FAC Explorer

Finding 569679 (2024-003)

Material Weakness Repeat Finding
Requirement
E
Questioned Costs
-
Year
2024
Accepted
2025-06-30
Audit: 361021
Organization: City of Long Beach (CA)
Auditor: Crowe LLP

AI Summary

  • Core Issue: The Housing Authority failed to conduct annual re-examinations of participant income for 31 out of 60 cases, risking noncompliance with HUD regulations.
  • Impacted Requirements: Eligibility criteria under Section 8 require annual income reviews; delays can lead to ineligible participants receiving benefits.
  • Recommended Follow-up: Increase resources or streamline processes to ensure timely re-examinations and compliance with HUD requirements.

Finding Text

Finding Number: 2024-003 Finding Title: Internal Controls and Compliance over the Timeliness of Housing Choice Voucher Participant Re-examination and Recertification Compliance Requirement(s): Eligibility Classification: Material Weakness Programs: Section 8 Housing Choice Vouchers ALN #: 14.871 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development (HUD) Federal Award Numbers: Multiple – City receives incremental funding throughout the year Federal Award Year: 2024 Criteria or specific requirement (including statutory, regulatory, or other citation) The PHA must examine family income and composition at least once every 12 months and adjust the tenant rent and housing assistance payment as necessary using the documentation. The Department of Housing and Urban Development (HUD) has provided a grace period of 2 months before they are reported as late. § 5.657 Section 8 project-based assistance programs: Reexamination of family income and composition. (a) Applicability. This section states requirements for reexamination of family income and composition in the Section 8 project-based assistance programs, except for the moderate rehabilitation and the project-based voucher programs. (b) Regular reexamination. The owner must conduct a reexamination and redetermination of family income and composition at least annually. (c) Interim reexaminations. (1) Generally. A family may request an interim reexamination of family income because of any changes since the last examination. The owner must conduct any interim reexamination within a reasonable time after the family request or when the owner becomes aware of an increase in family adjusted income under paragraph (c)(3) of this section. What qualifies as a “reasonable time” may vary based on the amount of time it takes to verify information, but such time generally should not exceed 30 days from the date a family reports changes in income to an owner. (2) Decreases in the family's annual adjusted income. The owner may decline to conduct an interim reexamination of family income if the owner estimates that the family's adjusted income will decrease by an amount that is less than ten percent of the family's annual adjusted income (or a lower amount established by HUD through notice), or such lower threshold established by the owner. (3) Increases in the family's annual adjusted income. The owner must conduct an interim reexamination of family income when the owner becomes aware that the family's adjusted income (as defined in § 5.611) has changed by an amount that the owner estimates will result in an increase of ten percent or more in annual adjusted income or such other amount established by HUD through notice, except. (i) The owner may not consider any increase in the earned income of the family when estimating or calculating whether the family's adjusted income has increased, unless the family has previously received an interim reduction under paragraph (c)(1) of this section during the certification period; and (ii) The owner may choose not to conduct an interim reexamination in the last three months of a certification period. (4) Policies on reporting changes in family income or composition. The owner must adopt policies consistent with this paragraph (c), prescribing when and under what conditions the family must report a change in family income or composition. (5) Effective date of rent changes. (i) If the family has reported a change in family income or composition in a timely manner according to the owner's policies, the owner must provide the family with 30 days advance notice of any rent increase, and such rent increase will be effective the first day of the month beginning after the end of that 30-day notice period. Rent decreases will be effective on the first day of the first month after the date of the actual change leading to the interim reexamination of family income. (ii) If the family has failed to report a change in family income or composition in a timely manner according to the owner's policies, owners must implement any resulting rent increases retroactively to the first of the month following the date of the change leading to the interim reexamination of family income. Any resulting rent decrease must be implemented no later than the first rent period following completion of the reexamination. However, rent decreases may be applied retroactively at the discretion of the owner, in accordance with the owner's conditions as established in written policy, and subject to paragraph (c)(5)(iii) of this section. (iii) A retroactive rent decrease may not be applied by the owner prior to the later of the first of the month following: (A) The date of the change leading to the interim reexamination of family income; or (B) The effective date of the family's most recent previous interim or annual reexamination (or initial examination if that was the family's last examination). Condition For 31 of 60 samples, the Authority did not re-examine eligible participants or redetermine family income on an annual basis (12 months). Of these 31, there were 12 samples completed within the 2-month grace period, before HUD considers the re-examination late for its purposes. The remaining 19 samples were not completed until after 14 months. Cause For the participants whose income was not re-examined during the fiscal year, it is due to the volume of participants within the HCV program in relation to the resources available to the Housing Authority of the City to administer the program. Effect or potential effect Delays in reviewing participant's eligibility status each 12-month period could lead to noncompliance with HUD regulations. Additionally, it could cause program resources to go to ineligible participants, which would result in unallowable cost to the program. Questioned costs None Context The Housing Authority of the City of Long Beach’s has 75 employees who are responsible for the administration of the programs over 7,800 participants, or over 100 Re-examinations per employee. Identification as a repeat finding if applicable 2023-007 Recommendation We recommend the City continue with its plan to address delays in the recertification processes through steps that are being taken to address resource constraints. Views of responsible officials and planned corrective actions The City of Long Beach Housing Authority (HACLB) acknowledges the audit finding and has implemented a comprehensive corrective action plan to address the timeliness of participant re-examinations and recertifications under the Housing Choice Vouchers Program (HCV). To improve program efficiency and compliance, HACLB has expanded staffing through the recruitment and training of new Housing Specialists and the hiring of key administrative officers, however the prolonged timeline for recruitment has resulted in operational challenges that impact overall efficiency, and there are still several supervisory positions that remain vacant after 10 months. HACLB also renewed a contract for support services to address the backlog of reexaminations and implemented a new housing software platform to enhance workflow management and productivity tracking. These combined efforts are expected to significantly reduce delays, enhance operational oversight, and support sustained compliance with HUD requirements. HACLB remains committed to continuously evaluating and improving its internal controls and procedures to ensure the timely completion of all HCV participant reexaminations and recertifications.

Corrective Action Plan

Program: Section 8 Housing Choice Voucher Finding: 2024-003 Contact Person: Michelle Mel-Duch Housing Administrative and Financial Services Officer Health & Human Services Department Phone: (562) 570-5344 Email: Michelle.Mel-Duch@longbeach.gov Planned Actions: 1. Staff Augmentation and Training: o In January 2025, HACLB submitted requisitions to the Human Resources Department to recruit additional Housing Specialists to improve the management of high volume HCV program participants, documentations, processes, and to meet various requirement deadlines. o As of May 3, 2025, four new Housing Specialists have been hired and are currently undergoing training. Four additional Housing Specialists are in the onboarding process with Human Resources Department. o Several supervisory positions remain unfilled due to the need to renew the hiring list. HACLB has submitted a request to initiate the renewal process in order to recruit from a new list. o In addition, HACLB has hired a Housing Administrative and Financial Services Officer and a Housing Operations Program Officer. These roles are critical in providing oversight of operational workflows, evaluating staff productivity, and developing strategies to optimize staffing levels and resource allocation. 2. Contracted Support Services: o To address a backlog of overdue reexaminations, HACLB renewed its contract with an external agency to provide dedicated assistance in processing pending cases. This contract became effective in May 2025 and has already begun to support the reexamination workload. 3. Technology Upgrade: o HACLB has transitioned to a new housing software platform tailored to improve the tracking and processing of annual recertifications. This system upgrade enhances productivity monitoring, facilitates efficient workflow management, and supports compliance with HUD timeliness standards. Expected Completion Date: September 30, 2026

Categories

HUD Housing Programs Allowable Costs / Cost Principles Eligibility

Other Findings in this Audit

  • 569667 2024-001
    Material Weakness Repeat
  • 569668 2024-001
    Material Weakness Repeat
  • 569669 2024-001
    Material Weakness Repeat
  • 569670 2024-001
    Material Weakness Repeat
  • 569671 2024-001
    Material Weakness Repeat
  • 569672 2024-001
    Material Weakness Repeat
  • 569673 2024-002
    Material Weakness Repeat
  • 569674 2024-002
    Material Weakness Repeat
  • 569675 2024-002
    Material Weakness Repeat
  • 569676 2024-002
    Material Weakness Repeat
  • 569677 2024-002
    Material Weakness Repeat
  • 569678 2024-002
    Material Weakness Repeat
  • 569680 2024-003
    Material Weakness Repeat
  • 569681 2024-004
    Significant Deficiency
  • 569682 2024-004
    Significant Deficiency
  • 569683 2024-005
    Material Weakness Repeat
  • 569684 2024-005
    Material Weakness Repeat
  • 569685 2024-006
    Material Weakness Repeat
  • 569686 2024-006
    Material Weakness Repeat
  • 569687 2024-007
    -
  • 569688 2024-007
    -
  • 1146109 2024-001
    Material Weakness Repeat
  • 1146110 2024-001
    Material Weakness Repeat
  • 1146111 2024-001
    Material Weakness Repeat
  • 1146112 2024-001
    Material Weakness Repeat
  • 1146113 2024-001
    Material Weakness Repeat
  • 1146114 2024-001
    Material Weakness Repeat
  • 1146115 2024-002
    Material Weakness Repeat
  • 1146116 2024-002
    Material Weakness Repeat
  • 1146117 2024-002
    Material Weakness Repeat
  • 1146118 2024-002
    Material Weakness Repeat
  • 1146119 2024-002
    Material Weakness Repeat
  • 1146120 2024-002
    Material Weakness Repeat
  • 1146121 2024-003
    Material Weakness Repeat
  • 1146122 2024-003
    Material Weakness Repeat
  • 1146123 2024-004
    Significant Deficiency
  • 1146124 2024-004
    Significant Deficiency
  • 1146125 2024-005
    Material Weakness Repeat
  • 1146126 2024-005
    Material Weakness Repeat
  • 1146127 2024-006
    Material Weakness Repeat
  • 1146128 2024-006
    Material Weakness Repeat
  • 1146129 2024-007
    -
  • 1146130 2024-007
    -

Programs in Audit

ALN Program Name Expenditures
14.871 Section 8 Housing Choice Vouchers $120.21M
14.871 Covid-19 Section 8 Housing Choice Vouchers $10.23M
10.557 Wic Special Supplemental Nutrition Program for Women, Infants, and Children $4.78M
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $4.71M
15.916 Outdoor Recreation Acquisition, Development and Planning $3.25M
14.218 Community Development Block Grants/entitlement Grants $3.09M
14.239 Covid-19 Home Investment Partnerships Program $2.69M
14.267 Continuum of Care Program $2.64M
93.391 Covid-19 Activities to Support State, Tribal, Local and Territorial (stlt) Health Department Response to Public Health Or Healthcare Crises $2.49M
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $2.24M
93.967 Centers for Disease Control and Prevention Collaboration with Academia to Strengthen Public Health $2.18M
21.027 Covid-19 Coronavirus State and Local Fiscal Recovery Funds $1.40M
14.905 Lead Hazard Reduction Demonstration Grant Program $1.38M
97.083 Staffing for Adequate Fire and Emergency Response (safer) $1.12M
93.086 Healthy Marriage Promotion and Responsible Fatherhood Grants $999,999
97.056 Port Security Grant Program $932,765
10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program $854,633
93.069 Public Health Emergency Preparedness $665,205
21.023 Covid-19 Emergency Rental Assistance Program $507,069
16.838 Comprehensive Opioid, Stimulant, and Other Substances Use Program $490,848
93.917 Hiv Care Formula Grants $484,663
14.239 Home Investment Partnerships Program $451,935
14.896 Family Self-Sufficiency Program $432,780
93.268 Immunization Cooperative Agreements $432,307
93.197 Childhood Lead Poisoning Prevention Projects, State and Local Childhood Lead Poisoning Prevention and Surveillance of Blood Lead Levels in Children $429,620
93.354 Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response $410,894
20.608 Minimum Penalties for Repeat Offenders for Driving While Intoxicated $383,791
97.039 Hazard Mitigation Grant $382,753
17.278 Wioa Dislocated Worker Formula Grants $350,555
97.067 Homeland Security Grant Program $300,000
93.914 Hiv Emergency Relief Project Grants $289,938
20.600 State and Community Highway Safety $284,300
93.779 Centers for Medicare and Medicaid Services (cms) Research, Demonstrations and Evaluations $256,377
93.116 Project Grants and Cooperative Agreements for Tuberculosis Control Programs $231,566
20.616 National Priority Safety Programs $218,597
93.994 Maternal and Child Health Services Block Grant to the States $210,338
20.823 Port Infrastructure Development Program $188,954
11.307 Economic Adjustment Assistance $182,968
93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (elc) $178,614
93.778 Medical Assistance Program $176,132
14.218 Covid-19 Community Development Block Grants/entitlement Grants $158,157
17.258 Wioa Adult Program $158,086
14.231 Covid-19 Emergency Solutions Grant Program $152,789
20.106 Covid-19 Airport Improvement Program $150,326
10.559 Summer Food Service Program for Children $140,895
17.277 Wioa National Dislocated Worker Grants / Wia National Emergency Grants $126,319
15.514 Reclamation States Emergency Drought Relief $122,865
16.835 Body Worn Camera Policy and Implementation $115,530
14.241 Housing Opportunities for Persons with Aids $102,582
66.472 Beach Monitoring and Notification Program Implementation Grants $100,392
14.895 Jobs-Plus Pilot Initiative $100,000
93.078 Strengthening Emergency Care Delivery in the United States Healthcare System Through Health Information and Promotion $100,000
97.042 Emergency Management Performance Grants $96,606
93.070 Environmental Public Health and Emergency Response $93,505
17.259 Wioa Youth Activities $92,985
93.354 Covid-19 Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response $90,945
93.421 Strengthening Public Health Systems and Services Through National Partnerships to Improve and Protect the Nation’s Health $80,000
14.231 Emergency Solutions Grant Program $78,943
14.251 Economic Development Initiative, Community Project Funding, and Miscellaneous Grants $78,176
93.318 Protecting and Improving Health Globally: Building and Strengthening Public Health Impact, Systems, Capacity and Security $76,544
20.106 Airport Improvement Program $73,897
93.558 Temporary Assistance for Needy Families $71,000
14.900 Lead Hazard Reduction Grant Program $65,146
93.977 Sexually Transmitted Diseases (std) Prevention and Control Grants $60,794
10.727 Inflation Reduction Act Urban & Community Forestry Program $53,135
16.710 Public Safety Partnership and Community Policing Grants $49,436
15.507 Watersmart (sustain and Manage America’s Resources for Tomorrow) $44,081
93.421 Covid-19 Strengthening Public Health Systems and Services Through National Partnerships to Improve and Protect the Nation’s Health $28,826
14.913 Healthy Homes Production Program $17,399
93.940 Hiv Prevention Activities Health Department Based $9,832
16.738 Edward Byrne Memorial Justice Assistance Grant Program $6,578
20.205 Covid-19 Highway Planning and Construction $5,130
20.205 Highway Planning and Construction $558