Finding Text
Finding No. 2024-001 - Eligibility - Material Weakness
Name of Federal Agency: The United States Department of Housing and Urban Development
Federal Program Name: Section 8 Housing Assistance Payments
Assistance Listing Number: 14.195
Federal Award Identification Number and Year: MD06L000037. Program year is 2024.
Name of Pass-through Entity (if applicable): N/A
Criteria
According to 4-14.195-6 of Appendix XI to 2 CFR, Part 200 of the United States Office of
Management and Budget, the Project must verify the eligibility of applicants by (a) obtaining signed
applications that contain the information needed to determine eligibility; (b) conducting verifications
of family income and other pertinent information through third parties the use of HUD's Enterprise
Income Verification (EIV) system in its entirety: (i) as a third-party source to verify tenant
employment and income information during annual and streamlined reexaminations of family
composition and income, and to reduce administrative and subsidy payment errors 24 CFR 5.233;
(c) documenting inspections and tenant certifications; and (d) determining that the tenant income
did not exceed the maximum limit set by HUD for the jurisdiction, as shown in HUD's published
notice transmitting the Limited for Low-Income and Very Low-Income Families under the Housing
Act of 1937. Additionally, project's must reexamine family income and composition at least once
every 12 months and adjust the total rent payment and housing assistance payment as necessary.
For both family income examinations and reexaminations, the Project must obtain and document in
the family file third party verification of (1) reported family annual income; (2) the value of assets; (3)
expenses related to deductions from annual income; and (4) other factors that affect the
determination of adjusted income or income-based rent (24 CFR section 982.516).
For reexaminations, the Project must utilize the Form HUD-50059 worksheet and maintain the
document in the tenant lease file (24 CFR section 208.104(a)(2) and 24 CFR section 208.108).
Condition
In a sample of 13 files tested, there were exceptions noted in 11 files. In 6 out of 13 files, the Project
did not perform timely income verification using the EIV system and this data was not maintained in
the lease file. In 3 out of 13 files, the Project did not obtain tenant income verification and this data
was not maintained in the lease file. In 3 out of 13 files, the Project did not complete a HUD-50059
form timely as part of the annual recertification process and this data was not maintained in the
lease file. In 3 out of 13 files, the Project did not perform a move out inspection and this data was
not maintained in the lease file. In 3 out of 13 files, the Project did not properly refund tenant
security deposits or maintain documentation for the refund. In 1 out of 13 files, the Project did not
properly calculate the tenant subsidy rent. In 1 out of 13 files, the Project did not properly calculate
the tenant portion of rent. In 7 out of 13 files, the Project did not correctly calculate tenant rents in
accordance with HUD-92458.
Cause
The Project failed to follow the policies and procedures which have been established for proper
tenant file maintenance and determining tenant eligibility in accordance with federal guidelines.
Effect
The Project is not in compliance with federal regulations regarding eligibility. The Housing
Assistance Payment ("HAP") calculation may be inaccurate resulting in an underpayment or
overpayment of HAP. Additionally, ineligible applicants may be approved for tenancy.
Questioned Costs
N/A
Context
A sample of 13 tenant files were selected from a population of 118. We identified exceptions in 11
out of the 13 files tested. The sample was not statistically valid.
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendation
We recommend that management reviews its internal controls over obtaining and maintaining
tenant file documentation to ensure compliance with eligibility requirements. Management should
establish procedures and monitor compliance with those procedures to ensure that the
determination of tenant eligibility and the maintenance of lease files are in accordance with
guidelines specified by federal regulations.