Finding 1211025 (2025-001)

Material Weakness Repeat Finding
Requirement
E
Questioned Costs
-
Year
2025
Accepted
2026-04-30

AI Summary

  • Core Issue: Deficiencies in tenant files, including missing recertifications, invalid forms, and incorrect HAP calculations, indicate weaknesses in internal controls.
  • Impacted Requirements: Compliance with HUD requirements and the Authority’s Administrative Plan regarding timely and accurate tenant documentation.
  • Recommended Follow-Up: Strengthen internal controls, ensure accurate HAP calculations, and improve accessibility of tenant files post-digitalization.

Finding Text

Condition: Out of an approximate population of 20,000 of Housing Voucher Cluster, 40 tenant files were tested and the following deficiencies were noted: • Three files did not have annual recertifications within 12 months; • Three files did not have valid 9886 forms; • Two files did not have the required forms of identification; • Six files did not have third party verification of income; and • Seven files had incorrect HAP calculations. Additionally, the Authority was undergoing a digitalization process for tenant files in which they contracted a third-party company to scan and organize physical files to convert them to digital files. Due to a complication in the conversion process, the Authority was unable to provide six of the requested tenant files. Criteria: The Authority’s Administrative Plan and 24 CFR 982.516 requires internal controls to be in place to ensure proper procedures are being followed in compliance with HUD requirements regarding timely, complete, and accurate tenant files. Context: The auditor randomly selected tenant files out of the population from each program as outlined, which we consider to be a statistically valid sample size. The auditor reviewed the tenant files and support to ensure that proper procedures are being followed and that the Authority is in compliance with HUD requirements regarding timely, complete, and accurate tenant files. Cause: The deficiencies occurred due to weaknesses in the Authority’s internal controls designed to ensure tenant eligibility documentation is properly obtained, reviewed, and maintained in accordance with HUD requirements. In addition, during the fiscal year the Authority was undergoing a digitalization process to convert physical tenant files into electronic records through a contracted third-party vendor. Complications in the file conversion and organization process resulted in certain tenant files being temporarily unavailable for review. Effect: The Authority is not in compliance with HUD requirements regarding eligibility which could result in the incorrect amount of rental assistance provided. Questioned Costs: Unknown Auditor Recommendations: The Authority should strengthen its internal controls over tenant eligibility documentation and file maintenance to ensure all required documentation is obtained, properly reviewed, and maintained in accordance with HUD requirements. Additionally, the Authority should implement procedures to ensure Housing Assistance Payment calculations are accurately performed and reviewed. The Authority should also ensure that all tenant files are complete and accessible following the transition to digital records. The Authority needs to correct the deficiencies noted in the tested files and consider the impact to the rest of the population of tenant files that were not selected as part of the auditor’s sample. Management Response: See the Corrective Action Plan in this report.

Corrective Action Plan

The Housing Authority of New Orleans (HANO) acknowledges the deficiencies identified in the audit related to tenant eligibility documentation, Housing Assistance Payment (HAP) calculations, and file accessibility during the transition to digital records. HANO will correct the deficiencies noted in the sampled files, including completing overdue recertifications, obtaining required HUD forms and identification documentation, securing proper third-party income verification, and recalculating HAP amounts where necessary. The Authority will also conduct an expanded internal review of additional tenant files to determine whether similar issues exist and will correct any deficiencies identified. To prevent recurrence, HANO has initiated formal staff training to reinforce compliance with HUD eligibility requirements, documentation standards, and proper HAP calculation procedures. Training began on March 19, 2026, and is being conducted by Circular Consulting LLC, a thirdparty firm with expertise in Housing Choice Voucher program compliance and operations. This training will continue through September 2026 to ensure staff receive comprehensive instruction and reinforcement of HUD program requirements. In addition, HANO will strengthen internal controls by implementing additional quality control (QC) reviews of tenant files and recertifications, including supervisory review of eligibility documentation and HAP calculations to ensure accuracy and completeness. These enhanced QC monitoring procedures will begin on April 20, 2026, and will be conducted on an ongoing basis to ensure errors are identified and corrected promptly. The Authority will also reconcile physical and digital tenant records to ensure that all files are properly digitized, complete, and accessible following the transition to electronic records. Responsible Party: Sonja Young, Director Implementation Timeline: Start Date: March 30, 2026 Completion Date: May 18, 2026

Categories

HUD Housing Programs Eligibility

Other Findings in this Audit

  • 1211023 2025-001
    Material Weakness Repeat
  • 1211024 2025-001
    Material Weakness Repeat
  • 1211026 2025-002
    Material Weakness Repeat
  • 1211027 2025-002
    Material Weakness Repeat
  • 1211028 2025-002
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
14.850 PUBLIC HOUSING OPERATING FUND $13.35M
14.872 PUBLIC HOUSING CAPITAL FUND $7.45M
14.889 CHOICE NEIGHBORHOODS IMPLEMENTATION GRANTS $2.06M
14.879 MAINSTREAM VOUCHERS $1.65M
14.871 SECTION 8 HOUSING CHOICE VOUCHERS $1.16M
14.238 SHELTER PLUS CARE $628,889
14.870 RESIDENT OPPORTUNITY AND SUPPORTIVE SERVICES - SERVICE COORDINATORS $624,425
14.249 SECTION 8 MODERATE REHABILITATION SINGLE ROOM OCCUPANCY $513,897