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2024-001 ALN 14.871 – Housing Voucher Cluster – Significant Deficiency in Internal Controls Over Compliance with Special Tests and Provisions Condition and Criteria: The PHA is required to comply with the following regulation related to the Housing Voucher Cluster Special Tests and Provisions: • 24 CFR 982.404(a) – Housing Quality Standards enforcement, requiring PHAs to ensure that all units meet HQS and to abate HAP when deficiencies are not corrected. • 24 CFR 982.517 – Utility Allowance Schedule, requiring accurate computation and application of utility allowances. • 24 CFR 982.451 – Housing Assistance Payments Contract, requiring proper calculation and disbursement of HAP payments in accordance with the 50058 form. During our audit of the Housing Voucher Cluster, we identified deficiencies in the Authority’s internal controls over compliance with Housing Quality Standards (HQS) enforcement, utility allowance calculations, and Housing Assistance Payments (HAP). The deficiencies primarily stem from data conversion issues associated with the Authority’s transition to new software on February 1, 2024. Amount of Questioned Costs: None Context: HQS Enforcement: Five out of twenty-five tested inspections failed, but the required enforcement actions were not taken. Due to software conversion issues, inspections that had passed were not properly recorded, and the PHA did not follow through with abating HAP or enforcing family obligations in applicable cases. Utility Allowance: For one of the twenty-five tenant files tested, there was a discrepancy noted in a tenant’s utility allowance calculation. The utility allowance computation sheet reflected an allowance of $42, whereas the 50058-form reported $35, leading to potential inaccuracies in tenant rent calculations. Housing Assistance Payments (HAP): For one of the twenty-five tenant files tested, the tenant appeared twice on the September 2024 HAP register with two different HAP payments—$460 and $434. The 50058-form reported only the $434 amount, indicating an overpayment error. Cause: The primary cause of these deficiencies appears to be issues associated with the software conversion implemented on February 1, 2024. The data migration resulted in errors in recording and processing inspections, utility allowances, and HAP transactions, leading to internal control failures and compliance deficiencies. Effect: The deficiencies noted indicate potential widespread internal control weaknesses within the Housing Voucher Cluster. Failure to enforce HQS could result in continued subsidy payments for units that do not meet minimum habitability standards. Inaccurate utility allowances may impact tenant rent calculations, leading to incorrect assistance payments. The HAP overpayment issue suggests possible financial mismanagement, leading to improper disbursements and increased program risk. Auditor’s Recommendation: We recommend that the Authority strengthen internal controls over HQS enforcement procedures to ensure timely follow-up on inspections and enforcement of abatement policies. We also recommend implementing a reconciliation process for utility allowances to ensure accuracy between the calculation sheet and the reported 50058 amount. Additionally, we recommend that the Authority perform a review of HAP registers to identify and correct duplicate or inaccurate payments and establish internal controls to prevent future occurrences. Lastly, we recommend that the Authority address and resolve outstanding software conversion issues and conduct system-wide reconciliations to ensure data accuracy and compliance with program regulations. Grantee Response: Management agrees with the finding and will follow the Auditor's recommendation.