Finding Text
Finding 2025-001 Significant Deficiency: Special Reporting - Compliance and Control Finding ALN 14.871 - Section 8 Housing Choice Vouchers Federal Agency: U.S. Department of Housing and Urban Development (HUD) Pass-Through Entity: N/A - Direct Award Criteria Or Specific Requirement: HUD requires Public Housing Authorities (PHAs) to submit a Form HUD-50058 within 60 days whenever a family ends participation in the program or moves out of the PHA’s jurisdiction under portability, or transfers from one assisted unit to another (unit-to-unit move). Condition: The Authority did not submit the required form within the designated time frame, nor did the existing control operate as intended to prevent the error from occurring. Cause: The control in place did not ensure timely submission of the HUD-50058. Effect: The possibility exists that noncompliance with federal requirements could go undetected regarding compliance relating to direct and material compliance requirements. Questioned Costs: Known questioned costs of $1,681 were identified. Due to the nature of the compliance deficiency, likely questioned costs could not be reasonably projected or estimated, but are likely to exceed $25,000. Context: Of the 40 participants tested, 3 participants that exited the program or moved units did not have the HUD-50058 form submitted within the required 60 day timeframe, resulting in HAP payment overages for periods where the participant was not housed in the unit in question. Identification As A Repeat Finding: The finding has been repeated from prior year finding 2024-001. Recommendation: We recommend that management evaluate their existing control over the timely submission of the HUD-50058 upon a participant’s exit of the program, and consider implementing additional controls such as contacting a sample of landlords each month to verify whether tenants at that location have not vacated their units without notifying the Authority. Views Of Responsible Officials: Beginning immediately, the Section 8 Director and Coordinator will strengthen compliance and internal controls for processing move-out HUD-50058 forms to reduce the risk of noncompliance and HAP overpayments. MCHA will implement a standardized move-out documentation process that includes maintaining a move-out tracking spreadsheet to record tenant names, move-out dates, PIC submission dates, and relevant notes, allowing staff to monitor and ensure HUD-50058 submissions are completed within the required 60-day timeframe while also providing documentation for audits and internal reviews. MCHA will reinforce communication with both landlords and residents by providing annual reminders of reporting responsibilities, including notification of move-outs, evictions, deaths, property sales, and contact or banking changes, and by reviewing family obligations with HCV participants during annual recertifications to emphasize their responsibility to report intended move-outs. Additionally, MCHA will recover any HAP overpayments through electronic repayment or billing as appropriate and will monitor all identified overpayments to ensure collection efforts are documented and followed through to resolution.