Finding 529869 (2024-003)

2024-003 ALN 14.850 – Public Housing Operating Fund – Eligibility Condition and Criteria: In accordance with HUD eligibility requirements set forth in 24 CFR § 5, subpart F and § 960.259, the Authority is required to obtain the necessary information, documentation, and releases for the Authority to verify income eligibility. The Authority is also required to obtain and document third party verification of annual income, the value of assets, expenses related to deductions, and other factors that affect the determination of adjusted income or income-based rent, and then properly calculate the tenant's rent payment using this documentation. It is then required to accurately complete the tenant's form HUD-50058 report at least every 12 months and maintain these reports in the tenant files. During our audit, it was determined that significant deficiencies in internal controls existed over the Authority’s Public Housing Operating Fund program process of maintaining required documentation in tenant files per HUD regulatory requirements. The Authority’s personnel responsible for eligibility determination procedures were not properly filing annual and interim recertification's form HUD-50058 in tenant files. Amount of Questioned Costs: None. Context: Within the 25 tenant files selected and tested for compliance with laws and regulations, 1 of these tenant files was unable to be located by the Authority. Therefore, we were unable to perform eligibility testing on this tenant file. Additionally, 9 of the tenant files tested did not have an EIV report, 1 tenant file tested did not have a signed Declaration of Section 214 Status, 2 of the tenant files tested did not have a copy of the requested HUD-50058, and 1 of the tenant files tested did not have adequate 3rd party support for income. Cause: The Authority did not have adequate internal controls in place over monitoring required documentation in tenant files and the retention of annual and interim re-certifications for Public Housing tenants. Effect: The Authority is not in compliance with HUD requirements over documentation in tenant files. The Authority potentially could be improperly performing annual and interim reexaminations. This could cause some of the tenants to pay an incorrect rent amount in accordance with HUD eligibility rules and regulations. Auditor’s Recommendation: We recommend that the Authority review documentation requirements regarding tenant files. We recommend the Authority implement adequate processes and procedures to ensure all required tenant files documentation per 24 CFR § 5, subpart F and § 960.259 is maintained. The Authority should also begin performing quality control procedures including internal audits of tenant files to ensure that these files are accurate and complete. Grantee Response: The Chief Executive Officer agrees with the finding and will follow the Auditor's recommendations.