Finding 566042 (2024-001)

Finding 2024-001 - Housing Choice Voucher Tenant Files - Eligibility - Internal Control over Tenant Flies - Noncompliance & Material Weakness - Housing Choice voucher Program - ALN #14.871 Condition & Cause: We reviewed one hundred (100) tenant files for compliance across multiple areas and found thirty­ two (32) files to be noncompliant. Of these, twenty-one (21) files contained errors related to adjusted annual income. Specifically: • Eight (8) files - Unable to locate income verification • Seven (7) files - A Change of Unit was conducted without verifying income as required by the Admin Plan • Seven (7) files - Miscalculations of annual income • Three (3) files - Unable to locate deduction verification We identified HAP misstatements within the sample, extrapolated the results to the full population, and disclosed the estimated questioned costs below. The extrapolated misstatement represents 0.17% of total HAP expense, which is immaterial to the financial statements for the reporting period. Additionally, we were unable to locate various documents that are required to be maintained, such as the applicable EIV report (16 files), original lease (6 files), identification documents (6 files), Declaration 214s (6 files), annual application for continued occupancy (3 files), and Form 9886 (3 files). Lastly, we noted four (4) instances in which the annual reexamination was submitted between three to five months after the effective date. The Agency is currently transitioning from physical files to digital records. This shift has contributed to documentation not being readily available during the audit. The income miscalculations were due to employee errors. As a corrective measure, post year-end, the department established a compliance division and enhanced internal quality control procedures. Criteria: The Code of Federal Regulations, the Housing Authority Administrative Plan and specific HUD guidelines in documenting and maintaining Housing Choice Voucher tenant files. Effect: Failure to properly verify and calculate annual income, maintain required documentation, and complete timely reexaminations can result in a misstatement of HAP expense leading to improper funding for the HCV program. Misstatements of HAP may also cause an undue financial burden to the participant, which goes against the mission of the Agency. Persistent noncompliance can result in increased scrutiny from regulatory agencies and a decrease in vouchers or program funding. Recommendation: We recommend that the Agency promptly finalize the transition to a digital file system with proper document retention protocols. The Agency should continue to enhance their monitoring and quality control review of the HCV program files and determine whether any occupancy specialists need additional training or procedures added to ensure compliance. Questioned Costs: Approximately $322,568 Repeat Finding: Yes Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.