Hopewell Redevelopment and Housing Authority

ALN #14.871 Compliance Requirement: Eligibililty Type of Finding: Noncompliance, Significant Deficiency Condition: The Authority did not complete annual recertifications in accordance with HUD regulations and its Administrative Plan, resulting in incomplete or missing documentation necessary to support tenant eligibility and rent determinations. Criteria HUD regulations require public housing authorities to reexamine family income and composition at least once every twelve (12) months and to calculate tenant rent and housing assistance payments based on complete and accurate information (24 CFR §§ 982.516, 982.158, and 982.305). The Authority’s Administrative Plan further establishes requirements for maintaining complete tenant files, including documentation supporting income verification, rent reasonableness, utility allowances, and participant eligibility. Cause The cause of the condition was inadequate management oversight and quality control over the recertification process, resulting in required documentation not being obtained, reviewed, or retained in accordance with established policies and HUD requirements. Effect Failure to properly complete annual recertifications and maintain required supporting documentation increases the risk that tenant rent and housing assistance payments are calculated inaccurately and that ineligible households receive housing assistance. Additionally, incomplete files limit the Authority’s ability to demonstrate compliance with HUD regulations and its Administrative Plan. Questioned Costs No questioned costs were identified; however, unsupported payments were noted due to incomplete eligibility documentation. Context During audit fieldwork, sixty (60) HAP contract files were selected and examined for compliance with annual recertification requirements. Our testing identified pervasive instances of incomplete recertification documentation within the files reviewed. Recommendation The Authority should strengthen oversight and quality control procedures over the Housing Choice Voucher recertification process to ensure that annual recertifications are completed timely and that all required documentation is obtained, reviewed, and retained in accordance with HUD regulations and the Authority’s Administrative Plan.

Condition Testing of interfund receivable balances owed to the Low Rent Public Housing (LRPH) programs from the nonfederal program indicated potential unallowable uses of LRPH grant funds . Criteria The Operating Fund is designed to make financial assistance available to PHA's for the operation and management of public housing . The use of a centralized revolving fund allows the use of one program's cash to cover expenses of another program which is subsequently reimbursed within a reasonable amount of time. Inter-program due to and due from balances, not reconciled on a timely basis, indicate the existence of temporary loans and are unallowable. Cause The COCC program had not generated sufficient cash required to reimburse the revolving fund for expenses incurred on its behalf before the end of the operating cycle. Effect It appears LRPH funds in the amount of$616,585 were used to cover costs of non-federal programs. This is considered an unallowable use of grant funds and may be subject to repayment. Questioned Costs $616,585 Recommendation We recommend the Authority reconcile and settle interfund balances on a monthly basis . In addition , we recommend the Authority establish controls to restrict interfund transactions for which there is no certainty of reimbursement before the accounting period cut-off.

Condition The Authority failed to complete annual recertifications in accordance with its Administrative Plan and HUD regulations. Criteria PHAs are required to reexam ine family income and co mposition at least on ce every twelve (1 2) months and calcu late tenant rents an d housing assistance pa ymen ts in accordance with 24 CFR 98 2.516 . Cause The overall cause was a lack of management oversight and quality control over this program. Effect Failure to complete the annual recertification could lead to inappropriate tenant rent and housi ng assistance payment charges and/or ineligible tenants receiving assistance. Questioned Costs Questioned costs were $2 ,226 , the amount of ineligible housing assistance payments received during the fiscal year. Context During audit fieldwork, forty (40) HAP contract files from statistically valid samples were examined for compliance with annual tenant recertification requirements. Of the 40 HAP files examined, one tenant failed to complete the annual recertification, and continued to receive housing assistance payments for 8 months subsequent to the renewal date, despite abandoning the unit. Recommendation The Authority should implement greater oversight over the Housing Choice Voucher program to ensure that annual recertifications are completed time ly and accurately.

Finding No. 2022-001 Housing Choice Voucher, CFDA #14.871 Low Rent Public Housing, CFDA #14.850 Compliance Requirement: Activities Allowed or Unallowed Type of Finding: Noncompliance, Significant Deficiency Condition Testing of interfund receivable balances owed to the Housing Choice Voucher (HCV) and Low Rent Pubic Housing (LRPH) programs from the nonfederal programs indicated potential unallowable uses of HCV and LRPH grant funds. Criteria The HCV program is designed to assist very low-income families, the elderly, and the disabled to afford decent, safe and sanitary housing in the private market. The Operating Fund is designed to make financial assistance available to PHA's for the operation and management of public housing. The use of a centralized revolving fund allows the use of one program's cash to cover expenses of another program which is subsequently reimbursed within a reasonable amount of time. Inter-program due to and due from balances, not reconciled on a timely basis, indicate the existence of temporary loans and are unallowable. Cause The Business Activities and State and Local programs had not generated sufficient cash required to reimburse the revolving fund for expenses incurred on its behalf before the end of the operating cycle. Effect It appears HCV funds in the amount of $157,990 and LRPH funds in the amount of $836,990 were used to cover development costs of non-federal programs. This is considered an unallowable use of grant funds and may be subject to repayment. Questioned Costs N/A Recommendation We recommend the Authority reconcile and settle interfund balances on a monthly basis. In addition, we recommend the Authority establish controls to restrict interfund transactions for which there is no certainty of reimbursement before the accounting period cut-off.

Finding No. 2020-001 CFDA 14.850A - Eligibility: Tenant Compliance: Significant Deficiency CONDITION: The Authority's Public Housing program had several tenant files missing income verification checks using the Enterprise Income Verification system (EIV). CRITERIA: Tenants of the Public Housing program are required to be recertified annually in accordance with HUD regulations. Recertification guidelines require tenants reported incomes to be reconciled to the EIV system. Guidelines also require annual recertification documentation including privacy releases and citizenship status documentation. QUESTIONED COSTS: The amount of questioned costs could not be determined. CONTEXT: Forty tenant files were chosen at random using a statically valid sample. Of the forty tenant files examined, two files had income calculated incorrectly or insufficiently verified. EFFECT: The Housing Authority could be maintaining or accepting tenants who are not properly certified in accordance with HUD regulations and may not be paying the appropriate amount of rent. CAUSE: The overall cause was a lack of effective management oversight and quality control over this program. RECOMMENDATION: The Housing Authority should implement greater oversight over the Public Housing program tenant compliance and train employees on procedures mandated by HUD regarding tenant income verification and annual recertification.

Finding No. 2019-001 CFDA 14.850A - Eligibility: Tenant Compliance; Significant Deficiency CONDITION:The Authority's Public Housing program had several tenant files missing income verification checks using the Enterprise Income Verification system (EIV). CRITERIA: Tenants of the Public Housing program are required to be recertified annually in accordance with HUD regulations. Recertification guidelines require tenants reported incomes to be reconciled to the EIV system. Guidelines also require annual recertification documentation including privacy releases and citizenship status documentation. QUESTIONED COSTS:The amount of questioned costs could not be determined. CONTEXT: Forty tenant files were chosen at random using a statically valid sample. Of the forty tenant files examined, eight files had income calculated incorrectly or insufficiently verified. In addition, three tenants did not have existing or timely 9886 signatures, and one had not been recertified in a timely manner. EFFECT:The Housing Authority could be maintaining or accepting tenants who are not properly certified in accordance with HUD regulations and may not be paying the appropriate amount of rent. The overall cause was a lack of effective management oversight and quality control over this program. RECOMMENDATION: The Housing Authority should implement greater oversight over the Public Housing program tenant compliance and train employees on procedures mandated by HUD regarding tenant income verification and annual recertification.

Finding No. 2019-002 CFDA 14.850A - Other Non-compliance: HQS Quality Control; Significant Deficiency CONDITION: As part of managing the Public Housing program, the Authority is required to perform quality control reinspection's of Housing Quality Standard (HQS) inspections performed during the year. The Authority did not perform the required number of reinspection's during the year. CRITERIA: The Authority is required by HUD (24 CFR 985.2) to perform quality control inspections of HQS inspections performed during the year. QUESTIONED COSTS: The amount of questioned costs could not be determined. CONTEXT: Forty tenant files were chosen at random using a statically valid sample. Of the forty tenant files examined, five of them did not have inspections completed. EFFECT: The Housing Authority could be providing subsidy for units that are not properly certified in accordance with HUD regulations and may not meet the minimum Housing Quality Standards. CAUSE: The overall cause was a lack of effective management oversight and quality control over this program during a period of turnover. RECOMMENDATION: The Housing Authority should implement greater oversight over the Public Housing program and train employees on procedures mandated by HUD regarding program requirements.