Finding 1218320 (2025-003)

Finding 2025-003 – Section 8 Participant Files – Eligibility – Internal Control over Participant Files – Noncompliance and Material Weakness – Section 8 Housing Assistance Cluster Program – ALNs 14.871, 14.879, and 14.EHV Condition & Cause: We reviewed forty (40) resident files for compliance across multiple areas and found seventeen (17) files to be noncompliant with some files containing multiple deficiencies. We specifically noted the following: • Two (2) files were unable to be located. • One (1) resident for which the HAP calculation is not supported by an action maintained in the file. • Three (3) files were missing proper verification of income. • Three (3) files had miscalculations of income • Nine (9) files were missing the EIV report • Four (4) files were missing a valid Authorization for Release of Information • One (1) file that did not have an annual reexamination completed when due or the Application for Continued Occupancy • One (1) file that did not have evidence of a biennial HQS inspection. Based on extrapolation, we found that the potential misstatement of HAP expense is immaterial to the financial statements. The noncompliance was primarily caused by high turnover within the department during the audit period, which limited the Agency’s ability to complete, maintain, and retain required documentation in a timely and accurate manner. Criteria: The Code of Federal Regulations, Housing Authority Administrative Plan, and specific HUD guidelines in documenting and maintaining participant files Effect: Failure to properly verify and calculate annual income, maintain required documentation, and complete timely reexaminations can result in a misstatement of HAP expense leading to improper funding for the HCV program. Misstatements of HAP may also cause an undue financial burden to the participant which goes against the mission of the agency. Persistent noncompliance can result in increased scrutiny from regulatory agencies and a decrease in vouchers or program funding. Recommendation: We recommend that the Agency conduct a resident file audit of existing residents in the HCV program to determine the extent of any additional misstatements of HAP expense. We also recommend that the Agency increase their monitoring and quality control review of the HCV program files to determine whether occupancy specialists need additional training or procedures added to ensure compliance. Our experience with agencies that increase monitoring and review of the files is that there are dramatically decreased error rates. Questioned Costs: None Repeat Finding: Yes Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.