Finding Text
Finding Reference: 2022-002 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Public and Indian Housing Assistance Listing Number: 14.850 Federal Grant Number: Not Applicable Category of Finding: Eligibility Classification of Finding: Material Weakness in Internal Control over Compliance Material Noncompliance Criteria In accordance with 24 CFR 960.257, for families who pay an income-based rent, the Authority must conduct a re-examination of family income and composition at least annually and must make appropriate adjustments in the rent after consultation with the family and upon verification of the information. For families who choose flat rents, the PHA must conduct a re-examination of family composition at least annually, and must conduct a re-examination of family income at least once every three years. Pursuant to Section 7-I.C.of the Authority?s Admissions and Continued Occupancy Policy dated October 6, 2021, the Authority must use the U.S. Department of Housing and Urban Development?s (HUD) Enterprise Income Verification (EIV) system in its entirely as a third-party source to verify tenant employment and income information during mandatory re-examinations or re-certifications of family composition and income in accordance with 24 CFR 5.236 and administrative guidance issued by HUD. EIV will be used to verify that families claiming zero income and are not receiving income from any of these sources. The Authority is required to submit HUD 50058, Family Report, electronically to HUD each time the PHA completes an admission, annual re-examination, interim re-examination, portability move-in, or other change of unit for a family. In the report, the Authority should include the tenant rent at line 13k or 3x based on the result of the examination and collect the amount from tenant properly. 24 CFR 960.257 also requires policies and internal controls be in place and complete and accurate tenant records to ensure compliance with HUD requirements. Condition We tested a statistically valid sample of one month for each of 59 participants selected from a population of 938 program participants who received public housing at the beginning of the fiscal year ended September 30, 2022. Identified issues are listed below: 1. For 12 participants, the Authority was not able to provide relevant documentation on eligibility redetermination and HUD 50058 reporting for our review. 2. For 12 participants, the internal Interim/Annual Review form used by the Authority to document completion and review of interim and annual reviews were not signed to support secondary or quality control reviews. Cause of Condition The Authority does not have adequate internal control procedures in place to ensure all relevant tenant records and documents are properly completed and filed. Effect The Authority is not in compliance with HUD requirements regarding eligibility, re-certifications and HUD-50058 reporting, which may result in assistance provided to ineligible participants. Questioned Costs Questioned costs cannot be determined as project costs are not directly assignable to participants. Identification of Repeat Findings This is a repeat of finding 2021-002 reported in the year ended September 30, 2021. Recommendation The Authority should correct the deficiencies noted in the tested files. In addition, the Authority should develop procedures, systems and controls to ensure documentation of proper compliance with tenant eligibility requirements, income calculations and third-party verifications. View of Responsible Officials and Planned Corrective Action See separately prepared Corrective Action Plan