Virginia Housing Development Authority

Eligibility Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871/14.879/14.EHV Federal Award Identification Number and Year: VA901; 2024-2025 Award Period: July 1, 2024 through June 30, 2025  Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: 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 982.516). (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 982.516). (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 section 5.601 et seq.) (24 CFR sections 982.201, 982.515, and 982.516). 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) one or more release forms to allow the PHA to obtain information from third parties; (b) a federally prescribed general release form for employment information; and (c) a privacy notice. Under some circumstances, other members of the family are required to sign these forms (24 CFR sections 5.212 and 5.230). (4) Use the Enterprise Income Verification (EIV) system in its entirety to verify tenant employment and income information during mandatory reexaminations of family composition and income in accordance with 24 CFR 5.233; and reduce administrative and subsidy payment errors in accordance with 24 CFR 5.236 and other administrative guidance issued by HUD. (5) Select tenants from the HCVP waiting list (see III.N.1, “Special Tests and Provisions – Selection from the Waiting List”) (24 CFR sections 982.202 through 982.207). (6) 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 section 982.516). 2 CFR 200.303 requires that recipients and subrecipients receiving federal awards establish, document and maintain effective internal control over the federal awards that provides reasonable assurance that the recipient or subrecipient is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition/Context: During our testing of 60 tenant files for eligibility requirements, we noted the following in 7 files: - 3 of 60 files tested did not have proper supporting documentation for income reported on the HUD-50058. - 2 of 60 files tested did not have proper supporting documentation for assets reported on the HUD-50058. - 1 of 60 files tested did not have proper supporting documentation for expenses/deductions reported on the HUD-50058. - 5 of 60 files tested had incorrectly calculated HAP due to missing or incorrect supporting documentation. - 2 of 60 files tested did not have proper supporting documentation showing that family income and composition were reexamined annually. - 2 of 60 files tested did not contain a HUD-9886 form signed by all members of the household over 18. - 2 of 60 files selected did not include the completed housing specialist checklist (or similar compensating internal control). Questioned costs: $3,839 Cause: As a balance-of-state PHA, Virginia Housing administers the HCV program through 26 Local Housing Agencies (LHAs), each with varying staffing levels, internal review capacity, and documentation practices. During the audit period, eligibility determinations and income verifications were primarily processed at the local level, with oversight conducted through periodic monitoring and quality control reviews. Certain documentation and calculation controls were not sufficiently standardized or centrally validated prior to final processing. In addition, enhancements to quality control procedures implemented during the fiscal year were not fully operational for the files selected for audit testing. These factors contributed to inconsistencies in documentation completeness and calculation accuracy. Virginia Housing will continue to evaluate the effectiveness of the enhanced QC process, monitor error trends, and assess whether additional measures are warranted. Effect: The lack of internal controls in place over the eligibility process could increase the risk of errors in the housing assistance payment calculations. Repeat Finding: This finding is a repeat finding in the immediate prior year over eligibility requirements. Prior year finding numbers were 2024-001 and 2023-001. Recommendation: We recommend that the Authority review its Agent’s internal controls and policies related to HUD tenant eligibility requirements to ensure that all required documentation is obtained and maintained at the time of recertification. We further recommend that the Authority implements uniform documentation standards and requirements across all local housing agencies (LHAs) and agents of the Authority. Views of responsible officials: There is no disagreement with the audit finding.

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Housing Voucher Cluster – Assistance Listing No. 14.871/14.879/14.EHV – Eligibility Recommendation: We recommend that the Authority review its Agent’s internal controls and policies related to HUD tenant eligibility requirements to ensure that all required documentation is obtained and maintained at the time of recertification. We further recommend that the Authority implements uniform documentation standards and requirements across all local housing agencies (LHAs) and agents of the Authority. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Virginia Housing is evaluating enhancements to its quality control framework. This evaluation includes reviewing best practices from peer agencies with strong compliance outcomes and consistent audit performance. Many of these agencies utilize more structured oversight models that provide independent file review functions while maintaining coordination with program operations. Virginia Housing is currently assessing options that may include: - Expanding centralized quality control review functions - Increasing file sampling and review throughout the year - Improving monitoring of HUD-9886 and third-party verification documentation Implementation details will be finalized following this evaluation process and may include structural adjustments, enhanced tools, or expanded oversight protocols. Name of the contact person responsible for corrective action: Yilla Smith, Director, Housing Opportunity Programs and Initiatives Planned completion date for corrective action plan: December 31, 2026

2024-001

HQS Annual and Failed Inspections Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871/14.879/14.EHV Federal Award Identification Number and Year: VA901; 2024-2025 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: The PHA must inspect the unit leased to a family in accordance with it’s Administrative Plan to determine if the unit meets Housing Quality Standards (HQS) and the PHA must conduct quality control re-inspections. The PHA must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)). Per the Authority's Administrative Plan, all units must pass an HQS inspection prior to the approval of a lease and at least once every 12 months (annually) during the term of the contract, and at other times as needed, to determine that the unit meets HQS. Additionally, per the Authority’s Administrative Plan, both the family and the owner must be given reasonable notice for all inspections. For units under HAP contract that fail to meet HQS, if the reported deficiency is life-threatening, the PHA must, within 24 hours of notification, both inspect the housing unit and notify the owner if the life-threatening deficiency is confirmed. The owner must then make the repairs within 24 hours of PHA notification. If the reported deficiency is non-life-threatening, the PHA must, within 15 days of notification, both inspect the unit and notify the owner if the deficiency is confirmed. The owner must then make the repairs within 30 days of notification from the PHA or within any PHA-approved extension. (24 CFR section 982.405(d)). 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 (24 CFR sections 982.158(d) and 982.404). Condition/Context: During our testing of 60 tenant files for HQS annual inspection requirements, we noted the following in 11 files: - 11 of 60 files tested included units where inspections were not performed annually in accordance with the administrative plan. During our testing of 60 tenant files for HQS failed inspections, we noted the following in 12 files: - 12 of 60 files tested had a reinspection that was not performed timely (30 days or 24 hours, depending on the cited deficiency). - 8 of 60 files tested where the Authority failed to process abatement of units after the second failed inspection. - 2 of 60 files tested where the Authority failed to enforce family obligations for tenant responsible failures. Questioned costs: $15,129 Cause: During the audit period, inspection scheduling, reinspection follow-up, and abatement processing were managed across multiple LHAs with differing capacity levels and geographic challenges, particularly in rural service areas. Oversight relied on decentralized systems and local workflows, which affected the consistency of inspection tracking, timeliness, and enforcement actions. In response, Virginia Housing launched a new statewide inspection model on April 1, 2025, which includes engagement of a third-party inspection vendor and strengthened centralized oversight. This new model is intended to improve inspection scheduling consistency, reinspection timeliness, and enforcement of abatement requirements. Since implementation, the Authority has begun to observe improved coordination and monitoring of inspection activities. However, because the new model was implemented near the end of the audit period, enhancements were not fully reflected in the files selected for testing. Virginia Housing will continue to monitor performance metrics and evaluate the effectiveness of this revised inspection framework to ensure sustained compliance and improved outcomes. Effect: The lack of internal controls in place over the HQS requirements could result in program participants living in unsafe housing, as well as housing assistance payments being paid for units that are not in compliance with HQS requirements. Repeat Finding: This finding is a repeat finding in the immediate prior year. Prior year finding numbers were 2024-003 and 2023-003. Recommendation: We recommend that the Authority reviews its Agent’s processes related to annual and failed HQS inspections to ensure that inspections are completed in a timely manner and in compliance with HUD and the Authority’s requirements. We further recommend that the Authority review its Agent’s procedures to ensure appropriate follow-up is performed to confirm that tenants or landlords make required corrections timely, or that housing assistance payments (HAP) are properly abated for the unit until such corrections are made. We recommend the Authority work with its Agent’s to alleviate any inspector shortage. Views of responsible officials: There is no disagreement with the audit finding.

Housing Voucher Cluster – Assistance Listing No. 14.871/14.879/14.EHV – HQS Annual and Failed Inspections Recommendation: We recommend that the Authority reviews its Agent’s processes related to annual and failed HQS inspections to ensure that inspections are completed in a timely manner and in compliance with HUD and the Authority’s requirements. We further recommend that the Authority review its Agent’s procedures to ensure appropriate follow up is performed to confirm that tenants or landlords make required corrections timely, or that housing assistance payments (HAP) are properly abated for the unit until such corrections are made. We recommend the Authority work with its Agent’s to alleviate any inspector shortage. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The Authority has taken proactive steps to enhance its inspection process to ensure compliance with HUD requirements. As part of these efforts, the Authority has contracted with a third-party vendor to manage all inspection activities statewide. This partnership is designed to improve the efficiency, consistency, and timeliness of inspections, strengthen follow-up procedures for failed inspections, and support more uniform enforcement of abatement requirements when necessary. Full implementation of the third-party inspection services occurred on April 1, 2025, approximately two months prior to the end of the audit reporting period. While the timing limited the impact reflected in this audit cycle, the Authority believes this represents an effective control enhancement. Virginia Housing will continue to monitor inspection timeliness, reinspection compliance, and abatement processing trends to evaluate performance and confirm that this action results in measurable improvement in future audit outcomes. Virginia Housing is evaluating the possibility of implementing a tracking dashboard for inspection timelines and abatement periods and will continue to meet with the third-party vendor bi-weekly to ensure progress is made. Name of the contact person responsible for corrective action: Yilla Smith, Director, Housing Opportunity Programs and Initiatives

2024-003

Waiting List Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871/14.879/14.EHV Federal Award Identification Number and Year: VA901; 2024-2025 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: The PHA must have written policies in its HCVP administrative plan for selecting applicants from the waiting list and PHA documentation must show that the PHA follows these policies when selecting applicants for admission from the waiting list. (24 CFR sections 5.410, 982.54(d), and 982.201 through 982.207). When a family has been selected from the waiting list, the PHA must notify the family (24 CFR 982.544(a)). Each family member, regardless of age, must submit the following evidence to the responsible entity: For U.S. citizens or U.S. nationals, the evidence consists of a signed declaration of U.S. citizenship or U.S. nationality. The responsible entity may request verification of the declaration by requiring presentation of a United States passport or other appropriate documentation, as specified in HUD guidance. (24 CFR 5.508) Condition/Context: During our testing of 74 tenant files for waiting list requirements, we noted the following in 18 files: - 1 out of 74 files did not include documentation that the Authority notified the applicant that their name had reached the top of the waiting list. - 5 out of 74 files did not include documentation confirming that the applicants were admitted to the program in accordance with the applicant selection policies found within the Administrative Plan. - 7 out of 74 files contained instances where the application date per the waiting list did not agree to the date per the application. - 2 out of 74 files did not include a signed Declaration 214 for all members of the household. - 1 out of 74 files did not include a copy of the executed voucher. - 1 out of 74 files did not include a copy of the signed HAP contract. - 1 out of 74 files could not be tested, as support was not provided. Questioned costs: None Cause: Waiting list administration and applicant selection processes were conducted at the local agency level. While policies were established in the Administrative Plan, documentation practices varied across LHAs, particularly regarding referrals for special purpose vouchers. Controls to verify documentation at the point of selection were not consistently standardized across agencies. As a result, certain required documents were either incomplete or not retained in a manner sufficient for audit verification. Effect: The lack of internal controls over the waiting list requirements could result in individuals not being selected or housed in accordance with the Authority’s and HUD’s requirements. Repeat Finding: This finding is a repeat finding in the immediate prior year. Prior year finding number was 2024-005. Recommendation: We recommend the Authority review its Agent’s internal controls over the waiting list process to ensure all documentation is maintained at the time each applicant is selected from the waiting list and that applicants are added to the waitlist accurately. We recommend the Authority implements uniform documentation standards and requirements across all local housing agencies (LHAs) and agents of the Authority. Views of responsible officials: There is no disagreement with the audit finding.

Housing Voucher Cluster – Assistance Listing No. 14.871/14.879/14.EHV – Waiting List Recommendation: We recommend the Authority review its Agent’s internal controls over the waiting list process to ensure all documentation is maintained at the time each applicant is selected from the waiting list and that applicants are added to the waitlist accurately. We recommend the Authority implements uniform documentation standards and requirements across all local housing agencies (LHAs) and agents of the Authority. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The Authority recognizes the need to strengthen documentation controls at the point of applicant selection. As part of its broader compliance review, the Authority is evaluating improvements to waiting list procedures. This includes reviewing documentation requirements, selection verification protocols, and file completeness standards. Enhancements under consideration include: - Providing training to LHAs on waiting list management, referral processes, extension documentation, and documentation retention requirements - Incorporating a quality control (QC) review of referrals to special purpose voucher programs to ensure documentation, eligibility verification, and notification records are consistently maintained - Strengthening monitoring procedures to validate that required documentation is retained at the time of selection Name of the contact person responsible for corrective action: Yilla Smith, Director, Housing Opportunity Programs and Initiatives Planned completion date for corrective action plan: December 31, 2026

2024-005

Housing Assistance Payments Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871/14.879/14.EHV Federal Award Identification Number and Year: VA901; 2024-2025 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: The PHA must pay a monthly HAP on behalf of the family that corresponds with the amount on line 12u of the HUD-50058. This HAP amount must be reflected on the HAP contract and HAP register (24 CFR section 982.158 and 24 CFR Part 982, Subpart K). A payment standard is used to calculate the monthly housing assistance payment for a family. The “payment standard” is the maximum monthly subsidy payment. The PHA shall pay a monthly housing assistance payment on behalf of the family that is equal to the lower of: (1) The payment standard for the family minus the total tenant payment; or (2) The gross rent minus the total tenant payment. The payment standard for the family is the lower of: (i) The payment standard amount for the family unit size; or (ii) The payment standard amount for the size of the dwelling unit rented by the family. 24 CFR 982.505. PHAs must adopt a payment standard schedule that establishes voucher payment standard amounts for each area in the PHA jurisdiction. PHAs must establish a payment standard amount for each unit size, measured by number of bedrooms (zero-bedroom, one-bedroom, and so on). These payment standard amounts comprise the PHA's payment standard schedule. Generally, PHAs may set payment standards within the basic range, which is 90 percent to 110 percent, of the HUD published Fair Market Rents (FMR) or Small Area FMRs (SAFMRs), whichever is applicable, without HUD notification or approval. PHAs may set payment standards outside of the basic range with HUD notification or HUD approval (24 CFR 982.503(d)). Condition/Context: During our testing of 60 tenant files for housing assistance payments requirements, we noted the following in 5 files: - 3 out of 60 files where the correct HAP contract could not be provided - 3 out of 60 files where the incorrect payment standard was used Questioned costs: None Cause: As a balance-of-state PHA, Virginia Housing administers the HCV program through 26 Local Housing Agencies (LHAs), each with varying staffing levels, internal review capacity, and documentation practices. During the audit period, HAP calculations and payment standard applications were primarily processed at the local level, with oversight conducted through periodic monitoring and quality control reviews. Certain documentation and calculation controls were not sufficiently standardized or centrally validated prior to final processing. In addition, enhancements to quality control procedures implemented during the fiscal year were not fully operational for the files selected for audit testing. These factors contributed to inconsistencies in documentation completeness and calculation accuracy. Virginia Housing will continue to evaluate the effectiveness of the enhanced QC process, monitor error trends, and assess whether additional measures are warranted. Effect: The lack of internal controls over the housing assistance payment (HAP) process could result in incorrect HAP being calculated or paid on behalf of program participants. Repeat Finding: No Recommendation: We recommend the Authority strengthen its controls to ensure proper documentation is maintained and that HAP contracts, payment standards, and HAP amounts are accurately applied and reviewed for compliance by its Agents. Views of responsible officials: There is no disagreement with the audit finding.

Housing Voucher Cluster – Assistance Listing No. 14.871/14.879/14.EHV – Housing Assistance Payments Recommendation: We recommend the Authority strengthen its controls to ensure proper documentation is maintained and that HAP contracts, payment standards, and HAP amounts are accurately applied and reviewed for compliance by its Agents. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Virginia Housing is evaluating enhancements to its quality control framework. This evaluation includes reviewing best practices from peer agencies with strong compliance outcomes and consistent audit performance. Many of these agencies utilize more structured oversight models that provide independent file review functions while maintaining coordination with program operations. Virginia Housing is currently assessing options that may include: - Expanding centralized quality control review functions - Increasing file sampling and review throughout the year - Implementing additional HAP calculation validation steps - Enhancing payment standard cross-check procedures Implementation details will be finalized following this evaluation process and may include structural adjustments, enhanced tools, or expanded oversight protocols. Name of the contact person responsible for corrective action: Yilla Smith, Director, Housing Opportunity Programs and Initiatives Planned completion date for corrective action plan: December 31, 2026

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871/14.879/14.EHV Federal Award Identification Number and Year: VA901; 2023-2024 Award Period: July 1, 2023 through June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: 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 982.516). (2) 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 (24 CFR section 982.516). (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 section 5.601 et seq.) (24 CFR sections 982.201, 982.515, and 982.516). 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) one or more release forms to allow the PHA to obtain information from third parties; (b) a federally prescribed general release form for employment information; and (c) a privacy notice. Under some circumstances, other members of the family are required to sign these forms (24 CFR sections 5.212 and 5.230). (4) Use the Enterprise Income Verification (EIV) system in its entirety to verify tenant employment and income information during mandatory reexaminations of family composition and income in accordance with 24 CFR 5.233; and reduce administrative and subsidy payment errors in accordance with 24 CFR 5.236 and other administrative guidance issued by HUD. (5) Select tenants from the HCVP waiting list (see III.N.1, 􀍆Special Tests and Provisions 􀌽 Selection from the Waiting List􀍇) (24 CFR sections 982.202 through 982.207). (6) 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 section 982.516). Condition/Context: During our testing of 60 files for eligibility requirements, we noted the following in 9 files: - 5 of 60 files tested did not have proper supporting documentation for income reported on the HUD-50058. - 1 of 60 files tested did not have proper supporting documentation for assets reported on the HUD-50058. - 1 of 60 files tested did not have proper supporting documentation for expenses/deductions reported on the HUD-50058. - 6 of 60 files tested had incorrectly calculated HAP due to missing or incorrect supporting documentation. - 2 of 60 files tested did not contain a HUD-9886 signed by all members of the household over 18. - 1 of 60 files selected did not include the completed housing specialist checklist. The samples were statistically valid samples. Questioned costs: $12,622 Cause: As a balance of state PHA, the Authority is responsible for ensuring the Housing Choice Voucher (HCV) program is administered in compliance with Federal regulations across Virginia. The Authority has partnered with 26 local housing agencies (LHAs) throughout the state to administer the program. However, due to the number of LHAs, inconsistencies have arisen in quality control practices. These variations stem from differences in agency size, staffing structures, geographic service areas, and overall program capacity. To address these challenges, the Authority has taken a methodical and intentional approach to improving the HCV program while balancing the need for timely compliance with federal regulations. As part of these efforts, quality control plans have been implemented to enhance program oversight. However, these plans were introduced after the audit review period and, therefore, were not applicable to the 60 files reviewed by the audit team. Effect: The Authority is not in compliance with HUD requirements. Repeat Finding: This finding is a repeat finding in the immediate prior year over eligibility requirements. Prior year finding number was 2023-001 with exceptions related to internal controls and missing files. Recommendation: We recommend that the Authority reviews its internal controls and policies over HUD’s tenant eligibility requirements to ensure all documentation is maintained at the time of recertification. Views of responsible officials: There is no disagreement with the audit finding.

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Housing Voucher Cluster – Assistance Listing No. 14.871/14.879/14.EHV - Eligibility Recommendation: We recommend that the Authority reviews its internal controls and policies over HUD’s tenant eligibility requirements to ensure all documentation is maintained at the time of recertification. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: On June 30, 2024, Virginia Housing implemented a comprehensive quality control process (previously submitted to HUD) designed to improve oversight and ensure compliance with HUD requirements. This policy was introduced following the audit review; therefore, it was not applicable to the 60 files reviewed by the audit team. As part of this initiative, Virginia Housing adopted a detailed checklist system to guide the recertification process. This checklist outlines each step, establishes clear deadlines, and assigns responsibility to designated staff to promote accuracy, accountability, and timely completion. Virginia Housing is also committed to maintaining staff proficiency through comprehensive training initiatives. Annual training is provided in partnership with Nan McKay to ensure both Virginia Housing and Local Housing Authority (LHA) staff adhere to consistent income calculation practices. In addition, all LHA staff were required to complete specialized training in 2024 on HCVP Specialist duties, HQS Inspections, and HCVP Program Management. To further support staff development, Virginia Housing will conduct a series of on-site training sessions from March 2025 through November 2025. These sessions will cover key topics such as HCVP Specialist Training, HCVP/PH Rent Calculation, Fair Housing and Reasonable Accommodations, Customer Service and Engagement, and HCVP program management and oversight. In preparation for the Housing Opportunity Through Modernization Act (HOTMA) implementation, Virginia Housing has updated its Administrative Plan to align with the required changes, including those related to income and asset determinations. To ensure staff readiness, Virginia Housing’s Program Compliance Officers (PCOs) attended a two-day HOTMA Summit in February 2024, equipping them with the knowledge needed to effectively implement these changes. Of the 60 files tested one (1) did not have proper supporting documentation for expenses/deductions reported on the HUD-50058, Virginia Housing. The local agent has corrected this file as of March 21, 2025. Virginia Housing remains committed to maintaining compliance, improving internal controls, and ensuring all staff are equipped with the tools and knowledge necessary to uphold program integrity. Name(s) of the contact person(s) responsible for corrective action: Yilla Smith, Director, Housing Opportunity Programs and Initiatives Planned completion date for corrective action plan: December 31, 2025

2023-001

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871/14.879/14.EHV Federal Award Identification Number and Year: VA901; 2023-2024 Award Period: July 1, 2023 through June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: The PHA must determine that the rent to the owner is reasonable at the time of initial leasing. Also, the PHA must determine reasonable rent during the term of the contract (a) before any increase in the rent to owner, and (b) at the HAP contract anniversary if there is a 5 percent decrease in the published Fair Market Rent in effect 60 days before the HAP contract anniversary. The PHA must maintain records to document the basis for the determination that rent to owner is a reasonable rent (initially and during the term of the HAP contract) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). Condition/Context: During our testing of 100 files for reasonable rent requirements, we noted the following in 4 files: - 4 of 100 files tested had a rent reasonableness determination performed after the effective date The samples were statistically valid samples. Questioned costs: $40,800 Cause: As a balance of state PHA, the Authority is responsible for ensuring the Housing Choice Voucher (HCV) program is administered in compliance with Federal regulations across Virginia. The Authority has partnered with 26 local housing agencies (LHAs) throughout the state to administer the program. However, due to the number of LHAs, inconsistencies have arisen in quality control practices. These variations stem from differences in agency size, staffing structures, geographic service areas, and overall program capacity. To address these challenges, the Authority has taken a methodical and intentional approach to improving the HCV program while balancing the need for timely compliance with federal regulations. As part of these efforts, quality control plans have been implemented to enhance program oversight. However, these plans were introduced after the audit review period and, therefore, were not applicable to the 100 files reviewed by the audit team. Of the 100 files reviewed, four contained rent reasonableness determination documentation dated after the effective date. While this remains non-compliant, Virginia Housing views this as a positive indication of progress compared to previous audit findings. This improvement reflects the successful implementation of enhanced quality control measures, which have increased LHA file reviews and improved the correction of deficiencies. Effect: The Authority is not in compliance with HUD’s reasonable rent requirements. Repeat Finding: This finding is a repeat finding in the immediate prior year. Prior year finding number was 2023-002. Recommendation: We recommend that the Authority reviews its process over reasonable rent determination to ensure that it is performed timely (before the effective date of the rent payment) and that the approved rent is properly carried forward to the HUD-50058 and HAP contract/HAP contract amendment. Views of responsible officials: There is no disagreement with the audit finding.

Housing Voucher Cluster – Assistance Listing No. 14.871/14.879/14.EHV – Reasonable Rent Recommendation: We recommend that the Authority reviews its process over reasonable rent determination to ensure that it is performed timely (before the effective date of the rent payment) and that the approved rent is properly carried forward to the HUD-50058 and HAP contract/HAP contract amendment. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: As noted above, as part of its comprehensive quality control process (previously submitted to HUD), Virginia Housing developed and implemented a detailed checklist system to guide each step of the annual and interim reexamination processes, including rent reasonableness documentation. This policy was introduced after the audit review; therefore, it was not applicable to the files reviewed by the audit team. In addition, during this fiscal year, Virginia Housing has been actively developing standardized documents and processes for all LHAs to promote consistency and compliance. This initiative includes the creation of job aids and reference materials such as quick-reference guides and flowcharts to support staff in following correct procedures. These resources will be designed to improve staff understanding, streamline processes, and reduce errors. Of the 100 files reviewed, four contained rent reasonableness determination documentation dated after the effective date. While this remains non-compliant, Virginia Housing views this as a positive indication of progress compared to previous audit findings. This improvement reflects the successful implementation of enhanced quality control measures, which have increased LHA file reviews and improved the correction of deficiencies. To further support staff development and ensure continued compliance, Virginia Housing will provide a series of on-site training sessions from March 2025 through November 2025. These sessions will cover key topics such as HCVP Specialist Training, HCVP/PH Rent Calculation, Fair Housing and Reasonable Accommodations, Customer Service and Engagement, and HCVP program management and oversight. Name(s) of the contact person(s) responsible for corrective action: Yilla Smith, Director, Housing Opportunity Programs and Initiatives Planned completion date for corrective action plan: December 31, 2025

2023-002

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871/14.879/14.EHV Federal Award Identification Number and Year: VA901; 2023-2024 Award Period: July 1, 2023 through June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: The PHA must 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 re-inspections. The PHA must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)). Per the Authority's Administrative Plan, all units must pass an HQS inspection prior to the approval of a lease and at least once every 12 months during the term of the contract, and at other times as needed, to determine that the unit meets HQS (Chapter 8 of the Admin Plan). Per the Authority’s administrative plan, both the family and the owner must be given reasonable notice of all inspections. 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 (24 CFR sections 982.158(d) and 982.404). Condition/Context: During our testing of 60 files for annual HQS annual inspection requirements, we noted the following in 12 files: - 3 of 60 files tested did not document the completion of an HQS inspection during the fiscal year. - 7 of 60 files tested had inspections that were not performed annually. - 4 of 60 files tested did not maintain documentation that the landlord and tenant were notified of the upcoming inspection. During our testing of 60 HQS failed inspections, we noted the following in 8 files: - 7 of 60 files tested had a reinspection that was not performed timely (30 days or 24 hours, depending on the cited deficiency). - 3 of 60 files tested where the Authority failed to process abatement of units after the second failed inspection. - 3 of 60 files tested where the Authority did not maintain documentation that the landlord and tenant were notified of the failed inspection results. The samples were statistically valid samples. Questioned costs: $2,482 Cause: As a balance of state PHA, the Authority is responsible for ensuring the Housing Choice Voucher (HCV) program is administered in compliance with Federal regulations across Virginia. The Authority has partnered with 26 local housing agencies (LHAs) throughout the state to administer the program. However, due to the number of LHAs, inconsistencies in quality control practices have emerged. These variations result from differences in agency size, staffing structures, geographic service areas, and overall program capacity. The Authority has been actively working to improve the HCV program by taking a methodical approach, making intentional decisions about program enhancements while balancing the need for swift compliance with federal regulations. One significant challenge identified by LHAs is the capacity to conduct inspections, particularly for agencies located in rural areas, where coordinating all required inspections remained difficult. As part of these efforts, quality control plans have been implemented to ensure the timely and accurate completion of required inspections. In addition, the authority has acted by hiring a Housing Quality Officer and contracting with a third-party vender to conduct all required inspections for the program and enhance oversight of the inspection process (both previously shared with HUD). However, these plans were introduced after the audit review period and, therefore, were not applicable to the files reviewed by the audit team. Effect: The Authority is not in compliance with the HQS requirements set forth in the administrative plan. Repeat Finding: This finding is a repeat finding in the immediate prior year. Prior year finding number was 2023-003. Recommendation: We recommend that the Authority reviews its processes over annual and failed inspections to ensure that they are completed timely and in compliance with HUD’s requirements. We recommend the Authority review their procedures to ensure they are following up that the tenants or landlords are making corrections timely or properly abating HAP for the unit until corrections are made. Views of responsible officials: There is no disagreement with the audit finding.

Housing Voucher Cluster – Assistance Listing No. 14.871/14.879/14.EHV – HQS Annual and Failed Inspections Recommendation: We recommend that the Authority reviews its processes over annual and failed inspections to ensure that they are completed timely and in compliance with HUD’s requirements. We recommend the Authority review their procedures to ensure they are following up that the tenants or landlords are making corrections timely or properly abating HAP for the unit until corrections are made. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The Authority has taken proactive steps to enhance its inspection process to ensure compliance with HUD requirements. As part of these efforts, quality control plans have been implemented to ensure the timely and accurate completion of required inspections. In addition, the authority has taking action hiring a Housing Quality Officer to provide oversight of the inspection process (both previously shared with HUD). However, these plans were introduced after the audit review period and, therefore, were not applicable to the files reviewed by the audit team. To further address concerns regarding the timeliness and follow-up of annual and failed inspections, the Authority has contracted with a third-party vendor to manage all inspection activities. This partnership aims to improve the efficiency and effectiveness of inspections, ensuring that required corrections are made promptly. Full implementation of the third-party inspection services is scheduled to begin on April 1, 2025, with the Authority conducting ongoing oversight to ensure the vendor's adherence to HUD standards and internal quality control measures. Name(s) of the contact person(s) responsible for corrective action: Yilla Smith, Director, Housing Opportunity Programs and Initiatives Planned completion date for corrective action plan: May 1, 2025

2023-003

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871/14.879/14.EHV Federal Award Identification Number and Year: VA901; 2023-2024 Award Period: July 1, 2023 through June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Per the Authority’s administrative plan, units sampled for quality control inspections must only include units that have been inspected within the preceding 3 months. Condition/Context: During our testing of 31 files for Quality-Control Inspection requirements, we noted the following in 2 files: - 2 of 31 inspections tested were performed more than 3 months after the initial inspection. The samples were statistically valid samples. Questioned costs: None Cause: As a balance of state PHA, the Authority is responsible for ensuring the Housing Choice Voucher (HCV) program is administered in compliance with Federal regulations across Virginia. The Authority has partnered with 26 local housing agencies (LHAs) throughout the state to administer the program. However, due to the number of LHAs, inconsistencies in quality control practices have emerged. These variations result from differences in agency size, staffing structures, geographic service areas, and overall program capacity. The Authority has been actively working to improve the HCV program by taking a methodical approach, making intentional decisions about program enhancements while balancing the need for swift compliance with federal regulations. One significant challenge identified by LHAs is the capacity to conduct inspections, particularly for agencies located in rural areas, where coordinating all required inspections remained difficult. Effect: The Authority is not in compliance with their Administrative Plan. Repeat Finding: This finding is a repeat finding in the immediate prior year. Prior year finding number was 2023-003. Recommendation: We recommend that the Authority review its process over quality-control inspections to ensure they are completed timely. Views of responsible officials: There is no disagreement with the audit finding.

Housing Voucher Cluster – Assistance Listing No. 14.871/14.879/14.EHV – Quality- Control Inspections Recommendation: We recommend that the Authority review its process over quality control inspections to ensure they are completed timely. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The Authority has taken proactive steps to enhance its inspection process to ensure compliance with HUD requirements. As part of these efforts, quality control plans have been implemented to ensure the timely and accurate completion of required inspections. In addition, the authority has taking action hiring a Housing Quality Officer to provide oversight of the inspection process (both previously shared with HUD). However, these plans were introduced after the audit review period and, therefore, were not applicable to the files reviewed by the audit team. As noted above, the Authority has contracted the services of a third-party vendor to complete all inspections, including quality control inspections. This partnership aims to improve the efficiency and effectiveness of inspections, ensuring that required corrections are made promptly. Full implementation of the third-party inspection services is scheduled to begin on April 1, 2025, with the Authority conducting ongoing oversight to ensure the vendor's adherence to HUD standards and required quality control policies. Name(s) of the contact person(s) responsible for corrective action: Yilla Smith, Director, Housing Opportunity Programs and Initiatives Planned completion date for corrective action plan: May 1, 2025

2023-003

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871/14.879/14.EHV Federal Award Identification Number and Year: VA901; 2023-2024 Award Period: July 1, 2023 through June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: When a family has been selected from the waiting list, the PHA must notify the family (24 CFR 982.544(a)). Condition/Context: During our testing of 60 files for waiting list requirements, we noted the following in 2 files: - 2 out of 60 files did not include documentation that the Authority notified the applicant that their name had reached the top of the waiting list. The samples were statistically valid samples. Questioned costs: None Cause: As a balance of state PHA, the Authority is responsible for ensuring the Housing Choice Voucher (HCV) program is administered in compliance with Federal regulations across Virginia. The Authority has partnered with 26 local housing agencies (LHAs) throughout the state to administer the program. However, due to the number of LHAs, inconsistencies in quality control practices have emerged. These variations result from differences in agency size, staffing structures, geographic service areas, and overall program capacity. The Authority has been actively working to improve the HCV program by taking a methodical approach, making intentional decisions about program enhancements while balancing the need for swift compliance with federal regulations. Effect: The Authority is not in compliance with HUD requirements. Repeat Finding: No Recommendation: We recommend that the Authority review its internal controls over the waiting list process to ensure all documentation is maintained at the time each applicant is selected from the waiting list. Views of responsible officials: There is no disagreement with the audit finding.

Housing Voucher Cluster – Assistance Listing No. 14.871/14.879/14.EHV – Waiting List Recommendation: We recommend that the Authority review its internal controls over the waiting list process to ensure all documentation is maintained at the time each applicant is selected from the waiting list. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Virginia Housing is committed to strengthening its internal controls over the waiting list process to ensure all required documentation is properly maintained at the time each applicant is selected. To address this concern, Virginia Housing has been conducting a comprehensive review of its current procedures to identify gaps and implement improvements that align with HUD requirements. As part of this effort, Virginia Housing is actively developing standardized documents and processes for all LHAs to promote consistency and enhance compliance. This initiative includes the creation of detailed job aids and reference materials such as quick reference guides and flowcharts. These resources are designed to improve staff understanding of proper waiting list procedures, reinforce documentation requirements, and reduce errors. Name(s) of the contact person(s) responsible for corrective action: Yilla Smith, Director, Housing Opportunity Programs and Initiatives Planned completion date for corrective action plan: December 31, 2025

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Choice Voucher Cluster Assistance Listing Number: 14.871/14.879/14.EHV Federal Award Identification Number and Year: VA901; 2022-2023 Award Period: July 1, 2022 through June 30, 2023 Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: The PHA must determine that the rent to the owner is reasonable at the time of initial leasing. Also, the PHA must determine reasonable rent during the term of the contract (a) before any increase in the rent to owner, and (b) at the HAP contract anniversary if there is a 5 percent decrease in the published Fair Market Rent in effect 60 days before the HAP contract anniversary. The PHA must maintain records to document the basis for the determination that rent to owner is a reasonable rent initially and during the term of the HAP contract) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). Condition/Context: During our testing of 65 files for reasonable rent requirements, we noted the following in 16 files: - 3 of 65 files were unable to be tested, as the Authority was not able to locate any documentation for the rent determinations. - 5 of 65 files tested had a rent reasonableness determination performed after the effective date - 11 of 65 files tested had an approved reasonable rent that did not agree to the contract rent listed on the HUD-50058 or the contract rent per the HAP Contract/HAP Contract Amendment. The samples were statistically valid samples. Questioned costs: $22,602 Cause: As a balance of state PHA, the Authority is responsible for ensuring the Housing Choice Voucher (HCV) program is administered in compliance with Federal regulations across Virginia. The Authority has partnered with 29 local housing agencies (LHAs) hroughout the state to administer the program. Due to the number of LHAs there are inconsistencies among agencies on quality control practices. LHA’s differ in size, staffing patterns, geographic service area, and overall capacity to operate the program. In addition to these differences, the Authority and its partner agencies are still recovering from the lingering impacts of COVID-19. Staff turnover and retention have contributed to challenges in quality control practices. The Authority has actively worked to improve the HCV Program by taking a methodical approach, making intentional decisions about program improvements while balancing the need to make changes quickly to ensure compliance with federal regulations. Effect: The Authority is not in compliance with HUD’s reasonable rent requirements. Repeat Finding: No Recommendation: We recommend the Authority review their process over reasonable rent determination to ensure that it is done timely, and that the approved rent is properly carried forward to the HUD-50058 and HAP Contract/HAP Contract Amendment. Views of responsible officials: There is no disagreement with the audit finding.

Housing Choice Voucher Cluster – Assistance Listing No. 14.871/14.879/14.EHV Recommendation: We recommend the Authority review their process over reasonable rent determination to ensure that it is done timely, and that the approved rent is properly carried forward to the HUD-50058 and HAP Contract/HAP Contract Amendment. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The Authority has developed a checklist system for each step in the process for determining and documenting rent reasonableness. The checklist includes each step of the process, along with due dates, and responsible entities. As part of the development and implementation of the quality control process for the HAP process, noted above, the Authority will also include a process for ensuring approved rent reasonableness match contract rents on all supporting documentation. The Authority will implement monthly reviews of HUD-50058 forms, HAP contracts and rent reasonableness documentation by the Housing Choice Voucher Program Compliance Manager. The Authority PCOs and/or HCVP’s accounting staff will work closely together, coordinate and follow the procedures for correcting any issues identified during the reviews. The Authority will also develop and implement a monitoring plan to ensure Local Housing Agencies (LHAs) are correctly following all the Authority established policies and procedures and adhering to Federal Regulations. The monitoring plan will outline how The Authority will conducts a risk analysis to target monitoring resources to the highest risk LHAs. Name(s) of the contact person(s) responsible for corrective action: Yilla Smith, Director, Housing Opportunity Programs and Initiatives Planned completion date for corrective action plan: June 30, 2024

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Choice Voucher Cluster Assistance Listing Number: 14.871/14.879/14.EHV Federal Award Identification Number and Year: VA901; 2022-2023 Award Period: July 1, 2022 through June 30, 2023, VA901 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: The PHA must 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 re-inspections. The PHA must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)). Per the Authority's Administrative Plan, all units must pass an HQS inspection prior to the approval of a lease and at least once every 12 months during the term of the contract, and at other times as needed, to determine that the unit meets HQS (Chapter 8 of the Admin Plan). Condition/Context: During our testing of 40 files for annual HQS inspection requirements, we noted the following in 5 files: - 5 of 40 files tested had inspections that were not performed annually. During our testing of 25 quality-control inspections, we noted the following in 2 files: - 2 of 25 files tested had a QC inspection that was performed more than 90 days after the initial inspection. The samples were statistically valid samples. Questioned costs: None Cause: As a balance of state PHA, the Authority is responsible for ensuring the Housing Choice Voucher (HCV) program is administered in compliance with Federal regulations across Virginia. The Authority has partnered with 29 local housing agencies (LHAs) throughout the state to administer the program. Due to the number of LHAs there are inconsistencies among agencies on quality control practices. LHA’s differ in size, staffing patterns, geographic service area, and overall capacity to operate the program. In addition to these differences, the Authority and its partner agencies are still recovering from the lingering impacts of COVID-19. Staff turnover and retention have contributed to challenges in quality control practices. The Authority has actively worked to improve the HCV Program by taking a methodical approach, making intentional decisions about program improvements while balancing the need to make changes quickly to ensure compliance with federal regulations. Effect: The Authority is not in compliance with the HQS requirements set forth in the administrative plan. Repeat Finding: No Recommendation: We recommend the Authority review their processes over annual and qualitycontrol inspections to ensure they are completed timely and in compliance with HUD’s requirements. Views of responsible officials: There is no disagreement with the audit finding.

Housing Choice Voucher Cluster – Assistance Listing No. 14.871/14.879/14.EHV Recommendation: We recommend the Authority review their processes over annual and quality-control inspections to ensure they are completed timely and in compliance with HUD’s requirements. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The Authority has contracted the services of a third-party vendor to assist with completing overdue inspections. The Authority has also hired a Senior Quality Control Inspector to assist with the completion of overdue inspections. The Senior Quality Control Inspector will develop a Quality Control Plan by [date]. The Authority is currently making software upgrades to align with HUD’s National Standards for the Physical Inspection of Real Estate (NSPIRE). In addition, the Authority is assessing technology needs of inspectors and considering possible technological improvements. Currently, The Authority PCOs have begun to monitor late inspections monthly. PCOs work with the LHAs to develop a plan to address late inspections and include a due date. Name(s) of the contact person(s) responsible for corrective action: Yilla Smith, Director, Housing Opportunity Programs and Initiatives Planned completion date for corrective action plan: June 30, 2024.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Choice Voucher Cluster Assistance Listing Number: 14.871/14.879/14.EHV Federal Award Identification Number and Year: VA901; 2022-2023 Award Period: July 1, 2022 through June 30, 2023 Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: HQS Enforcement: The PHA must inspect the unit leased to a family at least biennially 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 (24 CFR sections 982.158(d) and 982.405(b)). Per the Housing Choice Voucher Program Guidebook and the Authority's administrative plan, QC inspections must be performed on a HQS inspection that is no older than 3 months at the time of reinspection. 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 (24 CFR sections 982.158(d) and 982.404). Condition/Context: During our testing of 25 files for HQS enforcement requirements, we noted the following in 6 files: - 5 of 25 files tested had a failed inspection that was not followed up on within the required time frame (either 24 hours or 30 days depending on the severity of the failures). - 6 out of 25 files tested where the Authority failed to process abatements for units that failed on the second inspection. - 5 out of 25 files tested where the Authority failed to enforce the family obligations for units that failed on the second inspection. The samples were statistically valid samples. Questioned costs: $13,701 Cause: As a balance of state PHA, the Authority is responsible for ensuring the Housing Choice Voucher (HCV) program is administered in compliance with Federal regulations across Virginia. The Authority has partnered with 29 local housing agencies (LHAs) throughout the state to administer the program. Due to the number of LHAs there are inconsistencies among agencies on quality control practices. LHA’s differ in size, staffing patterns, geographic service area, and overall capacity to operate the program. In addition to these differences, the Authority and its partner agencies are still recovering from the lingering impacts of COVID-19VHDA S. Staff turnover and retention have contributed to challenges in quality control practices. The Authority has actively worked to improve the HCV Program by taking a methodical approach, making intentional decisions about program improvements while balancing the need to make changes quickly to ensure compliance with federal regulations. Effect: The Authority is not in compliance with their Administrative Plan or HUD’s requirements over HQS enforcement. Repeat Finding: No Recommendation: We recommend the Authority review their process over HQS failed inspections to ensure they are following up timely on correction or properly abating HAP for the unit until correction. Views of responsible officials: There is no disagreement with the audit finding.

Housing Choice Voucher Cluster – Assistance Listing No. 14.871/14.879/14.EHV Recommendation: We recommend the Authority review their process over HQS failed inspections to ensure they are following up timely on correction or properly abating HAP for the unit until correction. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: As noted above, the Authority has contracted the services of a third-party vendor and hired a Senior Quality Control Inspector to assist with the completion of inspections. As part of the Quality Control Plan the Authority tracks failed inspections. In addition to monitoring failed inspections, The Authority has required trainings or HCVP Department staff and partner agency staff, including HQS standards and HUD’s National Standards for the Physical Inspection of Real Estate (NSPIRE). Name(s) of the contact person(s) responsible for corrective action: Yilla Smith, Director, Housing Opportunity Programs and Initiatives Planned completion date for corrective action plan: June 30, 2024