Finding 523131 (2024-001)

- Repeat Finding
Requirement
A
Questioned Costs
$1
Year
2024
Accepted
2025-02-13

AI Summary

  • Core Issue: Tenant rent was calculated incorrectly in 6 instances, leading to underpayments.
  • Impacted Requirements: Violations of the Public Housing Occupancy Guidebook regarding income verification and rent calculation.
  • Recommended Follow-Up: Strengthen procedures for tenant rent calculations and ensure compliance with guidelines to avoid repeat findings.

Finding Text

Statement of Condition – For the Low Rent Public Housing program, we reviewed 40 tenant files (recertification files and new tenant files) for the fiscal year ended June 30, 2024. We reviewed 5 files for tenants who moved out during the fiscal year ended June 30, 2024. The selected files represent a sample of all tenant files in the two AMPS. We noted 6 instances in which tenant rent was calculated incorrectly. In 2 of these instances, the tenant rent was capped and the tenants were not paying the full amount calculated, 2 instances in which current social security benefits were not used, resulting in underpayments of tenant rent, 1 instance in which net social security benefits were used to calculate tenant income, resulting in underpayment of tenant rent, and 1 instance in which the medical allowance was calculated incorrectly, resulting in underpayments of tenant rent. Criteria – Per the Public Housing Occupancy Guidebook: 1. Section 3, a family’s portion of rent is determined based on annual income. There are no “ceiling caps” in place for family rents calculated below the unit’s set “flat rent” amount. 2. Section 8.2.2, “PHAs must use HUD’s verification hierarchy when verifying the family’s income, assets, deductions, and expenses…Enterprise Income Verification (EIV) is mandatory (i.e. must review EIV Income Report for all families when verifying income)”. 3. Section 3.9, “The gross amount of social security benefit income, prior to Medicare or other deductions, must be counted as income…”. 4. Section 6.4, medical expenses are expenses “anticipated to be incurred … which are not covered by outside sources, such as insurance”. Effect – For the files referenced above: 1. Tenant rent was incorrectly capped, resulting in an underpayment of $25 per month. 2. Prior year information was used, resulting in an underpayment of $91 per month. 3. Net social security benefits were used to calculate tenant income, resulting in an underpayment of $19 per month. 4. Out-of-pocket medical costs were calculated incorrectly, resulting in an underpayment in tenant rent of $200 per month. Cause – Incorrect procedures were followed in regards to calculating tenant income. Recommendation – Procedures surrounding tenant rent calculation processes should be strengthened. Information should be reviewed to ensure ceiling caps are not in place. Identification of a repeat finding – This is a repeat finding in the current year. Views of responsible officials and corrective action plans – The Authority agrees with this finding. Please refer to the corrective action plan on page 58.

Corrective Action Plan

The files in question will be adjusted during the tenant’s annual recertification. The housing managers (along with internal audit team members) will attend yearly rent recalculation refresher courses and check for errors when recalculating rent. The internal audit team will conduct internal tenant file reviews monthly. The Housing Director will discuss file management during monthly staff meetings. The Authority plans to implement these procedures effective January 1, 2025.

Categories

Questioned Costs HUD Housing Programs

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
14.850 Public Housing Operating Fund $1.19M
14.872 Public Housing Capital Fund $912,133
14.870 Resident Opportunity and Supportive Services - Service Coordinators $143,541