FAC Explorer

Finding 1235861 (2025-002)

Material Weakness Repeat Finding
Requirement
E
Questioned Costs
-
Year
2025
Accepted
2026-09-21
Audit: 411487
Organization: Springfield Housing Authority (IL)
Auditor: RECTOR REEDER & LOFTON PC

AI Summary

  • Core Issue: Significant errors in tenant file compliance were found, with 55 out of 75 files reviewed showing issues, primarily related to income verification and late reexaminations.
  • Impacted Requirements: Noncompliance with HUD guidelines and internal policies risks misstatements in Housing Assistance Payments (HAP) and affects tenant safety due to inadequate inspections.
  • Recommended Follow-Up: Enhance monitoring of internal controls, ensure timely supervisory reviews, provide ongoing staff training, and prioritize clearing the backlog of overdue reexaminations and inspections.

Finding Text

Finding 2025-002 – Housing Choice Voucher Tenant Files – Eligibility – Internal Control over Tenant Files Noncompliance & Material Weakness – Housing Choice Voucher Program – ALN 14.871 Condition & Cause: We randomly selected one hundred fifteen (115) tenant files for review. After reviewing seventy-five (75) files, we identified that the error rate was sufficient to establish that certain program criteria were not met on a pervasive basis. Given time constraints and the consistency of errors identified, we determined that continued full-scope testing of the remaining forty (40) files was unlikely to alter the conclusion. For the remaining files, we performed a limited procedure to confirm the PHA could locate and produce the file but did not test them for substantive compliance. Of the seventy-five (75) files reviewed for full compliance, we noted fifty-five (55) tenant files were out of compliance in one or more categories. Of these, six (6) files, or 8.0%, were impacted by errors related to adjusted annual income. We were able to extrapolate identified misstatements of HAP and found the potential misstatement to represent 0.16% of program HAP expense, which is immaterial to the financial statements. A summary of the review results is as follows: • Three (3) files contained a miscalculation of annual income; • Three (3) instances of missing or improper income verification; • Two (2) files contained unverified deductions from annual income; • Forty-four (44) annual reexaminations were conducted more than three months late; • Eighteen (18) files where the EIV was either missing or obtained unreasonably late; • Ten (10) files lacked evidence of an annual unit inspection; and • Three (3) files were missing a completed 9886 or 9886-A. Agency management attributed these deficiencies to significant staff turnover during the past several years. Management efforts to mitigate these circumstances include contracting with a third party to assist with processing reexaminations and conducting a salary survey to improve staff retention. Notably, the current status of late reexaminations shows improvement. During the prior year field visit in June 2025, the Agency had a backlog of 800+ annual reexaminations; during the current year field visit in July 2026, that backlog was below 250 annual reexaminations. Criteria: Title 24 of the Code of Federal regulations, the Housing Authority Administrative Plan, and specific HUD guidelines in documenting and maintaining Housing Choice Voucher tenant files. Effect: Failure to complete timely reexaminations or properly verify and calculate annual income can result in a misstatement of HAP expense leading to improper funding for the HCV program. Misstatements of HAP may cause an undue financial burden to the participant, which is incongruent with the mission of the Agency. The absence of required annual inspections compromises the Authority’s ability to ensure housing units meet HUD Housing Quality Standards (HQS), potentially affecting tenant safety and increasing the risk of further noncompliance. Continued noncompliance exposes the Agency to increased regulatory scrutiny. Recommendation: We acknowledge that the Authority has implemented internal quality control measures for tenant file actions and has taken steps to stabilize staffing within the department. We recommend continued and increased monitoring and refinement of these controls, including ensuring supervisory or second-level review of verification of income and HAP calculations occurs timely. To support long-term compliance, staff should continue to receive regular training, particularly in areas such as income verification and HAP calculation. In addition, the Authority should continue to prioritize clearing the backlog of overdue reexaminations to bring all tenant files current and in compliance with HUD requirements. This includes identifying and properly documenting any missing components of tenant file actions. Lastly, the Agency should adopt procedures to ensure inspections are completed within the required timeframes, even during periods of staffing shortages. 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.

Corrective Action Plan

FINDING 2025-002 "Housing Choice Voucher Tenant Files - Eligibility - Internal Control over Tenant Files - Noncompliance & Material Weakness " SHA RESPONSE The Springfield Housing Authority acknowledges the six (6) errors as delineated in the full 2025 FYE audit report accounting for eight (8) percent of files reviewed that were impacted by errors related to adjusted annual income. In 2025, the Springfield Housing Authority Housing Choice Voucher program identified the following positions to undertake income and rent calculations: one (1) Special Programs Coordinator, four (4) HCV Specialists and one (1) Program Integrity Specialist. The primary function of the Program Integrity Specialist position is to audit and quality control tenant files including adjusted annual income calculations conducted by HCV Specialist. The errors were primarily attributable to staffing shortages, former staff, lack of qualified candidates in the local workforce, unprecedented staff turnover resulting in the subsequent continuity and disruption in caseload management. The SHA has taken and will continue to take corrective actions to address the underlying causes and eradicate the errors associated with calculating adjusted annual income. In addition to the plan of action listed below, corrective actions include but are not limited to: pursuing alternative recruitment options; Training/cross training staff responsible for adjusted income calculations, ensuring staff responsible receive refresher training on applicable policies, procedures and calculation requirements as well as additional external training; management quality control reviews will provide additional scrutiny for higher-risk and more complex files. The SHA recognizes that staffing challenges may not be eliminated, accordingly, the corrective actions above are intended to address both the immediate errors identified in the audit and the underlying process weaknesses that contributed to the errors. The SHA will closely monitor implementation of these measures to ensure that adjusted incomes are accurate, properly documented and completed in accordance with applicable requirements. The Springfield Housing Authority hired third party consultants to assist with processing annual recertifications 1st Quarter of 2026 that continued through July 2026. The purpose of the third-party contractor was to complete a backlog of annual recertifications that were outstanding and due in FY2025. The Springfield Housing Authority collected all of the recertification documentation and submitted it to the third-party vendor for processing. Once the processing was completed by the third-party vendor, the Director of the Housing Choice Voucher program audited the files for accuracy (calculations and required documentation). Based on the success of this process in 2026, the Springfield Housing Authority issued a Request for Proposal and awarded a contract to a third-party contractor to assist in completion of 2026 recertifications as a consistent measure while the HCV department trains and onboards new HCV staff. The error rate was directly attributable to staff no longer working for the Springfield Housing Authority. The Director of HCV, HCV Manager, HCV Specialists, HCV Special Programs Coordinator and Program Integrity Specialist are continually provided with additional internal and external training opportunities in HCV rent calculations, program integrity and HOTMA provisions in 2025 and 2026. In addition to the aforementioned, the SHA will take the following corrective actions to correct the errors and/or prevent the errors moving forward: • The Program Integrity Specialist and/or Director of Housing Choice Voucher programs will conduct reviews of 100% of annual and interim recertifications for HCV program participants by December 31, 2026. A formal quality control review log has been established with on-going implementation. • The Program Integrity Specialist will ensure 100% audited file corrections are completed by the HCV Specialists, monthly. • The HCV Director and/or Manager will review 10% of the recertifications audited by the Program Integrity Specialist as an additional quality control measure by December 31, 2026. A formal quality control review log has been established with on-going implementation. • Any newly hired HCV Director, HCV Manager, HCV Specialists and Program Integrity Specialist will be provided with additional external training in Housing Choice Voucher program income and rent calculations and program integrity within sixty (60) days of employment. • The HCV Director and/or Manager will re-review the files identified with errors during the independent audit and resolve the errors in accordance with the SHA Administrative Plan and HUD rules and regulations by December 31, 2026. A formal quality control review log has been established with on-going implementation. • Further, upon identifying the FY2025 annual inspections were not fully completed by SHA Inspection staff, the Springfield Housing Authority issued a Request for Proposal for a third-party vendor to complete 100% annual inspections and assist with NSPIRE standards training and evaluation of $HA properties. The Springfield Housing Authority anticipates contract award September 2026 to address the outstanding unit inspections portion of the audit finding. Person Responsible: Kylie Jackson, Housing Choice Voucher Program Director Anticipated Completion Date: December 31, 2026

Categories

HUD Housing Programs

Other Findings in this Audit

  • 1235860 2025-001
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
14.850 PUBLIC HOUSING OPERATING FUND $3.89M
14.872 PUBLIC HOUSING CAPITAL FUND $2.95M
14.879 MAINSTREAM VOUCHERS $1.26M
14.871 SECTION 8 HOUSING CHOICE VOUCHERS $326,758
14.896 FAMILY SELF-SUFFICIENCY PROGRAM $249,424
14.870 RESIDENT OPPORTUNITY AND SUPPORTIVE SERVICES - SERVICE COORDINATORS $2,257