Eligibility Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871/14.879/14.EHV Federal Award Identification Number and Year: VA901; 2024-2025 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: The PHA must do the following: (1) As a condition of admission or continued occupancy, require the tenant and other family members to provide necessary information, documentation, and releases for the PHA to verify income eligibility (24 CFR sections 5.230, 5.609, and 982.516). (2) For both family income examinations and reexaminations, obtain and document in the family file third party verification of (a) reported family annual income; (b) the value of assets; (c) expenses related to deductions from annual income; and (d) other factors that affect the determination of adjusted income or income-based rent (24 CFR section 982.516). (3) Determine income eligibility and calculate the tenant’s rent payment using the documentation from third party verification in accordance with 24 CFR Part 5 Subpart F (24 CFR section 5.601 et seq.) (24 CFR sections 982.201, 982.515, and 982.516). Most PHAs devise their own application forms that are filled out by the PHA staff during an interview with the tenant. The head of household signs (a) one or more release forms to allow the PHA to obtain information from third parties; (b) a federally prescribed general release form for employment information; and (c) a privacy notice. Under some circumstances, other members of the family are required to sign these forms (24 CFR sections 5.212 and 5.230). (4) 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 in accordance with 24 CFR 5.233; and reduce administrative and subsidy payment errors in accordance with 24 CFR 5.236 and other administrative guidance issued by HUD. (5) Select tenants from the HCVP waiting list (see III.N.1, “Special Tests and Provisions – Selection from the Waiting List”) (24 CFR sections 982.202 through 982.207). (6) 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 (24 CFR section 982.516). 2 CFR 200.303 requires that recipients and subrecipients receiving federal awards establish, document and maintain effective internal control over the federal awards that provides reasonable assurance that the recipient or subrecipient is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition/Context: During our testing of 60 tenant files for eligibility requirements, we noted the following in 7 files: - 3 of 60 files tested did not have proper supporting documentation for income reported on the HUD-50058. - 2 of 60 files tested did not have proper supporting documentation for assets reported on the HUD-50058. - 1 of 60 files tested did not have proper supporting documentation for expenses/deductions reported on the HUD-50058. - 5 of 60 files tested had incorrectly calculated HAP due to missing or incorrect supporting documentation. - 2 of 60 files tested did not have proper supporting documentation showing that family income and composition were reexamined annually. - 2 of 60 files tested did not contain a HUD-9886 form signed by all members of the household over 18. - 2 of 60 files selected did not include the completed housing specialist checklist (or similar compensating internal control). Questioned costs: $3,839 Cause: As a balance-of-state PHA, Virginia Housing administers the HCV program through 26 Local Housing Agencies (LHAs), each with varying staffing levels, internal review capacity, and documentation practices. During the audit period, eligibility determinations and income verifications were primarily processed at the local level, with oversight conducted through periodic monitoring and quality control reviews. Certain documentation and calculation controls were not sufficiently standardized or centrally validated prior to final processing. In addition, enhancements to quality control procedures implemented during the fiscal year were not fully operational for the files selected for audit testing. These factors contributed to inconsistencies in documentation completeness and calculation accuracy. Virginia Housing will continue to evaluate the effectiveness of the enhanced QC process, monitor error trends, and assess whether additional measures are warranted. Effect: The lack of internal controls in place over the eligibility process could increase the risk of errors in the housing assistance payment calculations. Repeat Finding: This finding is a repeat finding in the immediate prior year over eligibility requirements. Prior year finding numbers were 2024-001 and 2023-001. Recommendation: We recommend that the Authority review its Agent’s internal controls and policies related to HUD tenant eligibility requirements to ensure that all required documentation is obtained and maintained at the time of recertification. We further recommend that the Authority implements uniform documentation standards and requirements across all local housing agencies (LHAs) and agents of the Authority. Views of responsible officials: There is no disagreement with the audit finding.
PIC Submissions Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871/14.879/14.EHV Federal Award Identification Number and Year: VA901; 2024-2025 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: The PHA is required to submit this form 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. The PHA must also submit the Family Report when a family ends participation in the program or moves out of the PHA’s jurisdiction under portability (24 CFR Part 908 and 24 CFR section 982.158). Condition/Context: During our testing of 60 tenant files for special reporting requirements, we noted the following in 8 files: - 8 out of 60 files could not be located within PIC. Questioned costs: None Cause: During the audit period, staffing transitions, system adjustments, and evolving reporting requirements affected the consistency of transmission monitoring and reconciliation processes. Controls to verify successful submission and confirmation of all required transactions were not formally reconciled on a recurring basis. In response, Virginia Housing has engaged a consultant to assist with PIC submission oversight and reconciliation. As a result of this engagement, the Authority has significantly reduced the number of late and missing submissions. In addition, training for the Systems Team is underway to strengthen internal capacity, improve understanding of submission protocols, and enhance ongoing monitoring controls. While improvements have already been realized, enhancements were implemented after the audit testing period and were not fully reflected in the sample reviewed. Effect: The lack of internal controls over the PIC submission process could result in information not being submitted to HUD timely. Repeat Finding: This finding is a repeat finding in the immediate prior year. Prior year finding numbers were 2024-006 and 2023-001. Recommendation: We recommend that the Authority review its Agent’s process for uploading data to the PIC system to ensure each HUD-50058 recertification gets submitted timely and accurately. Views of responsible officials: There is no disagreement with the audit finding.
HQS Annual and Failed Inspections Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871/14.879/14.EHV Federal Award Identification Number and Year: VA901; 2024-2025 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: The PHA must inspect the unit leased to a family in accordance with it’s Administrative Plan 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 Authority's Administrative Plan, all units must pass an HQS inspection prior to the approval of a lease and at least once every 12 months (annually) during the term of the contract, and at other times as needed, to determine that the unit meets HQS. Additionally, per the Authority’s Administrative Plan, both the family and the owner must be given reasonable notice for all inspections. For units under HAP contract that fail to meet HQS, if the reported deficiency is life-threatening, the PHA must, within 24 hours of notification, both inspect the housing unit and notify the owner if the life-threatening deficiency is confirmed. The owner must then make the repairs within 24 hours of PHA notification. If the reported deficiency is non-life-threatening, the PHA must, within 15 days of notification, both inspect the unit and notify the owner if the deficiency is confirmed. The owner must then make the repairs within 30 days of notification from the PHA or within any PHA-approved extension. (24 CFR section 982.405(d)). If the owner does not correct the cited HQS deficiencies within the specified correction period, the PHA 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 PHA must take prompt and vigorous action to enforce the family obligations (24 CFR sections 982.158(d) and 982.404). Condition/Context: During our testing of 60 tenant files for HQS annual inspection requirements, we noted the following in 11 files: - 11 of 60 files tested included units where inspections were not performed annually in accordance with the administrative plan. During our testing of 60 tenant files for HQS failed inspections, we noted the following in 12 files: - 12 of 60 files tested had a reinspection that was not performed timely (30 days or 24 hours, depending on the cited deficiency). - 8 of 60 files tested where the Authority failed to process abatement of units after the second failed inspection. - 2 of 60 files tested where the Authority failed to enforce family obligations for tenant responsible failures. Questioned costs: $15,129 Cause: During the audit period, inspection scheduling, reinspection follow-up, and abatement processing were managed across multiple LHAs with differing capacity levels and geographic challenges, particularly in rural service areas. Oversight relied on decentralized systems and local workflows, which affected the consistency of inspection tracking, timeliness, and enforcement actions. In response, Virginia Housing launched a new statewide inspection model on April 1, 2025, which includes engagement of a third-party inspection vendor and strengthened centralized oversight. This new model is intended to improve inspection scheduling consistency, reinspection timeliness, and enforcement of abatement requirements. Since implementation, the Authority has begun to observe improved coordination and monitoring of inspection activities. However, because the new model was implemented near the end of the audit period, enhancements were not fully reflected in the files selected for testing. Virginia Housing will continue to monitor performance metrics and evaluate the effectiveness of this revised inspection framework to ensure sustained compliance and improved outcomes. Effect: The lack of internal controls in place over the HQS requirements could result in program participants living in unsafe housing, as well as housing assistance payments being paid for units that are not in compliance with HQS requirements. Repeat Finding: This finding is a repeat finding in the immediate prior year. Prior year finding numbers were 2024-003 and 2023-003. Recommendation: We recommend that the Authority reviews its Agent’s processes related to annual and failed HQS inspections to ensure that inspections are completed in a timely manner and in compliance with HUD and the Authority’s requirements. We further recommend that the Authority review its Agent’s procedures to ensure appropriate follow-up is performed to confirm that tenants or landlords make required corrections timely, or that housing assistance payments (HAP) are properly abated for the unit until such corrections are made. We recommend the Authority work with its Agent’s to alleviate any inspector shortage. Views of responsible officials: There is no disagreement with the audit finding.
Waiting List Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871/14.879/14.EHV Federal Award Identification Number and Year: VA901; 2024-2025 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: The PHA must have written policies in its HCVP administrative plan for selecting applicants from the waiting list and PHA documentation must show that the PHA follows these policies when selecting applicants for admission from the waiting list. (24 CFR sections 5.410, 982.54(d), and 982.201 through 982.207). When a family has been selected from the waiting list, the PHA must notify the family (24 CFR 982.544(a)). Each family member, regardless of age, must submit the following evidence to the responsible entity: For U.S. citizens or U.S. nationals, the evidence consists of a signed declaration of U.S. citizenship or U.S. nationality. The responsible entity may request verification of the declaration by requiring presentation of a United States passport or other appropriate documentation, as specified in HUD guidance. (24 CFR 5.508) Condition/Context: During our testing of 74 tenant files for waiting list requirements, we noted the following in 18 files: - 1 out of 74 files did not include documentation that the Authority notified the applicant that their name had reached the top of the waiting list. - 5 out of 74 files did not include documentation confirming that the applicants were admitted to the program in accordance with the applicant selection policies found within the Administrative Plan. - 7 out of 74 files contained instances where the application date per the waiting list did not agree to the date per the application. - 2 out of 74 files did not include a signed Declaration 214 for all members of the household. - 1 out of 74 files did not include a copy of the executed voucher. - 1 out of 74 files did not include a copy of the signed HAP contract. - 1 out of 74 files could not be tested, as support was not provided. Questioned costs: None Cause: Waiting list administration and applicant selection processes were conducted at the local agency level. While policies were established in the Administrative Plan, documentation practices varied across LHAs, particularly regarding referrals for special purpose vouchers. Controls to verify documentation at the point of selection were not consistently standardized across agencies. As a result, certain required documents were either incomplete or not retained in a manner sufficient for audit verification. Effect: The lack of internal controls over the waiting list requirements could result in individuals not being selected or housed in accordance with the Authority’s and HUD’s requirements. Repeat Finding: This finding is a repeat finding in the immediate prior year. Prior year finding number was 2024-005. Recommendation: We recommend the Authority review its Agent’s internal controls over the waiting list process to ensure all documentation is maintained at the time each applicant is selected from the waiting list and that applicants are added to the waitlist accurately. We recommend the Authority implements uniform documentation standards and requirements across all local housing agencies (LHAs) and agents of the Authority. Views of responsible officials: There is no disagreement with the audit finding.
Housing Assistance Payments Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871/14.879/14.EHV Federal Award Identification Number and Year: VA901; 2024-2025 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: The PHA must pay a monthly HAP on behalf of the family that corresponds with the amount on line 12u of the HUD-50058. This HAP amount must be reflected on the HAP contract and HAP register (24 CFR section 982.158 and 24 CFR Part 982, Subpart K). A payment standard is used to calculate the monthly housing assistance payment for a family. The “payment standard” is the maximum monthly subsidy payment. The PHA shall pay a monthly housing assistance payment on behalf of the family that is equal to the lower of: (1) The payment standard for the family minus the total tenant payment; or (2) The gross rent minus the total tenant payment. The payment standard for the family is the lower of: (i) The payment standard amount for the family unit size; or (ii) The payment standard amount for the size of the dwelling unit rented by the family. 24 CFR 982.505. PHAs must adopt a payment standard schedule that establishes voucher payment standard amounts for each area in the PHA jurisdiction. PHAs must establish a payment standard amount for each unit size, measured by number of bedrooms (zero-bedroom, one-bedroom, and so on). These payment standard amounts comprise the PHA's payment standard schedule. Generally, PHAs may set payment standards within the basic range, which is 90 percent to 110 percent, of the HUD published Fair Market Rents (FMR) or Small Area FMRs (SAFMRs), whichever is applicable, without HUD notification or approval. PHAs may set payment standards outside of the basic range with HUD notification or HUD approval (24 CFR 982.503(d)). Condition/Context: During our testing of 60 tenant files for housing assistance payments requirements, we noted the following in 5 files: - 3 out of 60 files where the correct HAP contract could not be provided - 3 out of 60 files where the incorrect payment standard was used Questioned costs: None Cause: As a balance-of-state PHA, Virginia Housing administers the HCV program through 26 Local Housing Agencies (LHAs), each with varying staffing levels, internal review capacity, and documentation practices. During the audit period, HAP calculations and payment standard applications were primarily processed at the local level, with oversight conducted through periodic monitoring and quality control reviews. Certain documentation and calculation controls were not sufficiently standardized or centrally validated prior to final processing. In addition, enhancements to quality control procedures implemented during the fiscal year were not fully operational for the files selected for audit testing. These factors contributed to inconsistencies in documentation completeness and calculation accuracy. Virginia Housing will continue to evaluate the effectiveness of the enhanced QC process, monitor error trends, and assess whether additional measures are warranted. Effect: The lack of internal controls over the housing assistance payment (HAP) process could result in incorrect HAP being calculated or paid on behalf of program participants. Repeat Finding: No Recommendation: We recommend the Authority strengthen its controls to ensure proper documentation is maintained and that HAP contracts, payment standards, and HAP amounts are accurately applied and reviewed for compliance by its Agents. Views of responsible officials: There is no disagreement with the audit finding.