Finding Text
Finding 2024-002 Significant Deficiency: Special Reporting – Compliance and Control Finding ALN 14.850 – Public and Indian Housing Operating Fund Federal Agency: U.S. Department of Housing and Urban Development (HUD) Pass-Through Entity: N/A - Direct Award Criteria Or Specific Requirement: Public Housing Authorities (PHAs) are required to enforce Housing Quality Standards (HQS) by performing inspections at initial occupancy and at least annually, and ensuring deficiencies are corrected within required timeframes. PHAs must not make housing assistance payments (HAP) for units that fail to comply with HQS and are not timely abated. Condition: During our testing of the Housing Quality Standards enforcement process, we identified 10 instances in which units failed HQS inspections, and the deficiencies were not corrected or abated in a timely manner. Cause: The PHA experienced a lapse in its enforcement of HQS inspection requirements due to internal staffing changes. Responsibility for inspections was initially handled internally by a PHA staff member who departed. There was a delay in transitioning to a third-party inspection vendor, during which follow-up on failed inspections was not conducted consistently. Effect: Units remained noncompliant with HQS enforcement standards for extended periods As a result, the PHA paid housing assistance for units that should have had rent payments abated until required repairs were complete. Questioned Costs: Rent payments within periods where abatement should have taken place resulted in $29,300 in questioned costs. Identification As A Repeat Finding: The finding has been repeated from prior year finding 2023-002. Context: A sample of 40 HQS inspections under the 14.871 Housing Choice Voucher program revealed 10 units with failed inspections that were not followed up or abated in accordance with HUD regulations. The noncompliance occurred during a transitional period between internal and third-party inspection responsibility. Payments were not suspended or abated for units with uncorrected deficiencies, resulting in continued disbursement of HAP funds. Recommendations: We recommend that the PHA strengthen its Housing Quality Standards (HQS) inspection and enforcement process by implementing a formal tracking system to monitor inspection results and ensure timely follow-up on any deficiencies. View of Responsible Officials: A new documentation protocol will be established to provide clear proof that this process is occurring regularly. This will include date stamped review logs and signatures from responsible staff members. We will institute a monthly review of 3 to 5 initial failed inspections. The authority will conduct refresher training for all relevant staff to ensure they understand the importance of this process and their role in maintaining it. The Authority will implement an automated reminder system to alert staff when reviews and submissions are due and internal quarterly reviews will be conducted to ensure compliance with this process and to identify any potential issues early.