2024-001 – Eligibility Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Housing Voucher Cluster FALN: 14.871/14.879 Federal Award Identification Number and Year: MD023, 2024 Award Period: 1/1/2024-12/31/2024 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: For both family income examinations and reexaminations, the PHA must obtain and document in the family file third-party verification of (1) reported family annual income; (2) the value of assets; (3) expenses related to deductions from annual income; and (4) other factors that affect the determination of adjusted income or income-based rent (24 CFR section 982.516) Condition: The Commission did not follow its policies and procedures designed to ensure compliance with eligibility requirements. Questioned costs: $3,936 Context: Testing of 60 HCVP files indicated that 2 files had incorrect income values that were used to calculate the housing assistance payments (HAP). Cause: The commission must verify income annually through third-party verification and perform an accurate calculation. The commission did not complete this correctly. Effect: The Commission is not in compliance with HUD requirements. This could have an impact on HAP calculations. Repeat Finding: Yes, 2023-001 Recommendation: We recommend that the Commission review its procedures for collecting and recording third-party income support and data, and to ensure that HAP calculations are performed accurately. The Commission should ensure that staff involved in collection and recording of income support and data, and in performing related calculations, are properly informed of procedural changes and are provided with sufficient training. Views of responsible officials: There is no disagreement with the audit finding.
2024-002 – HQS Inspections Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Housing Choice Voucher Program FALN: 14.871/14.879 Federal Award Identification Number and Year: MD023, 2024 Award Period: 1/1/2024-12/31/2024 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance (Modified Opinion) Criteria or specific requirement: The PHA must inspect the unit leased to a family at least biennially 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)). Condition: The Commission did not follow its policies and procedures designed to ensure HQS inspections were performed timely. Questioned costs: Unknown Context: During our testing of 60 files over HQS inspections, we noted the following: • 18 of 60 units tested had an inspection that was not performed on a biennial basis as required per the Commission’s Administrative Plan. Cause: HCHC employs a third-party inspection company. Many of the issues caused by the previous inspection company did not surface until early in 2023. HCHC then attempted to work with the third-party inspection company, however, ultimately that company was not able to comply with inspection requirements and HCHC terminated its contract as of June 30, 2024. Effect: The Commission is not in compliance with HUD requirements. This could have an impact on HAP calculations. Repeat finding: Yes, 2023-002 Recommendation: We recommend the Commission review its HQS inspection policies and procedures and discuss these standards with the third-party inspection company that is utilized for these inspections to ensure all inspections are performed timely and that all necessary documentation is maintained for each inspection. Views of responsible officials: There is no disagreement with the audit finding.
2024-003 – HQS Failed Inspections Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Housing Choice Voucher Program FALN: 14.871/14.879 Federal Award Identification Number and Year: MD023, 2024 Award Period: 1/1/2024-12/31/2024 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance (Modified Opinion) Criteria or specific requirement: For units under HAP contract that fail to meet HQS, the Authority must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days or within a specified Authority-approved extension. If the owner does not correct the cited HQS deficiencies within the specified correction period, the Authority must stop (abate) HAPs beginning no later than the first of the month following the specified correction period or must terminate the HAP contract. The owner is not responsible for a breach of HQS as a result of the family’s failure to pay for utilities for which the family is responsible under the lease or for tenant damage. For family-caused defects, if the family does not correct the cited HQS deficiencies within the specified correction period, the Authority must take prompt and vigorous action to enforce the family obligations (24 CFR sections 982.158(d) and 982.404). Condition: We noted that the Commission did not properly abate HAP for landlords or enforce family obligations in which units failed inspections. Questioned costs: $234,839 Context: During our testing of 60 files for HQS enforcement, we noted the following: • 15 of 60 units tested failed inspection due to owner responsibilities and the Commission never abated HAP. • 18 of 60 units tested failed due to tenant responsibilities and the Commission did not take proper steps to enforce family obligations. Cause: HCHC employs a third-party inspection company. Many of the issues caused by the previous inspection company did not surface until early in 2023. HCHC then attempted to work with the third-party inspection company, however, ultimately that company was not able to comply with inspection requirements and HCHC terminated its contract as of June 30, 2024. Effect: The Commission is not in compliance with HUD requirements. This could have an impact on HAP calculations. Repeat finding: Yes, 2023-003 Recommendation: We recommend the Commission review their abatement procedures to ensure any unit that has not met the HQS standards is properly abated in cases of inspection deficiencies associated with landlord fault, and to review their procedures to enforce family obligations in cases of inspection deficiencies associated with tenant fault. Views of responsible officials: There is no disagreement with the audit finding.
2024-004 – Quality Control Inspections Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Housing Choice Voucher Program FALN: 14.871/14.879 Federal Award Identification Number and Year: MD023, 2024 Award Period: 1/1/2024-12/31/2024 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance (Modified Opinion) Criteria or specific requirement: The PHA must inspect the unit leased to a family at least biennially 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)). Per the Commission’s administrative plan, quality control (QC) re-inspections will be performed on recently completed HQS inspections, within 90 days of their completion. Condition: The Commission did not follow internal controls designed to ensure QC re-inspections are performed timely. Questioned costs: Unknown Context: During our testing of eight files for QC inspections, we noted the following: • eight of eight units had inspections where the quality control inspection was performed more than ninety days after the initial inspection. Cause: HCHC employs a third-party inspection company. Many of the issues caused by the previous inspection company did not surface until early in 2023. HCHC then attempted to work with the third-party inspection company, however, ultimately that company was not able to comply with inspection requirements and HCHC terminated its contract as of June 30, 2024. Effect: The Commission is not in compliance with HUD requirements. Repeat finding: No. Recommendation: We recommend the Commission review their quality control procedures to ensure any unit used for quality control is inspected timely. Views of responsible officials: There is no disagreement with the audit finding.
2024-005 – Cash Disbursements Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Housing Choice Voucher Program FALN: 14.871/14.879 Federal Award Identification Number and Year: MD023, 2024 Award Period: 1/1/2024-12/31/2024 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: PHAs may use HCVP and MV funds only for HAPs to participating owners, and for associated administrative fees (24 CFR sections 982.151 and 982.152). In addition, see expanded authority in the use of administrative fees under PIH Notice 2022-18, Use of Housing Choice Voucher (HCV) and Mainstream Voucher Administrative Fees for Other Expenses to Assist Families to Lease Units. Condition: The Commission did not follow internal controls designed to ensure that expenses charged to HCVP were allowable. Questioned costs: $35.43 Context: During our testing of 40 cash disbursements, we noted the following: • 1 out of 40 samples were unallowable (specifically for an entertainment activity, and the questioned-cost value represents whole of sporting-event-related activity observed within disbursement population). Cause: The Commission did not monitor their internal controls closely which resulted in the allocation of unallowable expenses to the program. Effect: The Commission is not in compliance with HUD requirements. Repeat finding: No. Recommendation: We recommend that the Commission review its policies and procedures in place to ensure that only allowable activities are associated with the usage of program funding allocations. Views of responsible officials: There is no disagreement with the audit finding.