Finding Text
Subject: Public Housing Operating Fund – Tenant Eligibility and Reexaminations Federal Agency: Department of Housing and Urban Development Federal Program: Public Housing Operating Fund Assistance Listing Number: 14.850 Federal Award Number and Year (or Other Identifying Number): CY 2025 Pass-Through Entity: Not applicable Compliance Requirement: Eligibility Audit Finding: Material Weakness and Material Noncompliance Condition and Context: Of the 22 public housing tenant files reviewed, 8 tenant files contained errors resulting in miscalculated tenant rent (36%). It was noted the Commission does not perform a secondary review of annual rent certifications resulting in tenant rent errors. Criteria: 24 CFR section 960.259 requires the Commission to obtain and document in the family file third-party verification of: (1) reported family annual income; (2) the value of assets; (3) expenses related to deductions from annual income; and (4) other factors that affect the determination of adjusted income or income-based rent. 24 CFR 85.20 requires the Commission to have effective internal controls, and accountability must be maintained for all funds. Cause: Lack of internal controls over tenant files. Effect: Non-compliance with the federal Eligibility requirement. Tenant rents may be miscalculated, other notifications and documentation may be missing. Tenant rents were undercharged, resulting in noncompliance with HUD eligibility requirements and a loss of rental revenue to the Commission. Questioned Cost: We performed an extrapolation of the undercharged rent based on our reviewed sample of tenant files. This resulted in likely questioned costs of $77,086, which reflects 9.9% of total rental income. Recommendation: The Commission should implement internal controls over tenant files to ensure accountability. All certifications and the required documentation should be maintained in the tenant's current file. Additionally, in order to ensure certifications are performed timely and tenant information is input correctly, the Commission should have a second party review files in a timely manner.