Audit 364699

Finding 2024-001 – Moving To Work Demonstration Tenant Files – Eligibility – Internal Control over Tenant Files – Noncompliance and Significant Deficiency Moving To Work Demonstration - Subsidy ALN 14.881 Condition & Cause: During our review of 170 tenant files under the Moving to Work (MTW) designation, comprised of 80 Public Housing and 90 Section 8 files, we identified 13 files (7.6%) in our sample with instances of noncompliance with HUD eligibility and reporting requirements. Six (6) of these noncompliant files pertained to Public Housing and seven (7) pertained to Section 8. Specifically: • Seven (7) files showed miscalculations of adjusted annual income • Five (5) files lacked third-party verification of reported income • Four (4) files included deductions that were not adequately verified • One (1) Section 8 file contained a discrepancy between the Housing Assistance Payment (HAP) reported on HUD Form 50058 and the actual amount paid to the landlord Using extrapolation, we concluded that the potential misstatement of subsidy from income miscalculations reflects 0.17% of Public Housing Operating Subsidy and Housing Assistance Payments combined and is immaterial to the financial statements. However, the likely questioned costs exceed the disclosure threshold and is reported in the Questioned Costs section below. We noted that the Agency had significant staff turnover during the audit period and believe this contributed to the deficiencies in income calculations. As a mitigating factor, management already had rent calculation training scheduled for staff as of our field visit. The HAP disagreement appears to be an isolated incident with an impact to one month stemming from multiple corrections and adjustments. Criteria: Compliance requirements are outlined in the Code of Federal Regulations, the Housing Authority’s Admissions and Continued Occupancy Policy (ACOP), Administrative Plan, Moving To Work (MTW) Plan, and specific HUD guidelines for documenting and maintaining Public Housing and Housing Choice Voucher tenant files. Effect: The deficiencies identified in income calculations, third-party verifications, and HAP reporting may lead to inaccurate subsidy determinations, resulting in potential over- or underpayments to landlords and incorrect tenant rent contributions. Ongoing noncompliance may also draw scrutiny from regulatory bodies, increasing the risk of financial penalties, decrease in funding for the Public Housing and Section 8 programs, or loss of MTW designation. Recommendation: We recommend that the Agency continue to offer and increase staff training in rent calculations and HUD preferred verification procedures. Additionally, we recommend the Agency increase quality control reviews over tenant files and HAP adjustments. Questioned Costs: Approximately $80,690 Repeat Finding: No Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.

Finding 2024-001 – Moving To Work Demonstration Tenant Files – Eligibility – Internal Control over Tenant Files – Noncompliance and Significant Deficiency Moving To Work Demonstration - Subsidy ALN 14.881 Condition & Cause: During our review of 170 tenant files under the Moving to Work (MTW) designation, comprised of 80 Public Housing and 90 Section 8 files, we identified 13 files (7.6%) in our sample with instances of noncompliance with HUD eligibility and reporting requirements. Six (6) of these noncompliant files pertained to Public Housing and seven (7) pertained to Section 8. Specifically: • Seven (7) files showed miscalculations of adjusted annual income • Five (5) files lacked third-party verification of reported income • Four (4) files included deductions that were not adequately verified • One (1) Section 8 file contained a discrepancy between the Housing Assistance Payment (HAP) reported on HUD Form 50058 and the actual amount paid to the landlord Using extrapolation, we concluded that the potential misstatement of subsidy from income miscalculations reflects 0.17% of Public Housing Operating Subsidy and Housing Assistance Payments combined and is immaterial to the financial statements. However, the likely questioned costs exceed the disclosure threshold and is reported in the Questioned Costs section below. We noted that the Agency had significant staff turnover during the audit period and believe this contributed to the deficiencies in income calculations. As a mitigating factor, management already had rent calculation training scheduled for staff as of our field visit. The HAP disagreement appears to be an isolated incident with an impact to one month stemming from multiple corrections and adjustments. Criteria: Compliance requirements are outlined in the Code of Federal Regulations, the Housing Authority’s Admissions and Continued Occupancy Policy (ACOP), Administrative Plan, Moving To Work (MTW) Plan, and specific HUD guidelines for documenting and maintaining Public Housing and Housing Choice Voucher tenant files. Effect: The deficiencies identified in income calculations, third-party verifications, and HAP reporting may lead to inaccurate subsidy determinations, resulting in potential over- or underpayments to landlords and incorrect tenant rent contributions. Ongoing noncompliance may also draw scrutiny from regulatory bodies, increasing the risk of financial penalties, decrease in funding for the Public Housing and Section 8 programs, or loss of MTW designation. Recommendation: We recommend that the Agency continue to offer and increase staff training in rent calculations and HUD preferred verification procedures. Additionally, we recommend the Agency increase quality control reviews over tenant files and HAP adjustments. Questioned Costs: Approximately $80,690 Repeat Finding: No Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.

Finding 2024-001 – Moving To Work Demonstration Tenant Files – Eligibility – Internal Control over Tenant Files – Noncompliance and Significant Deficiency Moving To Work Demonstration - Subsidy ALN 14.881 Condition & Cause: During our review of 170 tenant files under the Moving to Work (MTW) designation, comprised of 80 Public Housing and 90 Section 8 files, we identified 13 files (7.6%) in our sample with instances of noncompliance with HUD eligibility and reporting requirements. Six (6) of these noncompliant files pertained to Public Housing and seven (7) pertained to Section 8. Specifically: • Seven (7) files showed miscalculations of adjusted annual income • Five (5) files lacked third-party verification of reported income • Four (4) files included deductions that were not adequately verified • One (1) Section 8 file contained a discrepancy between the Housing Assistance Payment (HAP) reported on HUD Form 50058 and the actual amount paid to the landlord Using extrapolation, we concluded that the potential misstatement of subsidy from income miscalculations reflects 0.17% of Public Housing Operating Subsidy and Housing Assistance Payments combined and is immaterial to the financial statements. However, the likely questioned costs exceed the disclosure threshold and is reported in the Questioned Costs section below. We noted that the Agency had significant staff turnover during the audit period and believe this contributed to the deficiencies in income calculations. As a mitigating factor, management already had rent calculation training scheduled for staff as of our field visit. The HAP disagreement appears to be an isolated incident with an impact to one month stemming from multiple corrections and adjustments. Criteria: Compliance requirements are outlined in the Code of Federal Regulations, the Housing Authority’s Admissions and Continued Occupancy Policy (ACOP), Administrative Plan, Moving To Work (MTW) Plan, and specific HUD guidelines for documenting and maintaining Public Housing and Housing Choice Voucher tenant files. Effect: The deficiencies identified in income calculations, third-party verifications, and HAP reporting may lead to inaccurate subsidy determinations, resulting in potential over- or underpayments to landlords and incorrect tenant rent contributions. Ongoing noncompliance may also draw scrutiny from regulatory bodies, increasing the risk of financial penalties, decrease in funding for the Public Housing and Section 8 programs, or loss of MTW designation. Recommendation: We recommend that the Agency continue to offer and increase staff training in rent calculations and HUD preferred verification procedures. Additionally, we recommend the Agency increase quality control reviews over tenant files and HAP adjustments. Questioned Costs: Approximately $80,690 Repeat Finding: No Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.

Finding 2024-001 – Moving To Work Demonstration Tenant Files – Eligibility – Internal Control over Tenant Files – Noncompliance and Significant Deficiency Moving To Work Demonstration - Subsidy ALN 14.881 Condition & Cause: During our review of 170 tenant files under the Moving to Work (MTW) designation, comprised of 80 Public Housing and 90 Section 8 files, we identified 13 files (7.6%) in our sample with instances of noncompliance with HUD eligibility and reporting requirements. Six (6) of these noncompliant files pertained to Public Housing and seven (7) pertained to Section 8. Specifically: • Seven (7) files showed miscalculations of adjusted annual income • Five (5) files lacked third-party verification of reported income • Four (4) files included deductions that were not adequately verified • One (1) Section 8 file contained a discrepancy between the Housing Assistance Payment (HAP) reported on HUD Form 50058 and the actual amount paid to the landlord Using extrapolation, we concluded that the potential misstatement of subsidy from income miscalculations reflects 0.17% of Public Housing Operating Subsidy and Housing Assistance Payments combined and is immaterial to the financial statements. However, the likely questioned costs exceed the disclosure threshold and is reported in the Questioned Costs section below. We noted that the Agency had significant staff turnover during the audit period and believe this contributed to the deficiencies in income calculations. As a mitigating factor, management already had rent calculation training scheduled for staff as of our field visit. The HAP disagreement appears to be an isolated incident with an impact to one month stemming from multiple corrections and adjustments. Criteria: Compliance requirements are outlined in the Code of Federal Regulations, the Housing Authority’s Admissions and Continued Occupancy Policy (ACOP), Administrative Plan, Moving To Work (MTW) Plan, and specific HUD guidelines for documenting and maintaining Public Housing and Housing Choice Voucher tenant files. Effect: The deficiencies identified in income calculations, third-party verifications, and HAP reporting may lead to inaccurate subsidy determinations, resulting in potential over- or underpayments to landlords and incorrect tenant rent contributions. Ongoing noncompliance may also draw scrutiny from regulatory bodies, increasing the risk of financial penalties, decrease in funding for the Public Housing and Section 8 programs, or loss of MTW designation. Recommendation: We recommend that the Agency continue to offer and increase staff training in rent calculations and HUD preferred verification procedures. Additionally, we recommend the Agency increase quality control reviews over tenant files and HAP adjustments. Questioned Costs: Approximately $80,690 Repeat Finding: No Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.