Finding 1230005 (2025-008)

Finding 2025-008: Material Weakness in Internal Control Over Compliance – Housing Choice Voucher Program Federal Program Information Assistance Listing Number: 14.871 Program: Housing Choice Voucher Cluster Criteria: Management is responsible for establishing and maintaining effective internal controls over federal programs that provide reasonable assurance of compliance with applicable federal statutes, regulations, and program requirements. Internal controls should include documented procedures, supervisory reviews, monitoring activities, and controls designed to ensure compliance deficiencies are prevented or detected and corrected in a timely manner. Condition: During our audit of the Housing Choice Voucher Program, we identified deficiencies in the Agency's internal control structure over compliance. Specifically, we noted: • The Agency did not utilize a tenant file completeness checklist to help ensure all required eligibility and compliance documentation was maintained. • Supervisory reviews of tenant files were not consistently performed or documented. • Compliance processes relied heavily on employee knowledge and experience rather than formalized procedures and monitoring controls. • Required HOTMA provisions were not timely incorporated into the Administrative Plan. • Audit testing identified compliance deficiencies affecting multiple compliance areas within the Housing Choice Voucher Program. The existence of compliance deficiencies across multiple compliance requirements indicates that controls designed to monitor compliance were not operating effectively during the audit period. Cause: The Agency has not established a comprehensive system of internal controls over compliance for the Housing Choice Voucher Program. Management did not implement sufficient supervisory review procedures, compliance monitoring activities, or standardized documentation processes to ensure compliance requirements were consistently met. In addition, compliance responsibilities were concentrated among a limited number of employees and relied heavily on institutional knowledge rather than formal policies and procedures. Effect: As a result of these control deficiencies, noncompliance with federal program requirements was not prevented or detected in a timely manner. Weaknesses in the control environment increase the risk that additional compliance violations may occur and remain undetected, potentially affecting program operations and future funding. The deficiencies also contributed to the compliance findings reported elsewhere in this Schedule of Findings and Questioned Costs. Recommendation: We recommend the Agency strengthen its internal control structure over compliance by: 1. Developing and implementing written compliance procedures for the Housing Choice Voucher Program. 2. Establishing tenant file checklists to ensure required documentation is maintained. 3. Performing and documenting supervisory reviews of tenant files on a periodic basis. 4. Establishing procedures to monitor HUD notices, regulatory changes, and program requirements. 5. Providing training to staff responsible for administering the Housing Choice Voucher Program. 6. Periodically reporting compliance monitoring results to the Board of Commissioners and documenting corrective actions for identified deficiencies. Views of Responsible Officials: The Housing Agency agrees with the finding.