Finding Text
Eligibility Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871/14.879/14.EHV Federal Award Identification Number and Year: VA901; 2024-2025 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: The PHA must do the following: (1) As a condition of admission or continued occupancy, require the tenant and other family members to provide necessary information, documentation, and releases for the PHA to verify income eligibility (24 CFR sections 5.230, 5.609, and 982.516). (2) For both family income examinations and reexaminations, obtain and document in the family file third party verification of (a) reported family annual income; (b) the value of assets; (c) expenses related to deductions from annual income; and (d) other factors that affect the determination of adjusted income or income-based rent (24 CFR section 982.516). (3) Determine income eligibility and calculate the tenant’s rent payment using the documentation from third party verification in accordance with 24 CFR Part 5 Subpart F (24 CFR section 5.601 et seq.) (24 CFR sections 982.201, 982.515, and 982.516). Most PHAs devise their own application forms that are filled out by the PHA staff during an interview with the tenant. The head of household signs (a) one or more release forms to allow the PHA to obtain information from third parties; (b) a federally prescribed general release form for employment information; and (c) a privacy notice. Under some circumstances, other members of the family are required to sign these forms (24 CFR sections 5.212 and 5.230). (4) Use the Enterprise Income Verification (EIV) system in its entirety to verify tenant employment and income information during mandatory reexaminations of family composition and income in accordance with 24 CFR 5.233; and reduce administrative and subsidy payment errors in accordance with 24 CFR 5.236 and other administrative guidance issued by HUD. (5) Select tenants from the HCVP waiting list (see III.N.1, “Special Tests and Provisions – Selection from the Waiting List”) (24 CFR sections 982.202 through 982.207). (6) Reexamine family income and composition at least once every 12 months and adjust the tenant rent and housing assistance payment as necessary using the documentation from third party verification (24 CFR section 982.516). 2 CFR 200.303 requires that recipients and subrecipients receiving federal awards establish, document and maintain effective internal control over the federal awards that provides reasonable assurance that the recipient or subrecipient is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition/Context: During our testing of 60 tenant files for eligibility requirements, we noted the following in 7 files: - 3 of 60 files tested did not have proper supporting documentation for income reported on the HUD-50058. - 2 of 60 files tested did not have proper supporting documentation for assets reported on the HUD-50058. - 1 of 60 files tested did not have proper supporting documentation for expenses/deductions reported on the HUD-50058. - 5 of 60 files tested had incorrectly calculated HAP due to missing or incorrect supporting documentation. - 2 of 60 files tested did not have proper supporting documentation showing that family income and composition were reexamined annually. - 2 of 60 files tested did not contain a HUD-9886 form signed by all members of the household over 18. - 2 of 60 files selected did not include the completed housing specialist checklist (or similar compensating internal control). Questioned costs: $3,839 Cause: As a balance-of-state PHA, Virginia Housing administers the HCV program through 26 Local Housing Agencies (LHAs), each with varying staffing levels, internal review capacity, and documentation practices. During the audit period, eligibility determinations and income verifications were primarily processed at the local level, with oversight conducted through periodic monitoring and quality control reviews. Certain documentation and calculation controls were not sufficiently standardized or centrally validated prior to final processing. In addition, enhancements to quality control procedures implemented during the fiscal year were not fully operational for the files selected for audit testing. These factors contributed to inconsistencies in documentation completeness and calculation accuracy. Virginia Housing will continue to evaluate the effectiveness of the enhanced QC process, monitor error trends, and assess whether additional measures are warranted. Effect: The lack of internal controls in place over the eligibility process could increase the risk of errors in the housing assistance payment calculations. Repeat Finding: This finding is a repeat finding in the immediate prior year over eligibility requirements. Prior year finding numbers were 2024-001 and 2023-001. Recommendation: We recommend that the Authority review its Agent’s internal controls and policies related to HUD tenant eligibility requirements to ensure that all required documentation is obtained and maintained at the time of recertification. We further recommend that the Authority implements uniform documentation standards and requirements across all local housing agencies (LHAs) and agents of the Authority. Views of responsible officials: There is no disagreement with the audit finding.