Finding 968704 (2022-006)

Material Weakness
Requirement
E
Questioned Costs
-
Year
2022
Accepted
2024-04-03
Audit: 302533
Organization: Municipality of Juana Diaz (PR)

AI Summary

  • Core Issue: Internal controls failed to ensure proper reexamination and HAP determination processes, leading to potential inaccuracies in assistance payments.
  • Impacted Requirements: Missing documentation, incorrect payment standards, and incomplete verification processes violate federal regulations for eligibility and income verification.
  • Recommended Follow-Up: Strengthen internal controls and procedures to ensure compliance with program guidelines and timely collection of all necessary documentation.

Finding Text

FINDING NUMBER 2022-006 FEDERAL PROGRAM HOUSING VOUCHER CLUSTER: SECTION 8 HOUSING CHOICE VOUCHERS/ EMERGENCY HOUSING VOUCHERS (ASSISTANCE LISTING NUMBERS 14.871/ 14.EHV) U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT TYPE OF FINDING COMPLIANCE AND INTERNAL CONTROL COMPLIANCE REQUIREMENT ELIGIBILITY CONDITION During the Eligibility test, fifteen (15) participants’ files were examined related to the reexamination process, and noted the following conditions: a. In one (1) reexamination, the housing assistant payment (HAP) calculation was not performed using the applicable payment standard. The application of the correct payment standard modifies the HAP amount paid. b. In five (5) participants’ files, the Enterprise Income Verification (EIV) report corresponding to the annual reexamination selected for evaluation, was not available for my review. c. Twelve (12) files did not include the release form, HUD-9886, signed by all the family members who were 18 years or older. d. Five (5) files did not include certification of the verification in the sex offenders register for one or more adult family member. CRITERIA Code of Federal Regulation 24, Section 982.516 (a) states that the PHA must conduct a reexamination of family income and composition at least annually; (2) the PHA must obtain and document in the tenant file third party verification of the following factors or must document in the file why third party verification was not available: (A) reported family annual income; (B) the value of assets; (C) expenses related to deductions from annual income; and (D) other factors that affects the determination of adjusted income. Also, 24 CFR 982.516(g)(1) states that as a condition of admission to or continued assistance under the program, the PHA shall require the family head, and such other family members as the PHA designates, to execute a HUD-approved release and consent form (including any release and consent as required under § 5.230 of this title) authorizing any depository or private source of income, or any Federal, State or local agency, to furnish or release to the PHA or HUD such information as the PHA or HUD determines to be necessary. CRITERIA Code of Federal Regulation 24, Section 982.503 (a) states that (1) HUD publishes the fair market rents for each market area in the United States. The PHA must adopt a payment standard schedule that establishes voucher payment standard amounts for each FMR area in the PHA jurisdiction. For each FMR area, the PHA must establish payment standard amounts for each “unit size.” Unit size is measured by number of bedrooms (zero-bedroom, one-bedroom, and so on). (2) The payment standard amounts on the PHA schedule are used to calculate the monthly housing assistance payment for a family (§982.505). In accordance with the regulations at 24 CFR 5.856 and 5.905, O/As and PHAs must perform necessary criminal history background checks to determine if an applicant, or a member of an applicant’s household, is subject to a lifetime registration requirement under a state sex offender registration program. This check must be carried out with respects to the State in which the housing is located and with respect to States where the applicant and members of the applicant’s household are known to have resided. CAUSE The Program’s internal controls and procedures failed to ensure that the reexamination and HAP determination processes were performed according to program requirements and guidelines. Also, the internal controls did not ensure that all the required documentation necessary for the reexamination process was obtained from the participants. EFFECT The lack of monitoring and adequate supporting documentation during the reexamination processes could lead to the approval and disbursement of improper amounts and the approval of benefits to persons that do not qualify. RECOMMENDATION I recommend management to continue strengthening its internal controls and procedures to ensure that the reexamination and HAP determination processes are performed according to program requirements and guidelines. Also, management must reinforce the internal controls to ensure that all the required documentation necessary for the reexamination process is obtained in a timely manner. QUESTIONED COSTS None PRIOR YEAR FINDING Not applicable. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION Instructions were given to the Program staff to strengthening existing internal controls and procedures to ensure that the reexamination and HAP determination processes are performed according to program requirements and guidelines, and to obtain in a timely manner all of the required documentation for each reexamination executed. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION Instructions were given to the Program staff to ensure timely registration of program income transactions in the Integrated Disbursement and Information System (IDIS). During the fiscal year 2021-2022, changes occurred in the program's management staff, which may have led to the situation mentioned in the finding.

Categories

HUD Housing Programs Subrecipient Monitoring Eligibility Program Income Internal Control / Segregation of Duties

Other Findings in this Audit

  • 392260 2022-005
    Material Weakness
  • 392261 2022-006
    Material Weakness
  • 392262 2022-006
    Material Weakness
  • 392263 2022-007
    Material Weakness Repeat
  • 392264 2022-007
    Material Weakness Repeat
  • 392265 2022-007
    Material Weakness Repeat
  • 392266 2022-008
    Material Weakness
  • 392267 2022-009
    Material Weakness
  • 392268 2022-009
    Material Weakness
  • 968702 2022-005
    Material Weakness
  • 968703 2022-006
    Material Weakness
  • 968705 2022-007
    Material Weakness Repeat
  • 968706 2022-007
    Material Weakness Repeat
  • 968707 2022-007
    Material Weakness Repeat
  • 968708 2022-008
    Material Weakness
  • 968709 2022-009
    Material Weakness
  • 968710 2022-009
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
97.030 Community Disaster Loans $2.61M
93.356 Head Start Disaster Recovery $1.38M
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $1.21M
14.218 Community Development Block Grants/entitlement Grants $461,967
21.019 Coronavirus Relief Fund $353,054
10.558 Child and Adult Care Food Program $105,205
93.600 Head Start $96,463
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $66,155
14.871 Section 8 Housing Choice Vouchers $45,360
14.241 Housing Opportunities for Persons with Aids $37,317
20.505 Metropolitan Transportation Planning and State and Non-Metropolitan Planning and Research $36,115
21.027 Coronavirus State and Local Fiscal Recovery Funds $26,400
14.896 Family Self-Sufficiency Program $24,680