Audit 4310

Finding 2023-001 – Public Housing Tenant Account Receivables – Cash Management/Eligibility - Internal Control Over Tenant Terminations and Nonpayment of Rent – Low Income Public Housing Program ALN #14.850 – Noncompliance and Material Weakness Criteria: The Code of Federal Regulations, the Housing Authority’s Admissions and Continued Occupancy Policy, Housing Authority dwelling lease, and the Public Housing Occupancy Guidebook Condition & Cause: We noted a concerning year-over-year increase in Public Housing tenant account receivables (TARs). The balance of the account increased from $389,224 to $826,310. We elected to randomly sample eight (8) participants across the spread of AMPs with high receivable balances to test for proper compliance with the ACOP and dwelling lease pertaining to the nonpayment of rent. We noted that all participants were billed through at least June 2023. We found that all eight participants were significantly behind on their rent. Of the total possible ninety-six (96) FY 2023 payments of rent (8 participants * 12 months) we noted only four (4) payments collected. Five of the participants did not make a single payment during the fiscal year but their leases were not terminated. Further we noted that four of the participants had moved out either prior to their FY 2023 annual exam or early into the lease. Since the dwelling leases were not terminated and the billings continued through June 2023 this has the implication of meaning that the units are counting as occupied for this period when either the unit was not occupied or that the Housing Authority is not enforcing its dwelling lease. This brings into question the occupancy fees that the Housing Authority is receiving from public housing to the Central Office Cost Center, occupancy scores in MASS, and funding received under operating subsidy calculations. Four participants were still active at 3/31/2023. For all of FY 2023 there were only two (2) payments collected from these active participants which in all amounted to $715 total. These are units which could be assisting other eligible families that would contribute rent. We inquired of staff as to the collection policy of the Authority. It was stated to us that eviction proceedings would not occur for nonpayment of rent generally for at least 6-7 months of nonpayment. We note that this is not congruent with the signed leases which states that fourteen (14) days of nonpayment should trigger action. Since the Housing Authority waits so long to respond to these lease violations it risks unoccupied units to be reported as occupied as we noted above. We believe there are significant noncompliance issues with regards to the dwelling lease and admissions policy as they pertain to lease termination and rent collection. This is further evidenced by bad debt expense increasing from $248,945 to $513,248 despite the concerning increase in TARs. Recommendation: We recommend that the Housing Authority begin to enforce its dwelling lease and housing policies as they pertain to the timeliness of rent payments. Current units with aged receivables in excess of 90 days should be contacted to ensure that they are still being occupied. Questioned Costs: N/A Repeat Finding: No Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.

Finding 2023-002 –Low Income Public Housing Tenant Files – Eligibility – Internal Control over Tenant Files – Noncompliance and Material Weakness – Low Income Public Housing – Subsidy ALN #14.850 Condition & Cause: Our review of fifty-five (55) Low Income Public Housing tenant files revealed a total of sixteen (16) files in error, which equates to roughly twenty-nine percent. Of these, we noted twelve income verification errors, one failure to collect third-party full-time student status, one file in which the annual recertification was updated in PIC without tenant paperwork, and two instances in which the applicable action could not be located. The primary cause for the income verification errors was failure to gather third-party verification for self-certified income. We noted that tenants are signing affidavits stating where they receive assistance, and the Authority is taking this affidavit with no additional verification. We found that the Authority has had difficulty gathering documentation from its tenants during the post-COVID period. When the Authority was unable to gather documentation in a timely manner, they would process annual actions with prior year information and increase the tenants’ rent to the flat rent, which is not a procedure outlined in the Housing Authority’s ACOP. This led to the tenants’ inability to meet the rental burden placed on them. However, as described in Finding 2023-001, tenants were not being evicted on a timely basis, leading to tenants accumulating extremely high Tenant Accounts Receivable balances. Criteria: The Code of Federal Regulations, the Housing Authority’s Admissions and Continued Occupancy Policy, and specific HUD guidelines in documenting and maintaining the Low-Income Public Housing tenant files. Recommendation: We recommend that the Authority conduct a thorough internal audit of the Low-Income Public Housing tenant files to determine the number of tenants who are noncompliant with their dwelling lease and/or the Admissions and Continued Occupancy Policy. The Authority should move forward with eviction proceedings for tenants unwilling to become compliant and negotiate repayment agreements for tenants who are willing. Questioned Costs: None Repeat Finding: No Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.

Finding 2023-001 – Public Housing Tenant Account Receivables – Cash Management/Eligibility - Internal Control Over Tenant Terminations and Nonpayment of Rent – Low Income Public Housing Program ALN #14.850 – Noncompliance and Material Weakness Criteria: The Code of Federal Regulations, the Housing Authority’s Admissions and Continued Occupancy Policy, Housing Authority dwelling lease, and the Public Housing Occupancy Guidebook Condition & Cause: We noted a concerning year-over-year increase in Public Housing tenant account receivables (TARs). The balance of the account increased from $389,224 to $826,310. We elected to randomly sample eight (8) participants across the spread of AMPs with high receivable balances to test for proper compliance with the ACOP and dwelling lease pertaining to the nonpayment of rent. We noted that all participants were billed through at least June 2023. We found that all eight participants were significantly behind on their rent. Of the total possible ninety-six (96) FY 2023 payments of rent (8 participants * 12 months) we noted only four (4) payments collected. Five of the participants did not make a single payment during the fiscal year but their leases were not terminated. Further we noted that four of the participants had moved out either prior to their FY 2023 annual exam or early into the lease. Since the dwelling leases were not terminated and the billings continued through June 2023 this has the implication of meaning that the units are counting as occupied for this period when either the unit was not occupied or that the Housing Authority is not enforcing its dwelling lease. This brings into question the occupancy fees that the Housing Authority is receiving from public housing to the Central Office Cost Center, occupancy scores in MASS, and funding received under operating subsidy calculations. Four participants were still active at 3/31/2023. For all of FY 2023 there were only two (2) payments collected from these active participants which in all amounted to $715 total. These are units which could be assisting other eligible families that would contribute rent. We inquired of staff as to the collection policy of the Authority. It was stated to us that eviction proceedings would not occur for nonpayment of rent generally for at least 6-7 months of nonpayment. We note that this is not congruent with the signed leases which states that fourteen (14) days of nonpayment should trigger action. Since the Housing Authority waits so long to respond to these lease violations it risks unoccupied units to be reported as occupied as we noted above. We believe there are significant noncompliance issues with regards to the dwelling lease and admissions policy as they pertain to lease termination and rent collection. This is further evidenced by bad debt expense increasing from $248,945 to $513,248 despite the concerning increase in TARs. Recommendation: We recommend that the Housing Authority begin to enforce its dwelling lease and housing policies as they pertain to the timeliness of rent payments. Current units with aged receivables in excess of 90 days should be contacted to ensure that they are still being occupied. Questioned Costs: N/A Repeat Finding: No Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.

Finding 2023-002 –Low Income Public Housing Tenant Files – Eligibility – Internal Control over Tenant Files – Noncompliance and Material Weakness – Low Income Public Housing – Subsidy ALN #14.850 Condition & Cause: Our review of fifty-five (55) Low Income Public Housing tenant files revealed a total of sixteen (16) files in error, which equates to roughly twenty-nine percent. Of these, we noted twelve income verification errors, one failure to collect third-party full-time student status, one file in which the annual recertification was updated in PIC without tenant paperwork, and two instances in which the applicable action could not be located. The primary cause for the income verification errors was failure to gather third-party verification for self-certified income. We noted that tenants are signing affidavits stating where they receive assistance, and the Authority is taking this affidavit with no additional verification. We found that the Authority has had difficulty gathering documentation from its tenants during the post-COVID period. When the Authority was unable to gather documentation in a timely manner, they would process annual actions with prior year information and increase the tenants’ rent to the flat rent, which is not a procedure outlined in the Housing Authority’s ACOP. This led to the tenants’ inability to meet the rental burden placed on them. However, as described in Finding 2023-001, tenants were not being evicted on a timely basis, leading to tenants accumulating extremely high Tenant Accounts Receivable balances. Criteria: The Code of Federal Regulations, the Housing Authority’s Admissions and Continued Occupancy Policy, and specific HUD guidelines in documenting and maintaining the Low-Income Public Housing tenant files. Recommendation: We recommend that the Authority conduct a thorough internal audit of the Low-Income Public Housing tenant files to determine the number of tenants who are noncompliant with their dwelling lease and/or the Admissions and Continued Occupancy Policy. The Authority should move forward with eviction proceedings for tenants unwilling to become compliant and negotiate repayment agreements for tenants who are willing. Questioned Costs: None Repeat Finding: No Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.