Audit 383120

Finding 2025-003 – Low-Income Public Housing Tenant Files – Eligibility – Rent Calculations Noncompliance & Material Weakness Low-Income Public Housing Program – ALN 14.850 Criteria: The Code of Federal regulations, the Housing Authority’s Admissions and Continued Occupancy Policy (ACOP) and specific HUD guidelines in documenting and maintaining Low-Income Public Housing tenant files. Condition & Cause: Of the twenty Low-Income Public Housing tenant files reviewed, three (15%) contained errors. In each case, the tenant was improperly given a permissive deduction equal to 20% of total income, even though the Authority’s ACOP had been amended prior to fiscal year 2025 to eliminate all permissive deductions. These three annual certifications, effective October 2024, resulted in known questioned costs of $5,895. Despite the policy change, staff inconsistently applied permissive deductions in error. We acknowledge that the Authority has taken steps to remove permissive deductions from all rent calculations. Effect: Improperly applying permissive deductions results in decreased rental income, which affects the Authority’s future operating potential. Recommendation: We recommend that the Agency complete a current review of all participant files to identify and correct calculations still including permissive deductions. Questioned Costs: We performed an extrapolation of the undercharged rent based on our reviewed sample of resident files. This resulted in likely questioned costs of $95,693, which reflects 7.25% of total rental income. Repeat Finding: No Was sampling statistically valid? Yes Views of Responsible Officials: The PHA agrees with the results of the audit and recommendations.