Spokane Housing AuthorityLocal Government

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Spokane Housing Authority January 1, 2022 through December 31, 2022 2022-001 The Housing Authority had inadequate internal controls for ensuring compliance with Housing Quality Standards enforcement requirements of its Housing Voucher Cluster program. Assistance Listing Number and Title: 14.871 ? Section 8 Housing Choice Vouchers 14.879 ? Mainstream Vouchers Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WA055VO/WA055AF Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-001 Description of Condition During fiscal year 2022, the Housing Authority spent $43,681,168 under the Housing Voucher Cluster program, which includes the Section 8 Housing Choice Vouchers program (HCVP) and Mainstream Vouchers program. Of the amount spent, $1,424,677 was spent on the Emergency Housing Vouchers award that is not subject to Housing Quality Standards (HQS) enforcement requirements for 2022 and is not included in this finding. The HCVP provides rental assistance to help families with very low incomes afford decent, safe and sanitary rental housing. The Mainstream Voucher program enables families, for whom the head, spouse or co-head is a person with disabilities, to lease affordable private housing of their choice. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. The Housing Authority must inspect units leased to families at least every two years to determine if they meet federal HQS. For units under Housing Authority Payment (HAP) contract that fail to meet HQS, the Housing Authority must require owners to correct any cited life-threatening HQS deficiencies within 24 hours of inspections. Owners must correct non-life-threatening HQS deficiencies within 30 calendar days of inspections or within a specified Housing Authority-approved extension. If owners do not correct cited deficiencies within the specified correction period, the Housing Authority must stop assistance payments beginning no later than the first of the month following the correction period, or it must terminate the HAP contract. The Housing Authority must keep documentation demonstrating compliance with HQS enforcement requirements. Our audit found the Housing Authority?s established internal controls were ineffective for ensuring compliance with the program?s HQS enforcement requirements. Although the Housing Authority had internal controls for requiring owners to correct HQS deficiencies within 30 calendar days of inspections, it did not establish effective controls for requiring owners to correct any cited life-threatening HQS deficiencies within 24 hours of inspections, as the program requires. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition Although the Housing Authority provides housing inspection training to employees, personnel responsible for conducting the HQS inspections did not follow procedures for ensuring owners corrected cited life-threatening deficiencies within 24 hours of inspections. Additionally, during monitoring of the program, Housing Authority staff did not identify that personnel had not followed up with some owners who were cited for deficiencies to ensure they corrected them timely. After the fiscal year 2021 audit was completed in September 2022, the Housing Authority implemented corrective action measures, but the noncompliance found in the current audit was for cited life-threatening deficiencies that occurred before the prior audit was completed. Effect of Condition Using statistical sampling, we tested 29 failed inspections. Our testing found four with cited life-threatening HQS deficiencies for which the Housing Authority did not have documentation demonstrating it followed up on the inspections and required the owners to correct the deficiencies within 24 hours of inspections. Additionally, it did not comply with the requirement to stop the HAP for one owner who did not correct deficiencies timely. The Housing Authority reinspected the units within 30 days to verify whether the owners corrected the deficiencies and stopped the HAP for one owner. Because the Housing Authority did not follow up on HQS deficiencies within the required time frame, it cannot demonstrate that the housing units met HQS enforcement requirements. Recommendation We recommend the Housing Authority strengthen internal controls for ensuring it complies with HQS enforcement requirements. Specifically, the Housing Authority should follow up on cited life-threatening HQS deficiencies and require owners to correct them within 24 hours of inspections, as the program requires. Housing Authority?s Response Spokane Housing Authority acknowledges the above reference finding. Although personnel responsible for conducting the HQS inspections and ensuring owners corrected the cited life-threatening deficiencies were trained on policy and procedure, SHA did not establish the internal controls to ensure proper follow-up was made. In September 2022, SHA, established a Housing Support Specialist position, which will log life-threatening HQS deficiencies as documented on the HQS inspector?s reports daily and follow-up with the landlord within the 24-hour timeframe to ensure that repairs have been addressed and completed. If repairs have been made pursuant to the directive given by the inspector, then a letter will be sent to the landlord and tenant indicating that the 24-hour hazards have been fixed. If the landlord fails to comply within the 24-hour timeframe, then the unit fails, and a Notice of Termination of HAP letter will be sent to the landlord and tenant. SHA will work with the tenant to start the process of locating a new unit that passes HQS. The log of deficiencies will be reviewed by the Inspections Coordinator regularly as an additional internal control. Auditor?s Remarks We appreciate the Housing Authority?s commitment to resolve this finding and thank the Housing Authority for its cooperation and assistance during the audit. We will review corrective action taken during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 982, Section 8 Tenant-Based Assistance: Housing Choice Voucher Program, section 404, Maintenance: Owner and family responsibility; PHA remedies, establishes enforcement requirements for housing quality standards.

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTSSpokane Housing AuthorityJanuary 1, 2021 through December 31, 20212021-001 The Housing Authority had inadequate internal controls for ensuring compliance with Housing Quality Standards inspection and enforcement requirements of its Housing Voucher Cluster program.CFDA Number and Title: 14.871 ? Section 8 Housing Choice Vouchers14.871 ? COVID-19 Section 8 Housing Choice Vouchers14.879 ? Mainstream Vouchers14.879 ? COVID-19 Mainstream VouchersFederal Grantor Name: U.S. Department of Housing and Urban DevelopmentFederal Award/Contract Number: WA055VO / WA055AFPass-through Entity Name: N/APass-through Award/Contract Number: N/AQuestioned Cost Amount: $0Description of ConditionDuring fiscal year 2021, the Housing Authority spent $36,835,390 under the Housing Voucher Cluster program, which includes the Section 8 Housing Choice Vouchers program (HCVP) and Mainstream Voucher program. Of the amount spent, $73,297 was spent on the Emergency Housing Vouchers award that is not subject to Housing Quality Standards (HQS) inspection and enforcement requirements for 2021 and is not included in this finding. The HCVP provides rental assistance to help families with very low incomes afford decent, safe and sanitary rental housing. The Mainstream Voucher program enables families, for whom the head, spouse, or co-head is a person with disabilities, to lease affordable private housing of their choice.Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls.Housing Quality Standard InspectionThe Coronavirus Aid, Relief, and Economic Security (CARES) Act (Public Law 116-136) provides the U.S. Department of Housing and Urban Development (HUD) with broad authority to waive or establish alternative requirements for numerous statutory and regulatory requirements for the Housing Voucher Cluster. In Notice PIH 2020?05, published on April 10, 2020, HUD exercised its authority under the CARES Act to establish waivers and administrative flexibilities to provide relief to Public Housing Agencies (PHAs) in response to the COVID-19 pandemic. Subsequent revisions PIH 2020-33 (issued in November 2020) and PIH 2021-14 (issued in May 2021) allowed PHAs to delay biennial inspections for both tenant-based and project-based voucher units and instead rely on owners? certifications that they have no reasonable basis to have knowledge that life-threatening conditions exist in their unit or any units in question. At minimum, PHAs must require this owner certification.Our audit found the Housing Authority did not establish effective internal controls to ensure compliance with the program?s HQS inspection requirements. Specifically, when the Housing Authority delayed biennial inspections, it did obtain the required owner certifications.We consider this internal control deficiency to be a material weakness that led to material noncompliance. This issue was not reported as a finding in the prior audit.Housing Quality Standard EnforcementThe Housing Authority must inspect units leased to families at least every two years to determine if they meet federal HQS. For units under Housing Authority Payment (HAP) contract that fail to meet HQS, the Housing Authority must require owners to correct any cited life-threatening HQS deficiencies within 24 hours of inspections. Owners must correct non-life-threatening HQS deficiencies within 30 calendar days of inspections or within a specified Housing Authority-approved extension. The Housing Authority must keep documentation demonstrating compliance with HQS enforcement requirements.Our audit found the Housing Authority?s established internal controls were ineffective for ensuring compliance with the program?s HQS enforcement requirements. Specifically, the controls were ineffective for ensuring owners corrected cited life-threatening HQS deficiencies within 24 hours of inspections and non-life-threatening HQS deficiencies within 30 calendar days of inspections, as the program requires.We consider this internal control deficiency to be a material weakness that led to material noncompliance. This issue was reported as a finding in the prior audit as finding 2020-001.Cause of ConditionHousing Quality Standard InspectionHousing Authority employees received an email from HUD with a notice on inspection waiver guidance that allowed for delaying biennial inspections but, at a minimum, an owner certification was required instead of conducting an initial inspection. However, HUD subsequently updated this guidance to remove the words ?instead of conducting an initial inspection.? Housing Authority employees assert they did not receive notification of this change. Housing Authority employees relied on the original guidance and the word ?initial,? and did not perform additional research or contact HUD to determine if this was correct. Therefore, management and staff were unaware of this requirement and did not obtain the owner certifications.Housing Quality Standard EnforcementThe Housing Authority was understaffed, which caused increased workloads and delays in its inspection process. The Housing Authority provided housing inspection training to employees; however, personnel responsible for conducting the HQS inspections did not follow procedures for ensuring owners corrected the cited life-threatening deficiencies within 24 hours of inspections and all other HQS deficiencies within 30 calendar days of inspections. Additionally, during monitoring of the program, Housing Authority staff did not identify that personnel had not followed up with some owners who were cited for deficiencies to ensure they corrected them timely.Effect of ConditionHousing Quality Standard InspectionUsing statistical sampling, we tested 29 tenant files. Our testing found seven tenants for which the Housing Authority delayed inspections, as allowed, but did not obtain the required owner certifications. Because the Housing Authority did not obtain owner certifications, it cannot demonstrate that the housing units met HQS inspection requirements.Housing Quality Standard EnforcementUsing statistical sampling, we tested 29 failed inspections. Our testing found nine with cited life-threatening HQS deficiencies for which the Housing Authority did not have documentation demonstrating it followed up on the inspections and required the owners to correct the deficiencies within 24 hours of inspections. The Housing Authority reinspected the units within 30 days and verified owners corrected the deficiencies. Additionally, we found three inspections with cited non-life-threatening HQS deficiencies for which the Housing Authority did not have documentation demonstrating it followed up on the inspections and required the owners to correct the deficiencies within 30 days of inspections. Further, there were no Housing Authority-approved extensions for these three inspections. Because the Housing Authority did not follow up on HQS deficiencies within the required time frame, it cannot demonstrate that the housing units met HQS enforcement requirements.RecommendationWe recommend the Housing Authority strengthen internal controls to ensure it complies with HQS inspection and enforcement requirements. Specifically, the Housing Authority should:? At a minimum, obtain owner certifications for delayed biennial inspections, as the program requires? Follow up on cited life-threatening and non-life-threatening HQS deficiencies and require owners to correct them within the allowable time frames, as the program requiresHousing Authority?s ResponseThe Spokane Housing Authority acknowledges the above referenced finding as outlined:Our audit found the Housing Authority did not establish effective internal controls to ensure compliance with the program?s Housing Quality Standards (HQS) inspection requirements. Specifically, when the Housing Authority delayed biennial inspections, it did not obtain the required owner certifications. SHA acknowledges that it did not obtain the required owner certifications for the delayed biennial inspections. During this time, several waiver notices were published and amended by HUD, SHA failed to see the change in the delayed inspections waiver requiring the owner certifications. The delayed bi-annual inspection waiver expired December 31, 2021, therefore this is not an ongoing deficiency in control as SHA will have completed all delayed bi-annual inspections from 2021 as of the end of September 2022.Our audit found the Housing Authority?s established internal controls were ineffective for ensuring compliance with the program?s HQS enforcement requirements. Specifically, the controls were ineffective for ensuring owners corrected cited life-threatening HQS deficiencies within 24 hours of inspections and non-life-threatening HQS deficiencies within 30 calendar days of inspections, as the program requires. This is a repeat finding from FYE 12/31/2020. Unfortunately, the Housing Authority was notified of this finding in March of 2022, therefore it was unable to establish the needed internal control until after FY 2021 ended (current audit year). Since, SHA has taken proactive steps to ensure that Life Threatening HQS deficiencies are tracked and addressed within the 24-hour time frame required under federal regulations. SHA established an Inspection Support Specialist position, which logs life-threatening HQS deficiencies as documented on the HQS inspector?s reports daily, sends out abatement letters to both the landlord and tenant and follows-up with the landlord within the 24 hour timeframe to ensure that repairs have been addressed and completed and ready for re-inspection. In addition to logging life-threatening HQS deficiencies, all non-life-threatening deficiencies will be logged in the same manner to ensure consistent and timely follow-up within the 30-day time period. The log of deficiencies is reviewed by the Inspections Coordinator and Housing Programs Manager on a monthly basis as an additional internal control.Auditor?s RemarksWe appreciate the Housing Authority?s commitment to resolve this finding and thank the Housing Authority for its cooperation and assistance during the audit. We will review corrective action taken during the next auditApplicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.Notice PIH 2020-33(HA), REV-2, COVID-19 Statutory and Regulatory Waivers and Alternative Requirements for the Public Housing, Housing Choice Voucher (including Mainstream and Mod Rehab), Indian Housing Block Grant and Indian Community Development Block Grant programs, Suspension of Public Housing Assessment System and Section Eight Management Assessment Program, Revision 2.Notice PIH2021-14(HA), COVID-19 Statutory and Regulatory Waivers and Alternative Requirements for the Public Housing, Housing Choice Voucher (including Mainstream and Mod Rehab), Indian Housing Block Grant and Indian Community Development Block Grant programs, Suspension of Public Housing Assessment System and Section Eight Management Assessment Program, Revision 3.Title 24 CFR Part 982, Section 8 Tenant-Based Assistance: Housing Choice Voucher Program, section 404, Maintenance: Owner and family responsibility; PHA remedies, establishes enforcement requirements for housing quality standards.Title 24 CFR Part 982, Section 8 Tenant-Based Assistance: Housing Choice Voucher Program, section 405, PHA initial and periodic unit inspection, establishes inspection requirements for housing quality standards.

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Spokane Housing Authority January 1, 2020 through December 31, 2020 2020-001 The Housing Authority had inadequate internal controls for ensuring compliance with Housing Quality Standards enforcement requirements of its Section 8 Housing Choice Vouchers program. CFDA Number and Title: 14.871 Section 8 Housing Choice Vouchers 14.871 COVID-19 Section 8 Housing Choice Vouchers Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WA055VO / WA055AF Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Questioned Cost Amount: $0 Description of Condition During fiscal year 2020, the Housing Authority spent $35,546,851 under the Section 8 Housing Choice Vouchers program. The Housing Choice Vouchers program (HCVP) provides rental assistance to help very low-income families afford decent, safe, and sanitary rental housing. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The Housing Authority must inspect units leased to families at least every two years to determine if they meet federal Housing Quality Standards (HQS). For units under Housing Authority Payment (HAP) contract that fail to meet HQS, the Housing Authority must require owners to correct any cited life-threatening HQS deficiencies within 24 hours of inspections. Owners must correct all other HQS deficiencies within 30 calendar days of inspections or within a specified Housing Authority-approved extension. The Housing Authority must keep documentation demonstrating compliance with HQS enforcement requirements. The Housing Authority?s established internal controls were ineffective for ensuring compliance with the program?s HQS enforcement requirements. Although the Housing Authority had internal controls for requiring owners to correct HQS deficiencies within 30 calendar days of inspections, it did not establish effective controls for requiring owners to correct any cited life-threatening HQS deficiencies within 24 hours of inspections, as the program requires. We consider this internal control deficiency to be a material weakness that led to material noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition The Housing Authority provides housing inspection training to employees; however, personnel responsible for conducting the HQS inspections did not follow procedures for ensuring owners corrected the cited life-threatening deficiencies within 24 hours of inspections. During its monitoring of the program, the Housing Authority did not identify that personnel had not followed up with some owners who were cited for life-threatening deficiencies to ensure they corrected them timely. Effect of Condition Using non-statistical sampling, we tested 21 failed inspections and found six with cited life-threatening HQS deficiencies. The Housing Authority did not have documentation demonstrating it followed up on the inspections and required the owners to correct the life-threatening HQS deficiencies within 24 hours of inspections. The Housing Authority re-inspected the units within 30 days and verified owners corrected the deficiencies. Because the Housing Authority did not follow up on life-threatening HQS deficiencies within 24 hours of inspections, it cannot demonstrate that the housing units met HQS. Recommendation We recommend the Housing Authority strengthen internal controls for ensuring it complies with HQS enforcement requirements. Specifically, the Housing Authority should follow up on cited life-threatening HQS deficiencies and require owners to correct them within 24 hours of inspections, as the program requires. Housing Authority?s Response Spokane Housing Authority acknowledges the above reference finding. Although personnel responsible for conducting the HQS inspections and ensuring owners corrected the cited life-threatening deficiencies were trained on policy and procedure, SHA did not establish the internal controls to ensure proper follow-up was made. Since the audit, SHA has established a Housing Support Specialist position, which will log life-threatening HQS deficiencies as documented on the HQS inspector?s reports daily and follow-up with the landlord within the 24-hour timeframe to ensure that repairs have been addressed and completed. If repairs have been made pursuant to the directive given by the inspector, then a letter will be sent to the landlord and tenant indicating that the 24-hour hazards have been fixed. If the landlord fails to comply within the 24-hour timeframe, then the unit fails, and a Notice of Termination of HAP letter will be sent to the landlord and tenant. SHA will work with the tenant to start the process of locating a new unit that passes HQS. The log of deficiencies will be reviewed by the Inspections Coordinator regularly as an additional internal control. Auditor?s Remarks We appreciate the Housing Authority?s commitment to resolve this finding and thank the Housing Authority for its cooperation and assistance during the audit. We will review corrective action taken during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 982, Section 8 Tenant-Based Assistance: Housing Choice Voucher Program, section 404, Maintenance: Owner and family responsibility; PHA remedies, establishes enforcement requirements for housing quality standards.