Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Housing Choice Voucher Program Assistance Listing Number: 14.871 Award Period: 1/1/2022-12/31/2022 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: Under 24 CFR § 982.158 and 982.405, Public Housing Agencies (PHA) must inspect the unit leased to a family at least annually 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. In accordance with the Authority's administrative plan, all units must pass an HQS inspection prior to the approval of a lease and at least once every 24 months during the term of the contract and at other times as needed, to determine that the unit meets HQS. Condition: During our testing we noted instances where the Authority did not follow the internal controls in place to ensure that HQS inspections were performed timely. Questioned Costs: None Context: In 3 of the 60 files tested, the Authority did not complete the HQS inspections timely. Cause: The Authority did not consistently complete Housing Quality Standards (HQS) inspections within the required timeframes due to operational challenges experienced during the COVID-19 public health emergency and the implementation of a new housing management software system. Staffing adjustments, remote operations, increased administrative workload, and the transition to a new software platform affected the Authority's ability to effectively monitor inspection schedules and ensure all required inspections were completed timely. Although management implemented procedures to continue serving participants and maintain housing stability during this period, those procedures were not sufficient to prevent delays in all instances. Effect: The Authority is not in compliance with HUD regulations. Repeat Finding: No Recommendation: We recommend that the Authority review their process for scheduling HQS inspections to ensure that they are done timely. Views of Responsible Officials: The Authority concurs with this finding and acknowledges that certain HQS inspections were not completed within the required timeframes. During the audit period, the Authority faced significant operational challenges resulting from the COVID-19 public health emergency, including remote operations, increased administrative demands, and the implementation of a new housing management software system. These factors affected the Authority's ability to consistently monitor inspection schedules and complete all required inspections on time. Throughout this period, the Authority prioritized maintaining housing assistance for eligible families while continuing to operate under evolving federal guidance issued in response to the pandemic. Although these circumstances contributed to the delays, the Authority recognizes its responsibility to maintain compliance with HUD inspection requirements. Management has reviewed its inspection scheduling and monitoring procedures and has implemented additional controls within its current software system to better track inspection due dates and ensure timely completion of HQS inspections. The Authority is committed to strengthening its internal processes, improving oversight, and maintaining compliance with HUD requirements going forward.
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Public and Indian Housing Assistance Listing Numbers: 14.850 Award Period: 1/1/2022-12/31/2022 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: In accordance with HUD regulations under 24 CFR Sections 5.601, 960.253, 960.255, and 960.259, 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. The PHA must determine income eligibility and calculate the tenant’s rent payment using the documentation from third party verification. Condition: During our testing, we noted instances where the Authority did not follow the internal controls in place to ensure all necessary documentation was acquired and maintained to accurately calculate the tenants’ rent payment. Questioned Costs: None Content: In 5 of 40 files tested, we noted the following: - 3 of 40 samples did not have proper support for income - 2 of 40 samples did not have proper support for assets - As a result of missing or incorrect support, 3 of 40 samples had incorrectly calculated rent Cause: The Authority did not consistently maintain sufficient documentation to support tenant income and asset determinations during the audit period. During this time, the Authority was continuing to recover from the operational impacts of the COVID-19 public health emergency. Extended periods of modified operations, increased workloads, and significant staff turnover created challenges in completing certifications and maintaining supporting documentation while simultaneously addressing a backlog of work that accumulated during the pandemic. Three of the exceptions involved missing or insufficient third-party income documentation that should have been maintained in the tenant files. The remaining two exceptions involved jointly owned bank accounts where the full account balance was entered for each account holder rather than allocating each individual's ownership interest. Although the asset balances were overstated, they remained below HUD's threshold for counting asset income and did not affect the tenants' rent calculations. The Authority acknowledges that its internal review procedures were not sufficient to identify these documentation and data entry errors before certifications were finalized. Effect: The Authority is not in compliance with HUD regulations regarding tenant rent calculations. Repeat Finding: No Recommendation: We recommend that management review their procedures to ensure that all required documentation is maintained in the file. Views of Responsible Officials: The Authority concurs with this finding and acknowledges that required documentation was not consistently maintained to support certain income and asset determinations during the audit period. During 2022, the Authority was continuing to recover from the significant operational disruptions caused by the COVID-19 public health emergency. As normal operations resumed, staff were working to address a backlog of certifications and file processing that had accumulated during the pandemic while also managing substantial staff turnover. These circumstances placed increased demands on remaining personnel and contributed to weaknesses in file documentation and quality control. Three of the exceptions involved supporting income documentation that was not adequately maintained in the tenant files. The remaining two exceptions involved jointly owned bank accounts where the full account balance was entered for both account holders instead of allocating each participant's ownership interest. Although these asset balances were overstated, they remained below HUD's threshold for counting asset income and did not impact the tenants' rent calculations. Nevertheless, the Authority recognizes that these errors should have been identified through its established review process. The Authority accepts responsibility for these deficiencies and has taken corrective action to strengthen its internal controls. Management has reinforced staff training on HUD documentation and verification requirements, enhanced supervisory reviews of tenant files, and implemented additional quality control procedures to ensure that required third-party documentation is obtained, retained, and reviewed before certifications are finalized. These measures are intended to improve the accuracy and completeness of tenant files and ensure continued compliance with HUD requirements going forward.
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Public and Indian Housing Assistance Listing Numbers: 14.850 Award Period: 1/1/2022-12/31/2022 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: The Utility Expense Level (UEL) is used to calculate the utility portion of the Operating Fund subsidy. This compliance supplement requires testing of rolling base data. PHAs must retain such data pursuant to 990.325. PHAs receive invoices for utilities. The consumption and cost data from those invoices are aggregated, in an Excel workbook or other platform, commonly referred to as a utility ledger. The aggregated data is transferred to the Form 52722. The auditors should perform a random sample of each of the main utility types (gas, water/sewer, electric, etc.) to review accuracy of the unit of measure, consumption and cost data reported on Form 52722. Condition: During our testing, we noted that consumption levels and actual utility costs did not agree to the utility tracker for one property. Questioned Costs: $43,948 Content: During our testing, we noted one asset management project (AMP) that had a gas consumption level per the HUD-52722 that did not agree to the utility tracker maintained by the Authority. For this same AMP, the actual utility costs for water/sewer, gas and electricity did not agree to the totals per the utility tracker. Cause: The Authority did not consistently ensure that utility consumption and cost data reported on Form HUD-52722 agreed to the supporting utility tracking records. During the audit period, the Authority was continuing to recover from operational disruptions caused by the COVID-19 public health emergency and experienced significant staff turnover. As responsibilities were reassigned and new personnel assumed utility reporting duties, a data entry error occurred for one AMP, resulting in utility consumption and cost information being reported incorrectly. The Authority acknowledges that its review procedures were not sufficient to detect and correct the error before submission. Effect: The Authority is not providing accurate data to HUD regarding utility costs and usage, and the Authority is not in compliance with HUD regulations. Repeat Finding: No Recommendation: We recommend that management review their procedures for tracking utility costs and usage in order to accurately complete the HUD-52722 form. Views of Responsible Officials: The Authority concurs with this finding and acknowledges that utility consumption and cost data for one AMP was reported incorrectly on Form HUD-52722. During the audit period, the Authority was continuing to address the operational impacts of the COVID- 19 public health emergency while also experiencing significant staff turnover. As key responsibilities were transitioned to new personnel, a data entry error occurred during the preparation of the utility reporting information for one AMP. The Authority recognizes that its internal review process should have identified this discrepancy prior to submission. The Authority accepts responsibility for this deficiency and has taken corrective action to strengthen its internal controls over utility reporting. Management has implemented additional supervisory review procedures requiring reported utility data to be reconciled to the supporting utility tracker before submission. In addition, staff responsible for preparing and reviewing Form HUD-52722 have received additional training on utility reporting requirements and data verification procedures. These measures are intended to improve the accuracy of utility reporting and help ensure compliance with HUD requirements in future reporting periods.