Audit 366267

Finding 2024-001 – Public Housing Tenant Files – Eligibility – Internal Control over Tenant Files – Noncompliance and Significant Deficiency - Low Income Public Housing - ALN 14.850 Condition & Cause: We randomly selected fifty (50) tenant files for review. We noted eighteen (18) tenant files were out of compliance in one or more categories. Of these, five (5) files, or 10%, were impacted by errors related to adjusted annual income. Based on these errors, we extrapolated the potential rental charge misstatement and found it represented approximately 0.3% of total program rental revenue, which is immaterial to the financial statements. In our review, we noted: • Four (4) files had improper or missing income verification; • One (1) file contained a miscalculation of annual income; • Thirteen (13) files lacked documentation of required unit inspections; • Two (2) were missing the required Enterprise Income Verification (EIV) reports, or the reports were generated significantly after the effective date; • Two (2) annual reexaminations were completed more than three months past due. Agency management attributed these deficiencies, in part, to significant staff turnover during the year. It should be noted that the missed inspections were isolated to Asset Management Projects (AMPs) where the inspector position was vacant for part of the year. Criteria: Title 24 of the Code of Federal regulations, the Housing Authority’s Admissions and Continued Occupancy Policy, and specific HUD guidelines in documenting and maintaining the Public Housing tenant files. Effect: Failure to properly verify and calculate tenant income can result in misstatements of operating income and the operating subsidy earned by the Housing Authority. Inaccurate rental charges may also impose an undue financial burden on tenants, undermining the Agency’s mission to provide affordable housing. Additionally, the lack of timely unit inspections may result in noncompliance with HUD regulations and compromise the Agency’s ability to ensure that units meet housing quality standards. This increases the risk of undetected maintenance issues, potential safety concerns for residents, and further noncompliance findings in future reviews. Recommendation: The Authority has implemented internal quality control processes for most tenant reexaminations. We recommend continued monitoring of these controls for effectiveness, along with targeted staff training to address errors in income calculation and verification. Regarding inspections, we recommend that the Authority develop and implement procedures to ensure that required unit inspections are completed on time, including during periods of staff turnover or position vacancies. This may include cross-training staff, temporary assignments, or use of third-party inspectors to maintain compliance with inspection requirements. Questioned Costs: None Repeat Finding: Yes Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.

Finding 2024-002 – Housing Choice Voucher Tenant Files – Eligibility – Internal Control over Tenant Files - Noncompliance & Significant Deficiency - Housing Choice Voucher Program – ALN 14.871 Condition & Cause: We randomly selected one hundred ten (110) tenant files for review. We noted seventy-six (76) tenant files were out of compliance in one or more categories. Of these, seven (7) files, or 6.4% of our sample, were impacted by errors related to adjusted annual income. We were able to extrapolate identified misstatements of HAP and found the potential misstatement to represent 0.06% of program HAP expense, which is immaterial to the financial statements. A summary of the review results are as follows: • Six (6) instances of missing or improper income verification; • One (1) file contained a miscalculation of annual income; • Fifty-seven (57) annual reexaminations were conducted more than three months late; • Four (4) files were missing the documentation for the reexamination under review; • One (1) case where HAP was paid beyond the tenant’s termination date; • Twenty-one (21) files lacked evidence of an annual inspection; and • Four (4) files where the EIV was either missing or obtained unreasonably late. The Authority experienced significant staff turnover during the audit period, including prolonged vacancies in key positions such as the HCV Director. These staffing challenges contributed to the observed control deficiencies. Management efforts to mitigate these circumstances include contracting with a third party to assist with processing reexaminations and conducting a salary survey to improve staff retention. We noted that as of the audit field date the department is fully staffed. Criteria: Title 24 of the Code of Federal regulations, the Housing Authority Administrative Plan, and specific HUD guidelines in documenting and maintaining Housing Choice Voucher tenant files. Effect: Failure to complete timely reexaminations or properly verify and calculate annual income can result in a misstatement of HAP expense leading to improper funding for the HCV program. Misstatements of HAP may cause an undue financial burden to the participant, which is incongruent with the mission of the Agency. The absence of required annual inspections compromises the Authority’s ability to ensure housing units meet HUD Housing Quality Standards (HQS), potentially affecting tenant safety and increasing the risk of further noncompliance. Recommendation: We acknowledge that the Authority has implemented internal quality control measures for tenant file actions and has taken steps to stabilize staffing within the department. We recommend continued monitoring and refinement of these controls. To support long-term compliance, staff should receive regular training, particularly in areas such as income verification and HAP calculation. In addition, the Authority should prioritize clearing the backlog of overdue reexaminations to bring all tenant files current and in compliance with HUD requirements. This includes identifying and properly documenting any missing actions. Lastly, the Agency should adopt procedures to ensure inspections are completed within the required timeframes, even during periods of staffing shortages. Questioned Costs: None Repeat Finding: Yes Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.