Finding Text
Control Finding Over Special Provisions U.S Department of Housing and Urban Development Section 8 Housing Choice Voucher Program 14.871 Condition: During our testing of compliance with special tests and provisions for the Housing Choice Voucher Program, we noted that the HRA did not have adequate internal controls designed and implemented to ensure compliance with certain program requirements. Specifically, controls were not consistently documented or performed to verify that required procedures (e.g., proper documentation of rent reasonableness) were completed in accordance with HUD requirements. Criteria: In accordance with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200) and the applicable OMB Compliance Supplement for ALN 14.871, the auditee is required to establish and maintain effective internal controls to ensure compliance with program requirements. This includes controls over special tests and provisions, such as housing quality standards inspections, rent reasonableness determinations, income certifications, and other program-specific requirements. Additionally, Government Auditing Standards emphasize the need for controls to prevent or detect noncompliance with provisions of laws, regulations, and grant agreements. Cause: The deficiency appears to be due to a lack of formalized policies and procedures, as well as insufficient monitoring and review controls over program compliance. In addition, reliance on informal processes and staff knowledge resulted in inconsistent application of required procedures. Effect: The absence of effective internal controls over special tests and provisions increases the risk that noncompliance with HUD program requirements may occur and not be detected in a timely manner. This could result in questioned costs, potential repayment of funds, or other sanctions from the granting agency. Recommendation: We recommend that the HRA strengthen its internal control structure over compliance with special tests and provisions by: • Developing and implementing formal written policies and procedures addressing all applicable compliance requirements. • Establishing documented review and approval processes to ensure required procedures are consistently performed, and • Implementing monitoring controls (e.g., supervisory review or periodic internal audits) to ensure ongoing compliance with HUD requirements. Management Response: The HRA’s management has taken steps to correct this finding and ensure that proper review and controls are in place to review special tests and provisions to ensure that requirements are being met.