Finding Text
Public Housing Eligibility Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Low Rent Public Housing Assistance Listing Numbers: 14.850 Federal Award Identification Number and Year: FL080; 2025 Award Period: October 1, 2024 to September 30, 2025 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Noncompliance (Other Matters) Criteria or Specific Requirement: 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) a certification that the information provided to the PHA is correct; (b) one or more release forms to allow the PHA to get information from third parties; (c) a federally prescribed general release form for employment information; and (d) a privacy notice. Under some circumstances, other members of the family may be required to sign these forms (24 CFR sections 5.212, 5.230, and 5.601 through 5.615). 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 960.259). (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 960.259). (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 sections 5.601 et seq., and 24 CFR sections 960.253, 960.255, and 960.259). (4) Select tenants from the public housing waiting list (see III.N.2, “Special Tests and Provisions – Public Housing Waiting List”) (24 CFR sections 960.206 and 960.208). (5) 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 sections 960.253, 960.257, and 960.259). Condition: During testing of 10 tenant files, eligibility related exceptions were identified in 2 files. • In 1 instance, tenant income was improperly excluded, resulting in an inaccurate rent/subsidy calculation. • In 1 instance, tenant income was improperly calculated, resulting in an inaccurate rent/subsidy calculation. Questioned Costs: $2,047 Context: Out of 10 tenant files tested, 2 tenant files contained errors as noted above. Cause: The Authority had inadequate controls over the income verification and calculation processes, including insufficient review procedures to ensure all income sources are properly identified, evaluated, and included in rent calculations. Effect: These deficiencies increase the risk that tenant rent and subsidy amounts are not calculated in accordance with HUD requirements, potentially resulting in: • Overpayments or underpayments of subsidy, • Incorrect tenant rent charges, and • Noncompliance with HUD regulations, which may lead to questioned costs. Repeat Finding: This is a repeat finding from previous years. The finding numbers were 2023-006 and 2024-006. Recommendation: We recommend the Authority strengthen internal controls over income determination and rent calculation by: • Enhancing procedures to ensure all sources of tenant income are properly identified, verified, and included in calculations • Providing additional training to staff on HUD income determination and rent calculation requirements • Implementing or strengthening supervisory review controls to detect and correct errors in a timely manner Views of Responsible Officials: There is no disagreement with the audit finding.