Housing Authority of the City of TulsaLocal Government

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Housing Choice Voucher Program Assistance Listing Number: 14.871 Award Period: 1/1/2021-12/31/2021 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: Under 24 CFR § 982.516, Public Housing Agencies are required to conduct a reexamination of family income and composition at least annually. The PHA must make appropriate adjustments to the housing assistance payment (HAP) based on the updated information. Timely recertification is essential to ensure that HAP amounts are accurate and that program funds are used in accordance with federal requirements. Condition: During our testing we noted instances where the Authority did not follow the internal controls in place to ensure that HAP amounts are accurate and to ensure compliance with annual reexamination requirements. Questioned Costs: $6,553 Context: In 5 of the 40 files tested, the Housing Authority did not complete required annual reexaminations in a timely manner. In addition, the 5 of 40 files that did not complete annual recertification timely, had a HAP per the HUD-50058 that did not agree to the HAP register. As a result, housing assistance payments were made based on outdated information, leading to overpayments. Cause: The timing delays in annual reexaminations occurred during the height of the COVID-19 public health emergency, when the Authority was operating remotely under federal health guidance and prioritizing housing stability for vulnerable families. During this period, HUD issued temporary flexibilities and strongly encouraged PHAs not to terminate assistance due to delayed documentation or recertification hardships. Consistent with this national directive, the Authority focused on maintaining assistance for households experiencing pandemic-related employment, medical, transportation, and childcare challenges. These extraordinary operating conditions, combined with increased caseload needs and remote processing, resulted in several reexaminations being completed later than normally required, as well as incorrect HAP payments being made. Effect: The Authority is not in compliance with HUD regulations. Repeat Finding: No Recommendation: We recommend that the Authority should review their reexamination policies to ensure that all reexaminations are performed timely and that all necessary documentation is maintained for each reexamination. Views of Responsible Officials: The Authority concurs with this finding. During the audit period, operations were significantly impacted by the COVID-19 public health emergency. From March 2020 through July 2021, the Housing Authority was operating under remote conditions, and several federally issued COVID relief measures temporarily altered standard enforcement practices across the Housing Choice Voucher program. Notably, during this period Congress issued a federal eviction moratorium, and HUD provided guidance discouraging termination of assistance for late recertification and documentation delays when caused by pandemic-related hardships. Consistent with this guidance, the Authority did not terminate voucher participants for late reexaminations and made every effort to maintain housing stability for families. Additionally, the Authority’s administrative offices remained physically closed to the public through July 2021 to protect program participants and staff. During this time, the volume of remote processing increased substantially, which contributed to delays in receipt and verification of documentation needed to complete annual reexaminations. While these actions were taken in good faith to align with federal directives and support vulnerable households during the pandemic, the Authority acknowledges that several reexaminations were not completed timely, resulting in housing assistance payments based on outdated, and incorrect information.

Federal Program Title: Section 8 Project Based Cluster Assistance Listing Number: 14.195 & 14.856 Award Period: 1/1/2021-12/31/2021 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: In accordance with HUD regulations under 24 CFR Sections 880.609, 881.601, 882.410, 882.808(e), 883.701, 884.109, 886.112, and 886.312, Section 8 projectbased properties are required to annually adjust contract rent, which may include special adjustments when necessary. Condition: During our testing, we noted instances where the Authority did not follow the internal controls in place to ensure compliance with contract rent increase requirements. Questioned Costs: $5,685 Content: Testing of property files found exceptions with one of the four building rent files as noted below: - For one of the four building rents tested, CLA noted that the new contract rents were not implemented. Cause: The delay in implementing the contract rent increase occurred during a period of significant operational disruption caused by the COVID-19 pandemic. During 2021, the Authority’s administrative offices were closed to the public, many staff were working remotely, and documentation flow and approval processes were modified to maintain continuity of service. At the same time, the Authority was completing a major software system conversion and experiencing staff turnover within the Section 8 Project-Based program. As responsibilities were being reassigned and new staff were being trained under pandemic conditions, the tracking and verification process for contract rent adjustments was temporarily interrupted, resulting in the delayed implementation of the approved rent change for one property. Effect: The Authority is not ensuring the proper and timely accounting of contract rent changes and the Authority is not in compliance with HUD regulations. Repeat Finding: No Recommendation: We recommend that management review their procedures to ensure that contract rent changes are implemented and evidenced timely and accurately and establish a method that ensures compliance. Views of Responsible Officials: The Authority concurs with this finding. During the audit period, program operations were impacted by both pandemic-era staffing disruptions and a major software conversion. The Section 8 Project-Based program experienced significant staff turnover during 2021, and the transition of portfolio management responsibilities to newly trained staff led to delays in processing certain contract rent adjustments. Specifically, for one of the four property’s contract rent files tested, the approved contract rent increase was implemented 4 months later than the effective date. This resulted in a loss of $5,685 in reimbursement to the property. Once identified, the rent adjustment was corrected prospectively and has remained accurate since the correction. It is important to note that this issue was isolated to a single property, and no systemic errors in contract rent calculation were identified during the remaining sample testing. The Authority’s standard rent adjustment process otherwise complied with HUD regulations.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Section 8 Project Based Cluster Assistance Listing Number: 14.195 & 14.856 Award Period: 1/1/2021-12/31/2021 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: In accordance with 24 CFR section 5.653, applicants for Section 8 Project-Based Assistance must meet all eligibility requirements to receive housing assistance. Additionally, in accordance with 880.603, 881.601, 882.515, 884.218, 886.124, and 886.324, reexaminations of family income and composition must occur on at least an annual basis. 24 CFR sections 880.603, 882.808, 833.701, 884.214, 886.119, and 886.318 state that tenant income and other key values, including medical expenses, need to be verified as part of eligibility determination. Accurate calculations of tenant rent payments must be made, in accordance with 24 CFR section 5.613. Further, tenant utility allowances must be properly applied within tenant rent calculations, in accordance with 24 CFR sections 5.603, 880.610, 881.601, 882.510, 882.808(k), 883.701, 884.220, 886.126, and 886.326. Condition: During our testing, we noted instances where the Authority did not follow the internal controls in place to ensure compliance with eligibility and examination requirements. Questioned Costs: $4,164 Content: A sample of 40 participants were selected for testing out of a total 607 available units. Based on testing of 40 tenant file samples, we observed the following:  1 of 40 items selected could not be tested, as the Authority could not locate the tenant file information.  1 of 40 items selected lacked sufficient backup to support reported medical expenses. As a result, the rent payment was not properly calculated.  1 of 40 items selected did not have a recertification performed annually. Cause: The Authority underwent a major software system conversion during the audit period, and certain tenant file data did not migrate completely or accurately, resulting in missing documentation in a limited number of historical files. At the same time, operations were impacted by COVID-19 public health restrictions, including prolonged remote work and office closure through July 2021, which delayed the receipt and verification of tenant documentation and reexamination processing. These operational disruptions were compounded by significant staff turnover and onboarding of new staff during the pandemic, which reduced capacity to consistently apply internal controls and ensure timely file maintenance and recertification. As a result of these issues, the Authority did not sufficiently monitor controls to ensure proper storage and collection of tenant information and files. Further, staff inexperience and clerical errors caused failures to ensure the tenant information was recorded accurately, and the Authority did not sufficiently monitor controls to ensure all examinations were performed timely. Effect: The Authority is not providing accurate data to HUD to ensure the proper accounting of tenant information and the Authority is not in compliance with HUD regulations. Repeat Finding: No Recommendation: We recommend that management review their procedures for retrieving tenant information and establish a method that ensures compliance. We recommend that the Authority should review their examination policies to ensure that all examinations are performed timely. Views of Responsible Officials: The Authority concurs with this finding. During the period under audit, program administration was affected by both the COVID-19 public health emergency and a software system conversion. The Authority’s administrative offices remained closed to the public through July 2021, and remote work conditions created delays in obtaining and verifying documentation needed for eligibility reviews, medical expense verification, and annual reexaminations. Additionally, during this time, the Authority transitioned to a new housing management software system, and certain tenant file records did not migrate completely, contributing to incomplete documentation within one of the sampled files. These challenges were compounded by staff turnover during the pandemic, which required onboarding and training of new personnel under nonstandard operating conditions. It is important to note that the exceptions identified were limited in scope relative to the total portfolio tested. For 37 of the 40 files reviewed, eligibility determinations, reexamination processing, and rent calculations were completed correctly, indicating that the Authority’s policies and procedures are fundamentally sound; however, execution was impacted during this extraordinary period.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Section 8 Project Based Cluster Assistance Listing Number: 14.195 & 14.856 Award Period: 1/1/2021-12/31/2021 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: An amount as required by HUD or the state agency for 24 CFR Part 883 projects, as applicable, shall be deposited monthly in the replacement reserve fund in accordance with the Regulatory Agreement or HAP contract (24 CFR sections 880.601, 880.602, 881.601 and 883.701). Condition: During our testing, we noted instances where the Authority did not make the required deposits to their replacement reserve accounts. Questioned Costs: $2,593 Content: During our review of four replacement reserve accounts, we noted that two of the Projects did not make correct required deposit amounts to their replacement reserve accounts. Cause: The incorrect replacement reserve deposits occurred during a period in which the Authority was transitioning to a new software system and adjusting financial workflows affected by the COVID-19 pandemic. Certain reserve deposit schedules and automated payment settings did not migrate fully or accurately during the system conversion. At the same time, staffing turnover within the finance and asset management departments required new staff to assume responsibilities for which training and historical context were still in progress. These combined circumstances resulted in two properties temporarily depositing incorrect monthly replacement reserve amounts. Effect: The Authority is not in compliance with the replacement reserve requirements. Repeat Finding: No Recommendation: We recommend that management review their procedures for reviewing and monitoring the required deposit amounts to ensure that each Project deposits the correct amount each month. Views of Responsible Officials: The Authority concurs with this finding. During the audit period, the Authority was implementing a new financial and housing management software system while also responding to the operational impacts of the COVID-19 pandemic, including remote work conditions and staffing transitions. As automated workflows and financial schedules were being re-established in the new system, replacement reserve contribution amounts for two properties were not initially updated to reflect the correct required monthly deposits. Once identified, the Authority adjusted the monthly reserves to the correct levels and verified that all properties are now in compliance with the required reserve schedules. No issues were found with the remaining reserve accounts reviewed.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Housing Choice Voucher Program CFDA Number: 14.871 Award Period: 1/1/2020-12/31/2020 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Condition: During our testing we noted instances where the Authority did not follow the internal controls in place to ensure compliance with Annual HQS Inspections requirements. Criteria or Specific Requirement: 24 CFR Sections 982.158(d) and 982.405(b) state that 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. Questioned Costs: Unknown Content: Testing of tenant files found exceptions with four out of forty files as noted below: - Four out of forty files tested did not have a timely HQS inspection Cause: The Authority did not sufficiently monitor controls to ensure all inspections were performed timely. Effect: The Authority is not in compliance with HUD regulations. Repeat Finding: No Recommendation: We recommend that the Authority should review their HQS inspection policies to ensure that all inspections are performed timely and that all necessary documentation is maintained for each inspection. Views of Response Officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Public and Indian Housing CFDA Number: 14.850 Award Period: 1/1/2020-12/31/2020 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Condition: During our testing we noted instances where the Authority did not follow the internal controls in place to ensure compliance with Eligibility requirements. Criteria or Specific Requirement: 24 CFR Section 960.259 states that 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. Per THA’s ACOP, documentation for eligibility should include a summary of the pertinent contents (public housing worksheet) which is to be signed and dated by the staff member who examined the verification (pg 20). Questioned Costs: Unknown Content: Testing of tenant files found exceptions with four of ten files as noted below: - One out of ten files tested did not have proper support for assets or expenses, and therefore had incorrectly calculated rent due to the missing information. - Four out of ten files tested did not have a signed general release form maintained in the tenant file. Cause: During the previous fiscal year, the Authority had a system conversion. Some of the information was not brought through correctly, causing differences between the rent in the tenants’ files and what was included in the HUD-50058 forms in the system. The Authority did not sufficiently monitor controls to ensure compliance with the file checklist requirements. Effect: The Authority is not providing accurate data to HUD to ensure the proper accounting of tenant information and the Authority is not in compliance with HUD regulations. Repeat Finding: Yes Recommendation: We recommend that management review their procedures for retrieving tenant information and establish a method that ensures compliance. Views of Response Officials: There is no disagreement with the audit finding.

Finding 2019-002 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Public and Indian Housing CFDA Number: 14.850 Award Period: 1/1/2019-12/31/2019 Type of Finding: Significant Deficiency in Internal Control over Compliance Condition: During our testing we noted instances where the Authority did not follow the internal controls in place to ensure compliance with Eligibility requirements. Criteria: 24 CFR Section 960.259 states that 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. Per THA?s ACOP, documentation for eligibility should include a summary of the pertinent contents (public housing worksheet) which is to be signed and dated by the staff member who examined the verification (pg 20). Questioned Costs: Unknown Content: Testing of tenant files found exceptions with eight of forty files as noted below: ? Four out of forty files tested did not have a signed/completed recertification checklist. These files did not have any other errors noted in our review. ? One out of forty files tested did not have a signed/completed recertification checklist. This file did have an error noted in our review. ? Four out of forty files tested reported rent per the tenant file that did not agree to the HUD 50058. Cause: During the fiscal year, the Authority had a system conversion. Some of the information was not brought through correctly, causing differences between the rent in the tenants? files and what was included in the HUD-50058 forms in the system. The Authority did not sufficiently monitor controls to ensure compliance with the file checklist requirements. Effect: The Authority is not providing accurate data to HUD to ensure the proper accounting of tenant information and the Authority is not in compliance with HUD regulations. Repeat Finding: No Recommendation: We recommend that management review their procedures for retrieving tenant information and establish a method that ensures compliance. Views of Response Officials: There is no disagreement with the audit finding.

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