Audit 8676

Finding 2023-003 – Low-Income Public Housing – ALN 14.850 – Tenant Files – Eligibility – Internal Control over Tenant Files – Noncompliance and Significant Deficiency Condition & Cause: Our review of seventy (70) Low Income Public Housing tenant files revealed that there was a total of seven (7) annual recertifications completed past due, which represent 10% of the total files examined. Per 24 CFR 960.257(a)(1), “the PHA must conduct a reexamination of family income and composition at least annually.” These reexaminations not completed annually are reported as an audit finding for noncompliance and a significant deficiency. 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 Agency determine the number of outstanding annual reexaminations that are past due in the Low-Income Public Housing program and complete them. We also recommend that the Agency enforce their ACOP and Federal Regulations regarding systematically performing reconciliations. Effect: Failure to maintain compliance can result in loss of funding for grants and other programs which require no noncompliance. Noncompliance can also lead to a misstatement of program revenue, and the corresponding appropriation needs of the Agency. 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 – Housing Choice Voucher Program– Subsidy ALN 14.871 – Tenant Files – Eligibility – Internal Control over Tenant Files – Noncompliance and Material Weakness Condition & Cause: Our review of one hundred (100) Housing Choice Voucher tenant files revealed the following discrepancies: • Twenty-seven (27) annual reexaminations completed more than three months past due; • Eleven (11) instances of noncompliance in the verification and calculation of adjusted annual income; and • One (1) resident for whom the PHA continued to pay HAP after giving up assistance. We noted that the percentage of late reexaminations compared to the prior year audit increased from 22.5% to 27%. The income errors consist mainly of failure to gather third-party verification of wages or deductions, income miscalculations, and missing zero-income affidavits. We did not find the impact of the income errors to be pervasive to the financial statements. The continuation of HAP after the participant gave up assistance occurred because the PHA did not complete an End of Participation 50058. We noted that the Authority has experienced difficulty in hiring, training, and retaining quality staff. This is the cause for each of the instances of noncompliance referenced. Criteria: The Code of Federal Regulations, the Housing Authority’s Admin Plan, and specific HUD guidelines in documenting and maintaining the Housing Choice Voucher tenant files. Effect: Failure to maintain compliance can result in loss of funding for grants and other programs which require operations to have no audit findings and noncompliance. Noncompliance can also lead to a misstatement of HAP expense, HAP equity, and the corresponding appropriation needs of the Agency. Recommendation: We recommend that the Agency determine which vouchers are not in compliance and begin enforcing both the Administrative Plan and the Code of Federal Regulations on a consistent basis. Questioned Costs: None Repeat Finding: Yes Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.

Finding 2023-002 – Housing Choice Voucher Program– Subsidy ALN 14.871 – Internal Control over Waiting List – Eligibility – Noncompliance and Material Weakness Condition & Cause: We selected thirteen (13) tenants admitted during the fiscal year and ten (10) tenants admitted in June 2023, subsequent to year end. The selection was to determine whether or not the Housing Authority was in compliance with the Federal and local guidelines. Our review of the Section 8 waiting list unveiled control deficiencies in the management of the waiting list regarding record keeping, purging, and selection order. We were unable to gain assurance that the waiting list is maintained in accordance with the Admin Plan and the Code of Federal Regulations. In our review of one move-in during the fiscal year, we inquired about the status of fifty-one (51) applicants who were above the new admission in order. We noted that documentation was not readily available for seven (7) of these applicants. The Authority is not maintaining a clear audit trail as required by 24 CFR 982 Subpart E. We noted that the Authority does not purge the waitlist. The Authority sent update letters to lower ranked applicants for the purpose of updating contact and preference information only. Applicants are not removed from the waitlist if they do not respond to the update letter. The Authority is not following its Admin Plan, which states the PHA “will update and purge its waiting list at least annually to ensure that the pool of applicants reasonably represents interested families.” In our review of June 2023 admissions, we inquired about sixty-seven (67) applicants who were selected off the waitlist and found that thirteen (13) were selected out of order, or nineteen percent. Interest letters used to notify the applicant of selection for assistance are grouped into batches. Of the thirteen (13) applicants identified as selected out of order, seven (7) were mailed notice of selection before other applicants in their batch, and six (6) were mailed notice of selection after other applicants in their batch. Staff was unable to provide justification for the discrepancies. We noted that the Authority experienced difficulty in hiring, training, and retaining quality employees and are working with a high number of staff vacancies. This contributed to the instances of noncompliance uncovered during the review. Additionally, the Authority has contracted with a new software vendor and is in the process of cleaning data for transfer. We anticipate that the new software will ease the administrative burden that the current admissions process creates. Criteria: The Code of Federal Regulations and the Housing Authority’s Admin Plan Effect: Failure to maintain compliance can result in loss of funding for grants and other programs which require operations to have no audit findings and noncompliance. Recommendation: We recommend that the Agency more closely adhere to the Admin Plan and Code of Federal Regulations regarding management of the waitlist. Additionally, the Authority should true up the documentation of the applicants on the waiting list before transitioning to the new management software. 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 2023-003 – Low-Income Public Housing – ALN 14.850 – Tenant Files – Eligibility – Internal Control over Tenant Files – Noncompliance and Significant Deficiency Condition & Cause: Our review of seventy (70) Low Income Public Housing tenant files revealed that there was a total of seven (7) annual recertifications completed past due, which represent 10% of the total files examined. Per 24 CFR 960.257(a)(1), “the PHA must conduct a reexamination of family income and composition at least annually.” These reexaminations not completed annually are reported as an audit finding for noncompliance and a significant deficiency. 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 Agency determine the number of outstanding annual reexaminations that are past due in the Low-Income Public Housing program and complete them. We also recommend that the Agency enforce their ACOP and Federal Regulations regarding systematically performing reconciliations. Effect: Failure to maintain compliance can result in loss of funding for grants and other programs which require no noncompliance. Noncompliance can also lead to a misstatement of program revenue, and the corresponding appropriation needs of the Agency. 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 – Housing Choice Voucher Program– Subsidy ALN 14.871 – Tenant Files – Eligibility – Internal Control over Tenant Files – Noncompliance and Material Weakness Condition & Cause: Our review of one hundred (100) Housing Choice Voucher tenant files revealed the following discrepancies: • Twenty-seven (27) annual reexaminations completed more than three months past due; • Eleven (11) instances of noncompliance in the verification and calculation of adjusted annual income; and • One (1) resident for whom the PHA continued to pay HAP after giving up assistance. We noted that the percentage of late reexaminations compared to the prior year audit increased from 22.5% to 27%. The income errors consist mainly of failure to gather third-party verification of wages or deductions, income miscalculations, and missing zero-income affidavits. We did not find the impact of the income errors to be pervasive to the financial statements. The continuation of HAP after the participant gave up assistance occurred because the PHA did not complete an End of Participation 50058. We noted that the Authority has experienced difficulty in hiring, training, and retaining quality staff. This is the cause for each of the instances of noncompliance referenced. Criteria: The Code of Federal Regulations, the Housing Authority’s Admin Plan, and specific HUD guidelines in documenting and maintaining the Housing Choice Voucher tenant files. Effect: Failure to maintain compliance can result in loss of funding for grants and other programs which require operations to have no audit findings and noncompliance. Noncompliance can also lead to a misstatement of HAP expense, HAP equity, and the corresponding appropriation needs of the Agency. Recommendation: We recommend that the Agency determine which vouchers are not in compliance and begin enforcing both the Administrative Plan and the Code of Federal Regulations on a consistent basis. Questioned Costs: None Repeat Finding: Yes Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.

Finding 2023-002 – Housing Choice Voucher Program– Subsidy ALN 14.871 – Internal Control over Waiting List – Eligibility – Noncompliance and Material Weakness Condition & Cause: We selected thirteen (13) tenants admitted during the fiscal year and ten (10) tenants admitted in June 2023, subsequent to year end. The selection was to determine whether or not the Housing Authority was in compliance with the Federal and local guidelines. Our review of the Section 8 waiting list unveiled control deficiencies in the management of the waiting list regarding record keeping, purging, and selection order. We were unable to gain assurance that the waiting list is maintained in accordance with the Admin Plan and the Code of Federal Regulations. In our review of one move-in during the fiscal year, we inquired about the status of fifty-one (51) applicants who were above the new admission in order. We noted that documentation was not readily available for seven (7) of these applicants. The Authority is not maintaining a clear audit trail as required by 24 CFR 982 Subpart E. We noted that the Authority does not purge the waitlist. The Authority sent update letters to lower ranked applicants for the purpose of updating contact and preference information only. Applicants are not removed from the waitlist if they do not respond to the update letter. The Authority is not following its Admin Plan, which states the PHA “will update and purge its waiting list at least annually to ensure that the pool of applicants reasonably represents interested families.” In our review of June 2023 admissions, we inquired about sixty-seven (67) applicants who were selected off the waitlist and found that thirteen (13) were selected out of order, or nineteen percent. Interest letters used to notify the applicant of selection for assistance are grouped into batches. Of the thirteen (13) applicants identified as selected out of order, seven (7) were mailed notice of selection before other applicants in their batch, and six (6) were mailed notice of selection after other applicants in their batch. Staff was unable to provide justification for the discrepancies. We noted that the Authority experienced difficulty in hiring, training, and retaining quality employees and are working with a high number of staff vacancies. This contributed to the instances of noncompliance uncovered during the review. Additionally, the Authority has contracted with a new software vendor and is in the process of cleaning data for transfer. We anticipate that the new software will ease the administrative burden that the current admissions process creates. Criteria: The Code of Federal Regulations and the Housing Authority’s Admin Plan Effect: Failure to maintain compliance can result in loss of funding for grants and other programs which require operations to have no audit findings and noncompliance. Recommendation: We recommend that the Agency more closely adhere to the Admin Plan and Code of Federal Regulations regarding management of the waitlist. Additionally, the Authority should true up the documentation of the applicants on the waiting list before transitioning to the new management software. 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.