Finding 2025-003 – Section 8 Project-Based Cluster Tenant Files – Eligibility – Rent Calculations Noncompliance & Significant Deficiency Section 8 Housing Choice Voucher Cluster – ALNs 14.195 and 14.249 Corrective Action Plan: Finding: Somerville Housing Authority (SHA) received the authority’s Single Audit for the year ended March 31, 2025, indicating that SHA received a finding of Significant Deficiencies. Auditors identified two files missing proper income verification, and seven files missing the EIV report. Extrapolation of errors to the population found the potential misstatement to be immaterial to program HAP expense. Auditors note that all income-related discrepancies were found in files selected from a HAP register dated earlier in the fiscal year, indicating improvements in compliance as the year progressed. Auditors recommend that SHA should enhance its quality control procedures to ensure compliance with HUD income verification regulations and EIV review requirements. Regular internal reviews and staff training should be conducted t oaddress these compliance issues effectively. PHA Response: The SHA has implemented a corrective action plan to address noted deficiencies. The SHA has had significant staffing turnover in the last year. While vacant positions were filled, the SHA contracted with Nan McKay Associates (NMA) to complete all Annual Recertifications. NMA assigned four full-time staff to complete all recertifications and assigned one additional full-time staff person to conduct a monthly Qualify Control Review of all recertifications completed by NMA. During NMA’s contract, SHA focused on hiring and training new staff. SHA has hired a new Director of Leased Housing, a new Leased Housing Supervisor, three Leasing Coordinators, and a Tenant Selector. The Director and Supervisor have been providing one-on-one training and support. New staff have also been enrolled in training opportunities provided by outside vendors such as the Nan McKay Rent Calculation Class. As of 7/31/2024, SHA has resumed program management from NMA. SHA has also increased the agency’s internal quality control audits. The Director of Leased Housing has increased monthly SEMAP review from 40 to 50 files. Monthly feedback is provided to staffers individually and systemic issues are addressed to the entire department. The Supervisor also conducts a monthly review of the Income Verification Tool, following up with staffers to assist them in addressing discrepancies with their client’s records. Additionally, SHA has fully implemented an electronic file storage system, utilizing PHA Web’s online system to better organize, track, and maintain client files. Since implementation of the corrective action plan, 97% of reviewed files have appropriate third party documentation, 94% have appropriate adjusted income, and 97% were found to have appropriate Utility Allowances. Corrective action has been taken on all errors, and guidance has been provided to staff. SHA will continue conducting file audits, as well as following up with staff. PHA Goal: Based on the SHA’s monthly quality control sample of tenant files: (A) The SHA obtains third party verification of reported family annual income, the value of assets totaling more than $5,000, expenses related to deductions from annual income, and other factors that affect the determination of adjusted income, and uses the verified information in determining adjusted income, and/or documents tenant files to show why third party verification was not available; (B) The SHA properly attributes and calculates allowances for any medical, child care, and/or disability assistance expenses; and (C) The SHA uses the appropriate utility allowances to determine gross rent for the unit leased in accordance with 24 CFR 982.505. PHA Strategies: Target Completion Date: 1) The SHA will review its current quality control tracking system to record the results of random sampling of files as required in 985.2. The SHA will revise this system on an ongoing basis if necessary. 3/31/2026 2) Confirm that 90% or more files sampled contain proper third party written verification (or equivalent) of income and assets, proper calculation of appropriate deductions and allowances and that appropriate utility allowance were used in the calculation of tenant rent. 3/31/2026 Persons Responsible: Matt Lincoln, Director of Leased Housing David Hospedales, Leased Housing Supervisor