Pontiac Housing Commission

Subject: Section 8 Housing Choice Voucher Program – Tenant Eligibility and Reexaminations Federal Agency: Department of Housing and Urban Development Federal Program: Section 8 Housing Choice Vouchers Assistance Listing Number: 14.871 Federal Award Number and Year (or Other Identifying Number): CY 2025 Pass-Through Entity: Not applicable Compliance Requirement: Eligibility Audit Finding: Significant Deficiency Condition and Context: During audit fieldwork, 40 tenant files were reviewed for compliance with Program eligibility and reexamination requirements. It was noted the Housing Commission does not perform a second party review on annual rent certifications resulting in miscalculation of tenant rent and housing assistance payments for 6 program participants. Rent miscalculations were due to miscalculations of wages or income, incorrect utility allowances, and incorrect payment standards. Criteria: 24 CFR section 982.516 states in part “Except as provided in paragraph (a)(3) of this section, the PHA must obtain and document in the tenant file third-party verification of the following factors, or must document in the tenant file why third-party verification was not available: (i) Reported family annual income; (ii) The value of assets; (iii) Expenses related to deductions from annual income; and (iv) Other factors that affect the determination of adjusted income.” Cause: Failure to execute internal controls over the federal Eligibility compliance requirement. Effect: Non-compliance with the federal Eligibility requirement. Tenant rents may be miscalculated leading to incorrect housing assistance payments. Other notifications and documentations may be missing for program eligibility. Questioned Cost: Known and projected misstatement: $112,998 Recommendation: We recommend the Housing Commission implement and execute strengthened controls over the federal Eligibility compliance requirement to include the performance of annual reexaminations and documentation maintenance; the above discrepancies need to be addressed, and all tenant files should be reviewed for compliance.

2023-001 Condition: Deficiencies Noted in Examination of Housing Choice Voucher Program Participant Files In a sample of Twenty-five (25) Housing Choice Voucher Program Participant files, the following deficiencies were noted: 2 files lacked timely annual recertification 21 files lacked timely annual inspection FY 2023 1 file lacked FY 2023 termination information for participant Assistance Listing #: 14.871 Questioned Costs: None Criteria: 24 CFR § 982 requirements for HCVP participant file maintenance. Cause/Effect: The Authority’s deficiencies in its resident files stems from a lack of certain controls concerning HUD requirements and procedures. The Authority has not been in complete compliance with HUD requirements. Recommendation: We recommend that the Authority review its internal control procedures over tenant file re-certifications and documentation in relation to annual inspections. We also recommend more standardization in file organization of information. Reply: We concur with this finding and the Auditor’s recommendation. We will review the internal control procedures over tenant file re-certifications and documents. Management will implement procedures to clear this finding in FY 2024.

2023-002 Condition: Questionable Use of Federal Funds The Authority ran a deficit in the Central Office Cost Center (COCC) during the year ended March 31, 2023 primarily because the COCC has expended Low Income Public Housing (LIPH) funds to support the COCC operations in violation of Federal Rules and Regulations. Through the year ended March 31, 2023, the Authority has accumulated in excess of $:144,097 in COCC administrative operating costs above those normally covered by management fees, capital asset fees, and bookkeeping fees. Assistance Listing #: 14.850 Questioned Costs: Unknown Criteria: 0MB Uniform Guidance regarding eligible and ineligible costs. Cause/Effect: Lack of oversight and long-range planning in accordance with HUD's requirements. Recommendation: We recommend that the Authority review its internal control procedures over the budgeting process sufficient to ensure that each program operates both in accordance with its budget and within its means, and for the Authority to provide a work-out plan for the COCC to substantially reduce its costs or to generate additional revenue. Reply: We concur with this finding and the Auditor's recommendation. We will establish internal financial control procedures over the budget process to ensure that each program operates within its means and in accordance with HUD regulations. We have already taken steps to reduce expenses in the COCC and will generate revenue from grants and other business activity to offset the COCC expenses. Management will take corrective action to close this finding in connection with the FY 2024 audit report.

2022-1 Condition: Deficiencies Noted in Examination of Housing Choice Voucher Program Participant Files In a sample of Thirty (30) Housing Choice Voucher Program Participant files, the following deficiencies were noted: 3 files lacked timely annual recertification 6 files lacked support for 3rd party income verification 4 files lacked signed and dated 9886 for all adults 8 files lacked rent reasonableness for contract rent increase 3 files lacked new move in documentation 1 file lacked 214 citizenships for all adults CFDA Number: 14.871 Questioned Costs: None Criteria: 24 CFR ? 982 requirements for HCVP participant file maintenance. Cause/Effect: The Authority?s deficiencies in its resident files stems from a lack of certain controls concerning HUD requirements and procedures. The Authority has not been in complete compliance with HUD requirements. Recommendation: We recommend that the Authority review its internal control procedures over tenant file re-certifications and documentation in relation to annual inspections. We also recommend more standardization in file organization of information. Reply: We concur with this finding and the Auditor?s recommendation. We will review the internal control procedures over tenant file re-certifications and documents. Management will implement procedures to clear this finding in FY 2023.