Finding 2025-001 Significant Deficiency: Special Reporting - Compliance and Control Finding ALN 14.871 - Section 8 Housing Choice Vouchers Federal Agency: U.S. Department of Housing and Urban Development (HUD) Pass-Through Entity: N/A - Direct Award Criteria Or Specific Requirement: HUD requires Public Housing Authorities (PHAs) to submit a Form HUD-50058 within 60 days whenever a family ends participation in the program or moves out of the PHA’s jurisdiction under portability, or transfers from one assisted unit to another (unit-to-unit move). Condition: The Authority did not submit the required form within the designated time frame, nor did the existing control operate as intended to prevent the error from occurring. Cause: The control in place did not ensure timely submission of the HUD-50058. Effect: The possibility exists that noncompliance with federal requirements could go undetected regarding compliance relating to direct and material compliance requirements. Questioned Costs: Known questioned costs of $1,681 were identified. Due to the nature of the compliance deficiency, likely questioned costs could not be reasonably projected or estimated, but are likely to exceed $25,000. Context: Of the 40 participants tested, 3 participants that exited the program or moved units did not have the HUD-50058 form submitted within the required 60 day timeframe, resulting in HAP payment overages for periods where the participant was not housed in the unit in question. Identification As A Repeat Finding: The finding has been repeated from prior year finding 2024-001. Recommendation: We recommend that management evaluate their existing control over the timely submission of the HUD-50058 upon a participant’s exit of the program, and consider implementing additional controls such as contacting a sample of landlords each month to verify whether tenants at that location have not vacated their units without notifying the Authority. Views Of Responsible Officials: Beginning immediately, the Section 8 Director and Coordinator will strengthen compliance and internal controls for processing move-out HUD-50058 forms to reduce the risk of noncompliance and HAP overpayments. MCHA will implement a standardized move-out documentation process that includes maintaining a move-out tracking spreadsheet to record tenant names, move-out dates, PIC submission dates, and relevant notes, allowing staff to monitor and ensure HUD-50058 submissions are completed within the required 60-day timeframe while also providing documentation for audits and internal reviews. MCHA will reinforce communication with both landlords and residents by providing annual reminders of reporting responsibilities, including notification of move-outs, evictions, deaths, property sales, and contact or banking changes, and by reviewing family obligations with HCV participants during annual recertifications to emphasize their responsibility to report intended move-outs. Additionally, MCHA will recover any HAP overpayments through electronic repayment or billing as appropriate and will monitor all identified overpayments to ensure collection efforts are documented and followed through to resolution.
Finding 2025-002 Significant Deficiency: Special Tests and Provisions – Compliance and Control Finding ALN 14.871 – Section 8 Housing Choice Vouchers Federal Agency: U.S. Department of Housing and Urban Development (HUD) Pass-Through Entity: N/A - Direct Award Criteria Or Specific Requirement: Public Housing Authorities (PHAs) are required to enforce Housing Quality Standards (HQS) by performing inspections at initial occupancy and at least annually, and ensuring deficiencies are corrected within required timeframes. PHAs must not make housing assistance payments (HAP) for units that fail to comply with HQS and are not timely abated. Condition: The Authority failed to place applicable units into abatement and existing controls did not ensure that units requiring abatement were identified and processed in a timely manner. Cause: The control in place did not ensure timely abatement of rent as a result of failed inspection corrections. Effect: The possibility exists that noncompliance with federal requirements could go undetected regarding compliance relating to direct and material compliance requirements. Questioned Costs: Known questioned costs of $5,011 were identified. Due to the nature of the compliance deficiency, likely questioned costs could not be reasonably projected or estimated, but are likely to exceed $25,000. Context: Of the 40 units tested, 9 met the criteria for abatement but were not placed into abatement. Identification As A Repeat Finding: The finding has been repeated from prior year finding 2024-002. Recommendations: We recommend that the Authority strengthen its Housing Quality Standards (HQS) enforcement process by implementing a formal tracking system to monitor inspection results and ensure timely follow-up on any deficiencies occur, in accordance with the Authority’s Administrative Plan. View of Responsible Officials: To address this compliance and control deficiency, the Section 8 Director, with assistance from caseworkers, will strengthen oversight of failed inspections and the abatement process by reviewing and tracking all inspection reports received from the third-party inspector, ensuring deficiencies are corrected and re-inspections are completed timely, and conducting re-inspections by MCHA staff when necessary. Staff will monitor correction deadlines to determine when abatements are required, issue abatement notices promptly, and ensure HAP payments are suspended and reinstated in accordance with MCHA policy and successful re-inspection results. MCHA will maintain complete documentation of failed inspections, correction deadlines, re-inspections, abatements, and HAP payment actions, perform monthly reconciliations between failed inspections and HAP payment records to verify required abatements have been implemented, and conduct periodic reviews of inspection and abatement tracking to ensure all units requiring abatement are identified and processed in a timely manner.
Finding 2025-003 Significant Deficiency: Special Tests and Provisions – Compliance and Control Finding ALN 14.871 – Section 8 Housing Choice Vouchers Federal Agency: U.S. Department of Housing and Urban Development (HUD) Pass-Through Entity: N/A - Direct Award Criteria Or Specific Requirement: Public Housing Authorities (PHAs) are required to perform routine inspections to determine if the unit meets the Housing Quality Standards (HQS) set by HUD. Per the Authority’s Administrative Plan, HQS inspections must be conducted on an annual basis. Condition: The Authority failed to perform an annual reinspection of a participant’s unit within 1 year of the previously performed HQS inspection. Cause: The control in place did not ensure timely inspection of the unit. Effect: The possibility exists that noncompliance with federal requirements could go undetected regarding compliance relating to direct and material compliance requirements. Questioned Costs: None Context: Of the 40 units tested, 2 met the criteria for HQS inspections that were not performed within 1 year of the previous HQS inspection, as required by the Administrative Plan. Identification As A Repeat Finding: Not applicable Recommendations: We recommend that the Authority strengthen its Housing Quality Standards (HQS) inspection process to ensure all units are inspected in accordance with the Administrative Plan of the Authority. View of Responsible Officials: To address this compliance and control deficiency, MCHA will implement biennial inspections to ensure each HCV unit is inspected at least once every 24 months in accordance with HUD requirements. Although HUD revised the federal inspection standard from annual to biennial inspections in 2016, MCHA's Administrative Plan continued to require annual inspections until the adoption of a biennial inspection policy in July 2025. To strengthen internal controls and ensure compliance with inspection timeframes, MCHA will maintain an inspection-due report to track all HCV units, monitor upcoming inspection deadlines, and ensure inspections are scheduled and completed before the applicable 24-month requirement. Management will review the report regularly to identify units approaching their inspection due dates and prevent any unit from exceeding the required inspection cycle.