Finding Text
2025-001 The Housing Authority did not have adequate internal controls and did not comply with Housing Quality Standards enforcement requirements of its Housing Voucher Cluster program. Assistance Listing Number and Title: 14.871- Section 8 Housing Choice Vouchers Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WA014VO Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition The Housing Authority spent $2,037,363 in 2025 under the Housing Voucher Cluster program, which includes the Section 8 Housing Choice Vouchers Program (HCVP). The HCVP provides rental assistance to help low-income families afford safe and sanitary rental housing through Housing Authority Payment (HAP) contracts. Federal regulations require recipients to establish, document and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. The Housing Authority must inspect units leased to families at least every two years to determine if they meet federal Housing Quality Standards (HQS) requirements. For units under HAP contracts that fail to meet HQS requirements, the Housing Authority must require owners to correct any cited life-threatening HQS deficiencies within 24 hours of notification of the failed inspection. Owners must correct cited non-life-threatening HQS deficiencies within 30 calendar days of notification of the failed inspection or within a specified Housing Authority approved extension. If owners do not correct cited deficiencies within the specified correction period, the Housing Authority must stop assistance payments by the first of the month after the correction period ends or must terminate the HAP contract. The Housing Authority must keep documentation demonstrating compliance with HQS enforcement requirements. Our audit found the Housing Authority’s internal controls were ineffective for ensuring compliance with the program’s HQS enforcement requirements. Although the Housing Authority had procedures requiring owners to correct life-threatening HQS deficiencies within 24 hours and non-life-threatening HQS deficiencies within 30 calendar days of notification of failed inspections, it did not always follow through with this requirement. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition Authority management and staff did not fully understand HQS requirements for failed inspections. The Authority had significant turnover occur with the staff responsible for managing inspections and follow-up, and management did not communicate HQS requirements properly to new staff. Effect of Condition Using statistical sampling, we tested 22 failed inspections and found eight with cited life-threatening HQS deficiencies and 12 with cited non-life-threatening HQS deficiencies for which the Housing Authority did not have documentation demonstrating it followed up on the inspections and required the owners to correct the deficiencies within 24 hours and 30 days of notification, respectively. Because the Housing Authority did not follow up on HQS deficiencies within the required correction period, it cannot demonstrate that the housing units met HQS requirements Recommendation We recommend the Housing Authority strengthen internal controls to ensure it complies with HQS enforcement requirements. Specifically, the Housing Authority should follow up on cited HQS deficiencies and require owners to correct them within 24 hours or 30 days of notification of the failed inspection, depending on the deficiency type, as HCVP requires. Additionally, the Housing Authority should maintain documentation demonstrating compliance with this requirement. Housing Authority’s Response The Housing Authority previously had procedures in place to ensure that lifethreatening deficiencies were corrected within 24 hours and that staff conducted re-inspections within 24 hours of notifying property owners of the required repairs. However, following management and operations staff turnover, newly assigned personnel were not adequately trained on the established procedures and documentation requirements. As a result, required re-inspections and supporting documentation were not consistently completed within the prescribed timeframe. Upon identifying the compliance deficiency, the Housing Authority took immediate corrective action by providing training to all applicable staff members regarding Housing Quality Standards (HQS) documentation requirements and the mandatory 24-hour re-inspection timelines for life-threatening deficiencies. The Housing Authority has reinforced these procedures and implemented oversight measures to ensure ongoing compliance with HUD requirements. With respect to non-life-threatening deficiencies, the Housing Authority consistently notified property owners of required repairs and the 30-day correction deadline. However, re-inspections were not consistently conducted within 30 days of owner notification to verify that the deficiencies had been corrected. In many instances, re-inspections occurred after the required deadline had passed. Once this issue was identified, the Housing Authority immediately revised its procedures to ensure that re-inspections are scheduled and completed within 30 days of notifying property owners of required repairs. Staff received additional training on HQS compliance and re-inspection requirements, and management has implemented monitoring procedures to ensure timely follow-up and continued compliance with HUD regulations. Auditor’s Remarks We appreciate the steps the Housing Authority is taking to address these issues. We will follow up during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 982, Section 8 Tenant-Based Assistance: Housing Choice Voucher Program, section 404, Maintenance: Owner and family responsibility: PHA remedies, establishes enforcement requirements for housing quality standards.