Assistance Listing Number, Federal Agency, and Program Name U.S. Department of Housing and Urban Development Direct programs Low income Public Housing and Development 14.850a Federal Award Identification Number and Year Not applicable Pass through Entity Not applicable Finding Type Significant deficiency Repeat Finding No Criteria Under 24 CFR 5.230, 5.601, 5.609, 960.206, 960.208, 960.253, 960.255, 960.257, and 960.259, the Commission must: a. As a condition of admission or continued occupancy, require the tenant and other family members to provide necessary information, documentation, and releases for the Commission to verify income eligibility. b. For both family income examinations and reexaminations, obtain and document in the family file third party verification of: (1) reported family annual income, (2) the value of assets, (3) expenses related to deductions from annual income, and (4) other factors that affect the determination of adjusted income or income based rent. c. Determine income eligibility and calculate the tenant?s rent payment using documentation from third party verification. d. Select tenants from the public housing waiting list (see special tests and provisions public housing waiting list). e. Reexamine family income and composition at least once every 12 months and adjust the tenant rent and housing assistance payment as necessary using the documentation from third party verification. Condition Participant files selected for testing did not include complete information to support the level of benefits provided. Questioned Costs $21 Identification of How Questioned Costs Were Computed Questioned costs were computed on the individuals below by identifying overpayments of subsidy charged compared to the appropriate amount. Context A total of 60 tenant files were tested, and the results are as follows: Of the files tested, one participant lacked income support and upon recalculation of income there was an increase in tenant rent. 2 participant files used the incorrect utility reimbursement amount, resulting in a miscalculation of tenant rent. Cause and Effect The Commission does not have the proper controls in place to ensure proper compliance with regard to tenant eligibility requirements. Due to the lack of adequate controls, questioned costs for overpayment of subsidy were identified above. Recommendation The Commission should establish procedures to ensure participant eligibility is accurately calculated and reviewed annually. Periodic internal review of tenant files would help identify errors in a timely manner. Views of Responsible Officials and Planned Corrective Actions While the Detroit Housing Commission works towards implementing Rent Cafe, an electronic platform to allow applicants, residents, and management the ability to streamline the continued occupancy and eligibility process, the Commission will continue to utilize the manual application process with the following controls in place: 1. There will be ongoing training to support staff in public housing rent calculation. Within the designated training, housing specialists, property managers, assistant property managers, and compliance specialists will focus on correctly calculating subsidy for applicants and residents. Trainings will include, but are not limited to, properly identifying and verifying income, expenses, allowances, adjusted income, total tenant payment (TTP), utility standards, PHA payment, and subsidy standards. 2. Regional managers will conduct the first line of quality control file reviews. Upon housing specialist, property manager, and assistant property manager completing initial eligibility, annual, and interim recertifications, regional managers will review the proposed certification against the certification?s checklist for approval. 3. The compliance department will conduct ongoing quality control file reviews on a 10 percent sample selection of households to ensure timely completion and accuracy of ongoing participant rent determination. a. When deficiencies are identified during a quality control review, site staff will have seven days to cure and upload the corrective file to SharePoint. b. The final quality control review will also include reconciliation for acceptance of the electronic file to PIC. 4. To address the incorrect utility allowance amounts being utilized to calculate tenant rent, the following will occur: a. The Commission?s REM department will work with the Commission?s IT department to update the utility allowance tables in the housing?s Yardi software. Current utility allowances will be entered in the software?s utility allowance table and will prepopulate based on the action type and effective date of the recertification. b. Site staff will include the printed utility allowance chart within the certification with the allowance amount provided clearly identified for review by the regional manager when conducting the first line of quality control file review.