Finding Text
Finding 2025-002 Significant Deficiency: Special Tests and Provisions – 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: Public Housing Authorities (PHAs) are required to enforce Housing Quality Standards (HQS) by performing inspections at initial occupancy and at least annually, and ensuring deficiencies are corrected within required timeframes. PHAs must not make housing assistance payments (HAP) for units that fail to comply with HQS and are not timely abated. Condition: The Authority failed to place applicable units into abatement and existing controls did not ensure that units requiring abatement were identified and processed in a timely manner. Cause: The control in place did not ensure timely abatement of rent as a result of failed inspection corrections. 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 $5,011 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 units tested, 9 met the criteria for abatement but were not placed into abatement. Identification As A Repeat Finding: The finding has been repeated from prior year finding 2024-002. Recommendations: We recommend that the Authority strengthen its Housing Quality Standards (HQS) enforcement process by implementing a formal tracking system to monitor inspection results and ensure timely follow-up on any deficiencies occur, in accordance with the Authority’s Administrative Plan. View of Responsible Officials: To address this compliance and control deficiency, the Section 8 Director, with assistance from caseworkers, will strengthen oversight of failed inspections and the abatement process by reviewing and tracking all inspection reports received from the third-party inspector, ensuring deficiencies are corrected and re-inspections are completed timely, and conducting re-inspections by MCHA staff when necessary. Staff will monitor correction deadlines to determine when abatements are required, issue abatement notices promptly, and ensure HAP payments are suspended and reinstated in accordance with MCHA policy and successful re-inspection results. MCHA will maintain complete documentation of failed inspections, correction deadlines, re-inspections, abatements, and HAP payment actions, perform monthly reconciliations between failed inspections and HAP payment records to verify required abatements have been implemented, and conduct periodic reviews of inspection and abatement tracking to ensure all units requiring abatement are identified and processed in a timely manner.