Finding Text
The Housing Authority had inadequate internal controls for ensuring compliance with the Housing Quality Standards enforcement requirements of its Housing Voucher Cluster program.
Assistance Listing Number and Title: 14.871 – Section 8 Housing Choice
Vouchers
Federal Grantor Name: U.S. Department of Housing and
Urban Development
Federal Award/Contract Number: WA064
Pass-through Entity Name: N/A
Pass-through Award/Contract Number:
N/A
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Description of Condition
The Housing Authority spent $4,921,677 in 2023 under the Housing Voucher Cluster program, which includes the Section 8 Housing Choice Vouchers program (HCVP). The HCVP provides rental assistance to help low-income families afford decent, safe and sanitary rental housing through Housing Authority Payment (HAP) contracts.
Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls.
The Housing Authority must inspect units leased to families at least every two years to determine if they meet federal Housing Quality Standards (HQS) requirements. For units under HAP contracts that fail to meet HQS requirements, the Housing Authority must require owners to correct any cited life-threatening HQS deficiencies within 24 hours of notification of the failed inspection. Owners must correct cited non-life-threatening HQS deficiencies within 30 calendar days of notification of the failed inspection or within a specified Housing Authority-approved extension. If owners do not correct cited deficiencies within the specified correction period, the Housing Authority must stop assistance payments by the first of the month after the correction period ends or must terminate the HAP contract. The Housing Authority must keep documentation demonstrating compliance with HQS enforcement requirements.
Our audit found the Housing Authority’s internal controls were ineffective for ensuring compliance with the program’s HQS enforcement requirements. Although the Housing Authority had procedures to require owners to correct non-life-threatening HQS deficiencies within 30 calendar days of notification of failed inspections, it did not always follow through with this requirement.
We consider this internal control deficiency to be a material weakness that led to material noncompliance.
Cause of Condition
Although the Housing Authority provided housing inspection training to staff, those responsible for conducting the HQS inspections did not follow procedures for ensuring owners corrected non-life-threatening deficiencies within 30 days of notification of failed inspections. Additionally, during monitoring of the program, Housing Authority staff did not identify that they had not followed up with some owners who were cited for deficiencies to ensure they corrected them within 30 days of notification.
Effect of Condition
We tested all 23 failed inspections that occurred during 2023 and found three with cited non-life-threatening HQS deficiencies for which the Housing Authority did not have documentation demonstrating it followed up on the inspections and required the owners to correct the deficiencies within 30 days of notification. Because the Housing Authority did not follow up on HQS deficiencies within the required time frame, it cannot demonstrate that the housing units met HQS requirements.
Recommendation
We recommend the Housing Authority strengthen internal controls for ensuring it complies with HQS enforcement requirements. Specifically, the Housing Authority should follow up on cited non-life-threatening HQS deficiencies and require owners to correct them within 30 days of notification of the failed inspection, as HCVP requires.
Housing Authority’s Response
The HCV department will be creating an Excel spreadsheet for the inspector to complete and utilize to better manage compliance dates. It will include the failed inspection date, compliance due date, tenant and landlord names, passed date, abatement start date, and memos. In addition, the supervisor will be monitoring this spreadsheet and auditing inspection compliance more frequently.
Auditor’s Remarks
We appreciate the Housing Authority's commitment to resolving the issues noted and will follow up during the next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 24 CFR Part 982, Section 8 Tenant-Based Assistance: Housing Choice Voucher Program, section 404, Maintenance: Owner and family responsibility; PHA remedies, establishes enforcement requirements for housing quality standards.