Management Response and Corrective Action: HACLA administers the third largest Housing Choice Voucher program in the United States with an allocation of 52,646 vouchers and 44 percent of all HACLA certificate and voucher resources are housing formerly homeless individuals and families. The average income of all program participants is $19,815 per annum while the rents in Los Angeles are high. These participants have extremely low incomes, are at-risk households, living in a high-rent market, and without the subsidy would not be able to afford decent, safe, and sanitary housing. Further, the program is a valuable resource because in any given night there are more than 75,000 unsheltered residents in the Los Angeles area. HACLA?s highest priority is to house individuals which without the assistance of the program would be unable to pay rent and fall into homelessness or forced back to homelessness. With that said, program compliance is also a high priority for HACLA. As stated in Title 24 Code of Federal Regulations (24 CFR) ?982.516(a) the public housing authority must conduct a reexamination of family income and composition at least annually. Given HACLA?s very large program and the population it serves it is impossible to complete the annual reexamination within 12 months for 100% of the participants. Due to extenuating circumstances such as health issues, the death of the head of household and other challenges the family may be facing, it is impossible to have 100% compliance with this CFR. The housing authority must provide flexibility and extensions. The alternative would be for the housing authority to move forward with terminating the assistance in order to be fully compliant with the CFR--a position that HACLA does not take lightly given the humanitarian crisis in Los Angeles. The CFR is simply no longer in line with the realities of administering the program, and the expectation of the community. HACLA believes that HUD recognizes this in its monitoring practices for SEMAP. Nonetheless, HACLA?s goal is to complete all annual reviews within 12 months and will strike an appropriate balance to do so. These audit findings will assist HACLA in further advocating with HUD to adjust the regulatory requirement on annual reexamination completion time periods to be more in line with the reality of the homeless families that HACLA serves. HACLA?s Section 8 Department has the controls in place to ensure annual reexaminations are completed timely. Management will continue to proactively work with staff on an ongoing basis to ensure that participant families submit documentation timely or begin the intent to terminate process. This is a fine line, however, as HACLA is in the business of housing not terminating families. In line with HACLA?s Vision Plan, Executive Management is committed to improve processes across business lines. In mid-2022, HACLA contracted with Guidehouse, Inc., a consulting firm that works with housing authorities across the country such as the largest--the New York City Housing Authority, to identify and implement process improvements to simplify operations, meet regulatory requirements more efficiently and provide better customer services to applicants, participants and landlords. Guidehouse is in the process of that analysis and it is HACLA?s expectation that there will be an improvement and associated training in the annual reexamination completion process through better monitoring reports and dashboards to be provided in a shift to a better housing program platform as they have recommended. Person Responsible: Director of Section 8