Finding 404442 (2023-003)

Finding Reference: 2023-003 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Section 8 Housing Choice Vouchers Federal Catalog Number: 14.871 Federal Grant Number: Not Applicable Category of Finding: Special Tests and Provisions - HQS Enforcement Classification of Finding: Significant Deficiency in Internal Control over Compliance Instance of Noncompliance Criteria Pursuant to 24 CFR 982.404(a)(3), the Authority must not make any housing assistance payments (HAP) for a dwelling unit that fails to meet the housing quality standard (HQS), unless the owner corrects the defect within the period specified by the Authority and the Authority verifies the correction. If a defect is life threatening, the owner must correct the defect within no more than 24 hours. For other defects, the owner must correct the defect within no more than 30 calendar days (or any PHA-approved extension). Furthermore, 24 CFR 982.404(b)(2) states that if an HQS breach caused by the family is life threatening, the family must correct the defect within no more than 24 hours. For other family-caused defects, the family must correct the defect within no more than 30 calendar days (or any PHA-approved extension). Condition Of the total of 3,515 tenants with failed inspections during the fiscal year, we identified three cases in a statistically valid sample of 60 failed inspections in which the Authority did not perform follow-up inspections within the required timeframe to verify identified defects were corrected and/or did not abate HAPs for defects that were not corrected within the required timeframe. Cause of Condition The Authority does not have adequate controls in place to ensure that the HQS are being enforced or completed in a timely manner and that HAPs are being properly withheld. Effect The Authority is not in compliance with the HQS enforcement requirements, which may result in tenants living in unsafe housing units. In addition, the Authority may be paying HAPs to property owners whose units have inadequate housing quality and may be incorrectly withholding HAPs to landlords who have properly corrected the deficiencies within the required timeframe. Questioned Costs Known questioned costs totaled $10,770, which represents HAPs made for months in which the required follow-up inspections were not performed or HAPs were not abated after failed re-inspections. Identification of Repeat Finding This is not a repeat finding in the immediate prior audit period. Recommendation The Authority should continue to develop procedures and strengthen its internal controls related to HQS enforcement. The Authority should also regularly review the list of failed inspections to verify that units with failed HQS inspections have the housing assistance payments properly withheld and that property owners whose units passed re-inspection are properly paid. View of Responsible Officials and Planned Corrective Action See separately prepared Corrective Action Plan.