2025-001 FEDERAL COMPLIANCE – WAITING LIST PREFERENCES Federal Program Name: Housing Choice Voucher Program Catalog of Federal Domestic Assistance Number: 14.871 Federal Agency: U.S. Department of Housing and Urban Development Compliance Requirement: Special Tests and Provisions Criteria: According to 24 CFR 982.54(d), the PHA’s administrative plan must include procedures for the “Selection and admission of applicants from the PHA waiting list, including any PHA admission preferences, procedures for removing applicant names from the waiting list, and procedures for closing and reopening the PHA waiting list.” Condition: While reviewing applications for acceptance into the program, we noted several preference codes assigned to applicants that did not agree to information contained on the original application. Effect and Questioned Costs: Inadequate documentation of preference codes assigned to applicants. This could result in individuals improperly being moved to the top of the waiting list and allowed to enter the program before other qualified applicants. Repeat Finding: Yes, 2024-001 Recommendation: We recommend that the PHA implement procedures to document any changes to the original preference codes assigned to applicants. Management’s Response: The PHA has updated the Administrative Plan. Verification requirements are now explicitly stated, including what documentation is acceptable and what is not acceptable as verification. In addition, as the PHA selects applicants from the legacy waiting list, staff confirm the applicant still qualifies for the claimed preference at the time of selection.
2025-002 FEDERAL COMPLIANCE – TENANT DOCUMENTATION Federal Program Name: Housing Choice Voucher Program Catalog of Federal Domestic Assistance Number: 14.871 Federal Agency: U.S. Department of Housing and Urban Development Compliance Requirement: Eligibility and Special Provisions Criteria: HUD requires Public Housing Authorities (PHA) to properly document the eligibility of tenants, properly calculate benefits based on tenant income and determine rent is reasonable. Condition: During our testing of compliance with Section 8 requirements, we noted several errors while reviewing 40 tenant files. These include the following: • Missing or incomplete HQS/inspection documentation (reports, checklists, or proof of passing; some years not uploaded). • Voucher / Form 50058 (Family Report) missing or incomplete, including support for payment standard/bedroom size used. • Utility reimbursement (UR) and HAP payment changes not supported with required documentation or clear interim/recert support. • Rent reasonableness documentation missing or incomplete, including missing conclusion that rent was reasonable. • Other required file items missing, such as HAP contract, lease pages, eligibility verifications (e.g., birth verification), landlord certification forms, and zero-income forms. Cause: According to the PHA director, these issues were primarily caused by a server crash with the required documentation being unrecoverable. Effect and Questioned Costs: Noncompliance with HUD requirements. Repeat Finding: Yes, 2024-002 Recommendation: We recommend that procedures be implemented to ensure that documentation is maintained in accordance with HUD requirements. Management’s Response: The PHA began forwarding requested documentation to the auditors before the server crash impacted its ability to locate and respond to file requests. Once APD recovered the files in September, the PHA resumed providing recovered documentation to fulfill the auditors’ request. To date, the PHA is unable to locate three documents that were originally requested before the crash. The PHA is continuing to sort and review the 12,000+ files that were recovered and will provide any additional responsive documents if they are located. The PHA has revised its recertification/application intake procedures. If a participant submits a recertification packet/application that is incomplete, the PHA will not accept it for processing. Packets must be submitted complete, including all required supporting documentation, before the staff will move forward. In addition, the PHA has strengthened documentation controls to improve file integrity and retrieval going forward. These actions include: • Required intake checklist: The PHA uses a standardized checklist to verify that all required forms and documents are received before a packet is accepted. • File completeness review: The PHA conducts a second-level review to confirm documentation is present and appropriately filed/scanned before final processing. • Standardized scanning and labeling: The PHA scans and labels documents consistently to ensure they can be efficiently located and reproduced for monitoring or audit requests. • Ongoing reconciliation of recovered files: The PHA continues reviewing the 12,000+ recovered files and will provide any additional responsive documents if located, while also using this process to identify and address any gaps in recordkeeping practices. These measures are intended to reduce missing documentation, strengthen file retention practices, and ensure the timely retrieval of records in the future.
2025-003 FEDERAL COMPLIANCE - DISBURSEMENTS Federal Program Name: Housing Choice Voucher Program Catalog of Federal Domestic Assistance Number: 14.871 Federal Agency: U.S. Department of Housing and Urban Development Compliance Requirement: Allowable Costs Criteria: The City’s internal controls require that all disbursements be approved by the finance department prior to payment and that bank reconciliations be performed on all accounts. Condition: During our audit, we noted several check runs for the Section 8 program that did not include the finance department’s approval for payment. Additionally, we noted one check that cleared for an amount other than the amount included on the check register. These errors caused increased difficulty in reconciling the bank statements in a timely manner. Cause: According to the PHA director, these differences were caused by the check registers being printed by program instead of check number. Therefore, the payment amount for several tenants for a certain check were listed in a separate section. Other errors were due to misfeeds in the check printer. Effect and Questioned Costs: Reduced effectiveness of internal controls with the possibility of incorrect payments being processed. Repeat Finding: No Recommendation: We recommend that the PHA implement procedures to ensure that checks written agree to the check register prior to mailing and the finance department approve all Section 8 check runs. These procedures should include printing the check register by check number and comparing the printed checks to the register prior to mailing. If any differences are noted due to misfeeds in the check printer, the register should be updated to reflect correct information. Furthermore, an updated check register should be provided to the finance department with a memorandum documenting the changes. The City may consider investing in printing equipment that allows check numbers to be printed on the checks instead of utilizing preprinted checks. Management’s Response: Staff will conduct a manual, check-by-check review immediately after each monthly check run and before mailing to confirm that check totals align with supporting reports. In addition, the PHA will investigate and resolve the source of the discrepancy between the HAPPY Program Management Software outputs and the PHA’s internal control records to ensure consistent and accurate reporting going forward.
2025-004 FEDERAL COMPLIANCE – WAITING LIST CONTACT Federal Program Name: Housing Choice Voucher Program Catalog of Federal Domestic Assistance Number: 14.871 Federal Agency: U.S. Department of Housing and Urban Development Compliance Requirement: Eligibility and Special Provisions Criteria: Program procedures require sufficient documentation to demonstrate that waiting list selections and outreach were conducted consistently, timely, and in a transparent manner. Condition: For Section 8 project-specific vouchers, documentation of contact with individuals selected from the waiting list was not consistently maintained. Files lacked evidence of outreach such as letters, emails, call logs, or documentation of responses and outcomes. Cause: Documentation requirements for waiting list contact were not clearly defined or consistently enforced. Effect and Questioned Costs: Without documentation of outreach efforts, the program cannot demonstrate that project-specific voucher selections were conducted fairly and in compliance with program requirements, increasing risk of noncompliance or disputes. Recommendation: Management should implement a standardized process to document and retain all waiting list contact attempts, including method, dates, and outcomes, in project-specific voucher files. Management’s Response: When applicants call or come in to request a change to contact information, the PHA now requires the applicant to provide the updated information in writing (completed by the applicant) rather than staff updating records solely based on a verbal request. This provides documentation for the change and strengthens file integrity.