Mobile County Housing Authority

2024-001 – ALN 14.871 – Housing Voucher Cluster – Eligibility Condition and Criteria: In accordance with HUD eligibility compliance requirement, Uniform Guidance Single Audit compliance requires that for tenant eligibility, tenant files include certain information and documentation that is both accurate and complete such as to obtain and document third-party verification of annual income and other factors that affect the determination of adjusted income or income-based rent, and then properly calculate the rent payment using this documentation. Per 24 CFR sections 5.230, 5.609, & 982.516, tenants are required to provide necessary information, documentation, and releases for the Authority to verify income eligibility. Per 24 CFR 982 Subpart K, the Authority should maintain a utility allowance schedule, determine if rent to owner is reasonable, and adopt a payment standard schedule that establishes voucher payment standard amounts for each FMR area in the PHA jurisdiction. During our audit, it was determined that internal control deficiencies over compliance existed over the Authority’s Housing Voucher Cluster eligibility determination process. The Authority's previous staff had inadequate internal controls over the Authority’s Section 8 tenant eligibility process which has led to incomplete and inaccurate eligibility documentation. Out of twenty tenant files tested for eligibility compliance, 30% of these files had exceptions where there were either missing third-party verification of income or deduction sources, missing or improperly filled out HUD required forms, missing EIV (Enterprise Income Verification) documentation, or instances in which the correct 50058 could not be provided. Context: H&P noted that 30% of the files tested had issues relating to missing third-party verification of income or deduction sources, missing or improperly filled out HUD required forms, missing EIV (Enterprise Income Verification) documentation, or instances in which the correct 50058 could not be provided. There were three instances noted where supporting third-party verification of income or deductions was missing. There were two instances in which the annual reexamination was not done in a timely manner. We determined that these internal control deficiencies and resulting noncompliance appeared to be consistent and prevalent among the Authority's tenant files. Questioned Costs: None. Cause: The Authority’s previous staff's internal controls over the Housing Voucher Cluster eligibility determination process that were in place lacked the necessary controls over information and communication of HUD regulatory requirements to properly follow HUD’s eligibility requirements as determined by 24 CFR. There appears to be a lack of quality control procedures in place regarding the monitoring of tenant files in order to catch inaccurate and/or incomplete required tenant eligibility documentation and rent calculations. Effect: Some of the Authority’s tenants were not and/or potentially not receiving the correct amount of Housing Assistance Payments, which in turn, can cause the tenants' portion of rent payments owed to the landlords to be incorrect. Some of these tenants may still be receiving an erroneous Housing Assistance Payment and could be paying the wrong amount to the landlords until the staff and management can perform interim reexaminations or annual reexaminations. Auditor’s Recommendation: We recommend the Authority's new Executive Director and Section 8 staff review the internal controls over Section 8 HCV eligibility to improve the detection and correction of misstatements. The Authority's new staff should be attentive when calculating the annualized income for tenants and ensure that all third-party verification of income and deductions is being obtained. The Authority should utilize effective monitoring controls to check the accuracy of tenant rent calculations and payment standards for each initial lease-up and reexamination and, if any errors have been made, the Authority can identify these quickly and take the necessary corrective action. Additionally, the Authority should continue performing internal quality control re-inspections (not to be performed by the same employee who performed the original lease-up or reexamination but by someone with adequate knowledge of the tenant eligibility process) of a sample of applicant and tenant files to ensure that all eligibility and reexamination steps are being performed properly and in line with Federal regulations and the Authority's Section 8 Administrative Plan policies and procedures. Grantee Response: The Executive Director acknowledges the finding and is following the auditor’s recommendation.

2023-001 ALN 14.871 – Housing Voucher Cluster – Eligibility Condition and Criteria: In accordance with HUD eligibility compliance requirement, Uniform Guidance Single Audit compliance requires that for tenant eligibility, tenant files include certain information and documentation that is both accurate and complete such as to obtain and document third-party verification of annual income and other factors that affect the determination of adjusted income or income-based rent, and then properly calculate the rent payment using this documentation. Per 24 CFR sections 5.230, 5.609, & 982.516, tenants are required to provide necessary information, documentation, and releases for the Authority to verify income eligibility. Per 24 CFR 982 Subpart K, the Authority should maintain a utility allowance schedule, determine if rent to owner is reasonable, and adopt a payment standard schedule that establishes voucher payment standard amounts for each FMR area in the PHA jurisdiction. During our audit, it was determined that internal control deficiencies over compliance existed over the Authority’s Housing Voucher Cluster eligibility determination process. The Authority's previous staff had inadequate internal controls over the Authority’s Section 8 tenant eligibility process which has led to incomplete and inaccurate eligibility documentation. Out of ten tenant files tested for eligibility compliance, 100% of these files had exceptions where there were either missing third-party verification of income or deduction sources, missing or improperly filled out HUD required forms, missing EIV (Enterprise Income Verification) documentation, lack of an HQS inspection performed in the fiscal year, or instances in which the correct 50058 could not be provided. Context: H&P noted that 100% of the files tested had issues relating to missing third-party verification of income or deduction sources, missing or improperly filled out HUD required forms, missing EIV (Enterprise Income Verification) documentation, lack of an HQS inspection performed in the fiscal year, or instances in which the correct 50058 could not be provided. There were three instances noted where supporting third-party verification of income or deductions was missing. There were two instances in which the annual reexamination was not done in a timely manner. There were also three instances in which an HQS inspection was not performed in the fiscal year. One instance in where the HAP payment did not tie to the HAP Register. We determined that these internal control deficiencies and resulting noncompliance appeared to be consistent and prevalent among the Authority's tenant files. Questioned Costs: None. Cause: The Authority’s previous staff's internal controls over the Housing Voucher Cluster eligibility determination process that were in place lacked the necessary controls over information and communication of HUD regulatory requirements to properly follow HUD’s eligibility requirements as determined by 24 CFR. There appears to be a lack of quality control procedures in place regarding the monitoring of tenant files in order to catch inaccurate and/or incomplete required tenant eligibility documentation and rent calculations. Effect: Some of the Authority’s tenants were not and/or potentially not receiving the correct amount of Housing Assistance Payments, which in turn, can cause the tenants' portion of rent payments owed to the landlords to be incorrect. Some of these tenants may still be receiving an erroneous Housing Assistance Payment and could be paying the wrong amount to the landlords until the staff and management can perform interim reexaminations or annual reexaminations. Auditor’s Recommendation: We recommend the Authority's new Executive Director and staff review the internal controls over Housing Voucher Cluster eligibility to improve the detection and correction of misstatements. The Authority's new staff should be attentive when calculating the annualized income for tenants and ensure that all third-party verification of income and deductions is being obtained. The Authority should utilize effective monitoring controls to check the accuracy of tenant rent calculations and payment standards for each initial lease-up and reexamination and, if any errors have been made, the Authority can identify these quickly and take the necessary corrective action. Additionally, the Authority should continue performing internal quality control re-inspections (not to be performed by the same employee who performed the original lease-up or reexamination but by someone with adequate knowledge of the tenant eligibility process) of a sample of applicant and tenant files to ensure that all eligibility and reexamination steps are being performed properly and in line with Federal regulations and the Authority's Section 8 Administrative Plan policies and procedures. Grantee Response: The Executive Director acknowledges the finding and is following the auditor’s recommendation.

2023-003 ALN 14.871 – Housing Voucher Cluster – Waiting List Condition and Criteria: For compliance requirements related to selection from the waiting list, Housing Voucher Cluster applicants must be selected from the Authority’s waiting list in accordance with the Authority’s applicant selection policies documented in the Section 8 Administrative Plan and in accordance with federal regulations. Per 24 CFR section 960.202, applicants must be admitted for participation into the Program in accordance with HUD regulations and other requirements, including the Authority’s policies stated in the Section 8 Admin Plan, and that the Authority’s admission policy must state the system of admission preferences the Authority uses in determining the applicant selection order from the waiting list, including preferences such as any residency or other local preferences. The Authority was unable to provide sufficient waiting list documentation to evidence the order of the selection of applicants from the waiting list at any given time during the current audit period. Therefore, this resulted in an inability to test the Waiting List applicant selection procedures for internal controls and compliance. Context: Testing on compliance over the order in which applicants were selected from the waiting list was unavailable to be performed for the current audit period as supporting documentation for the waiting list applicant selection procedures was unable to be obtained from or reproduced by the Authority for testing. Questioned Costs None. Cause: The Authority's previous staff did not utilize appropriate internal controls over the waiting list applicant selection process. This resulted in the Authority not maintaining the appropriate documentation to adequately provide information required by federal regulations and the Section 8 Administrative Plan policies and procedures so that the waiting list could be monitored for proper compliance. Effect: Housing Voucher Cluster applicants could have been selected from the waiting list and admitted to the program in the incorrect order in accordance with the Authority's applicant selection policies included in the Authority's Section 8 Administrative Plan. Auditor’s Recommendation: The Authority's previous staff should have had a more effective set of monitoring controls in place to verify that evidence supporting any and all selected applicants from the waiting list was being documented and retained. The Authority's new management has already implemented proper internal control procedures and is currently in the process of addressing and correcting the internal control deficiencies and noncompliance. Grantee Response: The Executive Director acknowledges the finding and is following the auditor’s recommendation.

2022-001 ? ALN 14.871 ? Section 8 Housing Choice Vouchers Program - Eligibility Condition and Criteria: In accordance with HUD eligibility compliance requirement, Uniform Guidance Single Audit compliance requires that for tenant eligibility, tenant files include certain information and documentation that is both accurate and complete such as to obtain and document third-party verification of annual income and other factors that affect the determination of adjusted income or income-based rent, and then properly calculate the rent payment using this documentation. Per 24 CFR sections 5.230, 5.609, & 982.516, tenants are required to provide necessary information, documentation, and releases for the Authority to verify income eligibility. Per 24 CFR 982 Subpart K, the Authority should maintain a utility allowance schedule, determine if rent to owner is reasonable, and adopt a payment standard schedule that establishes voucher payment standard amounts for each FMR area in the PHA jurisdiction. During our audit, it was determined that internal control deficiencies over compliance existed over the Authority?s Section 8 Housing Choice Vouchers (HCV) eligibility determination process. The Authority's previous staff had inadequate internal controls over the Authority?s Section 8 tenant eligibility process which has led to incomplete and inaccurate eligibility documentation. Out of ten tenant files tested for eligibility compliance, 30% of these files had exceptions where there were either missing third-party verification of income or deduction sources, missing or improperly filled out HUD required forms, or missing EIV (Enterprise Income Verification) documentation. Context: H&P noted that 30% of the files tested had issues relating to missing third-party verification of income or deduction sources, missing or improperly filled out HUD required forms, or missing EIV (Enterprise Income Verification) documentation. There were three instances noted where supporting third-party verification of income or deductions was missing. Two instances in which the annual reexamination was not done in a timely manner. We determined that these internal control deficiencies and resulting noncompliance appeared to be consistent and prevalent among the Authority's tenant files. Questioned Costs: None. Cause: The Authority?s previous staff's internal controls over the Section 8 HCV eligibility determination process that were in place lacked the necessary controls over information and communication of HUD regulatory requirements to properly follow HUD?s eligibility requirements as determined by 24 CFR. There appears to be a lack of quality control procedures in place regarding the monitoring of tenant files in order to catch inaccurate and/or incomplete required tenant eligibility documentation and rent calculations. Effect: Some of the Authority?s tenants were not and/or potentially not receiving the correct amount of Housing Assistance Payments, which in turn, can cause the tenants' portion of rent payments owed to the landlords to be incorrect. Some of these tenants may still be receiving an erroneous Housing Assistance Payment and could be paying the wrong amount to the landlords until the staff and management can perform interim reexaminations or annual reexaminations. Auditor?s Recommendation: We recommend the Authority's new Executive Director and Section 8 staff review the internal controls over Section 8 HCV eligibility to improve the detection and correction of misstatements. The Authority's new staff should be attentive when calculating the annualized income for tenants and ensure that all third-party verification of income and deductions is being obtained. The Authority should utilize effective monitoring controls to check the accuracy of tenant rent calculations and payment standards for each initial lease-up and reexamination and, if any errors have been made, the Authority can identify these quickly and take the necessary corrective action. Additionally, the Authority should continue performing internal quality control re-inspections (not to be performed by the same employee who performed the original lease-up or reexamination but by someone with adequate knowledge of the tenant eligibility process) of a sample of applicant and tenant files to ensure that all eligibility and reexamination steps are being performed properly and in line with Federal regulations and the Authority's Section 8 Administrative Plan policies and procedures. Grantee Response: The Executive Director acknowledges the finding and is following the auditor?s recommendation.

2021-001 ? CFDA#14.871 ? Section 8 Housing Choice Vouchers Program - Eligibility Condition and Criteria: In accordance with HUD eligibility compliance requirement, Uniform Guidance Single Audit compliance requires that for tenant eligibility, tenant files include certain information and documentation that is both accurate and complete such as to obtain and document third-party verification of annual income and other factors that affect the determination of adjusted income or income-based rent, and then properly calculate the rent payment using this documentation. Per 24 CFR sections 5.230, 5.609, & 982.516, tenants are required to provide necessary information, documentation, and releases for the Authority to verify income eligibility. Per 24 CFR 982 Subpart K, the Authority should maintain a utility allowance schedule, determine if rent to owner is reasonable, and adopt a payment standard schedule that establishes voucher payment standard amounts for each FMR area in the PHA jurisdiction. During our audit, it was determined that internal control deficiencies over compliance existed over the Authority?s Section 8 Housing Choice Vouchers (HCV) eligibility determination process. The Authority's previous staff had inadequate internal controls over the Authority?s Section 8 tenant eligibility process which has led to incomplete and inaccurate eligibility documentation. Out of five tenant files tested for eligibility compliance, 100% of these files had exceptions where there were either missing third-party verification of income or deduction sources, missing or improperly filled out HUD required forms, or missing EIV (Enterprise Income Verification) documentation. In addition, there were several instances in which the amount reported on the HAP Register did not correspond with the amount listed as the HAP payment in the tenant file. Context: H&P noted that 100% of the files tested had issues relating to missing third-party verification of income or deduction sources, missing or improperly filled out HUD required forms, or missing EIV (Enterprise Income Verification) documentation. There were five instances noted where supporting third-party verification of income or deductions was missing. Five instances that involved the Authority not retaining in tenant files the necessary Declaration of Citizenship Status (Section 214) form. Four instances where the HAP payment in the tenant's file did not correspond with the HAP Register. One instance in which the annual reexamination was not done in a timely manner. We determined that these internal control deficiencies and resulting noncompliance appeared to be consistent and prevalent among the Authority's tenant files. Questioned Costs: None. Cause: The Authority?s previous staff's internal controls over the Section 8 HCV eligibility determination process that were in place lacked the necessary controls over information and communication of HUD regulatory requirements to properly follow HUD?s eligibility requirements as determined by 24 CFR. There appears to be a lack of quality control procedures in place regarding the monitoring of tenant files in order to catch inaccurate and/or incomplete required tenant eligibility documentation and rent calculations. Effect: Some of the Authority?s tenants were not and/or potentially not receiving the correct amount of Housing Assistance Payments, which in turn, can cause the tenants' portion of rent payments owed to the landlords to be incorrect. Some of these tenants may still be receiving an erroneous Housing Assistance Payment and could be paying the wrong amount to the landlords until the staff and management can perform interim reexaminations or annual reexaminations. Auditor?s Recommendation: We recommend the Authority's new Executive Director and Section 8 staff review the internal controls over Section 8 HCV eligibility to improve the detection and correction of misstatements. The Authority's new staff should be attentive when calculating the annualized income for tenants and ensure that all third-party verification of income and deductions is being obtained. The Authority should utilize effective monitoring controls to check the accuracy of tenant rent calculations and payment standards for each initial lease-up and reexamination and, if any errors have been made, the Authority can identify these quickly and take the necessary corrective action. Additionally, the Authority should continue performing internal quality control re-inspections (not to be performed by the same employee who performed the original lease-up or reexamination but by someone with adequate knowledge of the tenant eligibility process) of a sample of applicant and tenant files to ensure that all eligibility and reexamination steps are being performed properly and in line with Federal regulations and the Authority's Section 8 Administrative Plan policies and procedures. Grantee Response: The Executive Director acknowledges the finding and is following the auditor?s recommendation.

2021-002 ? CFDA#14.871 ? Section 8 Housing Choice Vouchers Program ? Activities Allowed, Unallowable/Allowable Costs Condition and Criteria: During our audit, we identified costs that did not have adequate supporting backup documentation to allow for us to determine whether or not the costs were allowable. Per 2 CFR ? 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart E ? Cost Principles, costs must meet certain general criteria in order to be allowable under Federal awards. These criteria include the fact that costs must conform to any limitations or exclusions set forth in the cost principles or in the Federal awards as to types or amount of cost items, and costs must be adequately documented. During our audit, it was determined that there were internal control deficiencies over the check disbursement process. The Authority's previous staff had inadequate internal controls over the Authority?s disbursement process which has led to a lack of supporting documentation. Out of 11 disbursements tested for activities allowed and unallowed/allowable costs, 55% of these files had exceptions where adequate supporting documentation could not be located. Context: Of the 12 months of disbursements for the fiscal year ended December 31, 2021, we examined 11 disbursements. Of these 11 disbursements that we tested; we could not locate adequate supporting backup documentation for 6 of these disbursements. As the total likely questioned costs were determined to be below $10,000, no questioned cost amount was required to be reported in this finding. Questioned Costs: None. Cause: The Authority?s prior management's internal controls over the purchasing and payables process were inadequate in monitoring and identifying where costs were incurred without maintaining adequate documentation to properly check for potential unallowable costs. The previous management who was responsible for reviewing and approving costs did not have an adequate knowledge of the applicable Cost Principles. These controls were not operating properly as unallowable costs could have existed during the fiscal year-ended December 31, 2021. Effect: A lack of internal controls could lead to unnecessary fines and penalties being incurred, which are unallowable costs under 24 CFR 200. The Authority also could have incurred additional unallowable costs related to the checks that were paid during the year that did not have adequate supporting backup documentation. However, these questioned costs could not be determined to be either allowable or unallowable as a result of the lack of adequate documentation. Auditor?s Recommendation: The Authority should match each check disbursement with the receipt and supporting document that is sufficient to ensure that all expenditures are allowable costs and adequately supported. We recommend the Authority review the internal controls over their purchases and payables to ensure that adequate monitoring over whether or not costs incurred are allowable and adequately supported. We also recommend that the persons responsible for reviewing and approving costs review over the applicable Cost Circulars to ensure they have an adequate understanding of what costs are allowable and what costs are unallowable. Grantee Response: The Executive Director acknowledges the finding and is following the auditor?s recommendation.

2020-001 ? CFDA#14.871 ? Section 8 Housing Choice Vouchers Program - Special Tests and Provisions - Waiting List, Reasonable Rent, Utility Allowance Schedules, HQS Inspections, HQS Enforcement, and Housing Assistance Payments (HAP) Condition and Criteria: The Authority's documentation to support its waiting list, reasonable rent determinations, utility allowance schedules, HQS (Housing Quality Standards) inspections and enforcement, and Housing Assistance Payment (HAP) lacked sufficient information in accordance with Federal regulations as well as the Authority?s Section 8 Administrative Plan policies and procedures. The Authority was unable to provide sufficient waiting list documentation for a portion of the current audit period that is needed in order to evidence whether or not new tenant move-ins were being admitted in the proper selection order per Federal regulations and the tenant selection policies included in the Authority's Administrative Plan. Per 24 CFR section 982.507(b), a PHA must determine whether the rent to owner is a reasonable rent in comparison to rent for other comparable unassisted units. To make this determination, the PHA must consider: (1) the location, quality, size, unit type, and age of the contract unit; and (2) any amenities, housing services, maintenance and utilities to be provided by the owner in accordance with the lease. The Authority must determine whether rents charged by owners/landlords are reasonable in certain situations including, but not limited to, prior to the initial lease approval and before any increase in the rent to owner/landlord. Additionally, 24 CFR section 982.54(d)(15) requires that the PHA administrative plan documents the method of determining that rent to owner is a reasonable rent, and 24 CFR section 982.158 requires the Authority to keep records for each tenant to document the basis for the PHA's determination that rent to owner is a reasonable rent. The Authority was unable to provide sufficient utility allowance documentation for each tenant file selected. Therefore, we could not determine if the tenant's portion of rent and HAP is correct. The Authority was unable to provide HQS inspection documentation for new move in files as well as for files in which inspections were performed based on documentation noted on the tenant?s HUD Form 50058. An inspection must be performed before execution of a HAP contract, and the Authority cannot provide assistance on behalf of a family until the unit fully complies with HQS. Upon testing of tenant files, we encountered three instances where the HAP payment in the tenant's file did not correspond with the HAP Register. We also could not obtain the HAP Contract; therefore, we could not determine if the HAP was correct. Context: As part of our audit procedures, we requested all supporting backup documentation evidencing the Authority?s processes of these Special Tests and Provisions. The Authority was unable to provide us with any documentation for a waiting list, rent reasonableness analysis, utility allowance schedules for each individual tenant, and HQS inspection documentation, as they said that none was maintained by the previous staff. Thus, we were unable to perform the necessary audit of these Housing Choice Vouchers Program compliance requirements. Questioned Costs: None Cause: The Authority's previous staff did not utilize adequate internal controls over the Special Tests and Provisions, as there is a lack of sufficient documentation to properly determine whether these tests have been performed in accordance with the Authority's Section 8 Administrative Plan policies and procedures and in accordance with Federal regulations. Effect: For the waiting list, tenants may not have been selected from the waiting list and admitted to the program in the correct order in accordance with the Authority's applicant selection policies included in the Section 8 Administrative Plan or in accordance with Federal regulations. For rent reasonableness, some of the Authority's tenants are possibly living in units that do not have reasonable rents which in turn could be causing the Authority's Housing Assistance Payments, as well as the tenant's portion of rent to the owners/landlords to be excessive, as compared to if the Authority had completely and/or adequately performed all of the reasonable rent determination procedures in accordance with the Authority's Section 8 Administrative Plan policies and procedures and Federal regulations. For utility allowance schedules, the tenant could have been receiving an incorrect utility allowance, which directly affects their portion of rent and HAP. For HQS inspections, tenants could have been living in units that do not comply with HQS. In addition, owners/landlords could be receiving HAP payments for units that do not comply with HQS. For HAP payments, the owner/landlord could be receiving an incorrect HAP, which directly affects their portion of rent. Auditor?s Recommendation: The Authority's new staff should have a more effective set of monitoring controls in place to verify that Special Tests and Provisions are being followed in accordance with the Authority's Section 8 Administrative Plan and Federal regulations. The Authority should implement proper waiting list procedures to ensure tenants are selected in accordance with their order on the list. The Authority should obtain a rent reasonableness software to ensure the owner/landlord is charging a rent that is considered reasonable in comparison to other units in the area. The Authority should include utility allowance schedules in each tenant file in order to provide documentation for the utility allowance number on HUD Form 50058. The Authority should perform HQS inspections before providing housing assistance to families or signing HAP contracts. In addition, the Authority should perform HQS inspections on a biennial basis to ensure the unit complies with HQS. The Authority should ensure the HAP Registers and each individual tenant's HUD Form 50058 report the same HAP. Grantee Response: The Executive Director acknowledges the finding and is following the auditor?s recommendation.

2020-002 ? CFDA#14.871 ? Section 8 Housing Choice Vouchers Program - Eligibility Condition and Criteria: In accordance with HUD eligibility compliance requirement, Uniform Guidance Single Audit compliance requires that for tenant eligibility, tenant files include certain information and documentation that is both accurate and complete such as to obtain and document third-party verification of annual income and other factors that affect the determination of adjusted income or income-based rent, and then properly calculate the rent payment using this documentation. Per 24 CFR sections 5.230, 5.609, & 982.516, tenants are required to provide necessary information, documentation, and releases for the Authority to verify income eligibility. Per 24 CFR 982 Subpart K, the Authority should maintain a utility allowance schedule, determine if rent to owner is reasonable, and adopt a payment standard schedule that establishes voucher payment standard amounts for each FMR area in the PHA jurisdiction. During our audit, it was determined that internal control deficiencies over compliance existed over the Authority?s Section 8 Housing Choice Vouchers (HCV) eligibility determination process. The Authority's previous staff had inadequate internal controls over the Authority?s Section 8 tenant eligibility process which has led to incomplete and inaccurate eligibility documentation. Out of ten tenant files tested for eligibility compliance, 100% of these files had exceptions where there were either missing third-party verification of income or deduction sources, missing or improperly filled out HUD required forms, or missing EIV (Enterprise Income Verification) documentation. The Authority also did not provide documentation for three files selected for testing. In addition, we could not verify that the correct utility allowance was used for the files selected due to a lack of documentation in the file. Context: H&P noted that 100% of the files tested had issues relating to missing third-party verification of income or deduction sources, missing or improperly filled out HUD required forms, or missing EIV (Enterprise Income Verification) documentation. There were four instances noted where supporting third-party verification of income or deductions was missing. Five instances that involved the Authority not retaining in tenant files the necessary Declaration of Citizenship Status (Section 214) form. Two instances in which the required HQS inspection form was not in the file. Six instances in which we could not verify that the correct utility allowance was used. Three instances where the HAP payment in the tenant's file did not correspond with the HAP Register. In addition, the Authority was unable to locate and provide documentation for three files selected. We determined that these internal control deficiencies and resulting noncompliance appeared to be consistent and prevalent among the Authority's tenant files. Questioned Costs: None Cause: The Authority?s previous staff's internal controls over the Section 8 HCV eligibility determination process that were in place lacked the necessary controls over information and communication of HUD regulatory requirements to properly follow HUD?s eligibility requirements as determined by 24 CFR. There appears to be a lack of quality control procedures in place regarding the monitoring of tenant files in order to catch inaccurate and/or incomplete required tenant eligibility documentation and rent calculations. Effect: Some of the Authority?s tenants were not and/or potentially not receiving the correct amount of Housing Assistance Payments, which in turn, can cause the tenants' portion of rent payments owed to the landlords to be incorrect. Some of these tenants may still be receiving an erroneous Housing Assistance Payment and could be paying the wrong amount to the landlords until the staff and management can perform interim reexaminations or annual reexaminations. Auditor?s Recommendation: We recommend the Authority's new Executive Director and Administrative Assistant review the internal controls over Section 8 HCV eligibility to improve the detection and correction of misstatements. The Authority's new staff should be attentive when calculating the annualized income for tenants and ensure that all third-party verification of income and deductions is being obtained. The Authority should utilize effective monitoring controls to check the accuracy of tenant rent calculations and payment standards for each initial lease-up and reexamination and, if any errors have been made, the Authority can identify these quickly and take the necessary corrective action. Additionally, the Authority should continue performing internal quality control re-inspections (not to be performed by the same employee who performed the original lease-up or reexamination but by someone with adequate knowledge of the tenant eligibility process) of a sample of applicant and tenant files to ensure that all eligibility and reexamination steps are being performed properly and in line with Federal regulations and the Authority's Section 8 Administrative Plan policies and procedures. Grantee Response: The Executive Director acknowledges the finding and is following the auditor?s recommendation.

Condition and Criteria: The Authority did not adequately maintain documentation for data related to the required Section Eight Management Assessment Program (SEMAP) indicators in their SEMAP certification report submitted to HUD. Per 24 CFR section 985.101, a PHA must submit a HUD-required SEMAP certification form within 60 calendar days after the end of its fiscal year. SEMAP establishes a system for HUD to measure PHA performance in key Section 8 program areas, also known as indicators, as described in 24 CFR section 985.3, and to assign performance ratings. SEMAP provides procedures for HUD to identify PHA management capabilities and deficiencies in order to target monitoring and program assistance more effectively. PHAs can use the SEMAP performance analysis to assess and improve their own program operations. The SEMAP certification report is a self-certifying report. Requirements include maintaining documentation in order to provide evidence that quality control inspections were performed for each applicable indicator. Context: As part of our audit procedures, we requested the SEMAP certification and all supporting backup documentation evidencing the Authority?s quality control tests that are part of their self-certification process. The Authority was unable to provide us with any of the backup for their SEMAP submission and stated none was maintained. Thus we were unable to perform the necessary audit of this Housing Choice Voucher Program Reporting compliance requirement. Questioned Costs: None Cause: Of the 15 SEMAP indicators, we noted that indicators requiring quality control samples did not have the necessary supporting documentation to support the self-certification responses evidencing that these quality control samples had been obtained. The Authority's Section 8 staff did not have the necessary experience and understanding of the SEMAP certification reporting requirements. SEMAP indicators requiring quality control testing of samples of Housing Choice Voucher program compliance areas such as the waiting list, reasonable rent, and HQS quality control inspections, among other indicators, were not actually performed by the Section 8 staff even though the Section 8 staff had self-certified in the SEMAP certification report that the Authority had performed these quality control tests and that the Authority was within the acceptable performance levels set by HUD. The Authority?s Senior Staff failed to adequately document and monitor the SEMAP report preparation process. If the SEMAP Reporting process had been adequately monitored, the Authority would have discovered that there was a lack of needed supporting documentation to evidence that the quality control tests had been performed. Effect: For SEMAP Reporting, as a result of the Authority's self-certified answers submitted to HUD potentially being incorrect due to no evidence of a quality control inspection, the score that the Authority received and that HUD uses to assist in measuring and monitoring the Authority's performance in key Section 8 program areas could also be incorrect. This could potentially trigger monitoring and program assistance from HUD. The fact that quality control tests were not performed (or adequately documented) means that the Authority could potentially have multiple areas that are not in compliance with HUD regulations. These areas should be assessed and improved upon by management to ensure that the Authority comes into compliance. Auditor's Recommendation: For SEMAP reporting, the Authority's Section 8 staff should acquire a better understanding of SEMAP certification reporting requirements as well as various key performance indicators. If management deems necessary, the Authority should provide the Section 8 staff with training on how to properly perform the necessary quality control testing to accurately perform the necessary steps to ensure that reported SEMAP certifications are properly documented, supported and maintained. The Executive Director should maintain oversight over all above noted procedures as well as review the final SEMAP certification report and supporting documentation to ensure that the information provided in the report is accurate prior to the SEMAP certification report being presented to the Board for review and approval and the subsequent annual submission to HUD. Grantee Response: Management acknowledges the finding and is following the auditor?s recommendation.

Condition and Criteria: The Authority's documentation to support its reasonable rent determinations lacked sufficient information in accordance with Federal regulations as well as the Authority?s Section 8 Administrative Plan policies and procedures, and the database where the Authority obtains information for reasonable rent comparability should be properly monitored and updated to include the most current and relevant information on unassisted units. Per 24 CFR section 982.507(b), a PHA must determine whether the rent to owner is a reasonable rent in comparison to rent for other comparable unassisted units. To make this determination, the PHA must consider: (1) the location, quality, size, unit type, and age of the contract unit; and (2) any amenities, housing services, maintenance and utilities to be provided by the owner in accordance with the lease. The Authority must determine whether rents charged by owners/landlords are reasonable in certain situations including, but not limited to, prior to the initial lease approval and before any increase in the rent to owner/landlord. Additionally, 24 CFR section 982.54(d)(15) requires that the PHA administrative plan documents the method of determining that rent to owner is a reasonable rent, and 24 CFR section 982.158 requires the Authority to keep records for each tenant to document the basis for the PHA's determination that rent to owner is a reasonable rent. Context: As part of our audit procedures, we requested all supporting backup documentation evidencing the Authority?s rent reasonableness analysis was performed. This is required when there is a new admission, during an annual recertification when rent to owner has increased, or when the published fair market rent has decreased by 5 percent or more. The Authority was unable to provide us with any documentation for a rent reasonableness analysis as they said that none was maintained. Thus, we were unable to perform the necessary audit of this Housing Choice Voucher Program Reasonable Rent compliance requirement. Questioned Costs: None Cause: The Authority did not utilize adequate internal controls over the reasonable rent determination process as there is a lack of sufficient documentation to properly determine whether rents are reasonable in accordance with the Authority?s Section 8 Administrative Plan policies and procedures and in accordance with Federal regulations. Additionally, the database where the Authority obtains information for comparability has not been adequately or consistently monitored and updated. We examined a sample of 10 tenants who held vouchers during the audit period and the Authority was unable to provide any documentation that serves as evidence that a rent reasonableness analysis was performed. Effect: Some of the Authority?s tenants are possibly living in units that do not have reasonable rents which in turn could be causing the Authority?s Housing Assistance Payments, as well as the tenants? portion of rent to the owners/landlords to be excessive, as compared to if the Authority had completely and/or adequately performed all of the reasonable rent determination procedures in accordance with the Authority?s Section 8 Administrative Plan policies and procedures and Federal regulations. Also, some rents that have been determined to be reasonable may not actually be reasonable as compared to other comparable unassisted units using the criteria set forth by Federal regulations and the Authority's Section 8 Administrative Plan policies and procedures for determining whether or not rent is reasonable, as the comparable data obtained from the Authority's database may no longer be accurate due to a failure by the Authority to adequately and consistently review and update the reasonable rent data maintained in the database. Auditor's Recommendation: The Authority should be more thorough and detailed in the documentation of reasonable rent determinations by utilizing the criteria set forth by Federal regulations and the Authority's Section 8 Administrative Plan policies and procedures. The Authority should have quality control internal audits of reasonable rent determination documents by someone other than the person who performed the initial reasonable rent determination in order to monitor the documentation for accuracy and completeness. The Authority should also have documented procedures in place for monitoring and updating the database that is currently being used, or the Authority should consider obtaining an alternative database provided by an outside source or software company for use in the reasonable rent determination process. The Authority could also decide to contract the reasonable rent determination process out to an outside third party company as long as the Authority could gain continued assurance that said company had the necessary knowledge and capabilities to ensure continued compliance with all applicable reasonable rent determination rules and regulations. Grantee Response: Management acknowledges the finding and is following the auditor?s recommendation.

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