DETROIT HOUSING COMMISSION

Assistance Listing Number, Federal Agency, and Program Name - 14.871 and 14.879, U.S. Department of Housing and Urban Development, Housing Vouchers Cluster Federal Award Identification Number and Year - Not applicable Pass-through Entity - Not applicable Finding Type - Material noncompliance with laws and regulations Repeat Finding - No Criteria - Under 24 CFR 982.305(2)(i) and 982.404, the Commission must notify the family and owner of the inspection determination within fifteen days after the inspection takes place. The Commission also must require the owner to correct any life threatening Housing Quality Standards (HQS) deficiencies within 30 calendar days or within a specified commissionapproved extension. If the owner does not correct the cited HQS deficiencies within the specified correction period, the Commission must stop (abate) the HAP. Condition - The Commission was unable to send failed HQS inspection notices within the fifteen day requirement to participants who needed to correct deficiencies. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable Context - A total of 40 inspections were tested, and the results are as follows: A total of 22 files had failed inspection where the letter to the owner was not sent within the fifteen day requirement, therefore participants could not correct deficiencies found before the 30 day required from the time of inspection was performed. Cause and Effect - Printer malfunctioning created delays in sending out the HQS fail letters and as a result participants were unable to correct the identified deficiencies within the required 30-day window. Recommendation - The Commission should establish procedures to ensure inspection letters are sent timely. Views of Responsible Officials and Corrective Action Plan - HCV will hire additional internal support for HQS inspections to work alongside external vendors and ensure timely updates/mailings/, and closeouts are uploaded to the work management system, Yardi.

Assistance Listing Number, Federal Agency, and Program Name - 14.871 and 14.879, U.S. Department of Housing and Urban Development, Housing Vouchers Cluster Federal Award Identification Number and Year - Not applicable Pass-through Entity - Not applicable Finding Type - Significant deficiency Repeat Finding - Yes 2024-003 Criteria - Under 24 CFR 5.230, 5.609, 982.201, 982.515, and 982.516, the Commission must: 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 thirdparty verification. Condition - The Commission did not complete fiscal year 2025 recertifications. Questioned Costs - $2,247 Identification of How Questioned Costs Were Computed - Questioned costs represents overpayments identified from testing performed. Context - A total of 40 tenant files were tested, and 2 participant files were delinquent recertifications during the year. Cause and Effect - The Commission did not have the proper controls in place to ensure tenant recertifications are completed timely. Due to the lack of adequate controls, questioned costs for overpayment of subsidy were identified above as the housing assistance payment calculation was not performed for the tenants. Recommendation - The Commission should establish procedures to ensure participant recertifications are documented and completed timely. Views of Responsible Officials and Planned Corrective Actions - Staff have been retrained on the compliance requirements under the standards of the HCV Program through the oversight of the Rental Assistance Department Manager and Continued Occupancy Supervisor. The Department Manager and Supervisor continue to utilize all Yardi monitoring reports to ensure the Department is operating in accordance with industry standards. Reporting is be done and monitored monthly to meet set goals. Weekly, Department Manager has review the certification pipeline to ensure compliance and follow up with the Housing Specialist to ensure compliance and meeting set weekly and monthly goals and metrics. We continue to work in accordance with HUD rules and regulations where Annual Recertification processes are concerned. Per HUD communication provided to us, as of June 30, 2025, HCV is 100% compliant with HUD recertification requirements.

Assistance Listing, Federal Agency, and Program Name - 14.872, U.S. Department of Housing and Urban Development, Public Housing Capital Fund Program Federal Award Identification Number and Year - Not applicable Pass-through Entity - Not applicable Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2024-001 Criteria - Under 24 CFR 905.324, Data Reporting Requirements, the Commission must submit the following: For modernization projects, the Commission shall submit form HUD-53001, Actual Modernization Cost Certificate, within 90 days after the expenditure end date. The Commission shall submit form HUD 50075.1, Annual Statement Performance and Evaluation Report, within 90 days of the expenditure end date. Condition - The Commission did not submit the required financial report and performance report. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable Context - The required financial reporting (HUD-53001) and performance report (HUD- 50075.1) for grant number MI28P001501-18 were not completed within 90 days of the expenditure end date. The required financial reporting (HUD-53001) for grant number MI28P001501-21 was not completed within 90 days of the expenditure end date. Cause and Effect - The Commission did not have the proper controls in place to ensure the timely completion and submission of required reports. Recommendation - The Commission should establish procedures to ensure financial reporting is filed and completed timely. Views of Responsible Officials and Planned Corrective Actions - The Capital Team Project Manager continues to reconcile HUD’s EPIC and ELOCC systems with Yardi monthly to ensure timely filing of capital projects' closeouts. This tracking critical spreadsheet, created by the Lead Performance Officer, will trigger key reporting dates for the DHC Capital Fund Program to remain in compliance with HUD reporting deadlines. At a minimum, monthly, this critical spreadsheet is distributed to the Supervisor of Capital and the Lead Performance Officer to ensure compliance. However, this was on the radar and continues the process of cleaning older items for corporate hygiene. As of December 2025, this was closed out and approved in EPIC by HUD.

Assistance Listing Number, Federal Agency, and Program Name - 14.872 - Public Housing Capital Fund Program Federal Award Identification Number and Year - Not applicable Pass through Entity - Not applicable Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Under 24 CFR 905.324, Data Reporting Requirements, the Commission must submit the following: For modernization projects, the Commission shall submit form HUD-53001, Actual Modernization Cost Certificate, within 90 days after the expenditure end date. The Commission shall submit form HUD-50075.1, Annual Statement Performance and Evaluation Report, within 90 days of the expenditure end date. Condition - The Commission did not submit the required financial report and performance report. Questioned Costs - Not applicable Context - The required financial reporting (HUD-53001) and performance report (HUD-50075.1) for grant number MI28P001501-17 were not completed within 90 days of the expenditure end date. Cause and Effect - The Commission did not have the proper controls in place to ensure the timely completion and submission of required reports. Recommendation - The Commission should establish procedures to ensure financial reporting is filed and completed timely. Views of Responsible Officials and Corrective Action Plan - The capital team project manager will reconcile HUD’s EPIC and ELOCCs system with Yardi monthly to ensure the timely filing of capital projects close out. This tracking critical spreadsheet created by the lead performance officer will trigger key reporting dates for the DHC Capital Fund Program to remain in compliance with HUD reporting deadlines. At a minimum, this critical spreadsheet is distributed monthly to the supervisor of capital and the lead performance officer to ensure compliance.

Assistance Listing Number, Federal Agency, and Program Name - 14.871 and 14.879 - Housing Vouchers Cluster Federal Award Identification Number and Year - Not applicable Pass through Entity - Not applicable Finding Type - Significant deficiency Repeat Finding - No Criteria - Under 24 CFR 982.158 and 982.404, the Commission must require the owner to correct any life threatening Housing Quality Standards (HQS) deficiencies within 30 calendar days or within a specified commission approved extension. If the owner does not correct the cited HQS deficiencies within the specified correction period, the Commission must stop (abate) the HAP. Condition - The Commission was not able to provide support the units that had HQS deficiencies were corrected timely, and the Commission did not abate the housing assistance payments (HAP) for units that failed HQS inspections. Questioned Costs - Not applicable Context - A total of 10 inspections were tested, and the results are as follows: A total of four files did not include documentation that the HQS deficiencies were corrected within 30 days, and the housing assistance payment was not abated. Cause and Effect - The Commission did not have the proper controls in place to ensure that the HQS deficiencies were properly enforced. Due to the lack of adequate controls, the support that the HQS deficiencies were corrected was not maintained. Recommendation - The Commission should establish procedures to ensure inspection deficiency corrections are enforced and documented timely. Views of Responsible Officials and Planned Corrective Actions - Contractor has been selected and trained in Yardi Systems. The landlord liaison supervisor will work closely with the new contractor to ensure abatements are conducted timely and in compliance with program regulatory requirements. The landlord liaison supervisor along with Yardi monitoring will conduct 10 percent quality control reviews to ensure contractor is following HUD compliance guidelines, as they pertain to abatement activity.

Assistance Listing Number, Federal Agency, and Program Name - Housing Vouchers Cluster - 14.871 and 14.879 Federal Award Identification Number and Year - Not applicable Pass through Entity - Not applicable Finding Type - Significant deficiency Repeat Finding - Yes 2023-001 Criteria - Under 24 CFR 5.230, 5.609, 982.201, 982.515, 982.516, and 982.516, the Commission must: 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. Condition The Commission did not complete fiscal year 2024 recertifications. Questioned Costs - $876 Identification of How Questioned Costs Were Computed - Questioned costs were computed on the individual below by identifying overpayments of subsidy charged compared to the appropriate amount. Context - A total of 60 tenant files were tested, and 2 participant files were delinquent recertifications during the year. Cause and Effect - The Commission did not have the proper controls in place to ensure tenant recertifications are completed timely. Due to the lack of adequate controls, questioned costs for overpayment of subsidy were identified above and the housing assistance payments could be incorrect for tenants. Recommendation - The Commission should establish procedures to ensure participant recertifications are documented and completed timely. Views of Responsible Officials and Planned Corrective Actions - Annual delinquent recertifications are being addressed according to HUD policy. Rent calculation training has been provided for and passed by all staff. We certify and maintain that it will be our standard operating procedure to ensure compliance with HUD policies. We will continue to mitigate PIC errors and ensure continued staff training to reduce these errors. The HCV manager will randomly review 10 percent of files for accuracy. A list will be maintained. As of February 17, 2025, HUD’s recertification score was 99.7 percent in compliance.

Assistance Listing Number, Federal Agency, and Program Name - Housing Vouchers Cluster - 14.871 and 14.879 Federal Award Identification Number and Year - Not applicable Pass through Entity - Not applicable Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Under 24 CFR 982.517, the Commission must: a. Review PHA procedures for obtaining and reviewing utility rate data each year b. Review data on utility rates that the PHA obtained during the last 12 months and ascertain, based on data available at the PHA, if there has been a change of 10 percent or more in a utility rate since the last time the utility allowance schedule was revised; if so, verify that the PHA revised its utility allowance schedule to reflect the rate increase Condition - The Commission did not conduct an annual review of utility data to ensure that the utility allowance schedule was properly updated. Questioned Costs - Not applicable Context - The Commission did not conduct an annual review of the utility data to properly update the utility allowance schedule. Cause and Effect - The Commission did not have proper controls in place to review the utility rate data, which could lead to the Commission charging improper amounts for the utility allowance. Recommendation - The Commission should establish policies and procedure to ensure utility data is being reviewed annually. Views of Responsible Officials and Planned Corrective Actions - Contract has been issued to conduct utility allowance, which is underway. Detroit Housing Commission is expecting for allowance study implementation in June 2025.

Assistance Listing Number, Federal Agency, and Program Name Housing Vouchers Cluster 14.871 and 14.879 Federal Award Identification Number and Year Not applicable Pass through Entity Not applicable Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding Yes 2022 001 Criteria Under 24 CFR 5.230, 5.609, 982.201, 982.515, 982.516, and 982.516, the Commission must: a. 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. b. For both family income examinations and reexaminations, obtain and document in the family file third party verification of (1) reported family annual income, (2) the value of assets, (3) expenses related to deductions from annual income, and (4) other factors that affect the determination of adjusted income or income based rent. c. Determine income eligibility and calculate the tenant’s rent payment using the documentation from third party verification. d. Select tenants from the HCVP waiting list (see special tests and provisions HCVP waiting list). e. 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. Condition The Commission did not complete fiscal year 2023 recertifications. Questioned Costs Unknown Identification of How Questioned Costs Were Computed Not applicable Context 60 tenant files were tested, and the results are as follows: A total of 5 participant files did not include fiscal year 2023 recertifications. Cause and Effect The Commission did not have the proper controls in place to ensure that the tenant recertifications are completed annually for each tenant. Due to the lack of adequate controls, recertifications were not performed and housing assistance payments could be incorrect. Recommendation The Commission should establish procedures to ensure participant recertifications are documented and completed annually. Views of Responsible Officials and Corrective Action Plan Staff will be retrained on the compliance requirements under the standards of the HCV Program through the oversight of the rental assistance department manager and continued occupancy supervisor. The department manager and supervisor will continue to utilize all Yardi monitoring reports to ensure the department is operating in accordance with industry standards. Reporting will be done and monitored monthly to meet set goals. We know and maintain we will work in accordance with HUD rules and regulations where annual recertification processes are concerned. On a weekly basis, the department manager will review the certification pipeline to ensure compliance and follow up with the housing specialist to ensure compliance and that set weekly and monthly goals and metrics are met.

Assistance Listing Number, Federal Agency, and Program Name Housing Vouchers Cluster 14.871 and 14.879 Federal Award Identification Number and Year Not applicable Pass through Entity Not applicable Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding Yes 2022 002 Criteria Under 24 CFR 5.230, 5.609, 982.201, 982.515, 982.516, and 982.516, the Commission must: a. 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. b. For both family income examinations and reexaminations, obtain and document in the family file third party verification of (1) reported family annual income, (2) the value of assets, (3) expenses related to deductions from annual income, and (4) other factors that affect the determination of adjusted income or income based rent. c. Determine income eligibility and calculate the tenant’s rent payment using the documentation from third party verification. d. Select tenants from the HCVP waiting list (see special tests and provisions HCVP waiting list). e. 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. Condition Participant files selected for testing did not include complete information to support participant eligibility. Questioned Costs $10,754 Identification of How Questioned Costs Were Computed Questioned costs were computed on the individuals below by identifying overpayments of subsidy charged compared to the appropriate amount. Context A total of 60 tenant files were tested, and the results are as follows: A total of 18 participant files were delinquent recertifications due to management delays and completed after the recertification date. Cause and Effect The Commission did not have the proper controls in place to ensure tenant recertifications are completely timely. Due to the lack of adequate controls, questioned costs for overpayment of subsidy were identified above and the housing assistance payments could be incorrect for tenants. Recommendation The Commission should establish procedures to ensure participant recertification are documented and completed timely. Views of Responsible Officials and Planned Corrective Actions Staff will be retrained on the compliance requirements under the standards of the HCV Program through the oversight of the rental assistance department manager and continued occupancy supervisor. The department manager and supervisor will continue to utilize all Yardi monitoring reports to ensure the department is operating in accordance with industry standards. Reporting will be done and monitored monthly to meet set goals. We know and maintain we will work in accordance with HUD rules and regulations where annual recertification processes are concerned. On a weekly basis, the department manager will review the certification pipeline to ensure compliance and follow up with the housing specialist to ensure compliance and that set weekly and monthly goals and metrics are met.

Assistance Listing Number, Federal Agency, and Program Name Housing Vouchers Cluster 14.871 and 14.879 Federal Award Identification Number and Year Not applicable Pass through Entity Not applicable Finding Type Significant deficiency Repeat Finding No Criteria Under the Housing Choice Voucher Program, the Commission accepts applications for rental assistance, selects applicants for admission, and issues family vouchers confirming eligibility. The Commission pays the owner of the unit that the family leases a portion of the rent (Housing Assistance Payment HAP) on behalf of the family. Under 24 CFR 5.230, 5.609, and 982.516, the Commission must verify and maintain documents supporting family income eligibility. This process needs to be performed annually. 24 CFR 982.516 (f) requires PHAs to establish procedures that are appropriate and necessary to ensure that income data provided by the applicant or participant families is accurate and complete. Condition Participant files selected for testing did not include complete information to support the participant's income to determine the level of benefits provided. Questioned Costs Unknown Identification of How Questioned Costs Were Computed Not applicable Context A total of 60 tenant files were tested, and the results are as follows: A total of 3 participants lacked income support, and, upon recalculation of income, there was an increase in tenant rent. Cause and Effect The Commission is not completely following the policies and procedures it has in place to ensure proper and timely compliance with regard to tenant rent calculations. The Commission could be charging the incorrect amount of rent or could be housing ineligible tenants. Recommendation The Commission should establish procedures to ensure participant eligibility is accurately calculated and reviewed annually. Periodic internal review of tenant files would help identify errors in a timely manner. Views of Responsible Officials and Planned Corrective Actions The Housing Choice Voucher Program will work towards and maintain program compliance to ensure we are meeting all regulatory requirements. We will do this through staff hiring and restructuring. Ongoing in house and industry training will help staff stay current and skilled on all program rules and updates as it pertains to the HCV Program with monthly and weekly reporting and monitoring. The Commission understands the challenges outlined above, and we have implemented measures to improve, redefine, address, and resolve all items according to HUD best practices. We will continue our ongoing efforts and have measurable goals with set dates and timelines. This will show marked improvement over the next 6-12 months in the following areas: • Reduction of annual recertifications • Increased utilization • Increased PBV potential/new RFP • PIC error corrective actions • Increased landlord outreach/landlord fairs • Customer service improvement/call center staffing • Continued industry training for all HCV housing specialists • HCV department RFP contract proposal

Assistance Listing Number, Federal Agency, and Program Name Housing Vouchers Cluster 14.871 and 14.879 Federal Award Identification Number and Year Not applicable Pass through Entity Not applicable Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria Under 24 CFR 5.230, 5.609, 982.201, 982.515, 982.516, and 982.516, the Commission must: a. 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. b. For both family income examinations and reexaminations, obtain and document in the family file third party verification of (1) reported family annual income; (2) the value of assets; (3) expenses related to deductions from annual income; and (4) other factors that affect the determination of adjusted income or income based rent. c. Determine income eligibility and calculate the tenant?s rent payment using the documentation from third party verification. d. Select tenants from the HCVP waiting list (see special tests and provisions HCVP waiting list). e. 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. Condition The Commission did not complete fiscal year 2022 recertification. Questioned Costs Unknown Identification of How Questioned Costs Were Computed Not applicable Context 40 tenant files were tested, and the results are as follows: A total of 5 participant files did not include fiscal year 2022 recertifications due to delays with tenants due to the pandemic. Cause and Effect The Commission did not have the proper controls in place to ensure that the tenant recertifications are completed annually for each tenant. Due to the lack of adequate controls, recertifications were not performed and housing assistance payments could be incorrect. Recommendation The Commission should establish procedures to ensure participant recertifications are documented and completed annually. Views of Responsible Officials and Corrective Action Plan Staff will be retrained on the compliance requirements under the standards of the HCV Program through the oversight of the rental assistance department manager and continued occupancy supervisor. The department manager and supervisor will continue to utilize all Yardi monitoring reports to ensure the department is operating in accordance with industry standards. Reporting will be done and monitored monthly to meet set goals. We know and maintain we will work in accordance with HUD rules and regulations where annual recertification processes are concerned. The department manager will review the certification pipeline weekly to ensure compliance and follow up with the housing specialist to ensure compliance and meeting set weekly and monthly goals and metrics.

Assistance Listing Number, Federal Agency, and Program Name Housing Vouchers Cluster 14.871 and 14.879 Federal Award Identification Number and Year Not applicable Pass through Entity Not applicable Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria Under 24 CFR 5.230, 5.609, 982.201, 982.515, 982.516, and 982.516, the Commission must: a. 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. b. For both family income examinations and reexaminations, obtain and document in the family file third party verification of (1) reported family annual income; (2) the value of assets; (3) expenses related to deductions from annual income; and (4) other factors that affect the determination of adjusted income or income based rent. c. Determine income eligibility and calculate the tenant?s rent payment using the documentation from third party verification. d. Select tenants from the HCVP waiting list (see special tests and provisions HCVP waiting list). e. 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. Condition Participant files selected for testing did not include complete information to support participant eligibility. Questioned Costs $7,965 Identification of How Questioned Costs Were Computed Questioned costs were computed on the individuals below by identifying overpayments of subsidy charged compared to the appropriate amount. Context A total of 40 tenant files were tested, and the results are as follows: A total of 12 participant files were delinquent recertifications due to management delays and completed after the recertification date. Cause and Effect The Commission did not have the proper controls in place to ensure tenant recertifications are completely timely. Due to the lack of adequate controls, questioned costs for overpayment of subsidy were identified above and the housing assistance payments could be incorrect for tenants. Recommendation The Commission should establish procedures to ensure participant recertification are documented and completed timely. Views of Responsible Officials and Planned Corrective Actions Staff will be retrained on the compliance requirements under the standards of the HCV Program through the oversight of the rental assistance department manager and continued occupancy supervisor. The department manager and supervisor will continue to utilize all Yardi monitoring reports to ensure the Department is operating in accordance with industry standards. Reporting will be done and monitored monthly to meet set goals. We know and maintain we will work in accordance with HUD rules and regulations where annual recertification processes are concerned. The department manager will review the certification pipeline weekly to ensure compliance and follow up with the housing specialist to ensure compliance and meeting set weekly and monthly goals and metrics.

Assistance Listing Number, Federal Agency, and Program Name Housing Vouchers Cluster 14.871 and 14.879 Federal Award Identification Number and Year Not applicable Pass through Entity Not applicable Finding Type Material weakness Repeat Finding No Criteria Under 24 CFR 982.158(d), 982.404, and 982.405(b) the Commission must: a. Inspect the unit leased to a family at least annually to determine if the unit meets Housing Quality Standards (HQS) and the PHA must conduct quality control reinspections. The PHA must prepare a unit inspection report. b. For units under HAP Contract that fail to meet HQS, the PHA must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days or within a specified PHA approved extension. If the owner does not correct the cited HQS deficiencies within the specified correction period, the PHA must stop (abate) HAPs beginning no later than the first of the month following the specified correction period or must terminate the HAP Contract. The owner is not responsible for a breach of HQS as a result of the family?s failure to pay for utilities for which the family is responsible under the lease or for tenant damage. For family caused defects, if the family does not correct the cited HQS deficiencies within the specified correction period, the PHA must take prompt and vigorous action to enforce the family obligations. Condition Inspections selected for testing did not include complete information to support completed inspections and enforcement of repairs. Questioned Costs Not applicable Identification of How Questioned Costs Were Computed Not applicable Context A total of 25 inspections were tested, and the results are as follows: Of the files tested, support that three inspections occurred were not provided. For an additional two inspections, additional support was not provided to complete testing of the enforcement of HQS deficiencies. Cause and Effect The Commission did not have the proper controls in place to ensure inspections are occurring timely. Due to the lack of adequate controls, the support for the inspections and corrections or repairs needed was not maintained. Housing assistance payments could be made to owners whose units do not meet the HQS standards. Recommendation The Commission should establish procedures to ensure inspections are performed annually and the corrections are corrected timely. Views of Responsible Officials and Planned Corrective Actions The landlord liaison will review the third party scheduled inspection report and reconcile it with the Yardi inspection report weekly to promptly ensure inspection completeness. Yardi reports will be reviewed and monitored by the department manager/supervisor to ensure we are operating in accordance with industry standards. The Yardi reports will also be utilized in working with our inspections contractor for accuracy and reliability with annual reporting to ensure all inspections are conducted in the regulatory timeframes whether initials, biannual, or quality control inspections to ensure housing stock is HQS compliant.

Assistance Listing Number, Federal Agency, and Program Name U.S. Department of Housing and Urban Development Direct programs Low income Public Housing and Development 14.850a Federal Award Identification Number and Year Not applicable Pass through Entity Not applicable Finding Type Significant deficiency Repeat Finding No Criteria Under 24 CFR 5.230, 5.601, 5.609, 960.206, 960.208, 960.253, 960.255, 960.257, and 960.259, the Commission must: a. As a condition of admission or continued occupancy, require the tenant and other family members to provide necessary information, documentation, and releases for the Commission to verify income eligibility. b. For both family income examinations and reexaminations, obtain and document in the family file third party verification of: (1) reported family annual income, (2) the value of assets, (3) expenses related to deductions from annual income, and (4) other factors that affect the determination of adjusted income or income based rent. c. Determine income eligibility and calculate the tenant?s rent payment using documentation from third party verification. d. Select tenants from the public housing waiting list (see special tests and provisions public housing waiting list). e. 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. Condition Participant files selected for testing did not include complete information to support the level of benefits provided. Questioned Costs $21 Identification of How Questioned Costs Were Computed Questioned costs were computed on the individuals below by identifying overpayments of subsidy charged compared to the appropriate amount. Context A total of 60 tenant files were tested, and the results are as follows: Of the files tested, one participant lacked income support and upon recalculation of income there was an increase in tenant rent. 2 participant files used the incorrect utility reimbursement amount, resulting in a miscalculation of tenant rent. Cause and Effect The Commission does not have the proper controls in place to ensure proper compliance with regard to tenant eligibility requirements. Due to the lack of adequate controls, questioned costs for overpayment of subsidy were identified above. Recommendation The Commission should establish procedures to ensure participant eligibility is accurately calculated and reviewed annually. Periodic internal review of tenant files would help identify errors in a timely manner. Views of Responsible Officials and Planned Corrective Actions While the Detroit Housing Commission works towards implementing Rent Cafe, an electronic platform to allow applicants, residents, and management the ability to streamline the continued occupancy and eligibility process, the Commission will continue to utilize the manual application process with the following controls in place: 1. There will be ongoing training to support staff in public housing rent calculation. Within the designated training, housing specialists, property managers, assistant property managers, and compliance specialists will focus on correctly calculating subsidy for applicants and residents. Trainings will include, but are not limited to, properly identifying and verifying income, expenses, allowances, adjusted income, total tenant payment (TTP), utility standards, PHA payment, and subsidy standards. 2. Regional managers will conduct the first line of quality control file reviews. Upon housing specialist, property manager, and assistant property manager completing initial eligibility, annual, and interim recertifications, regional managers will review the proposed certification against the certification?s checklist for approval. 3. The compliance department will conduct ongoing quality control file reviews on a 10 percent sample selection of households to ensure timely completion and accuracy of ongoing participant rent determination. a. When deficiencies are identified during a quality control review, site staff will have seven days to cure and upload the corrective file to SharePoint. b. The final quality control review will also include reconciliation for acceptance of the electronic file to PIC. 4. To address the incorrect utility allowance amounts being utilized to calculate tenant rent, the following will occur: a. The Commission?s REM department will work with the Commission?s IT department to update the utility allowance tables in the housing?s Yardi software. Current utility allowances will be entered in the software?s utility allowance table and will prepopulate based on the action type and effective date of the recertification. b. Site staff will include the printed utility allowance chart within the certification with the allowance amount provided clearly identified for review by the regional manager when conducting the first line of quality control file review.

Assistance Listing Number, Federal Agency, and Program Name - Low rent Public Housing and Development - 14.850a Federal Award Identification Number and Year - Not applicable Pass-through Entity - Not applicable Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2019-001; 2017-001; 2016-003; 2015-003. Criteria - Under 24 CFR 5.230, 5.601, 5.609, 960.206, 960.208, 960.253, 960.255, 960.257, and 960.259, the Commission must: a. As a condition of admission or continued occupancy, require the tenant and other family members to provide necessary information, documentation, and releases for the Commission to verify income eligibility. b. For both family income examinations and reexaminations, obtain and document in the family file third-party verification of: (1) reported family annual income, (2) the value of assets, (3) expenses related to deductions from annual income, and (4) other factors that affect the determination of adjusted income or income based rent. c. Determine income eligibility and calculate the tenant?s rent payment using documentation from third party verification. d. Select tenants from the public housing waiting list (see special tests and provisions - public housing waiting list). e. 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. Condition - DHC did not perform timely recertifications and in some instances did not maintain evidence of attempts to complete the recertifications. Questioned Costs - $9,914 Identification of How Questioned Costs Were Computed - Questioned costs were computed on the individuals below by identifying overpayments of subsidy charged compared to the appropriate amount. Context - 40 tenant files were tested, and the results were as follows: A total of 19 participant files were delinquent recertifications, due to delays with tenants due to the pandemic, and completed after the recertification date. For 13 of the participant files, documentation was maintained supporting the attempts to contact the tenants to perform the recertification, and 6 tenant files did not have any support for the attempt to perform the recertification. Recertifications were performed after the fact, and participants continued to be eligible. Cause and Effect - The Commission is not completely following the policies and procedures in place to ensure proper compliance with regard to tenant eligibility requirements. Due to the lack of adequate controls, recertifications were not performed timely. Recommendation - The Commission should establish procedures to ensure participant recertification are documented and completed annually. Views of Responsible Officials and Corrective Action Plan - Detroit Housing Commission (DHC) agrees with the finding. DHC continues to improve its administration of the Low Income Public Housing Program. Recently, DHC instated an in house compliance department and YARDI Resident Portal to streamline and improve documentation of participant files. DHC also continues to improve its program monitoring aspects to ensure compliance with HUD rules and regulations.

CFDA Number, Federal Agency, and Program Name U.S. Department of Housing and Urban Development Direct programs Low income Public Housing and Development 14.850a and 14.850b Federal Award Identification Number and Year Not applicable Pass through Entity Not applicable Finding Type Significant deficiency in internal controls of eligibility Repeat Finding Yes 2017 001; 2016 003, and 2015 003 Criteria Under 24 CFR 5.230, 5.601, 5.609, 960.206, 960.208, 960.253, 960.255, 960.257, and 960.259, the Commission must: a. As a condition of admission or continued occupancy, require the tenant and other family members to provide necessary information, documentation, and releases for the Commission to verify income eligibility. b. For both family income examinations and re examinations, obtain and document in the family file third party verification of: (1) reported family annual income, (2) the value of assets, (3) expenses related to deductions from annual income, and (4) other factors that affect the determination of adjusted income or income based rent. c. Determine income eligibility and calculate the tenant?s rent payment using documentation from third party verification. d. Select tenants from the public housing waiting list (see special tests and provisions public housing waiting list). e. Re examine 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. Condition Participant files selected for testing did not include complete information to support participant eligibility and/or the level of benefits provided. Questioned Costs $2,085 Identification of How Questioned Costs Were Computed Questioned costs were computed on the individuals below by identifying overpayments of subsidy charged compared to the appropriate amount. Context A total of 40 tenant files were tested and the results are as follows: Of the file tested, one participant file did not have a completed annual recertification performed during the fiscal year. A total of eight participant files were delinquent recertifications, due to management delays, and completed after the recertification date. Cause and Effect The Commission is not completely following the policies and procedures in place to ensure proper compliance with regard to tenant eligibility requirements. Due to the lack of adequate controls, questioned costs for overpayment of subsidy were identified above. Recommendation The Commission should establish procedures to ensure participant eligibility is documented and reviewed annually. Periodic internal review of tenant files would help identify errors/omissions in a timely manner. Views of Responsible Officials and Planned Corrective Actions DHC continues to improve its administration of the Low income Public Housing Program. Recently, Detroit Housing Commission instated an in house compliance department to improve the documentation for participant eligibility. Also, DHC has solicited an independent third party consulting firm to perform annual recertifications for families currently considered to be in delinquent status within the DHC managed portfolios. This firm has been charged with the completion of annual recertifications for families with the upcoming anniversary months of January 2020 and February 2020. By recertifying families with future anniversary dates, it ensures timely completion and will provide DHC?s tenant files with support for participant eligibility.

CFDA Number, Federal Agency, and Program Name U.S. Department of Housing and Urban Development Direct Programs Low income Public Housing and Development 14.850a and 14.850b Federal Award Identification Number and Year Not applicable Pass through Entity Not applicable Finding Type Significant deficiency in internal controls over special tests and provisions for public housing waiting lists Repeat Finding Yes 2016 004; 2015 004 Criteria In accordance with 24 CFR 960.202 through 960.206, the public housing a uthority (PHA), the Commission, must establish and adopt written policies for admission of tenants and should follow its own tenant selection policies in placing applicants on the waiting list and in selecting applicants from the waiting list to become tenants. Condition Separate waiting lists are maintained at each individual property; however, there was an instance in which the selections of applicants from the waiting list at one of the Commission's properties was not in accordance with the Commission's policies. Questioned Costs Not applicable Identification of How Questioned Costs Were Computed Not applicable Context A sample of 40 tenants were selected from DHC's 16 low rent properties. We noted that, for tenants selected from the Woodbridge property waiting list, seven applicants did not have sufficient support for selection. Cause and Effect The alternative management entity (AME) that manages the property where the errors were identified did not have adequate systems and controls in place to ensure tenants are properly pulled from the waitlist. As a result, some tenants may be pulled from the waitlist out of order or without sufficient support. Recommendation The Commission should enforce procedures that would provide adherence to the tenant selection policies by all alternative management entities. Views of Responsible Officials and Corrective Action Plan DHC has separate waiting lists that are maintained at each individual property. The error that occurred was identified at only one location, Woodbridge Senior Village, which is managed by an alternative management entity (AME). On November 26, 2019, DHC mandated and received a plan of action from the AME to ensure a proper protocol when selecting applications from the AME's waitlist. The plan was to outline the needs of the site that were lacking in order to successfully select its applicants correctly through DHC?s management information system, YARDI.

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