Newport News Redevelopment and Housing Authority

Housing Voucher Cluster – HQS QC Inspections Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Federal Award Identification Number and Year: VA003, 2023-2024 Assistance Listing Number: 14.871/14.879/14.EHV Award Period: July 1, 2023 – December 31, 2024 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 at least biennially 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, the re-inspection must be performed within 3 months (90 days) of the original inspection. Condition: During our testing, we noted the Authority did not have adequate internal controls designed to ensure compliance over HQS quality control re-inspection requirements was met. Context: During our testing of 6 files for quality control re-inspections, we noted that 6 of the files contained re-inspections that were not performed within 3 months of the original inspection. 1 file did not list the QC inspector's name. 1 file had the same inspector for both the original and quality control reinspection. Additionally, we noted only 19 quality control re-inspections were performed for the 18 month period. Questioned costs: Unable to determine Cause: The staff performing the inspections did not properly use the Yardi software program available to conduct and document the inspection process. Additional training will be provided to staff. Effect: The Authority is not in compliance with HUD regulations. Repeat Finding: Yes, 2023-004. Recommendation: We recommend the Authority review their quality control re-inspection process to ensure the inspections are performed timely and in accordance with the SEMAP requirements. We recommend that the Authority utilize Yardi software to its full potential in terms of inspection documentation. Views of responsible officials: There is no disagreement with the audit finding.

2024 – 002 – Housing Voucher Cluster – HQS Enforcement - Failed Inspections Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Federal Award Identification Number and Year: VA003, 2023-2024 Assistance Listing Number: 14.871/14.879/14.EHV Award Period: July 1, 2023 – December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: 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) HAP's beginning no later than the first of the month following the specified correction period or must terminate the HAP contract. 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: During our testing, we noted the Authority did not have adequate internal controls designed to ensure compliance over HQS enforcement requirements was met. Context: During our testing of 15 failed HQS inspections, we noted 1 instance where HAP was not abated and the tenant did not change units. There was no documentation that the unit ever passed inspection. Additionally, we noted there only 94 failed inspections per the population received. Questioned costs: $5,915 Cause: The staff performing the inspections did not properly use the Yardi software program available to conduct and document the inspection process. Effect: The Authority is not in compliance with HUD regulations. Repeat Finding: Yes, 2023-004. Recommendation: We recommend the Authority review their failed inspection process to ensure that any abatement/contract modifications are performed timely and in accordance with the compliance requirements. We recommend that the Authority utilize Yardi software to its full potential in terms of inspection documentation. Views of responsible officials: There is no disagreement with the audit finding.

Housing Voucher Cluster - 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: VA003, 2023-2024 Award Period: July 1, 2023 – December 31, 2024 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 (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). (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 24CFR 5.233; and reduce administrative and subsidy payment errors in accordance with 24 CFR 5.236 and other administrative guidance issued by HUD. (5) Reexamine family income and composition at least once every 12months and adjust the tenant rent and housing assistance payment as necessary using the documentation from third party verification (24CFR section 982.516). Condition: During our testing, we noted the Authority did not have adequate internal controls designed to ensure compliance over eligibility requirements was met. Context: During our testing of 60 tenants for eligibility requirements, we noted the following: - 6 of 60 tenant files tested did not have a signed Declaration 214 for all members of the household - 12 of 60 tenant files tested did not have proper support for income - 12 of 60 tenant files had improperly calculated rent due to missing and/or incorrect support for income, assets or expenses - 9 of 60 tenant files tested did not have a signed HUD-9886 in place Questioned costs: $45,998. Cause: The Authority has had vacancies and turnover in the staff who perform recertification processes, resulting in these processes being performed by less experienced and trained staff. Effect: The Authority is not in compliance with HUD regulations over eligibility. This could have an impact on HAP calculations. Repeat Finding: Yes, 2023-003. Recommendation: We recommend the Authority review their recertification process to ensure that all Eligibility requirements are met and documented. Views of responsible officials: There is no disagreement with the audit finding.

Housing Voucher Cluster - HQS Biennial 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: VA003, 2023-2024 Award Period: July 1, 2023 – December 31, 2024 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 at least biennially 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)). Condition: During our testing, we noted the Authority did not have adequate internal controls designed to ensure compliance over HQS inspections requirements was met. Context: During our testing of 60 units for biennial HQS requirements, we noted the following: - 18 of 60 units tested did not have documentation of a completed HQS inspection within 24 months of the effective date. - 36 of 60 units tested did not have inspections performed on a biennial basis. - 1 of 60 inspections tested did not have an inspection report that was signed off as completed by the inspector. Questioned costs: Unable to determine Cause: The staff performing the inspections did not properly use the Yardi software program available to conduct and document the inspection process. Effect: The Authority is not in compliance with HUD regulations regarding HQS inspections. Repeat Finding: Yes, 2023-004. Recommendation: We recommend the Authority review their inspection process to ensure that inspections are performed timely and that all documentation is maintained within Yardi or the tenant file. We recommend the Authority hiring additional inspectors or a third-party company to perform inspections to ensure compliance. Views of responsible officials: There is no disagreement with the audit finding.

Housing Voucher Cluster - Reasonable Rent Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Federal Award Identification Number and Year: VA003, 2023-2024 Assistance Listing Number: 14.871/14.879/14.EHV Award Period: July 1, 2023 – December 31, 2024 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% 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 (24CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). Condition: During our testing, we noted the Authority did not have adequate internal controls designed to ensure compliance over reasonable rent requirements was met. Context: During our testing of 120 files for rent reasonableness requirements, we noted the following: - 60 out of 120 files did not have a tenant-signed lease amendment that tied to the approved rental request form. - 53 of 120 files tested did not have a rent reasonableness determination form completed before the rent effective date. - 44 of 120 files tested did not have a rent reasonableness determination form completed. Questioned costs: None Cause: The Authority has had turnover in the staff who perform the rent reasonableness determinations, resulting in these processes being performed by less experienced and trained staff. Effect: The Authority is not in compliance with HUD’s requirements over rent reasonableness. This could have an impact on HAP calculations. Repeat Finding: Yes, 2023-005. Recommendation: We recommend the Authority review their process and internal controls for rent reasonableness to ensure compliance with HUD requirements and their administrative plan. Views of responsible officials: There is no disagreement with the audit finding.

Housing Voucher Cluster – Waitlist – New Tenants Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Federal Award Identification Number and Year: VA003, 2023-2024 Assistance Listing Number: 14.871/14.879/14.EHV Award Period: July 1, 2023 – December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: The Authority must have written policies in its HCVP administrative plan for selecting applicants from the waiting list and Authority documentation must show that the Authority follows these policies when selecting applicants for admission from the waiting list. Except as provided in 24 CFR section 982.203 Special admission (non-waiting list), all families admitted to the program must be selected from the waiting list. “Selection” from the waiting list generally occurs when the Authority notifies a family whose name reaches the top of the waiting list to come in to verify eligibility for admission (24 CFR sections 5.410, 982.54(d), and 982.201 through 982.207). Condition: During our testing, we noted the Authority did not have adequate internal controls designed to ensure compliance over waitlist – new tenant requirements was met. Context: During our testing of 24 files for new tenants selected off of the waitlist, the Authority was unable to locate 1 file. Questioned costs: None Cause: The Authority has had vacancies and turnover in the staff who perform these processes, resulting in these processes being performed by less experienced and trained staff. Effect: The Authority is not in compliance with HUD regulations. Repeat Finding: No. Recommendation: We recommend the Authority review their process and internal controls for new tenants to ensure compliance with HUD requirements and their administrative plan. Views of responsible officials: There is no disagreement with the audit finding.

2023 – 001 – Low Rent Public Housing Eligibility Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Low Rent Public Housing Assistance Listing Number: 14.850 Federal Award Identification Number and Year: VA003, 2022-2023 Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: In accordance with Title 24 of the Code of Federal Regulations parts 5, 902, 960, 966, and 990, only eligible individuals should participate in the program and there should be evidence of eligibility determinations. The Authority has established an application and re-examination checklist to be used during the eligibility determination process to ensure that all required documents are maintained in the tenant’s file. Condition/Context: During our testing of five files for Eligibility requirements, we noted that two files did not contain the completed Public Housing Annual Recertification checklist. Questioned costs: None Cause: The Authority has had turnover in the staffing who perform eligibility determinations, resulting in eligibility determinations being performed by less experienced and trained staff. Effect: The Authority did not follow the internal controls designed to ensure compliance with Eligibility requirements. Repeat Finding: Yes, prior year finding 2022-001 Recommendation: We recommend the Authority reinforce the individuals completing eligibility determinations with additional training and supervision as well as re-emphasize the controls and procedures that should be followed when completing the determinations. Views of responsible officials: There is no disagreement with the audit finding.

2023 – 002 – Section 8 Project-Based Cluster Eligibility Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 8 Project-Based Cluster Assistance Listing Number: 14.249/14.182/14.195 Federal Award Identification Number and Year: VA003, 2022-2023 Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: In accordance with Title 24 of the Code of Federal Regulations parts 880 through 883, only eligible individuals should participate in the program and there should be evidence of eligibility determinations. The Authority has established a move-in and re-examination checklist to be used during the eligibility determination process to ensure that all required documents are maintained in the tenant’s file. Condition/Context: During our testing of five files for Eligibility requirements, we noted that one file did not contain the completed move-in or re-examination checklist. Questioned costs: None Cause: The Authority has had turnover in the staffing who perform eligibility determinations, resulting in eligibility determinations being performed by less experienced and trained staff. Effect: The Authority did not follow the internal controls designed to ensure compliance with Eligibility requirements. Repeat Finding: Yes, prior year finding 2022-002 Recommendation: We recommend the Authority reinforce the individuals completing eligibility determinations with additional training and supervision as well as re-emphasize the controls and procedures that should be followed when completing the determinations. Views of responsible officials: There is no disagreement with the audit finding.

2023 – 003 – Housing Voucher Cluster 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: VA003, 2022-2023 Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Material Weakness, Material Noncompliance (Modified Opinion) Criteria or specific requirement: Most PHAs devise their own application forms that are filled out by the PHA staff during an interview with the tenant. The head of the 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). 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). 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). (5) 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). Most PHAs devise their own application forms that are filled out by the PHA staff during an interview with the tenant. The head of the 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). 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). Condition: The Authority did not have sufficient internal controls over eligibility determinations to ensure compliance with HUD requirements.   Context: During our testing of 40 tenants for eligibility requirements, we noted the following: - 3 of 40 tenant files tested did not have a signed Declaration 214 for all members of the household - 11 of 40 tenant files tested did not have proper support for income - 6 of 40 tenant files tested did not have proper support for assets - 4 of 40 tenant files tested did not have proper support for expenses (deductions) - In total, 15 of 40 tenant files had improperly calculated rent due to missing and/or incorrect support for income, assets or expenses - 5 of 40 tenant files tested did not have a signed HUD-9886 in place - 11 of 40 tenant files tested did not have a HAP contract/HAP contract amendment on file - 2 of 40 tenant files tested had a HAP made on their behalf that did not match the HUD-50058 in effect Questioned costs: $45,541 Cause: The Authority has had vacancies and turnover in the staff who perform recertification processes, resulting in these processes being performed by less experienced and trained staff. Effect: The Authority is not in compliance with HUD regulations over Eligibility, which could have an impact on HAP calculations. Repeat Finding: No Recommendation: We recommend the Authority review their recertification process to ensure that all Eligibility requirements are met and all necessary documentation is maintained. We recommend the Authority review their processes to ensure that the HAP calculated on the HUD-50058 is the amount paid to the landlords. Views of responsible officials: There is no disagreement with the audit finding.

2023 – 004 – Housing Voucher Cluster - HQS 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: VA003, 2022-2023 Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Material Weakness, Material Noncompliance (Modified Opinion) Criteria or specific requirement: Housing Quality Standards Inspections 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 re-inspections. The PHA must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)). HQS Enforcement 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) HAP's beginning no later than the first of the month following the specified correction period or must terminate the HAP contract. 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: The Authority did not have sufficient internal controls over Housing Quality Standards to ensure compliance with HUD requirements. Context: During our testing of 40 tenants for Annual HQS requirements, we noted the following: - 13 of 40 units tested did not have documentation of a completed HQS inspection within 24 months of the effective date. - 30 of 40 units tested did not have inspections performed on a biennial basis. - 10 of 40 tenants tested did not have an inspection report that was signed off as completed by the inspector. During our testing of 9 failed inspections, we noted 4 instances where abatement was not properly started and 2 instances where the Authority failed to enforce the family obligation in a timely manner. During our testing of 4 quality control (QC) re-inspections, we noted 2 instances where the QC inspection was not performed within 3 months of the original inspection. 1 file did not list the QC inspector’s name. 2 files had the same QC inspector for both the original inspection and the re-inspection. Questioned costs: $6,800 Cause: The staff performing the inspections did not properly use the Yardi software program available to conduct and document the inspection process. Additional training will be provided to staff. Effect: The Authority is not in compliance with HUD regulations regarding HQS inspections or HQS enforcement, which could have an impact on HAP calculations. Repeat Finding: No Recommendation: We recommend the Authority review their inspection process to ensure that they are performed timely and that all documentation is maintained within Yardi. We recommend the Authority review their process for abatement/enforcing family obligations to ensure timely correction and enforcement. Views of responsible officials: There is no disagreement with the audit finding.

2023 – 005 – Housing Voucher Cluster - Reasonable Rent Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Federal Award Identification Number and Year: VA003, 2022-2023 Assistance Listing Number: 14.871/14.879/14.EHV Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Material Weakness, Material Noncompliance (Modified Opinion) Criteria or specific requirement: The PHA’s administrative plan must state the method used by the PHA to determine that the rent to owner is reasonable in comparison to rent for other comparable unassisted units. The PHA determination must consider unit attributes such as the location, quality, size, unit type, and age of the unit, and any amenities, housing services, maintenance, and utilities provided by the owner. 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% 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 (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). Condition: The Authority did not have sufficient internal controls over reasonable rent determinations to ensure compliance with HUD requirements. Context: During our testing of 25 files for rent reasonableness requirements, we noted that 10 files had a reasonable rent determination that was not performed until after the effective date. Questioned costs: $1,800 Cause: The Authority has had turnover in the staff who perform the rent reasonableness determinations, resulting in these processes being performed by less experienced and trained staff. Effect: The Authority is not in compliance with HUD’s requirements over rent reasonableness. Repeat Finding: No Recommendation: We recommend the Authority review their reasonable rent determination process to ensure that it is performed before the rent is set to go into effect. Views of responsible officials: There is no disagreement with the audit finding.

2023 – 006 – Housing Voucher Cluster – HUD-50058 PIC Submissions Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Federal Award Identification Number and Year: VA003, 2022-2023 Assistance Listing Number: 14.871/14.879/14.EHV Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: The PHA is required to submit the HUD-50058 electronically to HUD each time the PHA completes an admission, annual reexamination, interim reexamination, portability move-in, or other change of unit for a family (24 CFR Part 908 and 24 CFR section 982.158). Condition: The Authority did not have sufficient internal controls over the PIC submission process to ensure compliance with HUD requirements. Context: During our testing of 40 recertifications we noted 1 that was not submitted electronically to HUD via the PIC system. Questioned costs: None Cause: The Public & Assisted Housing Compliance Analyst has had to assist property managers submit funding vouchers for other programs. This was an oversight and we will ensure all recertifications are submitted to HUD via the PIC system. Effect: The Authority is not in compliance with HUD’s regulations over reporting. Repeat Finding: No Recommendation: We recommend the Authority review their PIC upload process to ensure that all certifications are properly uploaded. Views of responsible officials: There is no disagreement with the audit finding.

Finding: 2022-001 Program Name: Low-Rent Public Housing Program (AL # 14.850) Compliance Requirement: Eligibility Type of Finding: Nonmaterial Noncompliance, Significant Deficiency Criteria: In accordance with Title 24 of the Code of Federal Regulations parts 5, 902, 960, 966, and 990, only eligible individuals should participate in the program and there should be evidence of eligibility determinations. The Authority has established an application and re-examination checklist to be used during the eligibility determination process to ensure that all required documents are maintained in the tenant?s file. Condition: Of the forty (40) tenants selected for testing, we noted the following: ? One (1) tenant file containing eligibility determinations could not be located. ? Twelve (12) tenant files were missing the completed move-in or re-examination checklist. ? Five (5) tenant files were missing documentation that income was accurately calculated and verified. Cause: The Authority has had turnover in the staffing who perform eligibility determinations, resulting in eligibility determinations being performed by less experienced and trained staff. Effect: The Authority did not properly follow the controls in place for eligibility determinations for the year ended June 30, 2022, which resulted in the Authority being unable to support the eligibility determinations for six (6) tenants. Auditor Recommendation: We recommend that the Authority reinforce the individuals completing eligibility determinations with additional training and supervision as well as re-emphasize the controls and procedures that should be followed when completing the determinations. Management Response: We will have the Housing Program Compliance Analyst audit a sample of tenant files based on the latest re-examinations to ensure that the calculated income agrees with the supporting documentation, checklist is completed in its entirety and is maintained in the tenant files. Identification of Repeat Finding: Not a repeat finding

Finding: 2022-002 Program Name: Section 8 Project-Based Cluster (AL # 14.249/14.182/14.195) Compliance Requirement: Eligibility Type of Finding: Nonmaterial Noncompliance, Significant Deficiency Criteria: In accordance with Title 24 of the Code of Federal Regulations parts 880 through 883, only eligible individuals should participate in the program and there should be evidence of eligibility determinations. The Authority has established a move-in and re-examination checklist to be used during the eligibility determination process to ensure that all required documents are maintained in the tenant?s file. Condition: Of the forty (40) tenants selected for testing, we noted the following: ? Seventeen (17) tenant files were missing the completed move-in or re-examination checklist. ? Three (3) tenant files were missing documentation that they had been selected from the waiting list. ? Two (2) tenant files were missing documentation of inspections and tenant certifications. Cause: The Authority has had turnover in the staffing who perform eligibility determinations, resulting in eligibility determinations being performed by less experienced and trained staff. Effect: The Authority did not properly follow the controls in place for eligibility determinations for the year ended June 30, 2022, which resulted in the Authority being unable to support the eligibility determinations for five (5) tenants. Auditor Recommendation: We recommend that the Authority reinforce the individuals completing eligibility determinations with additional training and supervision as well as re-emphasize the controls and procedures that should be followed when completing the determinations. Management Response: Within the next thirty days the Housing Program Compliance Analyst will complete a random audit at each complex of new admissions to confirm all HUD required forms have been completed and will review random files to confirm the re-examination checklists have been completed. A report will be provided to the Director of Housing once the analyst has completed the review. Identification of Repeat Finding: Not a repeat finding

Finding: 2021-002 Program Name: Housing Choice Voucher Program Cluster (CFDA # 14.871-CL) Federal Awarding Agency: Department of Housing and Urban Development (HUD) Compliance Requirement: Housing Quality Standards (HQS) Enforcement Type of Finding: Material Weakness; Material Noncompliance Qualification Criteria: Per Title 24 Section 982 of the Code of Federal Regulation (CFR), ?for units under Housing Assistance Payments (HAP) contract that fail to meet HQS, the Public Housing Authority (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 month following the specified correction period or must terminate the HAP contract.? Condition: Of the two (2) tested failed inspections, we noted two (2) instances where support for re-inspection of failed units could not be provided; therefore, we could not test to ensure that the deficiencies were corrected within the required time period. Cause: During fiscal year 2020 and continued during fiscal year 2021, the Authority's Housing Operations department incurred employee turnover of their head inspector and also switched to a new system for documenting the inspection of units and the re-inspection of failed units. The remaining department employees were not properly trained on the new system and the requirements to document the timely reinspection, which resulted in the remaining department employees not properly documenting the timely reinspection of failed units. Effect: The Authority was not in compliance with the HQS enforcement compliance requirement for the year ended June 30, 2021. Additionally, failure to re-inspect failed inspections to ensure deficiencies are corrected on a timely basis could result in Housing Assistance Payments being improperly paid. Auditor Recommendation: We recommend that the Authority maintain all documentation relating to inspections, re-inspections, and failed inspections. In addition, we recommend that the Authority review a report of all failed inspections on a monthly basis to determine that re-inspections are completed timely. Questioned Costs: Undeterminable. Management Response: The HQS Supervisor has developed a spreadsheet that tracks inspections to ensure failed inspections are not missed. The HQS Supervisor will require each inspector to submit their spreadsheet of all completed inspections for weekly review and follow up. In addition, upper management will increase the number of files for review under SEMAP Indicator 6 HQS Quality Control Enforcement to include a review of data entered in the tracking system.

Finding: 2020-001 Program Name: Housing Choice Voucher Program Cluster (CFDA # 14.871-CL) Federal Awarding Agency: Department of Housing and Urban Development (HUD) Compliance Requirement: Housing Quality Standards (HQS) Enforcement Type of Finding: Material Weakness; Material Noncompliance Qualification Criteria: Per Title 24 Section 982 of the Code of Federal Regulation (CFR), for units under Housing Assistance Payments (HAP) contract that fail to meet HQS, the Public Housing Authority (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 month following the specified correction period or must terminate the HAP contract. Condition: Of the five (5) tested failed inspections, we noted five (5) instances where support for re-inspection of failed units could not be provided; therefore, we could not test to ensure that the deficiencies were corrected within the required time period. Cause: During fiscal year 2020, the Authority's Housing Operations department incurred employee turnover of their head inspector and also switched to a new system for documenting the inspection of units and the re-inspection of failed units. The remaining department employees were not properly trained on the new system and the requirements to document the timely reinspection, which resulted in the remaining department employees not properly documenting the timely reinspection of failed units. Effect: The Authority was not in compliance with the HQS enforcement compliance requirement for the year ended June 30, 2020. Additionally, failure to re-inspect failed inspections to ensure deficiencies are corrected on a timely basis could result in HAP payments being improperly paid. Auditor Recommendation: We recommend that the Authority maintain all documentation relating to inspections, re-inspections, and failed inspections. In addition, we recommend that the Authority review a report of all failed inspections on a monthly basis to determine that re-inspections are completed timely. Questioned Costs: None noted Management Response: The HQS Supervisor has developed a spreadsheet that tracks inspections to ensure failed inspections are not missed. The HQS Supervisor will require each inspector to submit their spreadsheet of all completed inspections for weekly review and follow up. In addition, upper management will increase the number of files for review under SEMAP Indicator 6 HQS Quality Control Enforcement to include a review of data entered in the tracking system.

Finding: 2020-002 Program Name: HOPE VI Cluster (CFDA # 14.866-CL) Federal Awarding Agency: Department of Housing and Urban Development (HUD) Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Nonmaterial Noncompliance Criteria: Per Title 24 Section 135 of the Code of Federal Regulation (CFR), each recipient that administers covered public housing assistance, regardless of the amount expended, and each recipient that administers covered housing and community development assistance in excess of $200,000 in a program year, must submit HUD 60002 information. This report is due sixty (60) days after the end of an agency's fiscal cycle. Condition: The Authority submitted the HUD-60002 on January 12, 2021, which is after the required due date. Cause: The grant was new to the Authority during fiscal year 2020 and Authority personnel were not aware of the HUD requirement for submission of the report. Effect: The Authority was not in compliance with HUD-60002 reporting requirements as of June 30, 2020. Auditor Recommendation: We recommend that the Authority review all grant reporting requirements and deadlines when new grants are received and have a tracking process to ensure that all required reports are submitted timely. Questioned Costs: None noted Management Response: In May 2019, NNRHA and the City of Newport News were awarded a Choice Neighborhood Implementation grant. As this was a new grant, the HUD - 60002 was not submitted within 60 days of the reporting period. The Deputy Director and Director of Administrative Services have reviewed the grant expenditures for this reporting period and have since submitted the report. In the future, the Deputy Director and Director of Administrative Services will review all grant reporting requirements and deadlines when new grants are received to ensure that all required reports are submitted timely. Also, the Authority recently hired a Section 3 /Labor Compliance Coordinator who will be responsible for reviewing and submitting all required reports.

Finding: 2019-001 Program name: Section 8 Project-Based Cluster (CFDA # 14.182-CL) Compliance Requirement: Residual Receipts Account Type of Finding: Nonmaterial Noncompliance Criteria: Per Title 24 of the Code of Federal Regulations Section 880.601, any remaining project funds must be deposited with the mortgagee or other HUD-approved depository in an interest-bearing residual receipts account. Condition: Of the three (3) projects that were required to establish and deposit any remaining project funds into a residual receipts account, we noted two (2) projects that did not have a residual receipts account properly established as of the performance of our testing procedures in January 2020. Based on our review of mortgage loan documents these accounts should have been established sixty days after the June 30, 2018 year end. Upon inquiry of the accounts in January 2020, the Authority established the required accounts for the two (2) projects. Cause: Previously the equity partner for the projects held the responsibility of establishing the residual receipts account. Management of the equity partner changed, their policies and the responsibility was given to the borrowers to create the account. There was a lack of communication between the equity partners and NNRHA regarding this change, which led to the late creation of the residual receipts account. Effect: NNRHA was not in compliance with the residual receipts compliance requirement as of June 30, 2019. Auditor Recommendation: We recommend NNRHA establish procedures to ensure that required residual receipts accounts are established for any new Section 8 projects within the required time-frame. Management Response: As of January 2020, the residual receipts accounts for Oyster-Point Brighton and Cypress Terrace had been established with Old Point National Bank. Newport News Redevelopment and Housing Authority plans to work more closely with their equity partners upon entering into new projects to ensure all required accounts are established. Identification of repeat finding: Not a repeat finding