Finding Text
Finding 2025-001 (Repeated finding 2024-001) Subject: Section 8 Housing Choice Voucher Program – Tenant Eligibility and Reexaminations Federal Agency: Department of Housing and Urban Development Federal Program: Section 8 Housing Choice Vouchers Assistance Listing Number: 14.871 Federal Award Number and Year (or Other Identifying Number): CY 2025 Pass-Through Entity: Not applicable Compliance Requirement: Eligibility Audit Finding: Material Weakness Condition and Context: During the fieldwork, we selected 40 participant files for testing of compliance with eligibility, annual reexamination, tenant rent, utility allowances, and housing assistance payment requirements. We identified exceptions as follows: 15 annual recertifications were not completed timely 1 file miscalculated total tenant payment due to incorrect deductions applied 9 instances of misalignment of utility responsibilities across HAP contract and Lease Agreements Criteria: Under 24 CFR § 982.516(a), the PHA must conduct a reexamination of family income and composition at least annually. The PHA must obtain and maintain appropriate verification of income, assets, expenses relating to deductions, and other factors affecting adjusted income. Under 24 CFR § 982.516(e), at the effective date of a regular or interim reexamination, the PHA must make appropriate adjustments to the housing assistance payment in accordance with 24 CFR § 982.505. Under 24 CFR § 982.517, the PHA must maintain a utility allowance schedule and use the applicable allowance for tenant paid utilities when determining the family’s utility allowance. Under 24 CFR §§ 982.305, 982.308, and 982.451, the assisted lease and HAP contract must satisfy program requirements. The lease and HAP contract must be consistent regarding the utilities and appliances supplied by the owner and those supplied by the family. Cause: The Housing Commission did not have sufficiently designed and consistently implemented controls to ensure that annual reexaminations were identified and completed by their required effective dates, tenant payments and HAP calculations were independently reviewed, current payment standards and utility allowance schedules were retained and properly applied, and utility responsibilities were consistent among the lease, HAP contract, and housing software. Effect: The absence of effective controls over participant file processing increases the risk that ineligible or incorrectly calculated assistance could be provided and that errors may not be identified and corrected timely. Late annual reexaminations may also result in continued assistance based on outdated family income, composition, deduction, payment standard, or utility information. Inconsistent utility responsibilities among the lease and HAP contract could result in the use of an incorrect utility allowance, gross rent, tenant rent, or housing assistance payment. They may also create uncertainty regarding whether the owner or family is contractually responsible for paying particular utility costs. Questioned Cost: Known and projected misstatement cannot be determined due to incomplete information. The financial effect of the remaining exceptions could not be determined because the Housing Commission did not maintain the applicable utility allowance schedules or other records necessary to recalculate the housing assistance payments. Accordingly, additional potential questioned costs may exist but cannot presently be quantified. Recommendation: We recommend the Housing Commission implement the following procedures: Establish a tracking and supervisory review process to ensure that annual reexaminations are completed by their required effective dates Require an independent review of total tenant payment, payment standard, utility allowance, gross rent, and HAP calculations before transactions are finalized Maintain historical payment standard and utility allowance schedules supporting each participant calculation Reconcile utility responsibilities among the lease agreement, HAP contract, and housing software before executing the HAP contract and whenever lease terms change Review the affected participant files, recalculate assistance, and correct identified tenant rent and HAP errors Determine whether similar errors exist in the remaining participant population and consult with HUD concerning the resolution of overpayments or amounts owed to families or owners and Train responsible personnel on eligibility, annual reexamination, payment standard, utility allowance, and documentation requirements