Finding 1105411 (2024-001)

2024-001 - ELIGIBILITY Material Weakness/Material Noncompliance U.S. Department of Housing and Urban Development CFDA #: 14.850 – Public Housing Operating Fund CRITERIA PHAs shall establish allowances for PHA-furnished utilities for all check metered utilities and allowances for resident-purchased utilities for all utilities purchased directly by residents from the utilities suppliers. The PHA shall maintain a record that documents the basis on which allowances and scheduled surcharges, and revisions thereof, are established and revised. Such record shall be available for inspection by residents. (24 CFR 965.502) The PHA shall review at least annually the basis on which utility allowances have been established and, if reasonably required in order to continue adherence to the standards stated in § 965.505, shall establish revised allowances. The PHA may revise its allowances for resident-purchased utilities between annual reviews if there is a rate change (including fuel adjustments) and shall be required to do so if such change, by itself or together with prior rate changes not adjusted for, results in a change of 10 percent or more from the rates on which such allowances were based. An income-based rent is a tenant rent that is based on the family's income and the PHA's policies for determination of such rents. The income-based tenant rent must not exceed the total tenant payment (§ 5.628 of this title) for the family minus any applicable utility allowance for tenant-paid utilities. If the utility allowance exceeds the total tenant payment, the PHA shall pay such excess amount (the utility reimbursement) either to the family or directly to the utility supplier to pay the utility bill on behalf of the family. (24 CFR 960.253 c) CONDITION The Authority had not conducted an annual review of its utility allowances for the public housing program for 2023 to 2024. CAUSE The Authority did not follow its policy to annually review the utility allowances for the public housing program. EFFECT As a result of not reviewing and updating the utility allowances on a timely basis, residents overpaid their rent to the Authority. QUESTIONED COSTS Questioned Costs of $965,548 – Representing the aggregate amount of overpaid rent that was reimbursed to residents during fiscal year 2024. CONTEXT The Authority owns and operates 735 units of public housing. The Authority is required to review its utility allowance schedules at least annually. REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend that the implement policies and procedures to ensure that an annual review of its utility allowances is conducted and that the Authority should reimburse residents for any excess rental payments had the utility allowance schedules been update timely. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.