Finding 497905 (2023-002)

Material Weakness Repeat Finding
Requirement
N
Questioned Costs
-
Year
2023
Accepted
2024-09-23

AI Summary

  • Core Issue: The Commission failed to conduct timely Housing Quality Standards (HQS) inspections, violating federal requirements.
  • Impacted Requirements: Biennial inspections and quality control re-inspections were not performed as mandated by HUD regulations.
  • Recommended Follow-Up: Review and improve HQS inspection policies, and ensure the third-party inspection company adheres to timely inspection protocols.

Finding Text

2023-003 - HQS Inspections Federal Agency: Housing Choice Voucher Program FALM: 14.871/14.879 Federal Award Identification Number and Year: MD023, 2023 Award Period: 1/1/2023 - 12/31/2023 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance (Modified Opinion) Criteria or specific requirement: The PHA must inspect the unit leased to a family at least biennially to determine if the unit meets Housing Quality Standards (HQS) and the PHA must conduct quality control re-inspections. The PHA must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)). Condition: The Commission did not follow its policies and procedures designed to ensure HQS inspections were performed timely. Questioned costs: Unknown Context: During our testing of 60 files over HQS inspections, we noted the following: - 24 of 60 units tested had an inspection that was not performed on a biennial basis as required per the Commission’s Administrative Plan. Cause: HCHC employs a third-party inspection company. Many of the issues caused by the previous inspection company did not surface until early in 2023. Effect: The Commission is not in compliance with HUD requirements. This could have an impact on HAP calculations. Repeat finding: Yes, 2022-003 Recommendation: We recommend the Commission review its HQS inspection policies and procedures and discuss these standards with the third-party inspection company that is utilized for these inspections to ensure all inspections are performed timely and that all necessary documentation is maintained for each inspection. Views of responsible officials: There is no disagreement with the audit finding.

Corrective Action Plan

Housing Voucher Cluster – FALN No. 14.871 & 14.879 – Annual HQS Inspections Recommendation: We recommend the Commission review its HQS inspection policies and procedures and discuss these standards with the third-party inspection company that is utilized for these inspections to ensure all inspections are performed timely and that all necessary documentation is maintained for each inspection. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: HCHC employs a third-party inspection company. Many of the issues caused by the previous inspection company did not surface until early in 2023. HCHC then attempted to work with the inspection company, however, ultimately that company was not able to comply with inspection requirements and HCHC ended the contract as of June 30, 2024. A contract with a new third-party inspection firm became effective on July 1, 2024. To ensure the HQS inspections are done on time, HCHC now also: • Meets weekly with the third-party contractor. • Receives and reviews weekly reports of inspection status and results. • Ensures that the third-party inspector utilizes real-time data tools to communicate with the HCHC Yardi Software. Yardi has a mobile inspection app that the third-party inspector will begin using. Name(s) of the contact person(s) responsible for corrective action: Crystal Gorham, Director of Rental Assistance Planned completion date for corrective action plan: The new inspection protocols were put into place as of July 1, 2024.

Categories

HUD Housing Programs Material Weakness Internal Control / Segregation of Duties

Other Findings in this Audit

  • 497904 2023-001
    Significant Deficiency
  • 497906 2023-003
    Material Weakness Repeat
  • 497907 2023-001
    Significant Deficiency
  • 497908 2023-002
    Material Weakness Repeat
  • 497909 2023-003
    Material Weakness Repeat
  • 1074346 2023-001
    Significant Deficiency
  • 1074347 2023-002
    Material Weakness Repeat
  • 1074348 2023-003
    Material Weakness Repeat
  • 1074349 2023-001
    Significant Deficiency
  • 1074350 2023-002
    Material Weakness Repeat
  • 1074351 2023-003
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
14.871 Section 8 Housing Choice Vouchers $26.23M
14.879 Mainstream Vouchers $1.40M
14.218 Community Development Block Grants/entitlement Grants $361,341
14.241 Housing Opportunities for Persons with Aids $229,967
21.023 Emergency Rental Assistance Program $96,322
14.896 Family Self-Sufficiency Program $6,011