Finding Text
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program Title: Housing Voucher Cluster
Assistance Listing Number: 14.871
Federal Award Identification Number and Year: LA003, 2023
Award Period: 10/1/22-9/30/23
Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion)
Criteria or Specific Requirement: Most PHAs devise their own application forms that are filled out by the PHA staff during an interview with the tenant. The head of household signs (a) a certification that the information provided to the PHA is correct; (b) one or more release forms to allow the PHA to get information from third parties; (c) a federally prescribed general release form for employment information; and (d) a privacy notice. Under some circumstances, other members of the family may be required to sign these forms (24 CFR sections 5.212, 5.230, and 5.601 through 5.615).
The PHA must do the following:
(1) As a condition of admission or continued occupancy, require the tenant and other family members to provide necessary information, documentation, and releases for the PHA to verify income eligibility (24 CFR sections 5.230, 5.609, and 960.259).
(2) For both family income examinations and reexaminations, obtain and document in the family file third party verification of (a) reported family annual income, (b) the value of assets, (c) expenses related to deductions from annual income, and (d) other factors that affect the determination of adjusted income or income-based rent (24 CFR section 960.259).
(3) Determine income eligibility and calculate the tenant’s rent payment using the documentation from third party verification in accordance with 24 CFR Part 5, Subpart F (24 CFR sections 5.601 et seq., and 24 CFR sections 960.253, 960.255, and 960.259).
(4) Select tenants from the public housing waiting list (see III.N.2, “Special Tests and Provisions – Public Housing Waiting List”) (24 CFR sections 960.206 and 960.208).
(5) Reexamine family income and composition at least once every 12 months and adjust the tenant rent and housing assistance payment as necessary using the documentation from third party verification (24 CFR sections 960.253, 960.257, and 960.259).
(a) The Rental Demonstration program prohibits PHAs from rescreening or requiring a tenant recertification due solely to a RAD conversion. However, this requirement does not eliminate the normally scheduled recertification (normally annually). Recertifications required to be performed as part of the normal tenant recertification process that occur after the RAD conversion, but before the end of the calendar year, will be conducted under the selected conversion program (PBV or PBRA) and not Public Housing. These recertifications are to be conducted to ensure that tenant payments are appropriate under the new program. Any testing that results in an audit finding should be a finding of the PBV or PBRA program and not of the public housing program.
(b) Eligible beneficiaries are lower income families, which include citizens or eligible immigrants. “Families” include, but are not limited to, (1) a family with or without children; (2) an elderly family (head, spouse, or sole member 62 years or older); (3) near-elderly family (head, spouse, or sole member 50 years old but less than 62 years old); (4) a disabled family; (5) a displaced family; (6) the remaining member of a tenant family; or (7) a single person who is not elderly, near-elderly, displaced, or a person with disabilities.
Condition: During testing, it was noted that the Authority did not have adequate internal controls designed to ensure compliance with eligibility requirements.
Questioned Costs: $7,936
Context: During our testing of a sample of 60 tenant files, it was noted that 20 files did not comply with compliance requirements.
1 instance where the income reported on the 50058 were not supported within the tenant file.
2 instances where the expenses reported on the 50058 were not supported within the tenant file.
3 instances where the housing authority failed to calculate the correct HAP/TAP
19 instances where the housing authority did not review the family income, assets and expenses on an annual basis.
Cause: The Authority failed to provide adequate monitoring and oversight to ensure compliance with HUD rules and regulations, as well as their administrative policy.
Effect: The Authority is not in compliance with federal regulations regarding eligibility, including the calculation of tenant rent, HAP and verification of the tenants income.
Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2022-004.
Recommendation: We recommend that management review their controls over recertifications and ensure compliance standards for eligibility of tenants and HAP calculations are met. We also recommend management should designate one person to review a sample of the files that have been recertified each month. The purpose of the review is to determine if the tenant files were prepared in accordance with internal policies and verify the compliance deficiencies have been corrected.
Views of Responsible Officials: There is no disagreement with the audit finding. Following CLA’s recommendation, SVP of Housing Choice will audit a random sample of 10 files on a monthly basis. Agency working with Human Resources contractor to fill open staff positions.