BROCKTON HOUSING AUTHORITY

Finding 2024-001 – Moving To Work Demonstration Tenant Files – Eligibility – Internal Control over Tenant Files – Noncompliance and Significant Deficiency Moving To Work Demonstration - Subsidy ALN 14.881 Condition & Cause: During our review of 170 tenant files under the Moving to Work (MTW) designation, comprised of 80 Public Housing and 90 Section 8 files, we identified 13 files (7.6%) in our sample with instances of noncompliance with HUD eligibility and reporting requirements. Six (6) of these noncompliant files pertained to Public Housing and seven (7) pertained to Section 8. Specifically: • Seven (7) files showed miscalculations of adjusted annual income • Five (5) files lacked third-party verification of reported income • Four (4) files included deductions that were not adequately verified • One (1) Section 8 file contained a discrepancy between the Housing Assistance Payment (HAP) reported on HUD Form 50058 and the actual amount paid to the landlord Using extrapolation, we concluded that the potential misstatement of subsidy from income miscalculations reflects 0.17% of Public Housing Operating Subsidy and Housing Assistance Payments combined and is immaterial to the financial statements. However, the likely questioned costs exceed the disclosure threshold and is reported in the Questioned Costs section below. We noted that the Agency had significant staff turnover during the audit period and believe this contributed to the deficiencies in income calculations. As a mitigating factor, management already had rent calculation training scheduled for staff as of our field visit. The HAP disagreement appears to be an isolated incident with an impact to one month stemming from multiple corrections and adjustments. Criteria: Compliance requirements are outlined in the Code of Federal Regulations, the Housing Authority’s Admissions and Continued Occupancy Policy (ACOP), Administrative Plan, Moving To Work (MTW) Plan, and specific HUD guidelines for documenting and maintaining Public Housing and Housing Choice Voucher tenant files. Effect: The deficiencies identified in income calculations, third-party verifications, and HAP reporting may lead to inaccurate subsidy determinations, resulting in potential over- or underpayments to landlords and incorrect tenant rent contributions. Ongoing noncompliance may also draw scrutiny from regulatory bodies, increasing the risk of financial penalties, decrease in funding for the Public Housing and Section 8 programs, or loss of MTW designation. Recommendation: We recommend that the Agency continue to offer and increase staff training in rent calculations and HUD preferred verification procedures. Additionally, we recommend the Agency increase quality control reviews over tenant files and HAP adjustments. Questioned Costs: Approximately $80,690 Repeat Finding: No Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.

Finding 2019-001 Procurement Deficiencies ? Significant Deficiency & Noncompliance CFDA # 14.850 Condition: Our review of the contracting and procurement activities of the Authority revealed that the Authority spent in excess of $280,000 during the fiscal year for unit-turnaround services utilizing primarily one contractor, Sam Pham. While most of the individual jobs were below the threshold requiring formal bids, the aggregated total would indicate that this work should have been formally procured through the sealed-bid process, resulting in a `not-to-exceed? contract with the vendor awarded the contract. There is no evidence that these services were appropriately procured and that other contractors have been allowed to compete in the award of these services. Criteria: The Code of Federal regulations and HUD Handbook 7460.8, Procurement Handbook for Public and Indian Housing Authorities, give the requirements for proper procurement procedures and guidelines for maintaining procurement files for HUD programs. Specifically, Chapter 5 of the Procurement Handbook states that large purchases should not be broken down into smaller amounts to permit the use of small purchase procedures. Also, PHA policy and procedure dictates full compliance with these regulations as well as guidelines to be followed in maintaining these files. Additionally, the current procurement policy small purchase ceiling is $25,000; which means that anything in excess should have sealed bids. This policy is currently being rewritten to more adequately reflect the appropriate levels of small purchases. Cause: The services being utilized by this contractor have increased over time, and have been initially engaged due to the reasonableness of price and quality of the service being provided. The total payments have not been monitored to determine scope of services and whether such services needed to be formally bided out. Effect: Failure to properly advertise contract services can result in excessive amounts being paid and unfair competitive advantages for certain contractors. Consequently, HUD?s procurement Handbook is written to illustrate federal requirements, which can give preferential evaluation to certain qualified contractors. Failure to comply with established procurement policies and procedures and adequately maintain contract files can lead to potential liability issues, disallowed costs and non-compliance. Recommendation: We recommend that all future contracts be procured in accordance with the PHA policies and HUD guidelines. We also recommend that the PHA adequately document compliance with these guidelines within the contract files. Questioned Costs: None Repeat Finding: No Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.

Finding 2019-001 Procurement Deficiencies ? Significant Deficiency & Noncompliance CFDA # 14.850 (details of finding is contained above and does not need to be repeated in this section.) Finding 2019-002 Tenant File Deficiencies ? Material Weakness & Noncompliance CFDA # 14.850 Condition & cause: We reviewed 90 files from the Low-Rent Public Housing Program for compliance with HUD and federal regulations and have noted excessive errors and deficiencies in the files. The errors and deficiencies were as follows: ? Total Error rate of 15% (14 of 90 files examined were out of compliance) ? Fourteen (14) files contained income verification errors. ? Ten (10) files contained third party verification but failed to update income amounts on the 50058. This was the result of using the social security income from several years ago, rather than the current year. ? Four (4) files contained errors in which net pay was used to calculate income rather than gross pay Criteria: The Housing Authority should adequately document compliance with the Code of Federal Regulations and the Admission and Continued Occupancy Policy in regards to obtaining appropriate information in maintaining the tenant files. The PHA?s ACOP along with the Code of Federal Regulations and the PIH handbook 7465.1 clearly states that the income contained in the annual re-examination should be properly verified and that the documentation be contained within the file. Effect: The impact of noncompliance on these tenant files results in improper computation of dwelling rental and the corresponding HUD funding in operating subsidy. The PHA failed to recognize all income available to offset federal awards. Recommendation: We recommend that the PHA conduct internal quality control audits of random files on a regular basis to identify potential errors in the files. We also recommend that the staff obtain appropriate training in recording and documenting resident income. We recommend that the PHA continue to implement all required measures to ensure that the files are maintained in accordance with HUD regulations, the PHA?s Administrative Plan and Commonwealth of Massachusetts guideline. Questioned Costs: None Repeat Finding: No Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.