Finding 505118 — 2023-005

Finding Number: 2023-005 Program: COVID-19 Section 8 Housing Choice Vouchers ALN #: 14.871 Pass-through Entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development (HUD) Federal Award Numbers: Multiple – City receives incremental funding throughout the year. Federal Award Year: 2023 Compliance Requirement: Eligibility, Special Tests – Selections from Waiting List Criteria Most PHAs devise their own application forms that are filled out by the PHA staff during an interview with the tenant. The head of the household signs (a) one or more release forms to allow the PHA to obtain information from third parties; (b) a federally prescribed general release form for employment information; and (c) a privacy notice. Under some circumstances, other members of the family are required to sign these forms (24 CFR sections 5.212 and 5.230). The PHA must do the following: (1) As a condition of admission or continued occupancy, require the tenant and other family members to provide necessary information, documentation, and releases for the PHA to verify income eligibility (24 CFR sections 5.230, 5.609, and 982.516). (2) For both family income examinations and reexaminations, obtain and document in the family file third-party verification of (a) reported family annual income; (b) the value of assets; (c) expenses related to deductions from annual income; and (d) other factors that affect the determination of adjusted income or income-based rent (24 CFR section 982.516). (3) Determine income eligibility and calculate the tenant’s rent payment using the documentation from third-party verification in accordance with 24 CFR Part 5 Subpart F (24 CFR section 5.601 et seq.) (24 CFR sections 982.201, 982.515, and 982.516). (4) Select tenants from the HCVP waiting list (see III.N.1, “Special Tests and Provisions – Selection from the Waiting List”) (24 CFR sections 982.202 through 982.207). (5) 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 (24 CFR section 982.516). Title 45 US Code of Federal Regulations Part 75 (45 CFR part 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, section 75.303 also states that nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Conditions Found For 3 of 40 samples, the City did not re-examine eligible participants during the period ending September 30, 2023 or within the 12-month requirement, as noted above. Per discussion with the City and review of its policies and procedures over the eligibility process, the Housing Assistance Coordinator reviews and approves the re-examination sheets and supporting eligibility workpapers for each participant to ensure they continue to be eligible under the HCV program. For 40 of 40 sample selections, we noted that there was no evidence of this control being performed. Additionally, as part of the eligibility process and selecting individuals from the waiting list in accordance with policies, the City completes an intake form, which is reviewed and approved by a Housing Assistance Coordinator. Evidence of this control is noted at the end of the slip with a signature by the Housing Assistance Coordinator who completed the review. During our testing of this control, there were 14 of 40 samples where the intake route slip was not reviewed by the Housing Assistance Coordinator. Cause For the participants whose income was not re-examined during the fiscal year, it is due to the volume of participants within the City’s HCV program and the Housing Authority being understaffed. There are more than 7,000 participants of the HCV program and approximately 76 employees at the Housing Authority whose salaries are charged to the HCV grant. Due to the volume of new participants and active participants during the fiscal year ended September 30, 2023, the Housing Assistance Coordinator did not have the capacity to sign off on each individual’s eligibility package or review all intake forms upon initial pull from the waiting list. Effect Not properly reviewing participant’s eligibility status each 12 month period and upon initial selection, could cause the City to not be in compliance with HUD regulations. Additionally, it could cause the City to be providing assistance to ineligible participants, which would result in unallowable costs to the program. Questioned Costs Not applicable Repeat finding A similar finding was not reported in the prior year. Statistical sample The sample was not intended to be, and was not, a statistically valid sample. Recommendation We recommend the City continue reviewing each participant’s eligibility status once every 12 months and upon initial acceptance into the program. The City should implement a plan to ensure all participants are reviewed. Lastly, the Housing Assistance Coordinator who reviews the eligibility documents for each participant should evidence the review by signing or initialing the reexamination sheets. View of Responsible Officials While KPMG has opined that three out of the forty samples were not reexamined for eligibility within the 12-month requirement, on the contrary, HUD considers reexaminations being late if it has been fourteen months since the last reexamination (www.hud.gov/sites/dfiles/PIH/documents/Reexamination_Report_Instructions.pdf). For one of those three referenced samples, the annual reexamination was effective September 1, 2023, and it was completed on October 4, 2023. Therefore, the Housing Authority of the City of Long Beach (HACLB) disagrees with the finding for this particular sample, while it agrees that the other two samples were not reexamined timely. Due to staffing shortages experienced during the fiscal year and the high volume of participants in the City’s HCV program, HACLB had annual recertifications that were overdue, exceeding twelve months since the last recertification. Moreover, a significant amount of staff time was spent in training on Housing Opportunity Through Modernization Act (HOTMA) regulations that were continually revised and ultimately delayed, which reduced the amount of time that staff could have utilized for certification processes. The continuously changing regulations created ambiguity for existing and new staff. To address delays in recertification processes, HACLB has contracted with an agency to assist in processing the overdue recertifications, and HACLB has submitted recruiting requisitions to its Human Resources department to hire additional housing specialists to improve upon its management of the high volume of HCV program participants, documentation and processes, and comply with various deadlines. Regarding the Intake forms, HUD does not require an Intake/Eligibility sheet be completed. However, HACLB has typically included an Intake/Eligibility sheet to help ensure quality control. Recently, this was not consistently done, due to staffing shortages. To maintain this internal control in the process, staff will be reminded to ensure that an approved Intake/Eligibility sheet is included in the participant’s file. Response to Views of Responsible Officials Per HUD guidance and the OMB compliance supplement, which is outlined in the criteria section of this finding, a reexamination is required to be completed every 12 months. KPMG notes that the three samples outlined in the conditions found section of this finding had reexaminations that occurred outside the 12 month requirement. Further, the City communicated verbally and in writing, through process narrative understanding documents, that an intake form is completed for each new participant that is selected from the waiting list. Written process narratives were provided to KPMG on June 5, 2024.

ALN	Program Name	Expenditures
14.871	Section 8 Housing Choice Vouchers	$109.58M
14.871	Covid-19 Section 8 Housing Choice Vouchers	$9.90M
97.036	Disaster Grants - Public Assistance (presidentially Declared Disasters)	$8.84M
21.023	Covid-19 Emergency Rental Assistance Program	$6.76M
10.557	Wic Special Supplemental Nutrition Program for Women, Infants, and Children	$4.81M
14.218	Community Development Block Grants/entitlement Grants	$3.83M
93.391	Activities to Support State, Tribal, Local and Territorial (stlt) Health Department Response to Public Health Or Healthcare Crises	$2.97M
14.231	Covid-19 Emergency Solutions Grant Program	$2.63M
14.267	Continuum of Care Program	$2.49M
17.259	Wioa Youth Activities	$1.82M
93.354	Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response	$1.50M
21.027	Covid-19 Coronavirus State and Local Fiscal Recovery Funds	$1.38M
20.106	Covid-19 Airport Improvement Program	$1.34M
93.498	Covid-19 Provider Relief Fund and American Rescue Plan (arp) Rural Distribution	$1.17M
93.917	Hiv Care Formula Grants	$1.11M
93.086	Healthy Marriage Promotion and Responsible Fatherhood Grants	$1.10M
15.514	Reclamation States Emergency Drought Relief	$1.08M
10.561	State Administrative Matching Grants for the Supplemental Nutrition Assistance Program	$1.03M
97.056	Port Security Grant Program	$931,745
93.069	Public Health Emergency Preparedness	$917,989
15.504	Title Xvi Water Reclamation and Reuse Program	$850,412
14.900	Lead Hazard Reduction Grant Program	$795,149
14.905	Lead Hazard Reduction Demonstration Grant Program	$790,056
93.268	Immunization Cooperative Agreements	$765,063
93.967	Centers for Disease Control and Prevention Collaboration with Academia to Strengthen Public Health	$686,801
14.228	Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii	$645,239
93.323	Epidemiology and Laboratory Capacity for Infectious Diseases (elc)	$424,261
97.067	Homeland Security Grant Program	$369,977
16.825	Smart Prosecution Initiative	$353,473
14.896	Family Self-Sufficiency Program	$344,211
93.977	Sexually Transmitted Diseases (std) Prevention and Control Grants	$321,057
15.916	Outdoor Recreation Acquisition, Development and Planning	$310,615
20.205	Highway Planning and Construction	$296,991
14.231	Emergency Solutions Grant Program	$270,907
16.835	Body Worn Camera Policy and Implementation	$252,470
14.239	Home Investment Partnerships Program	$239,741
17.277	Wioa National Dislocated Worker Grants / Wia National Emergency Grants	$236,914
20.106	Airport Improvement Program	$227,664
16.738	Edward Byrne Memorial Justice Assistance Grant Program	$212,696
10.559	Summer Food Service Program for Children	$207,866
16.838	Comprehensive Opioid, Stimulant, and Other Substances Use Program	$197,989
20.616	National Priority Safety Programs	$179,047
16.560	National Institute of Justice Research, Evaluation, and Development Project Grants	$151,117
93.994	Maternal and Child Health Services Block Grant to the States	$150,165
20.600	State and Community Highway Safety	$144,593
93.778	Medical Assistance Program	$140,991
21.016	Equitable Sharing	$133,000
15.557	Applied Science Grants	$112,593
66.472	Beach Monitoring and Notification Program Implementation Grants	$102,678
93.070	Environmental Public Health and Emergency Response	$93,711
93.197	Childhood Lead Poisoning Prevention Projects, State and Local Childhood Lead Poisoning Prevention and Surveillance of Blood Lead Levels in Children	$91,128
14.895	Jobs-Plus Pilot Initiative	$87,063
97.042	Emergency Management Performance Grants	$82,000
93.914	Hiv Emergency Relief Project Grants	$69,207
93.558	Temporary Assistance for Needy Families	$68,144
14.241	Housing Opportunities for Persons with Aids	$57,714
93.940	Hiv Prevention Activities Health Department Based	$51,943
97.106	Securing the Cities Program	$37,947
93.354	Covid-19 Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response	$36,190
17.278	Wioa Dislocated Worker Formula Grants	$34,027
93.421	Strengthening Public Health Systems and Services Through National Partnerships to Improve and Protect the Nation�s Health	$25,000
16.742	Paul Coverdell Forensic Sciences Improvement Grant Program	$16,009
93.116	Project Grants and Cooperative Agreements for Tuberculosis Control Programs	$14,250
15.530	Water Conservation Field Services (wcfs)	$14,069
93.008	Medical Reserve Corps Small Grant Program	$10,000
14.256	Neighborhood Stabilization Program (recovery Act Funded)	$6,429
97.042	Covid-19 Emergency Management Performance Grants	$4,880
16.710	Public Safety Partnership and Community Policing Grants	$3,968
17.258	Wioa Adult Program	$3,890
97.024	Emergency Food and Shelter National Board Program	$2,646
14.218	Covid-19 Community Development Block Grants/entitlement Grants	$172

Finding 505118 (2023-005)

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