Audit 353380

Finding 2024-001: Known questioned costs related to eligibility Major Program: Housing Choice Voucher Program Federal Agency: U.S. Department of Housing and Urban Development Assistant Listing Number: 14.871 Criteria: The OMB Compliance Supplement for the Housing Choice Voucher Program (HCVP) states that the HCVP regulations are found in 24 CFR parts 5, 982, 983, and 985. 24 CFR 982.306(d) states that “The PHA must not approve a unit if the owner is the parent, child, grandparent, grandchild, sister, or brother of any member of the family, unless the PHA determines that approving the unit would provide reasonable accommodation for a family member who is a person with disabilities. This restriction against PHA approval of a unit only applies at the time a family initially receives tenant-based assistance for occupancy of a particular unit but does not apply to PHA approval of a new tenancy with continued tenant-based assistance in the same unit.” 2 CFR 200.516(a)(3) requires an audit finding to be reported for known questioned costs that are greater than $25,000 for a type of compliance requirement for a major program. Condition: As a result of our audit of the HCVP eligibility compliance requirement, it was noted that one (1) out of forty (40) participants reviewed did not meet the eligibility requirement because the tenant was a relative of the owner of the unit. Homeowner’s may apply for a reasonable accommodation for a family member who is a person with disabilities, however the owner did not request a reasonable accommodation. The owner and tenant were approved in May 2018, and payments began in June 2018. Cause: The City approved a housing choice voucher to a tenant that was ineligible due to being a relative of the owner because the City was unaware of the relationship between the owner and tenant upon approval of the housing choice voucher. The was unaware of the unallowed relationship because the owner and tenant certified that they were not related by signing the HUD-52517 form Request for Tenancy Approval that includes an owner’s certification that the owner is not the parent, child, grandparent, grandchild, sister or brother of any member of the family, unless the PHA has determined (and has notified the owner and the family of such determination) that approving leasing of the unit, notwithstanding such relationship, would provide reasonable accommodation for a family member who is a person with disabilities. Effect or Potential Effect: The City issued payments for a housing choice voucher to an ineligible owner and tenant since June 2018. Known Questioned Costs: $69,019 from June 2018 through September 2024. Current fiscal year known questioned costs were $11,712. The questioned costs are all payments made to the owner on behalf of the tenant mentioned above. Context: The auditor believes that the audit finding is an isolated instance and not a systemic problem. The City has appropriate internal controls, including inquiry of applicants as to whether they are related and obtains signed certifications that the owner and tenant are not related. In addition, the relationship was discovered through procedures that are not required by the Department of Housing and Urban Development. The finding was due to misrepresentations provided by the owner and tenant, and through other audit procedures there were no indications that this was a systematic issue. The sample selected was a valid sample and the City is still in overall compliance with the eligibility requirement for the HCVP major program. Repeat finding: No Recommendation: We recommend the City continue to clearly communicate to housing owners that they cannot rent to relatives, and to implement additional procedures over eligibility compliance on a sample basis going forward with regards to potential ineligible relationships between the owner and tenant. Examples of potential additional procedures include internet searches of the owner and tenant. View of Responsible Officials: See corrective action plan on page 9

Finding 2024-001: Known questioned costs related to eligibility Major Program: Housing Choice Voucher Program Federal Agency: U.S. Department of Housing and Urban Development Assistant Listing Number: 14.871 Criteria: The OMB Compliance Supplement for the Housing Choice Voucher Program (HCVP) states that the HCVP regulations are found in 24 CFR parts 5, 982, 983, and 985. 24 CFR 982.306(d) states that “The PHA must not approve a unit if the owner is the parent, child, grandparent, grandchild, sister, or brother of any member of the family, unless the PHA determines that approving the unit would provide reasonable accommodation for a family member who is a person with disabilities. This restriction against PHA approval of a unit only applies at the time a family initially receives tenant-based assistance for occupancy of a particular unit but does not apply to PHA approval of a new tenancy with continued tenant-based assistance in the same unit.” 2 CFR 200.516(a)(3) requires an audit finding to be reported for known questioned costs that are greater than $25,000 for a type of compliance requirement for a major program. Condition: As a result of our audit of the HCVP eligibility compliance requirement, it was noted that one (1) out of forty (40) participants reviewed did not meet the eligibility requirement because the tenant was a relative of the owner of the unit. Homeowner’s may apply for a reasonable accommodation for a family member who is a person with disabilities, however the owner did not request a reasonable accommodation. The owner and tenant were approved in May 2018, and payments began in June 2018. Cause: The City approved a housing choice voucher to a tenant that was ineligible due to being a relative of the owner because the City was unaware of the relationship between the owner and tenant upon approval of the housing choice voucher. The was unaware of the unallowed relationship because the owner and tenant certified that they were not related by signing the HUD-52517 form Request for Tenancy Approval that includes an owner’s certification that the owner is not the parent, child, grandparent, grandchild, sister or brother of any member of the family, unless the PHA has determined (and has notified the owner and the family of such determination) that approving leasing of the unit, notwithstanding such relationship, would provide reasonable accommodation for a family member who is a person with disabilities. Effect or Potential Effect: The City issued payments for a housing choice voucher to an ineligible owner and tenant since June 2018. Known Questioned Costs: $69,019 from June 2018 through September 2024. Current fiscal year known questioned costs were $11,712. The questioned costs are all payments made to the owner on behalf of the tenant mentioned above. Context: The auditor believes that the audit finding is an isolated instance and not a systemic problem. The City has appropriate internal controls, including inquiry of applicants as to whether they are related and obtains signed certifications that the owner and tenant are not related. In addition, the relationship was discovered through procedures that are not required by the Department of Housing and Urban Development. The finding was due to misrepresentations provided by the owner and tenant, and through other audit procedures there were no indications that this was a systematic issue. The sample selected was a valid sample and the City is still in overall compliance with the eligibility requirement for the HCVP major program. Repeat finding: No Recommendation: We recommend the City continue to clearly communicate to housing owners that they cannot rent to relatives, and to implement additional procedures over eligibility compliance on a sample basis going forward with regards to potential ineligible relationships between the owner and tenant. Examples of potential additional procedures include internet searches of the owner and tenant. View of Responsible Officials: See corrective action plan on page 9