Finding 1081772 (2024-002)

Material Non‐Compliance Material Weakness, Special Tests and Provisions Criteria: In accordance with 24 CFR sections 982.158(d) and 982.404, units under housing assistance payment (HAP) contract that fail to meet Housing Quality Standards (HQS), the Public Housing Authority (PHA) must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days or within a specified PHA-approved extension. If the owner does not correct the cited HQS deficiencies within the specified correction period, the PHA must stop HAPs beginning no later than the first of the month following the specified correction period or must terminate the HAP contract. Condition: The City did not follow procedures to ensure that the HQS were corrected or subsequent procedures to stop HAP were not enforced. Context: Of the 130 failed inspections during the current year, we examined 26 and determined that 22 (85% valued at $110,332) failed inspections were not corrected or the HAP were not stopped timely. Effect: Owner could receive benefits for which they are not eligible. Cause: Lack of proper internal control over HQS enforcement. Questioned Cost: In accordance with 2 CFR 200, auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. The sample results identified $110,332 in known questioned costs. Recommendation: Management should implement controls to ensure that HQS enforcement procedures are followed timely. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report.