Finding 404439 (2023-002)

Finding Reference: 2023-002 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Housing Voucher Cluster Assistance Listing Number: 14.871 and 14.879 Federal Grant Number: Not Applicable Category of Finding: Special Tests and Provisions (Housing Quality Standards Inspections) Classification of Finding: Material Weakness in Internal Control over Compliance Material Noncompliance Criteria Pursuant to 24 CFR 982.158 and 982.405, the Authority must inspect the unit leased to a family at least annually to determine if the unit meets Housing Quality Standards (HQS) and must also conduct quality control re-inspections. The PHA must prepare and maintain a unit inspection report for at least three years. To provide relief during the coronavirus pandemic, HUD waived the biennial inspections through December 31, 2021. The Authority was required to resume biennial inspections by December 31, 2021. The Authority was required to conduct all delayed biennial inspections from calendar year 2020 as soon as reasonably possible but no later than June 30, 2022 and was required to conduct all delayed biennial inspections from calendar year 2021 as soon as reasonably possible but no later than December 31, 2022. Condition From a total population of about 15,410 tenants for the fiscal year ended September 30, 2023, we selected a statistically valid sample of one monthly subsidy payment for each of 60 selected tenants, and identified fifteen tenants whose HQS inspections were completed past the due dates and seven tenants whose HQS inspection reports were not provided for review. Cause of Condition The Authority’s internal control procedures were not sufficient to ensure that all HQS inspections are completed within the specified due dates and that all related inspection records are properly filed. Effect The Authority is not in compliance with the HQS inspection requirements. The Authority may be paying Housing Assistance Payments (HAPs) to property owners whose units have inadequate housing quality. Questioned Costs Known questioned costs of $179,377 represent HAPs for the months for which compliance with housing assistance payments are questioned. Projecting the known questioned costs from the sample of 60 participants that totaled $1,550,585 in HAPs to the total HAPs of $385,748,113 for the year, results in likely questioned costs of $44,624,677. Identification of Repeat Finding This is a repeat of finding 2022-003 reported for the year ended September 30, 2022. Recommendation The Authority should correct the deficiencies noted in the sampled participant files and consider the impact of the audit results over the entire population. In addition, the Authority should revisit its procedures, systems and controls to ensure the required HQS inspections are completed in a timely manner, and to strengthen its record retention and filing systems. View of Responsible Officials and Planned Corrective Action See separately prepared Corrective Action Plan.