FAC Explorer

Finding 1146117 (2024-002)

Material Weakness Repeat Finding
Requirement
N
Questioned Costs
-
Year
2024
Accepted
2025-06-30
Audit: 361021
Organization: City of Long Beach (CA)
Auditor: Crowe LLP

AI Summary

  • Core Issue: The City has a backlog of Housing Quality Standards inspections, with 42 properties having late or incomplete inspections, violating HUD requirements.
  • Impacted Requirements: Non-compliance with inspection frequency and sampling size as per 24 CFR 92.251 and 2 CFR 200.303, leading to potential housing quality issues.
  • Recommended Follow-Up: Address staffing constraints and regularly review the inspection log for accuracy to ensure timely inspections and compliance.

Finding Text

Finding Number: 2024-002 Finding Title: Internal Controls and Compliance regarding the timeliness of Housing Quality Standards Inspections Compliance Requirement(s): Special Tests – Housing Quality Standards Classification: Material Weakness Programs: Home Investment Partnerships Program ALN #: 14.239 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Numbers: M20-MC060518, M21-MP060518, M21-MC060518, M22-MC060518, M23-MC060518 Federal Award Year: 2020, 2021, 2022, 2023 Criteria or specific requirement (including statutory, regulatory, or other citation) § 92.251 Property standards and inspections - (3) Ongoing inspections of HOME-assisted rental housing. During the period of affordability, the participating jurisdiction must perform on-site inspections of HOME-assisted rental housing to determine compliance with the property standards in paragraph (f)(1) of this section and to verify the information submitted by owners in accordance with the requirements of § 92.252. The participating jurisdiction must perform inspections in accordance with its established inspection procedures. These procedures, at minimum, must include the following requirements: … (iii) Units inspected. Inspections must be based on a random sample of the HOME-assisted units in the project with a mix of unit sizes (e.g., a mix of one-bedroom, two-bedroom, and three-bedroom units) in accordance with the chart contained in this paragraph. All inspections must include the inspectable areas for each building containing HOME-assisted units. For projects with one-to-four HOME-assisted units, the participating jurisdiction must inspect 100 percent of the HOME-assisted units and the inspectable areas for each building with HOME-assisted units. HOMEfires - Vol. 3 No. 2, February 2001 - Q: The HOME Final Rule states that each Participating Jurisdiction must perform on-site inspections of HOME-assisted rental housing. How frequently should these inspections be performed? How should each PJ determine the number of units that must be inspected? A: During the affordability period, HOME-assisted rental projects must be inspected regularly to ensure that they continue to meet or exceed the property standards outlined in 24 CFR 92.251. Section 92.504 (d)(1) of the HOME final rule establishes a schedule for on-site inspections based on the total number of units in the project. The schedule is as follows: Projects containing one to four units must be inspected every three years Five-to-twenty-five-unit projects must be inspected every two years; and Projects with twenty-six or more units must be inspected annually. Please note that it is the total number of units in the project rather than the number of HOME-assisted units that determines the monitoring schedule. Section 92.504 (d)(1) also states that the inspections must be based on "a sufficient sample" of units. The Office of Affordable Housing has recommended that each PJ adopt the standard practice of inspecting fifteen to twenty percent of the HOME-assisted units in a project, and a minimum of one unit in every building. For identified in sample units, the PJ should inspect the remaining units to ensure that all HOME-assisted units comply with established property standards. The participating jurisdiction must establish written inspection procedures. The procedures must include detailed inspection checklists, a description of how and by whom inspections will be carried out, and procedures for training and certifying qualified inspectors. For ongoing property inspections, the procedures must also describe how frequently the property will be inspected, consistent with this section and § 92.209. 2 CFR 200.303 - Additionally, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designated to ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure housing quality standards are appropriately performed and documented. Condition The City maintains a log to track housing quality standards inspections. The log lists all the projects, properties, total units, HOME units, required frequency of inspections, upcoming inspection due dates, and details on inspections including the unit number, date, and other details. Our testing included eight of a total seventy-four properties, none of which were inspected late. In reviewing the log, forty-two properties with 455 associated HOME units had either completed inspections late based on their required inspection date or were not yet completed and past their required inspection due date. Additionally 10 properties did not comply with HUDs 20% requirements for sampling with incorrect inspection frequency requirements listed in the log, and another 9 items did not meet the required sampling sizes as noted in Table 1 Paragraph (f)(3)(iii)—minimum Inspection Sample Size for Home Rental Housing Project in 24 CFR 92.251. Cause The City is working through a backlog of inspections due to staffing constraints which occurred in the prior year that caused a knock-on effect to inspections in the current year. Effect or potential effect Late or delayed inspections could lead to unidentified issues with housing leading to increased costs and non-compliance with HUD requirements related to the inspection process. Questioned costs None Context The City is currently responsible for seventy-four properties which include 1948 units, 1054 of which are HOME units. The City completed 227 inspections during the year per the log. Identification as a repeat finding if applicable 2023-003 Recommendation We recommend the City continue with its steps towards addressing resource constraints and implement a periodic review of the inspection log for accuracy, completeness and earlier identification of late inspections. Views of responsible officials and planned corrective actions Ensuring compliance with HUD requirements continues to be a central priority, and the City is actively enhancing our procedures to strengthen the Housing Quality Standards (HQS) process. The City is working to reduce the backlog of inspections by September 30, 2025, which requires additional effort in order to complete both the prior year inspections in addition to completing the current year inspections in a timely manner. To this end, the City has increased the number of properties inspected each fiscal year. For example, during the FY23 audit period, 204 inspections occurred. In the FY24 period, the number of inspections increased to 227. As of May 2025, the City has inspected 187 units and anticipates a total of 250 inspections will be completed by the end of FY25, thereby eliminating the current backlog and any late inspections. The Community Development Department implemented more proactive measures, including hiring an in-house inspector and an active master inspection log to track and target upcoming inspections. These efforts have resulted in a more streamlined, data-informed approach to HQS compliance, as evidenced by a significant reduction in the inspection backlog. The master inspection log is also being leveraged to optimize inspection scheduling and ensure that the required HOME units per property are inspected as required. To reinforce this approach, the City instituted a structured, monthly review of the log to improve data accuracy, completeness, and early identification of potential delays. The City is confident that these measures will demonstrate compliance with the HQS standards and resolve the auditor’s concerns.

Categories

Subrecipient Monitoring Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties Special Tests & Provisions HUD Housing Programs Material Weakness

Other Findings in this Audit

  • 569667 2024-001
    Material Weakness Repeat
  • 569668 2024-001
    Material Weakness Repeat
  • 569669 2024-001
    Material Weakness Repeat
  • 569670 2024-001
    Material Weakness Repeat
  • 569671 2024-001
    Material Weakness Repeat
  • 569672 2024-001
    Material Weakness Repeat
  • 569673 2024-002
    Material Weakness Repeat
  • 569674 2024-002
    Material Weakness Repeat
  • 569675 2024-002
    Material Weakness Repeat
  • 569676 2024-002
    Material Weakness Repeat
  • 569677 2024-002
    Material Weakness Repeat
  • 569678 2024-002
    Material Weakness Repeat
  • 569679 2024-003
    Material Weakness Repeat
  • 569680 2024-003
    Material Weakness Repeat
  • 569681 2024-004
    Significant Deficiency
  • 569682 2024-004
    Significant Deficiency
  • 569683 2024-005
    Material Weakness Repeat
  • 569684 2024-005
    Material Weakness Repeat
  • 569685 2024-006
    Material Weakness Repeat
  • 569686 2024-006
    Material Weakness Repeat
  • 569687 2024-007
    -
  • 569688 2024-007
    -
  • 1146109 2024-001
    Material Weakness Repeat
  • 1146110 2024-001
    Material Weakness Repeat
  • 1146111 2024-001
    Material Weakness Repeat
  • 1146112 2024-001
    Material Weakness Repeat
  • 1146113 2024-001
    Material Weakness Repeat
  • 1146114 2024-001
    Material Weakness Repeat
  • 1146115 2024-002
    Material Weakness Repeat
  • 1146116 2024-002
    Material Weakness Repeat
  • 1146118 2024-002
    Material Weakness Repeat
  • 1146119 2024-002
    Material Weakness Repeat
  • 1146120 2024-002
    Material Weakness Repeat
  • 1146121 2024-003
    Material Weakness Repeat
  • 1146122 2024-003
    Material Weakness Repeat
  • 1146123 2024-004
    Significant Deficiency
  • 1146124 2024-004
    Significant Deficiency
  • 1146125 2024-005
    Material Weakness Repeat
  • 1146126 2024-005
    Material Weakness Repeat
  • 1146127 2024-006
    Material Weakness Repeat
  • 1146128 2024-006
    Material Weakness Repeat
  • 1146129 2024-007
    -
  • 1146130 2024-007
    -

Programs in Audit

ALN Program Name Expenditures
14.871 Section 8 Housing Choice Vouchers $120.21M
14.871 Covid-19 Section 8 Housing Choice Vouchers $10.23M
10.557 Wic Special Supplemental Nutrition Program for Women, Infants, and Children $4.78M
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $4.71M
15.916 Outdoor Recreation Acquisition, Development and Planning $3.25M
14.218 Community Development Block Grants/entitlement Grants $3.09M
14.239 Covid-19 Home Investment Partnerships Program $2.69M
14.267 Continuum of Care Program $2.64M
93.391 Covid-19 Activities to Support State, Tribal, Local and Territorial (stlt) Health Department Response to Public Health Or Healthcare Crises $2.49M
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $2.24M
93.967 Centers for Disease Control and Prevention Collaboration with Academia to Strengthen Public Health $2.18M
21.027 Covid-19 Coronavirus State and Local Fiscal Recovery Funds $1.40M
14.905 Lead Hazard Reduction Demonstration Grant Program $1.38M
97.083 Staffing for Adequate Fire and Emergency Response (safer) $1.12M
93.086 Healthy Marriage Promotion and Responsible Fatherhood Grants $999,999
97.056 Port Security Grant Program $932,765
10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program $854,633
93.069 Public Health Emergency Preparedness $665,205
21.023 Covid-19 Emergency Rental Assistance Program $507,069
16.838 Comprehensive Opioid, Stimulant, and Other Substances Use Program $490,848
93.917 Hiv Care Formula Grants $484,663
14.239 Home Investment Partnerships Program $451,935
14.896 Family Self-Sufficiency Program $432,780
93.268 Immunization Cooperative Agreements $432,307
93.197 Childhood Lead Poisoning Prevention Projects, State and Local Childhood Lead Poisoning Prevention and Surveillance of Blood Lead Levels in Children $429,620
93.354 Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response $410,894
20.608 Minimum Penalties for Repeat Offenders for Driving While Intoxicated $383,791
97.039 Hazard Mitigation Grant $382,753
17.278 Wioa Dislocated Worker Formula Grants $350,555
97.067 Homeland Security Grant Program $300,000
93.914 Hiv Emergency Relief Project Grants $289,938
20.600 State and Community Highway Safety $284,300
93.779 Centers for Medicare and Medicaid Services (cms) Research, Demonstrations and Evaluations $256,377
93.116 Project Grants and Cooperative Agreements for Tuberculosis Control Programs $231,566
20.616 National Priority Safety Programs $218,597
93.994 Maternal and Child Health Services Block Grant to the States $210,338
20.823 Port Infrastructure Development Program $188,954
11.307 Economic Adjustment Assistance $182,968
93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (elc) $178,614
93.778 Medical Assistance Program $176,132
14.218 Covid-19 Community Development Block Grants/entitlement Grants $158,157
17.258 Wioa Adult Program $158,086
14.231 Covid-19 Emergency Solutions Grant Program $152,789
20.106 Covid-19 Airport Improvement Program $150,326
10.559 Summer Food Service Program for Children $140,895
17.277 Wioa National Dislocated Worker Grants / Wia National Emergency Grants $126,319
15.514 Reclamation States Emergency Drought Relief $122,865
16.835 Body Worn Camera Policy and Implementation $115,530
14.241 Housing Opportunities for Persons with Aids $102,582
66.472 Beach Monitoring and Notification Program Implementation Grants $100,392
14.895 Jobs-Plus Pilot Initiative $100,000
93.078 Strengthening Emergency Care Delivery in the United States Healthcare System Through Health Information and Promotion $100,000
97.042 Emergency Management Performance Grants $96,606
93.070 Environmental Public Health and Emergency Response $93,505
17.259 Wioa Youth Activities $92,985
93.354 Covid-19 Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response $90,945
93.421 Strengthening Public Health Systems and Services Through National Partnerships to Improve and Protect the Nation’s Health $80,000
14.231 Emergency Solutions Grant Program $78,943
14.251 Economic Development Initiative, Community Project Funding, and Miscellaneous Grants $78,176
93.318 Protecting and Improving Health Globally: Building and Strengthening Public Health Impact, Systems, Capacity and Security $76,544
20.106 Airport Improvement Program $73,897
93.558 Temporary Assistance for Needy Families $71,000
14.900 Lead Hazard Reduction Grant Program $65,146
93.977 Sexually Transmitted Diseases (std) Prevention and Control Grants $60,794
10.727 Inflation Reduction Act Urban & Community Forestry Program $53,135
16.710 Public Safety Partnership and Community Policing Grants $49,436
15.507 Watersmart (sustain and Manage America’s Resources for Tomorrow) $44,081
93.421 Covid-19 Strengthening Public Health Systems and Services Through National Partnerships to Improve and Protect the Nation’s Health $28,826
14.913 Healthy Homes Production Program $17,399
93.940 Hiv Prevention Activities Health Department Based $9,832
16.738 Edward Byrne Memorial Justice Assistance Grant Program $6,578
20.205 Covid-19 Highway Planning and Construction $5,130
20.205 Highway Planning and Construction $558