Housing Voucher Cluster – Special Tests - Reasonable Rent Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: VA003, 2025 Award Period: January 1, 2025 – December 31, 2025 Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: The PHA administrative plan must state the method used by the PHA to determine that the rent to owner is reasonable in comparison to rent for other comparable unassisted units. The PHA determination must consider unit attributes such as the location, quality, size, unit type, and age of the unit, and any amenities, housing services, maintenance, and utilities provided by the owner. The PHA must determine that the rent to the owner is reasonable at the time of initial leasing. Also, the PHA must determine reasonable rent during the term of the contract (a) before any increase in the rent to owner, and (b) at the HAP contract anniversary if there is a 10 percent decrease in the published Fair Market Rent in effect 60 days before the HAP contract anniversary. The PHA must maintain records to document the basis for the determination that rent to owner is a reasonable rent (initially and during the term of the HAP contract) (24 CFR sections 982.4, 982.54(d)(15), 982.158(£)(7), and 982.507). Condition: During testing, multiple instances were identified in which the Authority determined rent to be reasonable after the effective date of the HUD-50058 Family Report Form. Questioned costs: There are no questioned costs related to this test as all rent was determined to be reasonable. The finding is related to timeliness of the rent reasonableness determination. Context: During testing of 120 tenant files for rent reasonableness requirements, the following was noted: • 24 out of 120 files tested did not have a rent reasonableness determination form completed before the rent effective date. Cause: The Authority has had turnover in the staff who perform the rent reasonableness determinations, resulting in these processes being performed by less experienced and trained staff. Effect: The Authority is not in compliance with HUD’s requirements regarding rent reasonableness. This could have an impact on HAP calculations. Repeat Finding: Yes, prior year finding was 2024-005 Recommendation: We recommend the Authority review their processes and internal controls for rent reasonableness to ensure the reasonableness determination is completed prior to the effective date of the HUD-50058 Family Report Form. Views of responsible officials: There is no disagreement with the audit finding.
Housing Voucher Cluster – Housing Quality Standards (HQS) Inspections and Enforcement Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: VA003, 2025 Award Period: January 1, 2025 – December 31, 2025 Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: The PHA must inspect each unit leased to a family at least biennially to determine compliance with Housing Quality Standards (HQS), conduct required quality-control reinspections and prepare and retain a unit inspection report (24 CFR §§ 982.158(d) and 982.405(b)). For units under HAP contract that fail to meet HQS, if the reported deficiency is life threatening, the PHA must, within 24 hours of notification, both inspect the housing unit and notify the owner if the life-threatening deficiency is confirmed. The owner must then make the repairs within 24 hours of PHA notification. If the reported deficiency is non-life-threatening, the PHA must, within 15 days of notification, both inspect the unit and notify the owner if the deficiency is confirmed. The owner must then make the repairs within 30 days of notification from the PHA or within any PHA-approved extension. (24 CFR section 982.405(d)). If the owner does not correct the cited HQS deficiencies within the specified correction period, the PHA must stop (abate) HAPs beginning no later than the first of the month following the specified correction period or must terminate the HAP contract. The owner is not responsible for a breach of HQS because of the family's failure to pay for utilities for which the family is responsible under the lease or for tenant damage. For family caused defects, if the family does not correct the cited HQS deficiencies within the specified correction period, the PHA must take prompt and vigorous action to enforce the family obligations (24 CFR sections 982.158(d) and 982.404). Condition: During testing, multiple instances were identified in which the Authority does not meet HQS requirements. Questioned costs: $487 for the HQS enforcement test only. This was determined by calculating the HAP that should have been abated during the months the unit did not pass inspection. Questioned costs could not be determined for biennial inspections as the nature of the test is not for financial reasons. Context: During testing of 65 units for HQS requirements, the following was noted: • 27 units did not have inspections performed on a biennial basis, including 1 for which no inspection documentation could be located • 7 units did not have inspections performed within 2 years of the effective date tested • 1 unit where it failed inspection and HAP was not properly abated Cause: The staff performing the inspections did not properly use the Yardi software program available to conduct and document the inspection process. Effect: The Authority is not in compliance with HUD’s requirements regarding HQS Inspections. Repeat Finding: Yes, prior year findings were 2024-002 and 2024-004 Recommendation: We recommend the Authority review its HQS inspection process to ensure that inspections are performed timely and that all inspection-related documentation is maintained within Yardi or the tenant file. We recommend the Authority review its processes for tracking failed inspections to ensure that the proper actions are taken timely. Views of responsible officials: There is no disagreement with the audit finding.
Low-Rent Public Housing – Eligibility Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Public Housing Operating Fund Assistance Listing Number: 14.850 Federal Award Identification Number and Year: VA003, 2025 Award Period: January 1, 2025 – December 31, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Pursuant to 24 CFR §§ 5.230, 5.609, 5.601 et seq., 960.253, 960.255, and 960.259, PHAs must obtain and maintain documentation necessary to determine and support tenant eligibility and rent calculations, including third-party verification of family income, assets, allowable deductions, and expenses. PHAs are required to perform and document annual reexaminations of family income and composition, use verified information to determine rent payments, and maintain required application and recertification documentation, including HUD Form 9886 (Authorization for the Release of Information/Privacy Act Notice), applicable consent and general release forms, and other documentation supporting eligibility determinations and rent calculations. Additionally, management's established review and approval procedures must be completed and retained to provide evidence that eligibility and rent determinations were reviewed in accordance with HUD requirements and agency policies. Condition: During testing, multiple instances were noted where required supporting documentation was not maintained, including missing income, asset, and expense verifications; unsupported rent calculations; annual reexaminations that were not performed timely; missing HUD Form 9886 authorizations; missing general release forms; and missing evidence of management review as evidenced by unsigned eligibility review checklists. Questioned costs: $8,343; this was calculated by determining what the HAP would have been if the unsupported income, assets and/or expenditures were not factored into the HAP calculation, comparing to what was actually charged and then multiplying that by the number of months the incorrect HAP was charged through the end of the fiscal year. Context: During testing of tenant 40 files for eligibility requirements, the following was noted: • 2 out of 40 files could not be located for testing. • 3 out of 40 files lacked sufficient documentation to verify the income reported on the HUD-50058. Incorrect income verification could result in incorrect HAP calculations. • 1 out of 40 files lacked sufficient documentation to verify the assets reported on the HUD-50058. Incorrect asset verification could result in incorrect HAP calculations. • 1 out of 40 files lacked sufficient documentation to verify the expenditures reported on the HUD-50058. Incorrect expense verification could result in incorrect HAP calculations. • 1 out of 40 files did not contain an "Authorization for Release of Information/Privacy Act Notice" for (HUD-9886) dated 1/1/2024 or after. • 3 out of 40 files tested did not contain a certification checklist completed by the PHA specialist. Cause: The staff performing the inspections did not properly use the Yardi software program available to conduct and document the inspection process. Effect: The Authority is not in compliance with HUD eligibility requirements. Missing or incomplete supporting documentation, untimely annual reexaminations, unsupported rent calculations, and insufficient evidence of management review increase the risk that tenant eligibility and rental assistance may be determined incorrectly, which could result in improper subsidy calculations. Repeat Finding: No Recommendation: We recommend that the Authority strengthen controls over tenant eligibility and rent determinations by ensuring required income, asset, expense, consent, and release documentation is obtained and retained; annual reexaminations are completed timely; rent calculations are based on verified information; and supervisory review checklists are completed, signed, and maintained in each tenant file. Views of responsible officials: There is no disagreement with the audit finding.