Housing Authority of the City of Asheville

Finding 2024-003: Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Moving to Work Demonstration Program - Section 8 Housing Choice Vouchers & Housing Voucher Cluster Federal Assistance Listing Numbers: 14.881, 14.871, 14.879, 14.EHV Noncompliance – N. Special Tests and Provisions – Housing Quality Standards (HQS) & HQS Enforcement Non Compliance Material to the Financial Statements: Yes Material Weakness in Internal Control over Compliance for Special Tests and Provisions Criteria: HQS & HQS Enforcement. For units under HAP contract that fail to meet HQS, the PHA must require the owner to correct all life threatening HQS deficiencies within 24 hours after the inspections and all other deficiencies within 30 days or within a specified PHA-approved extension. Condition: Based upon inspection of the Authority’s files and on discussion with management, the Authority did not properly abate or provide proper extension documentation for failed inspections selected for testing. In addition, there were inspection reports that were unavailable for examination at the time of audit. Context: The Authority did not properly abate thirteen (13) out of twenty-five (25) annual failed inspections selected for testing in the Moving to Work Demonstration Program - Section 8 Housing Choice Vouchers Program. As a result, the Authority was not in compliance with the HQS as required by 24 CFR sections 982.158(d) and 982.405(b). The Authority did not properly abate one (1) out of two (2) annual failed inspections selected for testing in the Housing Voucher Cluster. Additionally, the Authority was unable to provide inspection reports for 2 (two) out of 2 (two) failed inspections selected for testing, therefore we were unable to determine if the unit passed resinspection within the required time in the Housing Voucher Cluster. As a result, the Authority was not in compliance with the HQS as required by 24 CFR sections 982.158(d) and 982.405(b). Known Questioned Costs: Moving to Work Demonstration Program - Section 8 Housing Choice Vouchers Program: $22,500 Housing Voucher Cluster: $6,940 Cause: There is a material weakness in internal controls over the compliance in the Moving to Work Demonstration - Section 8 Housing Choice Vouchers Program and the Housing Voucher Cluster for the special tests and provisions type of compliance related to HQS enforcement. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that assures the program is in compliance. Effect: The Moving to Work Demonstration - Section 8 Housing Choice Vouchers Program and Housing Voucher Cluster are in material non-compliance with the special tests and provisions type of compliance related to HQS enforcement. Auditors' Recommendation: We recommend the Authority design and implement internal control procedures that will reasonably assure compliance with the Uniform Guidance and the compliance supplement related to HQS enforcement. View of Responsible Officials and Corrective Actions: The Authority accepts the recommendation of the auditor regarding HQS inspections and has made arrangements to comply with the Moving to Work Demonstration - Section 8 Housing Choice Vouchers Program and the Housing Voucher Cluster.

Finding 2024-004: Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Moving to Work Demonstration Program - Section 8 Housing Choice Vouchers & Housing Voucher Cluster Federal Assistance Listing Numbers: 14.881, 14.871, 14.879, 14.EHV Noncompliance – E. Eligibility – Tenant Files Non Compliance Material to the Financial Statements: Yes Material Weakness in Internal Control over Compliance for Eligibility Criteria: Tenant Files. The PHA must do the following: As a condition of admission or continued occupancy, require the tenant and other family member to provide necessary information, documentation, and releases for the PHA to verify income eligibility (24 CFR sections 5.230, 5.609, and 982.516). These files are required to be maintained and available for examination at the time of audit. Condition: Based upon inspection of the Authority’s files and on discussion with management, there were documents that were unavailable for examination at the time of audit. Context: Moving to Work Demonstration Program - Section 8 Housing Choice Vouchers Program: There are approximately 2,556 units. Of a sample size of thirty-six (36) tenant files, the following information was unavailable for examination at the time of audit: • Original application was missing in three (3) files • HUD-9887 form was missing in two (2) files • Lead based paint form was missing in one (1) file • Signed lease was missing in four (4) files • Verification of income was missing in two (2) files Context (continued): Housing Voucher Cluster: There are approximately 347 units. Of a sample size of fifteen (15) tenant files, the following information was unavailable for examination at the time of audit: • Citizenship declaration form was missing in one (1) file • Signed lease was missing in one (1) files • Verification of income was missing in two (2) files. Our sample size is statistically valid. Known Questioned Costs: Moving to Work Demonstration Program - Section 8 Housing Choice Vouchers Program: $21,643 Housing Voucher Cluster: $34,166. Cause: There is a material weakness in internal controls over the compliance in the Moving to Work Demonstration - Section 8 Housing Choice Vouchers Program and Housing Voucher Cluster for the eligibility type of compliance related to the maintenance of tenant files. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that assures the program is in compliance. Effect: The Moving to Work Demonstration - Section 8 Housing Choice Vouchers Program and Housing Voucher Cluster are in material non-compliance with the eligibility type of compliance related to the maintenance of tenant files. Auditors' Recommendation: We recommend the Authority design and implement internal control procedures that will assure compliance with the Uniform Guidance and the compliance supplement related to eligibility requirements. View of Responsible Officials and Corrective Actions: The Authority accepts the recommendation of the auditor on the inspection of tenant files and has made arrangements to comply with the Moving to Work Demonstration - Section 8 Housing Choice Vouchers Program and Housing Voucher Cluster.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Moving to Work Demonstration Program - Section 8 Housing Choice Vouchers & Housing Voucher Cluster Federal Assistance Listing Numbers: 14.881, 14.871, 14.879, 14.EHV Noncompliance – N. Special Tests and Provisions – HQS Inspections Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Special Tests and Provisions Criteria: HQS Inspections. Per the Authority's HCV Admin Plan, the PHA must inspect the unit leased to a family at least biennially to determine if the unit meets HQS standards 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)). These inspection reports are required to be maintained and available for examination at the time of audit. Condition: Based upon inspection of the Authority’s files and on discussion with management there were inspection reports that were unavailable for examination at the time of audit. Context: Of a sample size of thirty-six (36) units in the Moving to Work Demonstration Program - Section 8 Housing Choice Vouchers, one (1) unit did not have a biennial HQS inspection performed. Of a sample size of fifteen (15) units in the Housing Voucher Cluster, three (3) units did not have a have a biennial HQS inspection performed. Our sample size is statistically valid. Known Questioned Costs: Moving to Work Demonstration Program - Section 8 Housing Choice Vouchers Program: $4,000 Housing Voucher Cluster: $9,268. Cause: There is a significant deficiency in internal controls over the compliance for the special tests and provisions type of compliance related to HQS inspections. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that assures the program is in compliance. Effect: The Moving to Work Demonstration - Section 8 Housing Choice Vouchers Program and Housing Voucher Cluster are in non-compliance with the special tests and provisions type of compliance related to HQS inspections. Auditors' Recommendation: We recommend the Authority design and implement internal control procedures that will reasonably assure compliance with the Uniform Guidance and the compliance supplement related to HQS inspections. View of Responsible Officials and Corrective Actions: The Authority has recognized the significant deficiency in the Moving to Work Demonstration - Section 8 Housing Choice Vouchers Program and Housing Voucher Cluster and will implement internal control procedures that will ensure compliance with federal regulations.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Housing Voucher Cluster Federal Assistance Listing Numbers: 14.871, 14.879, 14.EHV Noncompliance – N. Special Tests and Provisions – Depository Agreements Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Special Tests and Provisions Criteria: PHAs are required to enter into general depository agreements (GDA) with their financial institutions in the form required by HUD. The agreements serve as safeguards for federal funds and provide third party rights to HUD. Among the terms in many agreements are requirements for funds to be placed in an interest-bearing account (24 CFR section 982.156). Condition: Based on inspection of files and discussions with management, it was determined that the depository agreements were signed after the reporting period. Context: The Authority did not have signed depository agreements with their financial institutions on file during the reporting period, therefore we were unable to verify the existence of depository agreements and unable to determine if the Authority met the terms of the agreements. provision type of compliance related to depository agreements. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls for their partnered management company that assures the program is in compliance. Effect: The Housing Voucher Cluster is in noncompliance with the special tests and provisions type of compliance related to depository agreements. Auditors' Recommendation: We recommend that the Authority properly file HUD-51999 forms in accordance with HUD guidelines. View of Responsible Officials and Corrective Actions: The Authority accepts the recommendation of the auditor and will properly file HUD- 51999 forms in accordance with HUD guidelines.

Finding 2020-001 Housing Choice Voucher Tenant File Deficiencies Significant Deficiency in Internal Controls - Eligibility Federal Program: CFDA 14.871 Housing Choice Voucher Program Criteria: The Housing Authority of the City of Asheville (HACA) should perform annual re-certifications of all program participants to ensure that tenant files are maintained in compliance with all underlying HUD standards and requirements. This shall include documentation that all required elements are maintained in the file so that the Authority is in compliance with HUD regulations. Condition: Our review of forty (40) Housing Choice Voucher Program files revealed the following deficiencies: ? There were 2 files where the income after exclusions was incorrect, resulting in an incorrect calculation of the housing assistance payment Context: As part of the tenant re-certification process, HACA must correctly compute tenant rents and also maintain proper supporting documentation in the participant?s file. Cause: While performing annual re-certifications, errors in calculating tenant income were made. Effect: Tenant housing assistance payments were incorrectly computed. Questioned Costs: Undetermined. Auditors? Recommendation: We recommend that the agency review a quality control sampling of files at re-certification to ensure that income calculations are correct.HACA Response: We accept this recommendation and have corrected the relevant files. We will continue to review a quality control sample of at least 25% of files at re-certification to ensure that income calculations are correct and applicable verifications are on file. Some of the errors were made by inexperienced staff members. To remedy that going forward: ? 100% of files handled by new employees will have a quality-control review by experienced staff for the first 90-120 days on the job. ? All staff will be reminded to ensure that every client reporting zero income completes a zeroincome self-certification form at time of move-in, transfer, interim and annual recertification. ? Since 2020, all new hires and experienced eligibility staff have attended an industry-standard HCV rent calculation class and passed the exam. We will require that all new staff do the same within 60 days after their hire date. Staff Contact: Brandy Woodard, HCV Program Director Target Completion date: May 31, 2022

Finding 2019-001 Housing Choice Voucher Tenant File Deficiencies Significant Deficiency in Internal Controls- Eligibility Federal Program: CFDA 14.871 Housing Choice Voucher Program Criteria: The Housing Authority of the City of Asheville (HACA) should perform annual re-certifications of all program participants to ensure that tenant files are maintained in compliance with all underlying HUD standards and requirements. This shall include documentation that all required elements are maintained in the file so that the Authority is in compliance with HUD regulations. Condition: Our review of sixty (60) Housing Choice Voucher Program files revealed the following deficiencies: ? Seven files did not have a current rent reasonableness determination documented within the file. ? Two files did not contain the HUD Form 52646 Voucher within the file ? One file did not have proof of the required bi-annual inspection being performed. Effect: Failure to maintain adequate documentation in resident?s files leads to instances of noncompliance. Questioned Costs: There are no questioned costs related to this finding. Auditors? Recommendation: We recommend that the agency review all files at the next recertification to ensure that files are complete and in compliance with all HUD requirements. This shall include a review of the unit features and comparable as well as outreach with the landlord to ensure that all rents are appropriate. HACA Response: In response to this deficiency, we prepared new rent reasonableness determinations for those files going forward. All were files of long-term participants that have not had rent increases for several years, and we believe that the original rent reasonableness determinations were not brought forward from the participants? original files, but we have been unable to locate those original documents. Going forward, we will be sure to conduct a rent reasonableness determination at each annual recertification. Form 52646 focuses on rental housing searches, not homeownership, and both of those files were for HCV homeownership participants. We will research if a new Form 52646 is required when participants move from HCV rental to HCV homeownership and correct our process if required. In response to this deficiency, a new inspection was completed and provided to the audit team while they were still on site. The unit passed inspection. We believe that missed inspections are rare but will redouble our efforts to ensure that is true going forward. Staff Contact: Brandy Woodard, HCV Program Director (828) 258-1222. Target Completion date: March 31, 2021.