Audit Firm: CohnReznick Period Covered by Audit October 1, 2024 - September 30, 2025 Corrective Action Plan Prepared By: Name: Nancy Thomas Position Chief Financial Officer and Executive Vice President Telephone Number: 336-917-6066 Findings and Questioned Costs - Major Federal Award Program Audit Finding No. 2025-001; Eligibility and Reporting - Material Weakness-HCV Voucher Program Name of Federal Agency: Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster (Section 8 Housing Choice Vouchers Program; Mainstream Vouchers Program) Assistance Listing Number: 14.871; 14.879 Federal Award Identification Number and Year: NC012VO 2025; NC012EF 2025; NC012DV 2025 Criteria: In accordance with Uniform Guidance, internal controls are required to be in place to ensure compliance with federal requirements and to maintain complete and accurate participant files as noted in CFR 5.233, 982.151, 982.405(d), and 982.516. Condition and Context: Our testing of 40 participant files noted the following: • No support was able to be provided regarding tenant lease files for 4 of 40 participant selections. • No tenant addendum was able to be provided for 1 of 40 participant selections. • No HAP contract was able to be provided for 2 of 40 participant selections. • No electronic income verification was done within the required time period for 13 of 40 participant selections. • Annual recertifications were not completed timely for 3 of 40 participant selections. Effect or Potential Effect: The Housing Authority of the City of Winston-Salem (“ASPIRE”) is not in compliance with federal requirements regarding Eligibility and Reporting. Cause: Tenant lease files were not maintained, and tenant eligibility was not determined in accordance with Uniform Guidance. Questioned Costs: Unknown Identification as a Repeat Finding: Repeat finding 2024-001 Recommendation: ASPIRE should maintain complete and accurate participant files to ensure compliance with federal requirements. Views of Responsible Official(s) and Planned Corrective Actions: ASPIRE will improve internal controls to maintain complete and accurate participant files to ensure compliance with federal requirements. CORRECTIVE ACTION TO BE TAKEN: 1. No support was able to be provided regarding tenant lease files for 4 of 40 participant selections. Response: The agency underwent a relocation of its main office and experienced the loss of five Housing Choice Voucher Specialists, which necessitated the engagement of a contractor to assume responsibility for more than 1,800 participant case files. Due to the transition of these caseloads to the contractor and the limited storage capacity at the agency's new office location, physical participant files were transferred to an off-site storage facility. During the process of boxing, inventorying, and relocating more than 5,000 physical files, four participant files were inadvertently misplaced. Upon discovery, management took immediate action to reconstruct the missing files using available electronic records, third-party documentation, and information maintained within Yardi. To mitigate the risk of future file loss and strengthen document retention practices, the agency implemented enhanced procedures effective January 1, 2025. Staff are now required to electronically upload and attach all supporting documentation to the applicable HUD Form 50058 action within Yardi, in addition to maintaining the required physical file. This dual-record retention process ensures that participant documentation is preserved in both electronic and hard-copy formats, providing redundancy and improving accessibility, accountability, and compliance with record retention requirements. 2. No tenant addendum was able to be provided for 1 of 40 participant selections. Response: The absence of the tenant addendum was the result of an oversight by the Housing Choice Voucher Specialist. To prevent similar occurrences in the future, staff have been reminded of the requirement to maintain complete participant files, including all required HUD forms and addenda. In addition, the agency now requires that tenant addendums and all supporting documentation be maintained in both the participant's electronic file within Yardi and the physical file. This dual-record retention process provides an additional level of quality control and helps ensure that required documentation is readily available for future reviews and audits. 3. No HAP contract was able to be provided for 2 of 40 participant selections. Response: The agency was unable to provide a copy of the HAP Contract for two of the forty participant files selected for review. This was the result of an oversight in the maintenance of the participant files. Upon notification, management conducted a review of the files and implemented corrective measures to strengthen document retention practices. Staff have been retrained on the requirement to maintain complete participant files, including all required Housing Assistance Payment (HAP) Contracts and supporting documentation. In addition, the agency now requires that HAP Contracts be maintained in both the participant's electronic file within Yardi and the physical file. Management has also implemented periodic file reviews to verify that required documentation is present and properly retained. These measures are intended to improve recordkeeping controls and prevent similar occurrences in the future. 4. No electronic income verification was done within the required time period for 13 of 40 participant selections. Response: Electronic Income Verification (EIV) reports were not completed within the required timeframe for 13 of the 40 participant files selected for review. The delays were the result of staff oversight and workload challenges experienced during a period of significant staffing turnover within the Housing Choice Voucher Program. To address this issue, Housing Choice Voucher staff have been retrained on EIV requirements, including required timeframes for obtaining and reviewing EIV reports. Management has reinforced expectations regarding timely completion and documentation of EIV reviews. Additionally, the department auditor conducts monthly reviews of a random sample of participant files to verify compliance with EIV requirements and identify any deficiencies requiring corrective action. These measures are intended to strengthen compliance monitoring and ensure EIV reviews are completed within HUD-required timeframes. 5. Annual recertifications were not completed timely for 3 of 40 participant selections. Response: Annual recertifications were not completed within the required timeframe for three of the forty participant files selected for review. The delays were primarily attributable to staffing shortages and caseload transitions that occurred during the audit period, resulting in increased workloads and processing delays. To address this issue, staff have been retrained on annual recertification requirements and processing timelines. Management has reinforced expectations regarding the timely completion of annual recertifications and implemented additional monitoring procedures to track upcoming and overdue recertifications. The Director has also developed an Annual Recertification Calendar for staff to follow. This calendar outlines each step of the annual recertification process and establishes deadlines to ensure timely completion of all required actions. In addition, the department auditor conducts monthly reviews of a random sample of participant files to verify compliance and identify any deficiencies requiring corrective action. These measures are intended to improve timeliness, strengthen oversight, and ensure annual recertifications are completed in accordance with HUD requirements.