Finding 51968 (2022-003)

Material Weakness
Requirement
N
Questioned Costs
-
Year
2022
Accepted
2023-09-21

AI Summary

  • Core Issue: The Commission failed to conduct required Housing Quality Standards (HQS) inspections annually, leading to noncompliance with HUD regulations.
  • Impacted Requirements: 24 CFR sections 982.405(b) mandate timely inspections and proper documentation, which were not followed.
  • Recommended Follow-Up: Review and improve HQS inspection policies, collaborate with the inspection company, and ensure all documentation is maintained.

Finding Text

2022-003 ? HQS Inspections Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Housing Choice Voucher Program FALN: 14.871/14.879 Federal Award Identification Number and Year: MD023, 2022 Award Period: 1/1/2022-12/31/2022 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance (Modified Opinion) Criteria or specific requirement: 24 CFR sections 982.405(b) state that the PHA must inspect the unit leased to a family at least annually 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. Condition: The Commission did not follow its policies and procedures designed to ensure HQS inspections were performed timely. Questioned costs: Unable to determine. Context: During our testing of 40 files over HQS inspections, we noted the following: 21 of 40 units tested had an inspection that was not performed on a biennial basis as determined in the Administrative Plan. Cause: The Commission did not work closely with the inspection company with poorly written procedures in place for documenting inspections. The Commission experienced challenges during COVID in completing inspections timely. Effect: The Commission is not in compliance with HUD requirements. Repeat finding: No Recommendation: We recommend the Commission review their 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.

Corrective Action Plan

2022-003 Housing Choice Voucher Program ? FALN No. 14.871 Recommendation: We recommend the Commission review their 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 has hired a third-party inspector to conduct all inspections. The third party is also responsible for determining rent reasonableness for agency-owned properties. The following actions have been implemented to ensure the integrity of HQS inspections: ? Established a clear communication channel and reporting format with the third-party inspection company. ? Defined the inspection scope, frequency, and criteria to meet the quality standards. ? Conduct regular audits and reviews of the inspection results and reports to ensure accuracy and constancy. The reviews will be conducted monthly by a newly created Quality Control staff member and the Director of Rental Assistance. The monitoring process will consist of a review of (1) 50058 action type 13 submissions in PIC, (2) all failed inspections, and (3) the timeliness and abatement status of the third-party vendor. ? Provide regular feedback and recommendations to the third-party inspection company to improve their quality and efficiency. An established monthly meeting is currently in place; however, additional meetings will be setup if necessary. ? Ensure that the third-party company 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. In addition, the Commission will evaluate the existing third-party inspection company to decide if its contract will be renewed or terminated based on performance. If the contract is terminated, the Commission will solicit for a new inspection company. Name(s) of the contact person(s) responsible for corrective action: Paul Diggs, Director of HCVP Planned completion date for corrective action plan: December 31, 2023

Categories

HUD Housing Programs Material Weakness Internal Control / Segregation of Duties

Other Findings in this Audit

  • 51966 2022-001
    Significant Deficiency
  • 51967 2022-002
    Material Weakness
  • 51969 2022-004
    Significant Deficiency
  • 51970 2022-001
    Significant Deficiency
  • 51971 2022-002
    Material Weakness
  • 51972 2022-003
    Material Weakness
  • 51973 2022-004
    Significant Deficiency
  • 628408 2022-001
    Significant Deficiency
  • 628409 2022-002
    Material Weakness
  • 628410 2022-003
    Material Weakness
  • 628411 2022-004
    Significant Deficiency
  • 628412 2022-001
    Significant Deficiency
  • 628413 2022-002
    Material Weakness
  • 628414 2022-003
    Material Weakness
  • 628415 2022-004
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.871 Section 8 Housing Choice Vouchers $22.73M
14.879 Mainstream Vouchers $1.19M
21.023 Covid-19 - Emergency Rental Assistance Program $450,587
14.218 Community Development Block Grants/entitlement Grants $326,222
14.241 Housing Opportunities for Persons with Aids $250,315
14.896 Family Self-Sufficiency Program $67,165