Finding Text
Low-Rent Public Housing – Eligibility Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Public Housing Operating Fund Assistance Listing Number: 14.850 Federal Award Identification Number and Year: VA003, 2025 Award Period: January 1, 2025 – December 31, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Pursuant to 24 CFR §§ 5.230, 5.609, 5.601 et seq., 960.253, 960.255, and 960.259, PHAs must obtain and maintain documentation necessary to determine and support tenant eligibility and rent calculations, including third-party verification of family income, assets, allowable deductions, and expenses. PHAs are required to perform and document annual reexaminations of family income and composition, use verified information to determine rent payments, and maintain required application and recertification documentation, including HUD Form 9886 (Authorization for the Release of Information/Privacy Act Notice), applicable consent and general release forms, and other documentation supporting eligibility determinations and rent calculations. Additionally, management's established review and approval procedures must be completed and retained to provide evidence that eligibility and rent determinations were reviewed in accordance with HUD requirements and agency policies. Condition: During testing, multiple instances were noted where required supporting documentation was not maintained, including missing income, asset, and expense verifications; unsupported rent calculations; annual reexaminations that were not performed timely; missing HUD Form 9886 authorizations; missing general release forms; and missing evidence of management review as evidenced by unsigned eligibility review checklists. Questioned costs: $8,343; this was calculated by determining what the HAP would have been if the unsupported income, assets and/or expenditures were not factored into the HAP calculation, comparing to what was actually charged and then multiplying that by the number of months the incorrect HAP was charged through the end of the fiscal year. Context: During testing of tenant 40 files for eligibility requirements, the following was noted: • 2 out of 40 files could not be located for testing. • 3 out of 40 files lacked sufficient documentation to verify the income reported on the HUD-50058. Incorrect income verification could result in incorrect HAP calculations. • 1 out of 40 files lacked sufficient documentation to verify the assets reported on the HUD-50058. Incorrect asset verification could result in incorrect HAP calculations. • 1 out of 40 files lacked sufficient documentation to verify the expenditures reported on the HUD-50058. Incorrect expense verification could result in incorrect HAP calculations. • 1 out of 40 files did not contain an "Authorization for Release of Information/Privacy Act Notice" for (HUD-9886) dated 1/1/2024 or after. • 3 out of 40 files tested did not contain a certification checklist completed by the PHA specialist. Cause: The staff performing the inspections did not properly use the Yardi software program available to conduct and document the inspection process. Effect: The Authority is not in compliance with HUD eligibility requirements. Missing or incomplete supporting documentation, untimely annual reexaminations, unsupported rent calculations, and insufficient evidence of management review increase the risk that tenant eligibility and rental assistance may be determined incorrectly, which could result in improper subsidy calculations. Repeat Finding: No Recommendation: We recommend that the Authority strengthen controls over tenant eligibility and rent determinations by ensuring required income, asset, expense, consent, and release documentation is obtained and retained; annual reexaminations are completed timely; rent calculations are based on verified information; and supervisory review checklists are completed, signed, and maintained in each tenant file. Views of responsible officials: There is no disagreement with the audit finding.