Finding 1190745 (2025-002)

Finding: 2025-002: Significant Deficiency in Internal Control Over Compliance and Non-Material Noncompliance Federal Awarding Agency: Department of Housing and Urban Development (HUD) State Awarding Agency: Not applicable (Direct Award) Program Name: Housing Voucher Cluster ALN: 14.871 and 14.879 Compliance Requirement: Special Test-Housing Quality Standards (HQS) Inspection and Enforcement Prior Year Finding Number: 2024-003 Criteria: Per 24 CFR 982.404 “The public housing authority (“PHA”) must not make any housing assistance payments (HAP) for a dwelling unit that fails to meet the HQS, unless the owner corrects the defect within the period specified by the PHA and the PHA verifies the correction. If a defect is life threatening, the owner must correct the defect within no more than 24 hours. For other defects, the owner must correct the defect within no more than 30 calendar days (or any PHA-approved extension).” Per 2 CFR Section 200.303, non-Federal entities receiving federal awards must establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and terms and conditions of the federal award. Per 24 CFR 982.405, “The PHA must inspect the unit leased to a family prior to the initial term of the lease, at least biennially during assisted occupancy, and at other times as needed, to determine if the unit meets the Housing Quality Standards (HQS).” Condition: During our testing of sixty (60) inspections, we noted three (3) instances where a unit was notinspected on the required biennial basis. Additionally, we noted that the County failed to maintain appropriate logs or records of failed HQS inspectionsduring the year. However, during our testing of the six (6) units that failed HQS, the County appropriatelydocumented the enforcement of the HQS, properly notified the unit owners of the reported deficiencies, andperformed timely follow-up inspections. Cause: The County does not appear to have adequate policies and procedures in place to ensure inspections are performed on a timely basis. The County converted to a new HQS tracking system during current fiscal year which caused challenges with maintaining appropriate logs or records of failed HQS inspections. Effect: The County’s control environment over HQS enforcements did not ensure inspections were timely performed. As a result, the County was not in compliance with the HQS enforcement requirements as of June 30, 2025. Non-compliance with these requirements creates a risk that the County may provide federal funds to tenants of ineligible units. Recommendation: The recommendation is for the County to review their client management software system’s functionality to determine whether an electronic process for scheduling and follow-up or comprehensive reporting can be identified to improve efficiency and eliminate the potential for human error. If an electronic process or comprehensive reporting is not available, or cannot fully cover the deficiency, the recommendation is for the County to identify measures that streamline their current process and to eliminate non-compliance. Potential examples include having the Housing Choice Voucher (HCV) Program Manager review and schedule upcoming inspections in advance, checking in with the Inspector on a monthly basis to review inspections that are due and inspections that are scheduled, and having the HCV Program Manager ensure that each scheduled inspection is documented timely in the system. Questioned costs: None. Context: This is a condition based on testing of the County’s compliance with specified requirements. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. Views of Responsible Officials: The County concurs with the auditor’s finding and recommendation.