Audit 402872

2025-001 Finding – Internal controls over compliance Federal Program: Housing Voucher Cluster; Section 8 Housing Choice Voucher Program - Assistance Listing #14.155 and Mainstream Vouchers – Assistance Listing #14.879 Federal Agency: U.S. Department of Housing and Urban Development Award Period: 2025 Finding resolution status In process Information on universe and population size The issue with the Authority’s system of internal control over compliance represents a significant deficiency in internal control. The total population of all Housing Choice Voucher (HCV) files subject to testing was 448. Of these 448 tenant files, we selected 25 items to test and noted 1 exception during our testing. Sample size information A non‑statistical sample of 25 tenant files were selected for testing. One error was identified. Identification as a repeat finding This was not a repeat finding. Criteria 2 CFR §200.303 requires non-Federal entities to establish and maintain effective internal controls over Federal programs that provide reasonable assurance of compliance with applicable requirements. HUD guidance requires that income determinations, including excluded amounts such as loans, be supported by adequate documentation retained in tenant files. Statement of condition During our review of tenant files, one file included a reported lump-sum payment of $6,700 that was treated as a loan and excluded from income. However, the Authority did not obtain or retain supporting documentation, such as a loan agreement or third-party verification, to substantiate the exclusion. Cause The Authority’s internal controls over compliance did not ensure that staff obtained and retained documentation for excluded income items. Effect Without effective controls over documentation, there is an increased risk that income determinations may not be properly supported, which could result in noncompliance with HUD requirements and inaccurate housing assistance calculations. Auditor non-compliance code S – Internal control deficiencies Questioned costs $0 Views of responsible officials Management acknowledges the deficiency and plans to strengthen controls over income verification and documentation retention. Context This was an isolated instance affecting one tenant file and does not appear to be a systemic issue. Recommendation We recommend that the Authority enhance internal controls to require documentation of all excluded income amounts, including supervisory review to ensure compliance with HUD requirements. Auditor’s summary of auditee’s comments on the findings and recommendations Management agrees with the finding and recommendation. Response indicator Agree Completion date September 30, 2026 Response Management agrees with the finding.