Finding Number 2025-002: Inadequate Tenant File Documentation in MTW Housing Choice Vouchers (ALN 14.881) (Repeat of Finding 2024-005) Condition: During tenant file testing for the Housing Choice Voucher (HCV) component of the MTW Demonstration Program, we identified the following deficiencies. This condition is a repeat of prior year finding 2024-005: 1. For one port-out tenant, the tenant file did not contain the required HUD Form 50058 or the Enterprise Income Verification (EIV) documentation. As a result, the family’s eligibility, income determination, and assistance could not be substantiated from the file. 2. For one tenant, the Authority was unable to provide the HUD Form 50058; the form was not retained in the tenant file and only tenant balances from the Authority’s housing software were available. The data is reportedly retrievable from HUD’s IMS/PIC system but could not be reproduced from the Authority’s records. 3. For one tenant, the income determination was incorrect. Social Security income was not recalculated based on the prior-year recertification; although an updated Social Security benefit letter was received indicating a change in the monthly benefit, the income reported on the HUD Form 50058 was not updated accordingly, resulting in an inaccurate rent and housing assistance payment (HAP) calculation. Criteria: Under 2 CFR §200.302 and §200.303, the Authority must maintain financial management systems and internal controls sufficient to ensure that costs are allowable, supported, and compliant with program requirements. The 2025 Compliance Supplement (4-14.881) identifies Eligibility (Type E) as subject to audit and requires that the HUD Form 50058-MTW key line items be “documented in the recipient’s file.” HUD program rules require PHAs to complete and retain accurate HUD Forms 50058, to verify income through HUD’s EIV system, and to recalculate income upon receipt of updated benefit information. Records supporting federal program compliance must be retained and accessible (2 CFR §200.334). Cause: The Authority lacked effective internal controls over tenant file documentation, income verification (including use of EIV and updated benefit information), HUD Form 50058 completion and retention, and reexamination procedures. Effect: Missing Forms 50058 and EIV documentation leave family eligibility and assistance payments unsupported; the failure to recalculate income based on updated Social Security benefit information resulted in an inaccurate income determination and rent/HAP calculation. These deficiencies increase the risk of over- or under-payment of housing assistance and questioned costs under the MTW program. Questioned Costs: $395,581 Recommendation: The Authority should ensure the executed HUD Form 50058 (and supporting income/EIV documentation) is completed and retained in each tenant file; recalculate income promptly upon receipt of updated benefit information and reflect the change on the Form 50058; perform EIV verification and reconciliation at each admission and reexamination; conduct a file-completeness review before sign-off; provide staff training on income determination, EIV, and federal recordkeeping; and, where forms were not retained, download and refile them from IMS/PIC. Reply and Corrective Action Plan: The Authority concurs with the finding and questioned costs of $395,581 and acknowledges it is a repeat of finding 2024-005. Ensure Forms 50058 and supporting documentation are retained; recalculate household income when required; retrieve or reconstruct missing records; resolve questioned costs with HUD; conduct file reviews; and provide staff training.
Late Submission of Unaudited Financial Data Schedule (FDS) (ALN 14.881) Finding Number 2025-003: Condition: The Authority’s fiscal year ended September 30, 2025. The unaudited Financial Data Schedule (FDS) was required to be submitted electronically to HUD’s Real Estate Assessment Center (REAC) through the Financial Assessment Subsystem (FASS-PH) no later than November 29, 2025 (60 days after fiscal year end). The Authority did not submit the unaudited FDS until May 29, 2026 — approximately six months after the required due date. Criteria: 24 CFR §5.801 (Uniform Financial Reporting Standards) requires PHAs to submit unaudited financial information (the FDS) to HUD via FASS-PH no later than 60 days after the fiscal year end, and audited financial information no later than 9 months after fiscal year end. The 2025 Compliance Supplement (4-14.881, §III.L.1.d) identifies the FASS-PH financial submission (OMB No. 2535-0107) as a Reporting requirement subject to audit and references Notice PIH 2012-21, Section 13, for MTW reporting to FASS-PH. Cause: The Authority did not have adequate procedures or a monitoring calendar to ensure regulatory financial reporting deadlines were met, contributed to by delays in completing the year-end close. Effect: Noncompliance with 24 CFR §5.801. Late submission of unaudited financial data impairs HUD/REAC’s ability to timely assess the Authority’s financial condition and may adversely affect the Authority’s financial assessment and PHAS score. Questioned Costs: None. Recommendation: The Authority should establish a regulatory reporting calendar with assigned responsibility and supervisory review to ensure the unaudited FDS is submitted to FASS-PH within 60 days of fiscal year end (and the audited FDS within 9 months), supported by an accelerated year-end close process. Reply and Corrective Action Plan: The Authority concurs with the finding regarding late submission of the unaudited FDS. Establish a regulatory reporting calendar; assign responsibilities and supervisory review; and accelerate year-end closing procedures to support timely FDS submissions.
Compliance Deficiencies Identified in HUD Monitoring Review (ALN 14.881) Condition: The compliance deficiencies identified in the U.S. Department of Housing and Urban Development (HUD) Compliance Monitoring Review conducted June 24–28, 2024 (formalized in HUD’s letter dated March 24, 2025) remained unresolved as of September 30, 2025. The open items span multiple program areas, including governance and internal controls, Housing Choice Voucher (HCV) program compliance, Project-Based Voucher (PBV) documentation, Public Housing operations, ROSS grant administration, Violence Against Women Act (VAWA) policy, and Section 3 compliance. This condition is a repeat of prior year finding 2024-006. Criteria: The HUD findings cite noncompliance with various federal regulations, including 2 CFR Part 200 and 24 CFR Parts 5, 35, 75, 960, 982, and 983, as well as HUD Notices PIH 2016-22, 2017-13, 2022-10, and 2023-03. Under 2 CFR §200.303 and §200.521, the Authority is responsible for taking timely and appropriate corrective action on identified deficiencies. Cause: The Authority had not fully implemented or updated the policies, procedures, and documentation necessary to resolve the open HUD monitoring findings and align with current HUD requirements. Effect: Failure to resolve these deficiencies on a timely basis results in continued noncompliance with federal program requirements, may lead to disallowed costs or HUD sanctions, and increases the risk of recurring audit findings in future periods. Questioned Costs: None. Recommendation: The Authority should prioritize timely resolution of all open HUD monitoring findings; implement the corrective actions outlined in HUD’s letter (policy updates, staff training, file reviews, and required certifications); assign responsibility and target completion dates for each open item; and maintain ongoing communication with HUD to confirm closure. Reply and Corrective Action Plan: The Authority concurs with the finding and acknowledges it is a repeat of finding 2024-006. Maintain a remediation tracker; implement corrective actions identified by HUD; conduct training and file reviews; submit required certifications; and provide progress updates until all items are closed.
Improper Timing of MTW Capital Fund Program (CFP) Drawdowns (ALN 14.881) Condition: During testing of the Capital Fund Program (CFP) component of the Moving to Work (MTW) Demonstration Program, we determined that the Authority drew down CFP funds in advance of need. As of September 30, 2025, $1,891,326 of CFP funds drawn during the fiscal year remained unearned (undisbursed) and were carried as restricted/unearned amounts at year end. The drawdowns were not aligned with immediate, allowable obligations or expenditures at the time the funds were requested. This condition is a repeat of prior year finding 2024-002. Criteria: Under 2 CFR §200.305(b), non-Federal entities (other than states) must minimize the time elapsing between the transfer of funds from HUD and their disbursement; funds may be drawn only when needed for immediate disbursement (HUD’s “just-in-time” funding requirement). 2 CFR §200.302(b)(6) requires written procedures for payment consistent with §200.305. Under the MTW Demonstration Program (ALN 14.881), the Authority is subject to the financial management and cash management requirements applicable to non-MTW agencies; the 2025 Compliance Supplement (4-14.881) states that “No flexibility under the MTW demonstration permits an agency to waive any requirements regarding cash management” and that MTW agencies “are subject to the same cash management requirements as non-MTW agencies.” HUD controlled-disbursement and eLOCCS drawdown requirements apply (Notice PIH 2017-06). Cause: The Authority lacked effective internal controls to ensure CFP drawdowns were tied to immediate, documented, and allowable obligations and expenditures at the time of request, and did not reconcile amounts drawn to amounts earned and expended during the year. Effect: Federal cash was drawn in advance of need, contrary to the cash management standards of 2 CFR §200.305(b), resulting in $1,891,326 of undisbursed federal funds held by the Authority at year end. Holding undisbursed federal funds increases the risk of improper use, may give rise to an interest-remittance obligation under 2 CFR §200.305(b)(9) to the extent interest earned exceeds the $500 de minimis, and exposes the Authority to recapture or repayment. Questioned Costs: None. Recommendation: The Authority should (1) implement written drawdown procedures requiring each CFP request to be supported by immediate, documented, and eligible obligations or expenditures in accordance with HUD’s “just-in-time”/eLOCCS requirements; (2) perform periodic reconciliations of amounts drawn to amounts earned and expended, and promptly return or properly apply funds drawn but not needed; (3) monitor and remit any interest earned on undisbursed federal cash above the de minimis; and (4) provide staff training on federal cash management requirements under 2 CFR Part 200 and HUD guidance. Reply and Corrective Action Plan: The Authority concurs with the finding and acknowledges it is a repeat of finding 2024-002 involving cash management and drawdown procedures. Revise cash management procedures; require documented support and approval for drawdowns; perform monthly reconciliations; monitor interest earned on undisbursed federal cash; provide staff training; and report compliance status to the Board of Commissioners.
Use of Emergency Housing Voucher (EHV) Funds for Non-EHV Program Activities (ALN 14.EHV) Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Noncompliance and significant deficiency in internal control over compliance. Condition: During our testing of Emergency Housing Voucher (EHV) program activity, we noted that approximately $90,317 of EHV funds were used for activities outside of the EHV program. Management indicated that the Authority did not obtain a waiver or approval from HUD authorizing the use of EHV funds within the MTW program or for non-EHV activities. Criteria: EHV funds are restricted to activities allowable under the EHV program and are not subject to MTW funding fungibility. While an MTW agency may request HUD approval to apply certain MTW administrative flexibilities to EHV vouchers, such approval must be obtained from HUD before implementation. In the absence of HUD approval, EHV funds must be used solely for authorized EHV purposes. Cause: The Authority did not maintain adequate controls to ensure EHV funds were restricted to allowable EHV program expenditures and to verify that appropriate HUD approval was obtained prior to using EHV funds for activities outside of the EHV program. Effect: As a result, federal funds may have been expended for purposes not authorized under the EHV program, resulting in noncompliance with federal requirements. The Authority may be required to repay improperly expended funds and could be subject to additional HUD review or corrective actions. Questioned Costs: $90,317 Recommendation: The Authority should strengthen controls over federal program expenditures to ensure EHV funds are used solely for allowable EHV activities. In addition, the Authority should establish procedures to obtain and retain documentation of any HUD approvals or waivers before applying MTW flexibilities to EHV vouchers or using EHV funds outside of their intended purpose. Reply and Corrective Action Plan: The Authority concurs with the finding and questioned costs of$90,317. The Authority will strengthen controls over federal program expenditures to ensure EHV funds are used solely for allowable EHV activities; establish procedures to obtain and retain documentation of any HUD approvals or waivers before applying MTW flexibilities to EHV vouchers or using EHV funds outside of their intended purpose; work with HUD to resolve the questioned costs; and provide staff training on EHV program eligibility and allowable-cost requirements.