SOUTHERN NEVADA REGIONAL HOUSING AUTHORITY

Finding 2025-001 – Section 8 Tenant Files – Eligibility – Internal Control over Tenant Files – Noncompliance & Material Weakness – Section 8 Housing Assistance Program Cluster – ALNs 14.871, 14.879, & 14.EHV Condition: We reviewed one hundred eighty (180) tenant files for compliance across multiple areas and found fifty-one (51) files to be noncompliant, or 28.3%. Of these, twenty-two (22) files contained errors related to adjusted annual income, or 11.7%. Specifically: • Twelve (12) files – Improper or missing verification of income • Eight (8) files – Identified miscalculations of income • Two (2) files – Unsupported or miscalculated deductions Additional identified discrepancies include units not undergoing a biennial HQS inspection (20), improper or unsupported utility allowances (10), missing EIV reports (5), and an unsigned Continued Occupancy Application and 9886 (1). Error rates declined both compared to the prior year and within the current audit period, indicating improvement in program compliance. The overall file error rate decreased from 32% in 2024 to 28.3% in 2025, and the income-based error rate decreased more substantially, from 21% in 2024 to 11.7% in 2025. Improvement was also evident within the audit period itself — files with discrepancies dropped from 34% in the April 2025 HAP register sample to 23% in the September 2025 HAP register sample. Testing identified instances where tenant income appears to have been underreported, resulting in overstated HAP expense. Known Questioned Costs were identified within the sample and extrapolated to the population to estimate Likely Questioned Costs, as disclosed below. The extrapolated misstatement represents 0.5% of total HAP expense, which has been determined to be material at the financial statement level. Cause: The identified noncompliance is attributable in part to operational challenges the organization faced during the audit period. Management was in the process of transitioning from physical to electronic file management, and the quality control team responsible for reviewing files for compliance was newly established. These concurrent transitions likely contributed to inconsistencies in documentation practices and income calculation procedures during this period. Criteria: Title 24 of the Code of Federal Regulations, the Housing Authority’s Administrative Plan, and specific HUD guidelines in documenting and maintaining Housing Choice Voucher tenant files. Effect: Errors in income verification and calculation, compounded by the absence of mandatory EIV reports, increase the risk that unreported or underreported income is going undetected. This may have resulted in overpaid HAP to owners and understated rental charges to assisted families. Units lacking required HQS inspections may have unaddressed health and safety deficiencies. Recommendation: We recommend that the Agency continue strengthening its quality control processes to ensure tenant files contain all required documentation, income is accurately verified and calculated, and units are inspected within required timeframes prior to processing Housing Assistance Payments. Questioned Costs: Approximately $976,652 Repeat Finding: Yes Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.

Finding 2024-001 - Housing Choice Voucher Tenant Files - Eligibility - Internal Control over Tenant Flies - Noncompliance & Material Weakness - Housing Choice voucher Program - ALN #14.871 Condition & Cause: We reviewed one hundred (100) tenant files for compliance across multiple areas and found thirty­ two (32) files to be noncompliant. Of these, twenty-one (21) files contained errors related to adjusted annual income. Specifically: • Eight (8) files - Unable to locate income verification • Seven (7) files - A Change of Unit was conducted without verifying income as required by the Admin Plan • Seven (7) files - Miscalculations of annual income • Three (3) files - Unable to locate deduction verification We identified HAP misstatements within the sample, extrapolated the results to the full population, and disclosed the estimated questioned costs below. The extrapolated misstatement represents 0.17% of total HAP expense, which is immaterial to the financial statements for the reporting period. Additionally, we were unable to locate various documents that are required to be maintained, such as the applicable EIV report (16 files), original lease (6 files), identification documents (6 files), Declaration 214s (6 files), annual application for continued occupancy (3 files), and Form 9886 (3 files). Lastly, we noted four (4) instances in which the annual reexamination was submitted between three to five months after the effective date. The Agency is currently transitioning from physical files to digital records. This shift has contributed to documentation not being readily available during the audit. The income miscalculations were due to employee errors. As a corrective measure, post year-end, the department established a compliance division and enhanced internal quality control procedures. Criteria: The Code of Federal Regulations, the Housing Authority Administrative Plan and specific HUD guidelines in documenting and maintaining Housing Choice Voucher tenant files. Effect: Failure to properly verify and calculate annual income, maintain required documentation, and complete timely reexaminations can result in a misstatement of HAP expense leading to improper funding for the HCV program. Misstatements of HAP may also cause an undue financial burden to the participant, which goes against the mission of the Agency. Persistent noncompliance can result in increased scrutiny from regulatory agencies and a decrease in vouchers or program funding. Recommendation: We recommend that the Agency promptly finalize the transition to a digital file system with proper document retention protocols. The Agency should continue to enhance their monitoring and quality control review of the HCV program files and determine whether any occupancy specialists need additional training or procedures added to ensure compliance. Questioned Costs: Approximately $322,568 Repeat Finding: Yes Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.

Finding 2023-001 – Housing Choice Voucher Tenant Files – Eligibility – Internal Control over Tenant Files - Noncompliance & Significant Deficiency Housing Choice Voucher Program – ALN 14.871 Condition & Cause: We reviewed two hundred fifty (250) tenant files for full compliance, as well as fifty (50) tenant files for existence, for a total of three hundred (300) tenant files reviewed. Of the two hundred fifty (250) tenant files fully reviewed, we noted twenty-eight (26) tenant files were not in compliance. Of these, twenty-one (21) files, or 8.4% of our sample, contained errors related to adjusted annual income. The income-related discrepancies mainly consist of failure to gather or provide third-party verification of income or deductions and miscalculations of income due to nonconsecutive pay data, improper pay frequencies, or other procedures that are incongruent with the Administrative Plan and Federal Regulations. We were able to extrapolate identified misstatements of HAP and found the potential misstatement to represent 0.07% of program HAP expense, which is immaterial to the financial statements. The remaining discrepancies reflect files for which a biennial inspection was not conducted. We noted two factors that we believe contributed to the tenant file discrepancies. First, the Housing Choice Voucher department has experienced frequent turnover in leadership over the past several audits. Second, the Agency has encountered challenges in their conversion from paper to electronically maintained tenant files. Criteria: The Code of Federal regulations, the Housing Authority Administrative Plan and specific HUD guidelines in documenting and maintaining Housing Choice Voucher tenant files. Effect: Failure to properly verify and calculate annual income can result in a misstatement of HAP expense leading to improper funding for the HCV program. Misstatements of HAP may also cause an undue financial burden to the participant, which goes against the mission of the Agency. Additionally, noncompliance can result in a decrease of vouchers or loss of program funding. Recommendation: We recommend that the Agency increase their monitoring and quality control review of the HCV program files to determine whether occupancy specialists need additional training or procedures added to ensure compliance. Our experience with agencies that increase monitoring and review of the files is that there are dramatically decreased error rates. 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 2020-001 ? Housing Choice Voucher Tenant Files ? Eligibility ? Internal Control over Tenant Files ? Noncompliance and Material Weakness Housing Choice Voucher Program CFDA #14.871 Condition & Cause: Our review of three hundred and thirty (330) Housing Choice Voucher tenant files revealed that there was a total of seventeen (17) income-related errors, which represent 5.15% of the total files examined. Of these seventeen (17) errors, there were eight (8) which could be numerically extrapolated to the population. Based upon this computation the error was material to the Housing Assistance Payments and therefore reported as a finding for noncompliance and a material weakness. The nine (9) remaining files were a result of differences between the EIV system and the reexamination data in the file. In addition to complexities of staffing during the COVID pandemic, as noted in the prior year, there still exists a large amount of employee turnover. Also, the agency has not been able to conduct the adequate amount of training needed for HCV staff. We also recommend that the quality control process be increased or improved to find deficiencies in a timely basis or to determine which staff needs additional training. Criteria: The Code of Federal regulations, the Housing Authority?s Administrative plan, and specific HUD guidelines in documenting and maintaining the Housing Choice Voucher tenant files. Recommendation: We commend that the Agency conduct a thorough tenant file audit of existing tenants in the HCV program to determine whether there are any misstatements of rental income. We also recommend that the Agency increase their monitoring and review of the HCV program files to determine whether occupancy specialist need additional training or procedures added to ensure compliance. Questioned Costs: None Repeat Finding: Yes Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.

Finding 2019-001 ? Housing Choice Voucher Tenant Files ? Eligibility ? Internal Control over Tenant Files ? Noncompliance and Material Weakness Housing Choice Voucher Program CFDA #14.871 Condition & Cause: Our Review of three hundred and thirty (330) HCV tenant files revealed that there were thirty-four (34) errors of noncompliance noted during the audit. This represents a 10.30% sample deviation rate across the total population. The errors consisted of failure to calculate tenant wages correctly, failure to have a third party verify tenant income correctly, and HAP payments not agreeing to the tenant HUD 50058 rent calculation forms. Of these thirty-four (34) errors, thirty-three (33) of these were income-related errors. During our inquires of management within the Housing Choice Voucher program, it was noted that there has been a large amount of employee turnover during the fiscal year. In addition, there had been inadequate training for the staff of the Housing Choice Voucher program. Although the authority has a quality control system set up to catch errors within files, the quality control system failed to discover errors within these files. Criteria: The Code of Federal regulations, the Housing Authority?s Administrative plan, and specific HUD guidelines in documenting and maintaining the Housing Choice Voucher tenant files. Recommendation: We commend that the Agency conduct a thorough tenant file audit of existing tenants in the HCV program to determine whether there are any misstatements of rental income. We also recommend that the Agency increase their monitoring and review of the HCV program files to determine whether occupancy specialist need additional training or procedures added to ensure compliance. Our experience with agencies that increase monitoring and review of the files is that there are dramatically decreased error rates. 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.

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