Finding: 2025‐002 U.S. Department of Housing & Urban Development Program Name: Section 8 Housing Voucher Cluster AL Number: 14.871 Material Non‐Compliance Material Weakness Eligibility, Reporting, Special Tests and Provisions Criteria: In accordance with 2 CFR 200, management should have an adequate system of internal control procedures in place to ensure that applicants have all required documentation in their file. In accordance with 24 CFR Part 5 Subpart F, the City must maintain documentation to support tenant eligibility. In accordance with 24 CFR section 982.516, the City must reexamine family income and composition at least once every 12 months and adjust the tenant rent and housing assistance payment as necessary using the documentation from third party verification. In accordance with 24 CFR section 5.233, the Public Housing Agencies must use the Enterprise Income Verification (EIV) system in its entirety to verify tenant employment and income information during mandatory reexaminations of family composition and income and reduce administrative and subsidy payment errors in accordance with 24 CFR 5.236 and other administrative guidance issued by HUD. In accordance with 24 CFR Part 908 and 24 CFR section 982.158, the Public Housing Agencies (PHA) is required to submit form HUD-50058, Family Report, electronically to HUD each time the PHA completes an issuance, admission, annual reexamination, interim reexamination, portability move-in, expiration, or other change of unit for a family. In accordance with 24 CFR sections 960.202 through 960.208, the City must establish, adopt, and follow policies for admission of tenants as it relates to the Public Housing waiting list. All families admitted to the program must be selected from the waiting list. In accordance with 24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507, the PHA must determine that the rent to the owner is reasonable at the time of initial leasing. Also, the PHA must determine reasonable rent during the term of the contract. The PHA must maintain records to document the basis for the determination that rent to owner is a reasonable rent. In accordance with 24 CFR section 982.158 and 24 CFR Part 982, Subpart K, the PHA must pay a monthly Housing Assistance Payment (HAP) on behalf of the family that corresponds with the amount on the HUD-50058. This HAP amount must be reflected on the HAP contract and HAP register. Condition: The Public Housing Department did not follow procedures to ensure the proper eligibility determination, reexaminations, waiting lists, reasonable rent, reporting, and housing assistance payments were made and documented. Context: Of the 1,764 housing assistance payments during the current year valued at $903,155, we examined 60 (valued at $36,324) and determined that 51 (85% valued at $31,680) housing assistance payments were not supported with case documentation to confirm eligibility. Reexaminations were not completed timely to allow adjustments to housing assistance payments as necessary. No EIV in case file to support the calculation for the HAP payment. Therefore, the housing assistance payments made during fiscal year 2025 were not supported by accurate information. Of the 60 housing assistance payments we examined, we determined that 60 applicants (100%) did not have documentation to ascertain that the public housing authority documented and determined reasonable rent. Upon further review, the City was able to provide verification of reasonable rent. Of the 60 housing assistance payments we examined, we determined that 60 applicants (100%) did not have proper documentation on file to ascertain that applicants were added and selected from the waiting list. Of the 60 housing assistance payments we examined, we determined that 24 applicants (40%) did not have proper documentation on file to support the amounts on the HAP contract or did not have the form HUD-50058, Family Report. Effect: Owners could receive benefits for which they are not eligible. Cause: Weakness in implementation of controls over eligibility, reporting, and special tests and provisions procedures. Due to the turnover in the housing department, the City failed to obtain or retain the completed documentations required. Identification of a Repeat Finding: This is modified and a repeat Finding of 2024-001 from the immediate previous audit. Questioned Cost: In accordance with 2 CFR 200, auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. The sample results identified $31,680 in known questioned costs. Recommendation: Management should adhere to the program’s policy and maintain proper eligibility documentation in the applicant’s file. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report.
Finding: 2025‐003 U.S. Department of Housing & Urban Development Program Name: Section 8 Housing Voucher Cluster AL Number: 14.871 Material Non‐Compliance Material Weakness Special Tests and Provisions Criteria: In accordance with 2 CFR 200, management should have an adequate system of internal control procedures in place to ensure that applicants have all required documentation in their file. In accordance with 24 CFR Part 5 Subpart F, the City must maintain documentation to support tenant eligibility. In accordance with 24 CFR sections 960.202 through 960.208, the City must establish, adopt, and follow policies for admission of tenants as it relates to the Public Housing waiting list. All families admitted to the program must be selected from the waiting list. In accordance with 24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507, the PHA must determine that the rent to the owner is reasonable at the time of initial leasing. Also, the PHA must determine reasonable rent during the term of the contract. The PHA must maintain records to document the basis for the determination that rent to owner is a reasonable rent. Condition: The Public Housing Department did not follow procedures to ensure the waiting lists and reasonable rent were made and documented. Context: Of the 6 new participants during the current year valued at $33,340, we examined 2 (valued at $13,590) and determined that 2 (100%) that the case file was missing documentation to support that the rent to the owners were reasonable and that the tenant was selected from the waiting list. Effect: Owners could receive benefits for which they are not eligible. Cause: Weakness in implementation of controls over special tests and provisions procedures. Due to the turnover in the housing department, the City failed to obtain or retain the completed documentations required. Identification of a Repeat Finding: This is modified and a repeat Finding of 2024-002 from the immediate previous audit. Questioned Cost: The finding represented an internal control weakness; therefore, no questioned costs are applicable. Recommendation: Management should adhere to the program’s policy and maintain proper eligibility documentation in the applicant’s file. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report.
Finding: 2025‐004 U.S. Department of Housing & Urban Development Program Name: Section 8 Housing Voucher Cluster AL Number: 14.871 Material Non‐Compliance Material Weakness Special Tests and Provisions Criteria: In accordance with 24 CFR sections 982.158(d) and 982.405(b), the Public Housing Agencies (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. Condition: The City did not follow procedures to ensure compliance of housing quality standards inspections. Context: Of the 1,764 applicants during the current year valued at $903,155, we examined 60 and determined that 4 (7% valued at $1,933) did not have a unit inspection report to verify that the unit was inspected. Effect: Units leased to a family could not meet the housing quality standards necessary for the health and safety of program participants. Cause: Lack of proper internal control over housing quality standards inspections. Identification of a Repeat Finding: This is modified and a repeat Finding of 2024-003 from the immediate previous audit. Questioned Cost: The finding represented an internal control weakness; therefore, no questioned costs are applicable. Recommendation: Management should implement controls to ensure that housing quality standards inspections are completed at lease biennially and documented on a unit inspection report. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report.