2024-002 ALN 14.871 – Housing Voucher Cluster – Activities Allowed or Unallowed
Condition and Criteria:
The Authority operates several distinct programs. Allocated expenses are paid from the Public and Indian housing funds and reimbursed using inter-program accounts. Reimbursement between programs was not made timely and has caused an increase in inter-program receivables and payables over time.
Cash management is the process of managing the Authority to optimize its use of funds. This process involves the timing of receipts and disbursements to assure the availability of funds to meet expenditures and to maximize the yield from the investment of temporary surplus funds. The Authority incurred unallowable activities relating to the handling of inter-program balances between the various programs due to poor cash management controls.
Amount of Questioned Costs:
None
Context:
The Authority’s management failed to ensure inter-program advances were reimbursed properly and timely between its various federal and nonfederal programs. Programs with excessive inter-program balances include the Public Housing Operating Fund, Housing Choice Voucher, Revitalization of Severely Distressed Public Housing, Choice Neighborhoods Planning Grants, and COCC programs.
Cause:
The Authority has a lack of internal controls over cash management and has not been regularly monitoring and reconciling inter-program activities between their various federal and nonfederal programs.
Effect:
Various programs do not have sufficient unrestricted cash to satisfy inter-program balances. The lack of cash to cover inter-program imbalances can limit the liquidity and operational flexibility of the program. There is an increased risk of non-compliance with federal guidelines.
Auditor’s Recommendation:
We recommend that the Authority settle inter-program balances on a monthly basis and implement a process to review net cash balances during its budgetary procedures to reduce the risk of further noncompliance. Further, the Authority needs to implement stricter processes around inter-program balances to ensure the Authority can properly assess cash balances at a program level.
Grantee Response:
The Chief Executive Officer agrees with the finding and will follow the Auditor's recommendation.
2024-003 ALN 14.871 – Housing Voucher Cluster – Eligibility
Condition and Criteria:
The Authority is required to adhere to eligibility compliance requirements for all tenants participating in the housing program. Specifically:
• Birth certificates, social security cards, and citizenship declaration forms must be maintained for all tenants as part of the eligibility documentation.
• The Enterprise Income Verification (EIV) system must be used at least annually to verify tenant income and prevent overpayment.
• The calculation of tenant assistance payments must include all sources of income, including child support payments.
• The utility allowance amount reported on the HUD-50058 form must reflect accurate and current data in accordance with HUD requirements.
During testing, it was noted that the Authority did not have adequate internal controls designed to ensure compliance with eligibility requirements.
Amount of Questioned Costs:
None
Context:
During our testing of a sample of 40 tenant files, it was noted that 11 files did not meet eligibility compliance requirements.
• 2 instances of files missing birth certificates, social security cards, or citizenship declaration forms.
• 3 instances where an EIV report was not ran within the current year. This is required to be produced at least once annually.
• 1 instance where the assistance payment was incorrectly calculated as child support payments were not included in the tenant's income.
• 5 instances where the Authority did not report the correct utility allowance amount on the 50058 forms.
Cause:
The Authority failed to provide adequate monitoring and oversight to ensure compliance with HUD rules and regulations, as well as their administrative policy.
Effect:
The Authority is not in compliance with federal regulations regarding eligibility.
Auditor’s Recommendation:
We recommend that management review their controls over recertifications and ensure compliance standards for the eligibility provision and HAP calculations are met. We also recommend that management should designate one person to review a sample of the files that have been recertified each month. The purpose of the review is to determine if the tenant files were prepared in accordance with internal policies and verify the compliance deficiencies have been corrected.
Grantee Response:
The Chief Executive Officer agrees with the finding and will follow the Auditor's recommendation
2024-004 ALN 14.871 – Housing Voucher Cluster – Reporting
Condition and Criteria:
HUD-50058, Family Report (OMB No. 2577-0083) – The PHA is required to submit this form electronically to HUD each time the PHA completes an admission, annual reexamination, interim reexamination, portability move-in, or other change of unit for a family. The PHA must also submit the Family Report when a family ends participation in the program or moves out of the PHA’s jurisdiction under portability (24 CFR Part 908 and 24 CFR section 982.158).
Additionally, HUD requires PHAs to accurately report financial and leasing data in the Voucher Management System (VMS) and ensure that this data reconciles with the Financial Data Schedule (FDS). Proper reconciliation between these reports is necessary for accurate financial reporting and compliance with HUD funding requirements.
During testing, it was noted that the Authority did not have adequate internal controls designed to ensure compliance with reporting requirements regarding submissions of HUD-50058’s into the PIC system for 6 out of 40 files tested.
Additionally, the Authority did not properly reconcile the Voucher Management System (VMS) report to the Financial Data Schedule (FDS). Discrepancies were noted between the two reports, indicating a lack of proper reconciliation procedures. These inconsistencies could lead to inaccurate financial reporting and potential noncompliance with HUD requirements. The differences may be due to errors in data entry, timing issues, or misclassification of financial transactions.
Amount of Questioned Costs:
None
Context:
During testing of a sample of 40 HUD-50058 forms, it was noted that 6 forms were not accurately prepared.
• 1 HUD-50058 form incorrectly calculated the amount of assistance received as child support payments were not included in income.
• 5 HUD-50058 forms reported the incorrect utility allowance amount.
The VMS data collection report contained several material variances from the unaudited FDS submission.
Cause:
The Authority did not have internal controls to ensure compliance with the reporting requirements over submitting the required forms into the PIC system. Additionally, the Authority lacked a structured reconciliation process between the VMS report and the FDS, leading to reporting discrepancies.
Effect:
The Authority is not in compliance with federal regulations regarding the submission of the HUD-50058 to PIC. The inaccurate data could potentially affect the determination of HAP funding. Furthermore, the failure to reconcile the VMS report to the FDS could result in financial misstatements and impact funding calculations.
Auditor’s Recommendation:
We recommend that the Authority performs quality control reviews on the 50058 submissions to ensure timely and accurate reporting. Additionally, the Authority should implement a reconciliation process to ensure that the financial data reported in the VMS aligns with the FDS. This process should include periodic reviews, detailed variance analysis, and appropriate documentation to support reported amounts. Staff should receive training on proper reconciliation techniques and HUD reporting requirements to prevent future discrepancies.
Grantee Response:
The Chief Executive Officer agrees with the finding and will follow the Auditor's recommendation
2024-005 ALN 14.871 – Housing Voucher Cluster – Special Tests – HQS Enforcement
Condition and Criteria:
The PHA must inspect the unit leased to a family at least annually to determine if the unit meets Housing Quality Standards (HQS) and the PHA must conduct quality control re-inspections. The PHA must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)).
During testing, it was noted that the Authority did not have adequate internal controls designed to ensure compliance with failed HQS inspection requirements.
Amount of Questioned Costs:
None
Context:
During testing of a sample of 40 units for HQS enforcement, it was noted that 6 files did not comply with compliance requirements. These tenants who failed inspections were missing HUD-52580-A inspection forms. We were unable to obtain sufficient evidence that these failed HQS inspections were followed up with a reinspection within the allowed numbers of days or that the HQS inspection had finally passed at some point. Therefore, we were unable to determine if the Authority took proper steps to abate Housing Assistance Payments or enforce family obligations when appropriate.
Cause:
The Authority did not sufficiently monitor staff and internal controls to ensure compliance with HQS inspection requirements. The Authority was transitioning to a new data collection system and during this period of transition, inspections were written down on the back of letters & previous inspection reports. The actual prescribed HUD inspection form did not exist for these failed inspections.
Effect:
The Authority is not in compliance with federal regulations regarding HQS inspections.
Auditor’s Recommendation:
We recommend that management review their controls for conducting HQS inspections and ensure compliance standards are met. We also recommend that staff receive appropriate training to be able to navigate the new software system properly. Lastly, we recommend that the Authority contacts the software vendor or IT service to resolve any remaining issues with the software system.
Grantee Response:
The Chief Executive Officer agrees with the finding and will follow the Auditor's recommendation.
2024-002 ALN 14.871 – Housing Voucher Cluster – Activities Allowed or Unallowed
Condition and Criteria:
The Authority operates several distinct programs. Allocated expenses are paid from the Public and Indian housing funds and reimbursed using inter-program accounts. Reimbursement between programs was not made timely and has caused an increase in inter-program receivables and payables over time.
Cash management is the process of managing the Authority to optimize its use of funds. This process involves the timing of receipts and disbursements to assure the availability of funds to meet expenditures and to maximize the yield from the investment of temporary surplus funds. The Authority incurred unallowable activities relating to the handling of inter-program balances between the various programs due to poor cash management controls.
Amount of Questioned Costs:
None
Context:
The Authority’s management failed to ensure inter-program advances were reimbursed properly and timely between its various federal and nonfederal programs. Programs with excessive inter-program balances include the Public Housing Operating Fund, Housing Choice Voucher, Revitalization of Severely Distressed Public Housing, Choice Neighborhoods Planning Grants, and COCC programs.
Cause:
The Authority has a lack of internal controls over cash management and has not been regularly monitoring and reconciling inter-program activities between their various federal and nonfederal programs.
Effect:
Various programs do not have sufficient unrestricted cash to satisfy inter-program balances. The lack of cash to cover inter-program imbalances can limit the liquidity and operational flexibility of the program. There is an increased risk of non-compliance with federal guidelines.
Auditor’s Recommendation:
We recommend that the Authority settle inter-program balances on a monthly basis and implement a process to review net cash balances during its budgetary procedures to reduce the risk of further noncompliance. Further, the Authority needs to implement stricter processes around inter-program balances to ensure the Authority can properly assess cash balances at a program level.
Grantee Response:
The Chief Executive Officer agrees with the finding and will follow the Auditor's recommendation.
2024-003 ALN 14.871 – Housing Voucher Cluster – Eligibility
Condition and Criteria:
The Authority is required to adhere to eligibility compliance requirements for all tenants participating in the housing program. Specifically:
• Birth certificates, social security cards, and citizenship declaration forms must be maintained for all tenants as part of the eligibility documentation.
• The Enterprise Income Verification (EIV) system must be used at least annually to verify tenant income and prevent overpayment.
• The calculation of tenant assistance payments must include all sources of income, including child support payments.
• The utility allowance amount reported on the HUD-50058 form must reflect accurate and current data in accordance with HUD requirements.
During testing, it was noted that the Authority did not have adequate internal controls designed to ensure compliance with eligibility requirements.
Amount of Questioned Costs:
None
Context:
During our testing of a sample of 40 tenant files, it was noted that 11 files did not meet eligibility compliance requirements.
• 2 instances of files missing birth certificates, social security cards, or citizenship declaration forms.
• 3 instances where an EIV report was not ran within the current year. This is required to be produced at least once annually.
• 1 instance where the assistance payment was incorrectly calculated as child support payments were not included in the tenant's income.
• 5 instances where the Authority did not report the correct utility allowance amount on the 50058 forms.
Cause:
The Authority failed to provide adequate monitoring and oversight to ensure compliance with HUD rules and regulations, as well as their administrative policy.
Effect:
The Authority is not in compliance with federal regulations regarding eligibility.
Auditor’s Recommendation:
We recommend that management review their controls over recertifications and ensure compliance standards for the eligibility provision and HAP calculations are met. We also recommend that management should designate one person to review a sample of the files that have been recertified each month. The purpose of the review is to determine if the tenant files were prepared in accordance with internal policies and verify the compliance deficiencies have been corrected.
Grantee Response:
The Chief Executive Officer agrees with the finding and will follow the Auditor's recommendation
2024-004 ALN 14.871 – Housing Voucher Cluster – Reporting
Condition and Criteria:
HUD-50058, Family Report (OMB No. 2577-0083) – The PHA is required to submit this form electronically to HUD each time the PHA completes an admission, annual reexamination, interim reexamination, portability move-in, or other change of unit for a family. The PHA must also submit the Family Report when a family ends participation in the program or moves out of the PHA’s jurisdiction under portability (24 CFR Part 908 and 24 CFR section 982.158).
Additionally, HUD requires PHAs to accurately report financial and leasing data in the Voucher Management System (VMS) and ensure that this data reconciles with the Financial Data Schedule (FDS). Proper reconciliation between these reports is necessary for accurate financial reporting and compliance with HUD funding requirements.
During testing, it was noted that the Authority did not have adequate internal controls designed to ensure compliance with reporting requirements regarding submissions of HUD-50058’s into the PIC system for 6 out of 40 files tested.
Additionally, the Authority did not properly reconcile the Voucher Management System (VMS) report to the Financial Data Schedule (FDS). Discrepancies were noted between the two reports, indicating a lack of proper reconciliation procedures. These inconsistencies could lead to inaccurate financial reporting and potential noncompliance with HUD requirements. The differences may be due to errors in data entry, timing issues, or misclassification of financial transactions.
Amount of Questioned Costs:
None
Context:
During testing of a sample of 40 HUD-50058 forms, it was noted that 6 forms were not accurately prepared.
• 1 HUD-50058 form incorrectly calculated the amount of assistance received as child support payments were not included in income.
• 5 HUD-50058 forms reported the incorrect utility allowance amount.
The VMS data collection report contained several material variances from the unaudited FDS submission.
Cause:
The Authority did not have internal controls to ensure compliance with the reporting requirements over submitting the required forms into the PIC system. Additionally, the Authority lacked a structured reconciliation process between the VMS report and the FDS, leading to reporting discrepancies.
Effect:
The Authority is not in compliance with federal regulations regarding the submission of the HUD-50058 to PIC. The inaccurate data could potentially affect the determination of HAP funding. Furthermore, the failure to reconcile the VMS report to the FDS could result in financial misstatements and impact funding calculations.
Auditor’s Recommendation:
We recommend that the Authority performs quality control reviews on the 50058 submissions to ensure timely and accurate reporting. Additionally, the Authority should implement a reconciliation process to ensure that the financial data reported in the VMS aligns with the FDS. This process should include periodic reviews, detailed variance analysis, and appropriate documentation to support reported amounts. Staff should receive training on proper reconciliation techniques and HUD reporting requirements to prevent future discrepancies.
Grantee Response:
The Chief Executive Officer agrees with the finding and will follow the Auditor's recommendation
2024-005 ALN 14.871 – Housing Voucher Cluster – Special Tests – HQS Enforcement
Condition and Criteria:
The PHA must inspect the unit leased to a family at least annually to determine if the unit meets Housing Quality Standards (HQS) and the PHA must conduct quality control re-inspections. The PHA must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)).
During testing, it was noted that the Authority did not have adequate internal controls designed to ensure compliance with failed HQS inspection requirements.
Amount of Questioned Costs:
None
Context:
During testing of a sample of 40 units for HQS enforcement, it was noted that 6 files did not comply with compliance requirements. These tenants who failed inspections were missing HUD-52580-A inspection forms. We were unable to obtain sufficient evidence that these failed HQS inspections were followed up with a reinspection within the allowed numbers of days or that the HQS inspection had finally passed at some point. Therefore, we were unable to determine if the Authority took proper steps to abate Housing Assistance Payments or enforce family obligations when appropriate.
Cause:
The Authority did not sufficiently monitor staff and internal controls to ensure compliance with HQS inspection requirements. The Authority was transitioning to a new data collection system and during this period of transition, inspections were written down on the back of letters & previous inspection reports. The actual prescribed HUD inspection form did not exist for these failed inspections.
Effect:
The Authority is not in compliance with federal regulations regarding HQS inspections.
Auditor’s Recommendation:
We recommend that management review their controls for conducting HQS inspections and ensure compliance standards are met. We also recommend that staff receive appropriate training to be able to navigate the new software system properly. Lastly, we recommend that the Authority contacts the software vendor or IT service to resolve any remaining issues with the software system.
Grantee Response:
The Chief Executive Officer agrees with the finding and will follow the Auditor's recommendation.