Audit 332661

Finding: 2024-001 Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871/879 Federal Awarding Agency: Department of Housing and Urban Development (HUD) State Awarding Agency: Not applicable (Direct Award) Department: City of Virginia Beach Department of Housing and Neighborhood Preservation (DHNP) Compliance Requirement: Eligibility; Special Tests and Provisions – Reasonable Rent; Special Tests and Provisions – NSPIRE/Housing Quality Standards Inspections; Special Tests and Provisions – Housing Assistance Payments (HAP) Prior Year Finding Number: Not applicable Type of Finding: Significant Deficiency, Non-Material Non-Compliance Criteria: Per 24 CFR 982.158, the public housing authority (PHA) must maintain complete and accurate accounts and other records for the program in accordance with HUD requirements, in a manner that permits a speedy and effective audit. The records must be in the form required by HUD, including requirements governing computerized or electronic forms of recordkeeping. Per 24 CFR Section 982.201, income eligibility should be determined using documentation from third party verification. Per 24 CFR Section 982.507, a public housing authority must determine that the rent to the owner is reasonable at the time of the initial leasing, before any increase in the rent to owner, and at the HAP contract anniversary if there is a 10% decrease in the published fair market rent in effect 60 days before the HAP contract anniversary. The PHA must maintain records to document the basis for the determination that the rent to owner is a reasonable rent. Per 24 CFR 982.405, the public housing authority must inspect the unit leased to a family prior to the initial term of the lease to determine if it meets the housing quality standards. Condition: During our testing of 60 tenant files, we noted the following: • Five (5) instances where documentation of third party verification of income was not maintained in the tenant’s file. • One (1) instance where the HAP contract was not maintained in the tenant’s file. • Three (3) instances where documentation of rent reasonableness was not maintained in the tenant’s file. • One (1) instance where there was no documentation that an inspection occurred prior to the tenant moving into their unit. Cause: There was turnover within DHNP resulting in documentation not being properly maintained within the tenant’s eligibility files. In some instances, the documentation was included in an employee’s email who is no longer employed by the City. Effect: DHNP’s files did not contain proper support to fully document compliance with eligibility, reasonable rent, housing quality standards, and housing assistance payments. Recommendation: We recommend that DHNP ensure files are maintained in their entirety and documentation is not separately maintained outside of the file. We also recommend DHNP create a checklist to ensure that all required documentation is properly maintained within the tenant’s eligibility file. Questioned Costs: None View of Responsible Officials and Planned Corrective Actions: DHNP will create a checklist for all staff, to ensure all documents are maintained in the file. DHNP has an effective Quality Control review process that was implemented February 2024. The audit findings were based on files completed in FY23/24. All files go through the Quality Control review process and if errors are found, they must be corrected before payments are approved to be released.

Finding: 2024-001 Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871/879 Federal Awarding Agency: Department of Housing and Urban Development (HUD) State Awarding Agency: Not applicable (Direct Award) Department: City of Virginia Beach Department of Housing and Neighborhood Preservation (DHNP) Compliance Requirement: Eligibility; Special Tests and Provisions – Reasonable Rent; Special Tests and Provisions – NSPIRE/Housing Quality Standards Inspections; Special Tests and Provisions – Housing Assistance Payments (HAP) Prior Year Finding Number: Not applicable Type of Finding: Significant Deficiency, Non-Material Non-Compliance Criteria: Per 24 CFR 982.158, the public housing authority (PHA) must maintain complete and accurate accounts and other records for the program in accordance with HUD requirements, in a manner that permits a speedy and effective audit. The records must be in the form required by HUD, including requirements governing computerized or electronic forms of recordkeeping. Per 24 CFR Section 982.201, income eligibility should be determined using documentation from third party verification. Per 24 CFR Section 982.507, a public housing authority must determine that the rent to the owner is reasonable at the time of the initial leasing, before any increase in the rent to owner, and at the HAP contract anniversary if there is a 10% decrease in the published fair market rent in effect 60 days before the HAP contract anniversary. The PHA must maintain records to document the basis for the determination that the rent to owner is a reasonable rent. Per 24 CFR 982.405, the public housing authority must inspect the unit leased to a family prior to the initial term of the lease to determine if it meets the housing quality standards. Condition: During our testing of 60 tenant files, we noted the following: • Five (5) instances where documentation of third party verification of income was not maintained in the tenant’s file. • One (1) instance where the HAP contract was not maintained in the tenant’s file. • Three (3) instances where documentation of rent reasonableness was not maintained in the tenant’s file. • One (1) instance where there was no documentation that an inspection occurred prior to the tenant moving into their unit. Cause: There was turnover within DHNP resulting in documentation not being properly maintained within the tenant’s eligibility files. In some instances, the documentation was included in an employee’s email who is no longer employed by the City. Effect: DHNP’s files did not contain proper support to fully document compliance with eligibility, reasonable rent, housing quality standards, and housing assistance payments. Recommendation: We recommend that DHNP ensure files are maintained in their entirety and documentation is not separately maintained outside of the file. We also recommend DHNP create a checklist to ensure that all required documentation is properly maintained within the tenant’s eligibility file. Questioned Costs: None View of Responsible Officials and Planned Corrective Actions: DHNP will create a checklist for all staff, to ensure all documents are maintained in the file. DHNP has an effective Quality Control review process that was implemented February 2024. The audit findings were based on files completed in FY23/24. All files go through the Quality Control review process and if errors are found, they must be corrected before payments are approved to be released.

Finding: 2024-001 Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871/879 Federal Awarding Agency: Department of Housing and Urban Development (HUD) State Awarding Agency: Not applicable (Direct Award) Department: City of Virginia Beach Department of Housing and Neighborhood Preservation (DHNP) Compliance Requirement: Eligibility; Special Tests and Provisions – Reasonable Rent; Special Tests and Provisions – NSPIRE/Housing Quality Standards Inspections; Special Tests and Provisions – Housing Assistance Payments (HAP) Prior Year Finding Number: Not applicable Type of Finding: Significant Deficiency, Non-Material Non-Compliance Criteria: Per 24 CFR 982.158, the public housing authority (PHA) must maintain complete and accurate accounts and other records for the program in accordance with HUD requirements, in a manner that permits a speedy and effective audit. The records must be in the form required by HUD, including requirements governing computerized or electronic forms of recordkeeping. Per 24 CFR Section 982.201, income eligibility should be determined using documentation from third party verification. Per 24 CFR Section 982.507, a public housing authority must determine that the rent to the owner is reasonable at the time of the initial leasing, before any increase in the rent to owner, and at the HAP contract anniversary if there is a 10% decrease in the published fair market rent in effect 60 days before the HAP contract anniversary. The PHA must maintain records to document the basis for the determination that the rent to owner is a reasonable rent. Per 24 CFR 982.405, the public housing authority must inspect the unit leased to a family prior to the initial term of the lease to determine if it meets the housing quality standards. Condition: During our testing of 60 tenant files, we noted the following: • Five (5) instances where documentation of third party verification of income was not maintained in the tenant’s file. • One (1) instance where the HAP contract was not maintained in the tenant’s file. • Three (3) instances where documentation of rent reasonableness was not maintained in the tenant’s file. • One (1) instance where there was no documentation that an inspection occurred prior to the tenant moving into their unit. Cause: There was turnover within DHNP resulting in documentation not being properly maintained within the tenant’s eligibility files. In some instances, the documentation was included in an employee’s email who is no longer employed by the City. Effect: DHNP’s files did not contain proper support to fully document compliance with eligibility, reasonable rent, housing quality standards, and housing assistance payments. Recommendation: We recommend that DHNP ensure files are maintained in their entirety and documentation is not separately maintained outside of the file. We also recommend DHNP create a checklist to ensure that all required documentation is properly maintained within the tenant’s eligibility file. Questioned Costs: None View of Responsible Officials and Planned Corrective Actions: DHNP will create a checklist for all staff, to ensure all documents are maintained in the file. DHNP has an effective Quality Control review process that was implemented February 2024. The audit findings were based on files completed in FY23/24. All files go through the Quality Control review process and if errors are found, they must be corrected before payments are approved to be released.

Finding: 2024-001 Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871/879 Federal Awarding Agency: Department of Housing and Urban Development (HUD) State Awarding Agency: Not applicable (Direct Award) Department: City of Virginia Beach Department of Housing and Neighborhood Preservation (DHNP) Compliance Requirement: Eligibility; Special Tests and Provisions – Reasonable Rent; Special Tests and Provisions – NSPIRE/Housing Quality Standards Inspections; Special Tests and Provisions – Housing Assistance Payments (HAP) Prior Year Finding Number: Not applicable Type of Finding: Significant Deficiency, Non-Material Non-Compliance Criteria: Per 24 CFR 982.158, the public housing authority (PHA) must maintain complete and accurate accounts and other records for the program in accordance with HUD requirements, in a manner that permits a speedy and effective audit. The records must be in the form required by HUD, including requirements governing computerized or electronic forms of recordkeeping. Per 24 CFR Section 982.201, income eligibility should be determined using documentation from third party verification. Per 24 CFR Section 982.507, a public housing authority must determine that the rent to the owner is reasonable at the time of the initial leasing, before any increase in the rent to owner, and at the HAP contract anniversary if there is a 10% decrease in the published fair market rent in effect 60 days before the HAP contract anniversary. The PHA must maintain records to document the basis for the determination that the rent to owner is a reasonable rent. Per 24 CFR 982.405, the public housing authority must inspect the unit leased to a family prior to the initial term of the lease to determine if it meets the housing quality standards. Condition: During our testing of 60 tenant files, we noted the following: • Five (5) instances where documentation of third party verification of income was not maintained in the tenant’s file. • One (1) instance where the HAP contract was not maintained in the tenant’s file. • Three (3) instances where documentation of rent reasonableness was not maintained in the tenant’s file. • One (1) instance where there was no documentation that an inspection occurred prior to the tenant moving into their unit. Cause: There was turnover within DHNP resulting in documentation not being properly maintained within the tenant’s eligibility files. In some instances, the documentation was included in an employee’s email who is no longer employed by the City. Effect: DHNP’s files did not contain proper support to fully document compliance with eligibility, reasonable rent, housing quality standards, and housing assistance payments. Recommendation: We recommend that DHNP ensure files are maintained in their entirety and documentation is not separately maintained outside of the file. We also recommend DHNP create a checklist to ensure that all required documentation is properly maintained within the tenant’s eligibility file. Questioned Costs: None View of Responsible Officials and Planned Corrective Actions: DHNP will create a checklist for all staff, to ensure all documents are maintained in the file. DHNP has an effective Quality Control review process that was implemented February 2024. The audit findings were based on files completed in FY23/24. All files go through the Quality Control review process and if errors are found, they must be corrected before payments are approved to be released.

Finding: 2024-001 Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871/879 Federal Awarding Agency: Department of Housing and Urban Development (HUD) State Awarding Agency: Not applicable (Direct Award) Department: City of Virginia Beach Department of Housing and Neighborhood Preservation (DHNP) Compliance Requirement: Eligibility; Special Tests and Provisions – Reasonable Rent; Special Tests and Provisions – NSPIRE/Housing Quality Standards Inspections; Special Tests and Provisions – Housing Assistance Payments (HAP) Prior Year Finding Number: Not applicable Type of Finding: Significant Deficiency, Non-Material Non-Compliance Criteria: Per 24 CFR 982.158, the public housing authority (PHA) must maintain complete and accurate accounts and other records for the program in accordance with HUD requirements, in a manner that permits a speedy and effective audit. The records must be in the form required by HUD, including requirements governing computerized or electronic forms of recordkeeping. Per 24 CFR Section 982.201, income eligibility should be determined using documentation from third party verification. Per 24 CFR Section 982.507, a public housing authority must determine that the rent to the owner is reasonable at the time of the initial leasing, before any increase in the rent to owner, and at the HAP contract anniversary if there is a 10% decrease in the published fair market rent in effect 60 days before the HAP contract anniversary. The PHA must maintain records to document the basis for the determination that the rent to owner is a reasonable rent. Per 24 CFR 982.405, the public housing authority must inspect the unit leased to a family prior to the initial term of the lease to determine if it meets the housing quality standards. Condition: During our testing of 60 tenant files, we noted the following: • Five (5) instances where documentation of third party verification of income was not maintained in the tenant’s file. • One (1) instance where the HAP contract was not maintained in the tenant’s file. • Three (3) instances where documentation of rent reasonableness was not maintained in the tenant’s file. • One (1) instance where there was no documentation that an inspection occurred prior to the tenant moving into their unit. Cause: There was turnover within DHNP resulting in documentation not being properly maintained within the tenant’s eligibility files. In some instances, the documentation was included in an employee’s email who is no longer employed by the City. Effect: DHNP’s files did not contain proper support to fully document compliance with eligibility, reasonable rent, housing quality standards, and housing assistance payments. Recommendation: We recommend that DHNP ensure files are maintained in their entirety and documentation is not separately maintained outside of the file. We also recommend DHNP create a checklist to ensure that all required documentation is properly maintained within the tenant’s eligibility file. Questioned Costs: None View of Responsible Officials and Planned Corrective Actions: DHNP will create a checklist for all staff, to ensure all documents are maintained in the file. DHNP has an effective Quality Control review process that was implemented February 2024. The audit findings were based on files completed in FY23/24. All files go through the Quality Control review process and if errors are found, they must be corrected before payments are approved to be released.

Finding: 2024-001 Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871/879 Federal Awarding Agency: Department of Housing and Urban Development (HUD) State Awarding Agency: Not applicable (Direct Award) Department: City of Virginia Beach Department of Housing and Neighborhood Preservation (DHNP) Compliance Requirement: Eligibility; Special Tests and Provisions – Reasonable Rent; Special Tests and Provisions – NSPIRE/Housing Quality Standards Inspections; Special Tests and Provisions – Housing Assistance Payments (HAP) Prior Year Finding Number: Not applicable Type of Finding: Significant Deficiency, Non-Material Non-Compliance Criteria: Per 24 CFR 982.158, the public housing authority (PHA) must maintain complete and accurate accounts and other records for the program in accordance with HUD requirements, in a manner that permits a speedy and effective audit. The records must be in the form required by HUD, including requirements governing computerized or electronic forms of recordkeeping. Per 24 CFR Section 982.201, income eligibility should be determined using documentation from third party verification. Per 24 CFR Section 982.507, a public housing authority must determine that the rent to the owner is reasonable at the time of the initial leasing, before any increase in the rent to owner, and at the HAP contract anniversary if there is a 10% decrease in the published fair market rent in effect 60 days before the HAP contract anniversary. The PHA must maintain records to document the basis for the determination that the rent to owner is a reasonable rent. Per 24 CFR 982.405, the public housing authority must inspect the unit leased to a family prior to the initial term of the lease to determine if it meets the housing quality standards. Condition: During our testing of 60 tenant files, we noted the following: • Five (5) instances where documentation of third party verification of income was not maintained in the tenant’s file. • One (1) instance where the HAP contract was not maintained in the tenant’s file. • Three (3) instances where documentation of rent reasonableness was not maintained in the tenant’s file. • One (1) instance where there was no documentation that an inspection occurred prior to the tenant moving into their unit. Cause: There was turnover within DHNP resulting in documentation not being properly maintained within the tenant’s eligibility files. In some instances, the documentation was included in an employee’s email who is no longer employed by the City. Effect: DHNP’s files did not contain proper support to fully document compliance with eligibility, reasonable rent, housing quality standards, and housing assistance payments. Recommendation: We recommend that DHNP ensure files are maintained in their entirety and documentation is not separately maintained outside of the file. We also recommend DHNP create a checklist to ensure that all required documentation is properly maintained within the tenant’s eligibility file. Questioned Costs: None View of Responsible Officials and Planned Corrective Actions: DHNP will create a checklist for all staff, to ensure all documents are maintained in the file. DHNP has an effective Quality Control review process that was implemented February 2024. The audit findings were based on files completed in FY23/24. All files go through the Quality Control review process and if errors are found, they must be corrected before payments are approved to be released.