met HQS requirements.
Recommendation
We recommend the Housing Authority strengthen internal controls for ensuring it follows the established policy and complies with HQS enforcement requirements. Specifically, the Housing Authority should follow up on cited life-threatening HQS deficiencies and require owners to correct them within 24 hours of notification, as HCVP requires.
Housing Authority’s Response
The Housing Authority does concur with the State Auditor’s Office finding that the Housing Quality Standards (HQS) requirements are to follow up with the landlord if any life-threatening deficiencies are identified during an inspection. The requirement states that “If a deficiency is life-threatening, the owner (landlord) must correct the deficiency within 24 hours of notification” (24 CFR 982.404(a)(3)).
The Housing Authority’s corrective action plan moving forward includes the following:
• Reviewing HQS/NSPIRE standards with current staff assigned to performing and processing Section 8 inspections during a monthly meeting
• Implement internal controls that ensure all life-threatening deficiencies are identified and all required notifications are made
• Review all parts of the Code of Federal Regulations (CFR) and PIH notices distributed by HUD monthly that pertain to HQS/NSPIRE inspection standards
• All pertinent staff will take the next NSPIRE Inspection Standards training (all inspectors and Section 8 Occupancy Specialist)
• Updating our process to include the use of a new inspection checklist that separately identifies life-threatening deficiencies, as well as using a new form to document attempts to contact the landlord and the date the deficiency is resolved
The Housing Authority acknowledges that we lacked the appropriate internal controls to identify and notify the landlords of any life-threatening deficiencies that must be corrected within 24 hours. With this corrective action plan in place as of September 9, 2024, the Housing Authority feels that we are on track to comply with the requirements set forth by HUD and any relevant CFRs.
Auditor’s Remarks
We appreciate the Housing Authority’s commitment to resolve this finding and thank the Housing Authority for its cooperation and assistance during the audit. We will review corrective action taken during the next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 24 CFR Part 982, Section 8 Tenant-Based Assistance: Housing Choice Voucher Program, section 404, Maintenance: Owner and family responsibility; PHA remedies, establishes enforcement requirements for housing quality standards.
SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Housing Authority of Asotin County
January 1, 2023 through December 31, 2023
2023-001 The Housing Authority had inadequate internal controls for ensuring compliance with Housing Quality Standards enforcement requirements of its Housing Voucher Cluster program.
Assistance Listing Number and Title: 14.871 – Section 8 Housing Choice Vouchers
Federal Grantor Name: U.S. Department of Housing and Urban Development
Federal Award/Contract Number: WA017AFR123
Pass-through Entity Name: N/A
Pass-through Award/Contract Number: N/A
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Description of Condition
The Housing Authority received $1,541,725 in 2023 under the Housing Voucher Cluster program, which includes the Section 8 Housing Choice Vouchers program (HCVP). The HCVP provides rental assistance to help low-income families afford decent, safe and sanitary rental housing through Housing Authority Payment (HAP) contracts.
Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls.
The Housing Authority must inspect units leased to families at least every two years to determine if they meet federal Housing Quality Standards (HQS) requirements. For units under HAP contracts that fail to meet HQS requirements, the Housing Authority must require owners to correct any cited life-threatening HQS deficiencies within 24 hours of notification of the failed inspection. Owners must correct cited non-life-threatening HQS deficiencies within 30 calendar days of notification or within a specified Housing Authority-approved extension. If owners do not correct cited deficiencies within the specified correction period, the Housing Authority must stop assistance payments by the first of the month after the correction period ends or must terminate the HAP contract. The Housing Authority must keep documentation demonstrating compliance with HQS enforcement requirements.
Our audit found the Housing Authority’s internal controls were ineffective for ensuring compliance with the program’s HQS enforcement requirements. Although the Housing Authority had internal controls for requiring owners to correct HQS deficiencies within 30 calendar days of notification of failed inspections, it did not establish effective controls for requiring owners to correct cited life-threatening HQS deficiencies within 24 hours of notification, as the program requires.
We consider this internal control deficiency to be a material weakness that led to material noncompliance.
Cause of Condition
Although the Housing Authority provides housing inspection training to staff, those responsible for conducting the HQS inspections did not understand and follow established policies and procedures for identifying certain inspection failures as life-threatening and ensuring owners corrected them within 24 hours of notification. Additionally, during monitoring of the program, Housing Authority staff did not identify that inspectors did not separately cite life-threatening deficiencies and follow up with owners as required to ensure owners corrected deficiencies within the correction period.
Effect of Condition
Using statistical sampling, we tested eight failed inspections and found seven with HQS deficiencies defined as life-threatening in the Housing Authority’s policy. The Housing Authority did not have documentation demonstrating it followed up and required the owners to correct the deficiencies within 24 hours of notification. Additionally, it did not comply with the requirement to terminate the HAP contract or stop the HAP for five owners who did not correct deficiencies within the correction period. The Housing Authority reinspected the units within 30 days to verify whether the owners corrected the deficiencies and stopped the HAP for two owners.
We expanded testing and found that 55 out of 72 failed inspections in 2023 had life-threatening deficiencies that the Housing Authority did not follow up on and require the owners to correct within 24 hours of notification as required. Because the Housing Authority did not follow up on HQS deficiencies within the required correction period, it cannot demonstrate that the housing units met HQS requirements.
Recommendation
We recommend the Housing Authority strengthen internal controls for ensuring it follows the established policy and complies with HQS enforcement requirements. Specifically, the Housing Authority should follow up on cited life-threatening HQS deficiencies and require owners to correct them within 24 hours of notification, as HCVP requires.
Housing Authority’s Response
The Housing Authority does concur with the State Auditor’s Office finding that the Housing Quality Standards (HQS) requirements are to follow up with the landlord if any life-threatening deficiencies are identified during an inspection. The requirement states that “If a deficiency is life-threatening, the owner (landlord) must correct the deficiency within 24 hours of notification” (24 CFR 982.404(a)(3)).
The Housing Authority’s corrective action plan moving forward includes the following:
• Reviewing HQS/NSPIRE standards with current staff assigned to performing and processing Section 8 inspections during a monthly meeting
• Implement internal controls that ensure all life-threatening deficiencies are identified and all required notifications are made
• Review all parts of the Code of Federal Regulations (CFR) and PIH notices distributed by HUD monthly that pertain to HQS/NSPIRE inspection standards
• All pertinent staff will take the next NSPIRE Inspection Standards training (all inspectors and Section 8 Occupancy Specialist)
• Updating our process to include the use of a new inspection checklist that separately identifies life-threatening deficiencies, as well as using a new form to document attempts to contact the landlord and the date the deficiency is resolved
The Housing Authority acknowledges that we lacked the appropriate internal controls to identify and notify the landlords of any life-threatening deficiencies that must be corrected within 24 hours. With this corrective action plan in place as of September 9, 2024, the Housing Authority feels that we are on track to comply with the requirements set forth by HUD and any relevant CFRs.
Auditor’s Remarks
We appreciate the Housing Authority’s commitment to resolve this finding and thank the Housing Authority for its cooperation and assistance during the audit. We will review corrective action taken during the next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 24 CFR Part 982, Section 8 Tenant-Based Assistance: Housing Choice Voucher Program, section 404, Maintenance: Owner and family responsibility; PHA remedies, establishes enforcement requirements for housing quality standards.