Finding 528943 (2024-007)

Significant Deficiency
Requirement
N
Questioned Costs
-
Year
2024
Accepted
2025-03-19
Audit: 346929
Organization: City of Southfield, Michigan (MI)

AI Summary

  • Core Issue: The City released housing assistance payments despite a failed inspection, violating HUD's Housing Quality Standards.
  • Impacted Requirements: The City did not follow the 30-day correction rule, leading to ineligible payments totaling $1,542.
  • Recommended Follow-Up: Implement stronger controls for tracking failed inspections and ensure timely communication with inspectors to halt payments when necessary.

Finding Text

Assistance Listing Number, Federal Agency, and Program Name 14.871, U.S. Department of Housing and Urban Development (HUD), Section 8 Housing Choice Vouchers Program Federal Award Identification Number and Year Not applicable Pass through Entity Not applicable Finding Type Significant deficiency Repeat Finding No Criteria Per 24 CFR Chapter IX, Part 982, Subpart I, Section 982.405 (a), the PHA must inspect the unit prior to the initial term of the lease to determine if the unit meets the Housing Quality Standards (HQS) as prescribed by HUD. If the HQS standards are not met, the owner must correct the deficiency within 30 days of the notification from the PHA (Section 982.405 (d)(2)). Per Section 982.405(j)(4), if the owner fails to correct the deficiencies within the 30 day cure period, the PHA must withhold the housing assistance payments until the owner makes the repairs and the PHA verifies the correction. Condition The City had insufficient controls in place that resulted in the City releasing HAP payments on behalf of a participant, despite a failed HQS inspection, which was not rectified within the 30-day cure period or the months that followed. Questioned Costs $1,542 Identification of How Questioned Costs Were Computed Questioned costs are all the housing assistance payments made during the City's fiscal year ended June 30, 2024 on behalf of this participant, which was July 2023 to January 2024 Context During tenant file testing, we identified the City had one participant whose initial HQS inspection failed and lacked supporting information to demonstrate the deficiencies were cured within the 30-day cure period, yet teh City continued to provide the participant with housing assistance payments throughout the year. Cause and Effect The City was not able to provide sufficient documentation of the owner correcting the deficiencies from the initial failed HQS inspection and did not terminate housing assistance payments to the participants. This resulted in the participant receiving ineligible housing assistance payments of $1,058 during the year under audit and $1,542 in totality, inclusive of amounts pertaining to the City's prior fiscal year. Recommendation We recommend the City implement controls surrounding the follow up of failed initial inspections after the 30 day cure period is over to ensure the owner corrected all deficiencies. We also recommend the City obtain these results from the third party inspectors in a timely manner in order for the City to stop housing assistance payments immediately, and remain compliance with the program requirement. Views of Responsible Officials and Corrective Action Plan The City has implemented controls with our inspection vendors to ensure reinspection is completed within the necessary 30 days and communicated to the PHA. If the owner fails to make the necessary corrections within the 30 day cure period, the PHA will withhold housing assistance payments in accordance with 24 CFR Chapter IX, Part 982 until the PHA verifies the corrections have been made. The City has also implemented a process to ensure reinspection documentation, when applicable, is included in the participant file. We expect this finding to be corrected by June 30, 2025.

Corrective Action Plan

Condition: The City had insufficient controls in place that resulted in the City releasing HAP payments on behalf of a participant, despite a failed HQS inspection, which was not rectified within the 30-day cure period or the months that followed. Questioned Costs $1,542 Planned Corrective Action: The City has implemented controls with our inspection vendors to ensure reinspection is completed within the necessary 30 days and communicated to the PHA. If the owner fails to make the necessary corrections within the 30-day cure period, the PHA will withhold housing assistance payments in accordance with 24 CFR Chapter IX, Part 982 until the PHA verifies the corrections have been made. The City has also implemented a process to ensure reinspection documentation, when applicable, is included in the participant file. We expect this finding to be corrected by June 30, 2025. Contact person responsible for corrective action: Austen Michaels, Director of Fiscal Services and Sherry Veal, Executive Director Section 8 Program Anticipated Completion Date: June 30, 2025

Categories

HUD Housing Programs Eligibility Significant Deficiency

Other Findings in this Audit

  • 1105385 2024-007
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.871 Section 8 Housing Choice Vouchers $2.29M
17.258 Wioa Adult Program $257,573
17.259 Wioa Youth Activities $205,042
93.558 Temporary Assistance for Needy Families $191,182
17.207 Employment Service/wagner-Peyser Funded Activities $186,661
17.278 Wioa Dislocated Worker Formula Grants $179,133
21.027 Covid-19 - Coronavirus State and Local Fiscal Recovery Funds $128,086
17.225 Unemployment Insurance $92,690
16.922 Equitable Sharing Program $70,695
14.218 Community Development Block Grants/entitlement Grants $47,865
20.600 State and Community Highway Safety $41,637
32.009 Emergency Connectivity Fund Program $39,950
17.245 Trade Adjustment Assistance $37,332
21.019 Covid-19 - Coronavirus Relief Fund $33,734
17.268 H-1b Job Training Grants $16,994
17.285 Registered Apprenticeship $15,833
97.042 Emergency Management Performance Grants $15,776
21.027 Covdi-19 - Coronavirus State and Local Fiscal Recovery Funds $12,000
10.675 Urban and Community Forestry Program $10,000
45.310 Covid-19 - Grants to States $8,122
11.307 Economic Adjustment Assistance $6,760
84.126 Rehabilitation Services Vocational Rehabilitation Grants to States $3,829
17.801 Jobs for Veterans State Grants $3,478
93.136 Injury Prevention and Control Research and State and Community Based Programs $800