Audit 403946

2025-001: Internal Controls over Compliance for Allowable Costs/Cost Principals, Eligibility, and Special Tests & Provisions (Housing Assistance Payments) U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Section 8 Housing Choice Vouchers – ALN 14.871 Criteria: Adequate internal controls should exist to ensure an entity complies with program eligibility requirements and that benefits paid to or on behalf of individuals are calculated correctly. The HRA’s internal controls over eligibility and Housing Assistance Payment (HAP) calculations include staff completion of tenant eligibility and HAP calculation checklists, with a separate program specialist responsible for reviewing and approving the checklists. Condition: The HRA did not complete or maintain tenant file checklists as required by its established internal controls when performing tenant eligibility determinations and annual recertifications for certain individuals receiving HAPs during 2025. As a result, three instances were identified where the lack of documentation of control procedures led to errors in individual HAP calculations. Cause: Turnover within the HRA during 2024 contributed to this condition. While procedures were in place to ensure program compliance, they were not consistently followed. Corrective actions began in 2025; however, these actions were not fully implemented during the year and remain in process. Effect: As a result of not consistently following established procedures, errors in tenant eligibility determinations and HAP calculations occurred, and there is an increased risk that additional errors may exist. Known Questioned Costs: $4,184 Context: Our sample of tenant files supporting 25 Housing Choice Vouchers selected from a population of approximately 11,100 vouchers showed that only 12 of the 25 files had supporting tenant file checklists. Additionally, three of the sampled vouchers lacking tenant file checklists had incorrect HAP calculations, resulting in the questioned costs noted above. Two of these three vouchers related to the same individual, who should not have received HAPs due to an increase in income identified at the time of annual recertification. Based on the results of our testing, projected questioned costs exceeded $25,000. These projected amounts were considered in evaluating the significance of the finding and were not considered material to the major federal program. Identification of Repeat Finding: This is a continuation of prior-year finding 2024-004. Recommendation: We recommend the HRA implement and monitor controls to ensure policies and procedures related to tenant eligibility determinations and recertifications are consistently followed. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and is in the process of strengthening internal controls to ensure timely and appropriate actions addressing the deficiency. Additional details are included in the City of Bloomington’s Corrective Action Plan.