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HomeMy WebLinkAbout2019-06-20; Housing Voucher Management System Validation Review; |Fountain, Debbie| Barberio, Gary|To the members of the: CITY COUNCIL Datet,/oo h9 CA v' CC \I CM ~ coo V DCM (3) V June 20, 2019 Council Memorandum To: Honorable Mayor Hall and Members of the City Council {cityof Carlsbad Memo ID# 2019067 From: Debbie Fountain, Community & Economic Development Director Gary Barberio, Deputy City Manager j __.. Elaine Lu key, Chief Operations Officer tJf Via: Re: Housing Voucher Management System Validation Review This memorandum provides an update for the City Council on the recent Voucher Management System (VMS) validation review of our Section 8 Rental Assistance Voucher Program. Background On a routine and regular basis, the U.S. Department of HUD audits various areas of administration related to the federally-funded and regulated Section 8 Rental Assistance Program, operated by the Carlsbad Public Housing Authority (PHA). Discussion On May 21, 2019, Quality Assurance Division (QAD) staff from the U.S. Department of Housing & Urban Development {HUD) initiated an on-site validation review of the on line VMS administered by the Carlsbad Housing & Neighborhood Services Division for the city's federally- funded Section 8 Rental Assistance Voucher Program. The purpose of the review was to identify any VMS reporting discrepancies, and for HUD to provide guidance and technical assistance related to improving the integrity of the data for the Housing Choice Voucher (HCV) Program that is reported into the VMS. The review focused on the VMS reporting period, April 2018 through March 2019. Specifically, the audit focused on validating the Unit Months Leased {UML) and related Housing Assistance Payment (HAP) expenses certified as accurate by the Carlsbad PHA, which is staffed by Housing & Neighborhood Services with accounting/financial assistance from Finance Department staff. QAD staff validated the PHA's source documents against the VMS data entries, which is used by the Office of Housing Voucher Program, Financial Management Division (FMD) to calculate program ~enewal funding. QAD staff identified areas where the Carlsbad Housing & Neighborhood Services Division can improve the accuracy of its VMS reporting. The report contained five areas of concern and required corrective actions within 30 days of the report to ensure the best possible VMS data integrity. Attached is the summary of the recommendations, concerns, and corrective actions set forth by QAD staff to address identified accounting concerns as a result of their on-site audit (letter dated May 30, 2019). Community Services Branch Community & Economic Development 1635 Faraday Avenue I Carlsbad, CA 92008 I Honorable Mayor Hall and Members of the City Council June 20, 2019 Page 2 Next Steps While there were several areas of concern identified by QAD staff, there were no formal audit findings. QAD staff acknowledged that city staff received some conflicting instruction from previous auditors which resulted in some of the discrepancies between General Ledger entries and VMS recordings. Corrective actions, addressing the discrepancies identified within the QAD audit report are required within 30 days of the date of the report (May 30, 2019). The main discrepancy relates to a difference in accounting systems and policies between the city and the VMS; it is not the result of errors in accounting or reporting by the city. Adjustments are required in VMS to make the required corrective actions set forth by the QAD staff. Housing & Neighborhood Services staff is working with Finance staff to complete the corrective actions. These actions will enhance the integrity of the data and will be corrected for the future and will satisfy the requirements of HUD. These corrections and adjustments will be completed, and city staff will provide written correspondence to HUD documenting our corrections and adjustments by no later than June 29, 2019. In addition, a new software system (Voyager) has been installed recently for use by city staff which will provide for better accounting within VMS and should result in fewer discrepancies in the future. Attachment: Letter from U.S. Department of Housing and Urban Development, dated May 30, 2019 cc: Scott Chadwick, City Manager Celia Brewer, City Attorney U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WASHINGTON, DC 20410-5000 OFFICE OF PUBLIC AND INDIAN HOUSING Quality Assurance Division May 30, 2019 Debbie Fountain, Executive Director Carlsbad Housing and Neighborhood Services 1200 Carlsbad Village Dr. Carlsbad, CA 92008 . Dear Ms. Fountain, Recently, Quality Assurance Division (QAD) staff conducted an on-site Housing Choice Voucher Program (HCV) Voucher Management System (VMS) Validation Review of the Carlsbad Housing and Neighborhood Services (CA077). The purpose of the review to identify any VMS reporting discrepancies, and to provide guidance and technical assistance related to improving the HCV data reported in the VMS. Our review focused on the VMS reporting period, April 2018 through March 2019. QAD staff identified areas where the Carlsbad Housing and Neighborhood Services can improve the accuracy of its VMS reporting. These areas and any technical assistance provided are detailed in the enclosed report. The report contains five (5) Concerns. Since corrections to VMS data were identified by the QAD staff, it is important that these corrections be made as directed in the enclosed report as soon as possible, but not later than 30 days from the date of this report. Notification of informal corrective action(s) as a result of review Concerns may be sent via e-mail to Raymond.Phung@hud.gov. We appreciate the cooperation extended to QAD staff during our review, and your assistance in helping us ensure the best possible VMS data integrity. Should you have any questions or concerns, please contact Ray Phung at Raymond.Phung@hud.gov or 971-222-2662. Sincerely, Brian McIntyre Supervisory Program Analyst Quality Assurance Division Enclosure: On-Site VMS Valid~tion Report-CA077 cc: Marcie Chavez, Director, Office of Public & Indian Housing, Los Angeles Brenda Buhrmester, Division Director, Financial Management Center, Kansas City Matt Hall, Board Chair, Carlsbad Housing and Neighborhood Services Bobbi Nunn, Housing Program Manager, Carlsbad Housing and Neighborhood Services On-Site VMS Validation Report -CA077 Background: VMS collects data on monthly leasing activities and costs for the HCV program via mandatory PHA reporting. The Department reviews the VMS data to identify issues of concern to PHAs and/or the Department. The system is periodically enhanced to provide new flexibilities or features for improved ease and accuracy of reporting and use of the data. VMS is a critical data system that is used for a variety of major functions, including budget formulation, utilization analysis, and funding allocations. The purpose of this review was to validate the Unit Months Leased (UML) and related Housing Assistance Payment (HAP) expenses certified as accurate by the Carlsbad Housing and Neighborhood Services (PHA) for the period April 1, 2018 through March 31, 2019. For the period covered by our review, we validated the PHA's source documents against their VMS data entries, which is used by the OHVP Financial Management Division (FMD) to calculate renewal funding. Our review revealed several reporting discrepancies as noted in the body of this report. Concerns Concern No. 1: Cumulative discrepancies in the Housing Assistance Payments (HAP) reporting categories resulted in incorrect Total HAP Condition: The Total HAP expenses for the entire review were incorrect in the Voucher Management System by $8,982 (see Table 6). Tables 1 through 5 below consist of the categories which comprise of the HAP variances found in VMS. Non-Elderly Disabled -Non MTW HAP Portable Vouchers Paid HAP Table 1 Reported Validated Difference Table 2 Reported Validated Difference Apr-18 65,768 66,769 -1,001 Apr-18 33,443 33,443 0 May-18 69,342 68,341 1,001 Mav-18 40,925 40,925 0 Jun-18 69,666 68,610 1,056 Jun-18 41,513 41,513 0 Jul-18 69,666 69,718 -52 Jul-18 39,701 43,464 -3,763 Aug-18 70,711 71,715 -1,004 Aug-18 45,586 43,914 1,672 Sep-18 71,029 71,029 0 Sep-18 41 ,642 41,642 0 Oct-18 71 ,126 71,126 0 Oct-18 41 ,512 35,785 5,727 Nov-18 74,371 74,371 0 Nov-18 30,316 36,043 -5,727 Dec-18 75,057 75,057 0 Dec-18 51,700 51,700 0 Jan-19 74,259 74,775 -516 Jan-19 40,844 41,487 -643 Feb-19 73,471 73,471 0 Feb-19 43,454 43,454 0 Mar-19 73,655 73,157 498 Mar-19 41 ,813 41,813 0 12 Month Total 858,121 858,139 -18 12 Month Total 492,449 495,183 -2,734 1 On-Site VMS Validation Report -CA077 All Other Vouchers HAP FSS Escrow Deposits Table 3 Reported Validated Difference Table 4 Reported Validated Difference Apr-18 430,665 430,155 510 Apr-18 0 821 -821 Mav-18 432,609 433,731 -1 , 122 Mav-18 0 241 -241 Jun-18 441 ,078 438,978 2,100 Jun-18 1,554 241 1,313 Jul-18 428,391 430,145 -1,754 Jul-18 0 241 -241 Aug-18 424,791 431,954 -7,163 Aug-18 0 241 -241 Sep-18 440,749 440,749 0 Sep-18 0 241 -241 Oct-18 444,310 443,906 404 Oct-18 0 96 -96 Nov-18 435,532 436,300 -768 Nov-18 0 96 -96 Dec-18 431,333 432,426 -1 ,093 Dec-18 0 96 -96 Jan-19 437,271 437,549 -278 Jan-19 0 96 -96 Feb-19 439,901 439,901 0 Feb-19 1,348 96 1,252 Mar-19 439,298 430,689 8,609 Mar-19 96 96 0 12 Month Total 5,225,928 5,226,483 -555 12 Month Total 2,998 2,602 396 All VO Expenses After the First of Month Total HAP Table 5 Reported Validated Difference Table 6 Reported Validated Difference Apr-18 0 Unvalidated 0 Apr-18 529,876 531,188 -1 ,312 Mav-18 1,319 Unvalidated 1,319 Mav-18 544,195 543,238 957 Jun-1 8 782 Unvalidated 782 Jun-18 554,593 549,342 5,251 Jul-18 1,466 Unvalidated 1,466 Jul-18 539,224 543,568 -4,344 Aug-18 4,572 Unvalidated 4,572 Aug-18 545,660 547,824 -2, 164 Sep-18 0 Unvalidated 0 Sep-18 553,420 553,661 -241 Oct-18 0 Unvalidated 0 Oct-18 556,948 550,913 6,035 Nov-18 2,384 Unvalidated 2,384 Nov-18 542,603 546,810 -4,207 Dec-18 575 Unvalidated 575 Dec-18 558,665 559,279 -614 Jan-19 795 Unvalidated 795 Jan-19 553,169 553,907 -738 Feb-19 0 Unvalidated 0 Feb-19 558,174 556,922 1,252 Mar-19 0 Unvalidated 0 Mar-19 554,862 545,755 9,107 12 Month Total 11 ,893 Unvalidated 11,893 12 Month Total 6,591 ,389 6,582,407 8,982 Cause: Over the twelve-month review period, the PHA incorrectly reported expended HAP in the categories of Non-Elderly Disabled -Non MTW HAP, Portable Vouchers Paid HAP, HAP All Other Vouchers, and All Voucher HAP Expenses After the First of the Month. These discrepancies subsequently affected Total HAP. Generally, the PHA utilizes the amounts booked to the PHA's General Ledger each month to calculate HAP expenses. The PHA's General Ledger, which is maintained in a separate software system than the PHA's family reporting software, only tracks expense data by payee/landlord rather than by tenant. For UML calculation, the PHA generates the "S8 Check Edit Report" from Y ardi for utilization information; these reports also contain "by tenant" payment information. This validation utilized these tenant-level reports for HAP expenses. In several instances, the General Ledger balances and S8 Check Edit Reports differed due to the delayed 2 On-Site VMS Validation Report -CA077 timing between when payments were entered into the family reporting system and when the payments were actually made from the PHA' s accounting department. These differences occurred in most of the HAP categories and make up the majority of the variances. Additionally, the following issues were noted for these categories: • All Voucher HAP Expenses After the First of the Month: The review team was unable to validate cost data for this category. While the PHA utilizes a separate General Ledger account for some prorated expenses for HAP contracts beginning after the first of the month, the PHA was only capturing these expenses for the All Other Voucher category. In most months in the review period, prorated expenses were also paid for tenants in the Portable Vouchers Paid and Non-Elderly Disabled Voucher categories. The prorated expenses paid on behalf of these tenants should be included in this category as well. Furthermore, for their monthly VMS submission, the PHA utilizes cash reporting for reporting HAP totals, reporting expenses in the month that payments were made rather than the months they are applicable. During the review period, prorated HAP payments were sometimes made in the month following the tenants move-in. In these instances, the PHA failed to report these prorated expenses in the correct month. Because of these two factors, the review team was unable to validate all the expenses in this category, and the prorated HAP expenses were included in the first of the month expenses totals. The VMS User Manual defines this category as the "total amount of HAP expenses incurred for NEW contracts effective after the first of the month for any categories above. If the amount of HAP covers the entire month then it should not be reported in this field." • FSS Escrow Deposits: Because the PHA is reporting HAP expenses on a cash reporting basis and as booked in their General Ledger, the PHA only reported FSS Escrow Deposits on a quarterly basis when the finance staff booked the accumulated escrow balances. The VMS User's Manual requires PHAs to report the FSS Escrow Deposits as "Deposits to FSS participant escrow accounts made for this month." FSS Escrow Deposits represent the total amount of deposits made to a FSS participant's escrow account for the month reported. VMS should reflect the liability that is "incurred" during the reporting month whether or not the PHA actually books the deposits or records it in the accounting system. The VMS User Manual defines the remaining categories as follows: • Non Elderly Disabled-Non-MJ'W (HAP): Total HAP expenses incurred this month for Mainstream 1 or Non-Elderly Disabled voucher leasing as reported in Units section (non- MTW PHAs ONLY). • Portable Vouchers Paid HAP: Total HAP expenses incurred for portability vouchers reported in the Units section. The HAP payments to be reported here are for port-outs for which the PHA is being billed by another PHA. 3 On-Site VMS Validation Report -CA077 • All Other Vouchers HAP: Total HAP expenses incurred for all other vouchers reported in the unit's section, for contracts in effect on the first day of the month. Do not include any HAP expenses already reported in ANY other Voucher HAP Expense categories ,above or for FSS escrow Deposits below. Because the PHA is reporting expenses on a cash reporting basis, they are not in compliance with FMC Bulletin 06-04, which states, " ... amounts paid during a particular month that were incurred in a different month should be adjusted and reflected for the month incurred." Additional, Appendix A of the VMS Manual states, "HAP expenses are entered under the month for which they are applicable regardless of the month in which they are actually paid." Effect: HUD relies on VMS data to monitor the state of each PHA's Housing Choice Voucher Program and to calculate the funding PHAs receive each year. Additionally, HUD also uses the data contained within VMS to provide reports on the Voucher Program to Congress. Misreporting negatively affects HUD's ability to determine accurate HAP expenses for the Agency. Since HUD provides renewal funding for each public housing agency based on validated leasing and cost data in VMS, it is essential that VMS reported data are both timely and accurate. Notice PIH 2015-16, paragraph 9, states, "PHAs are required to transmit certain leasing and cost data electronically through VMS. The Department uses VMS data for budget formulation, cash management, monitoring, determining renewal funding levels, and funding-related factors under the Section Eight Management Assessment Program (SEMAP). Therefore, it is imperative that PHAs comply with reporting requirements and timelines for reporting through VMS, ensuring that the information submitted is both timely and accurate. The data submitted in VMS is subject to verification and review by the PIH OHVP, Quality Assurance Division." Accuracy of VMS data is extremely important. HUD relies on PHAs to accurately separate and report first of the month and after the first of the month UML and HAP expenses in VMS. Failure to adequately separate first of the month from after the first of the month units and costs results in inaccurate calculation of per unit costs (PUC) of the PHA's HCV program. HUD makes use of PUC data when calculating the PHA's renewal funding each year, to project HCV expenses through the end of the year, and when monitoring PHA's for potential funding shortfalls. Recommended Corrective Action No. 1: Correct all HAP entries referenced in the above Tables 1 through 5 to the QAD validated amounts. The Total HAP is system calculated and will be the resulting outcome once these corrections have been submitted in VMS. Recommended Corrective Action No. 2: The PHA should implement procedures, including a quality control process, to ensure expense data is correctly captured and reported timely in VMS. The implemented processes should ensure that each category reported adhere to the VMS Manual definitions, should include all revisions, and should account for prior period adjustment/corrections. The PHA must retain all supporting documentation verifying VMS entries. 4 On-Site VMS Validation Report -CA077 Concern No. 2: Cumulative discrepancies in the Unit Months Leased (UML) reporting categories in VMS resulted in incorrect Total UML Condition: The Total UML over the twelve-month review period was incorrect in the Voucher Management System by 54 Unit Months Leased (See Table 11). Tables 7 through 10 below consist of the various categories which comprise the UML variance found in VMS reporting. Non-Elderl v Disabled -Non MTW UML Portable Vouchers Paid UML Table 7 Reported Validated Difference Table 8 Reported Validated Difference Apr-18 71 71 0 Apr-18 39 40 -1 Mav-18 72 72 0 Mav-18 35 35 0 Jun-18 72 72 0 Jun-18 34 34 0 Jul-18 73 73 0 Jul-18 35 35 0 Aug-18 73 73 0 Aug-18 34 34 0 Sep-18 74 73 1 Sep-18 34 34 0 Oct-18 77 74 3 Oct-18 28 28 0 Nov-18 77 76 1 Nov-18 28 28 0 Dec-18 74 74 0 Dec-18 30 30 0 Jan-19 75 74 1 Jan-19 31 31 0 Feb-19 73 73 0 Feb-19 33 33 0 Mar-19 74 72 2 Mar-19 . 32 32 0 12 Month Total 885 877 8 12 Month Total 393 394 -1 All Other Vouchers UML VO Under Lease on Last Day of Month Table 9 Reoorted Validated Difference Table 10 Reported Validated Difference Aor-18 448 447 1 Apr-18 553 557 -4 Mav-18 447 447 0 May-18 551 556 -5 Jun-18 443 443 0 Jun-18 543 550 -7 Jul-18 443 438 5 Jul-18 543 550 -7 Aua-18 439 439 0 Aug-18 541 559 -18 Seo-18 439 433 6 Sep-18 547 540 7 Oct-18 440 438 2 Oct-18 543 538 5 Nov-18 440 429 11 Nov-18 536 531 5 Dec-18 436 428 8 Dec-18 537 530 7 Jan-19 437 438 -1 Jan-19 532 538 -6 Feb-19 429 425 4 Feb-19 532 528 4 . Mar-19 425 414 11 Mar-19 531 518 13 12 Month Total 5,266 5,219 47 12 Month Total 6,489 6,495 -6 5 On-Site VMS Validation Report -CA077 Total UML Table 11 Reported Validated Difference Aor-18 558 558 0 Mav-18 554 554 0 Jun-18 549 549 0 Jul-18 551 546 5 Aua-18 546 546 0 Sep-18 547 540 7 Oct-18 545 540 5 Nov-18 545 533 12 Dec-18 540 532 8 Jan-19 543 543 0 Feb-19 535 531 4 Mar-19 531 518 13 12 Month Total 6,544 6,490 54 Cause: The PHA incorrectly reported UML information in Non-Elderly Disabled -Non-MI'W UML , Portable Vouchers Paid UML, and All Other Vouchers UML. Furthermore, Vouchers Under Lease on the Last Day of the Month was subsequently affected. The review team noted that during the review period the PHA was using an older legacy version of Y ardi. The PHA utilized data on the VMS Summary Report pulled from Y ardi for leasing information. In this older version of Y ardi, the detailed data behind this summary report was not able to be viewed; instead, the PHA utilized the S8 Check Edit Reports as back-up documentation do this VMS Summary Report. In many instances, the number of families leased listed on the VMS Summary Report did not match the hand-counted totals from the S8 Check Edit Report. This mismatch accounted for much of the variation in all the UML categories. In one instance, the PHA failed to timely submit an End of Participation (EOP) action for a tenant who was over-income for over 180 days. This tenant became a zero-HAP client on June 1, 2018. The end of the 180 days period of consecutive days with no HAP payments should have been on November 28, 2018. This was still an active tenant in PIC. As a result, the PHA erroneously counted this tenant as a leased UML from December 2018 until March 2019. For Vouchers Under Lease on the Last Day of the Month, the review team used first of the month leasing numbers along with a move-in and move-out report to calculate this number. This number is affected by variances in first of the month leasing numbers and should include mid- month move~ins and exclude mid-month move-outs. The VMS User Manual defines these categories as follows: • Non Elderly Disabled -Non-MI'W: Total number of vouchers leased this month from initial or renewal Mainstream 1 or Non-Elderly Disabled program increments (non- MTW PHAs ONLY). 6 On-Site VMS Validation Report -CA077 • Portable Vouchers Paid: Total number of vouchers for which the PHA is being billed by and is remitting HAP costs to another PHA urider the portability option. These vouchers are part of the PHA's inventory and are commonly referred to as "Port-Outs". • All Other Vouchers: Total number of vouchers leased for all other purposes. Do not include any vouchers already reported in the other voucher categories above. • Vouchers Under Lease on the Last Day of the Month: Total number of vouchers under lease on the "LAST" day of the month for all categories listed in "HAP Total" above. This includes HAP contracts that expired that day. Effect: The UML data is utilized by the Financial Management Division for calculating PHA administrative fee allocation. Inaccurate UML reporting in VMS may adversely impact the amount of the administrative fees received. HUD relies on accurate VMS data to monitor the state of each PHA's Housing Choice Voucher (HCV) Program to calculate the HCV funding PHAs receive each year. Inaccurate reporting of UMLs results in inaccurate calculation of per unit costs (PUC) of the PHA's HCV program. HUD makes use of PUC data to project HCV expenses through the end of the year, and when monitoring PHAs for potential funding shortfalls. Additionally, HUD also uses the HCV data contained within VMS to provide reports on the HCV Program to Congress. Inaccurate VMS information may impact the PHA financially as it is critical for ensuring correct program funding. VMS data is used for funding decisions, monitoring and funding related factors under the Section Eight Management Assessment Program. PIH Notice 2014-05 emphasizes that, "The VMS is a critical data system that is used for a variety of major function, including budget formulation, utilization analysis and funding allocation. As such, accuracy of the data is extremely important." Recommended Corrective Action No. 3: The PHA should implement procedures, including a quality control process, to ensure UML data is correctly captured and reported in VMS. The PHA must establish procedures for ensuring data integrity prior to submitting leasing data in VMS. The implemented processes should ensure that each category reported adhere to the VMS Manual definitions and should include all revisions and adjustments for prior month corrections. Recommended Corrective Action No. 4: Correct all UML entries referenced in the above Table 7 through 10 to the QAD validated amounts. The Total UML is system calculated and will be the resulting outcome once these corrections have been submitted in VMS. The PHA should correct VMS as soon as possible, but no later than 30 days from the date of this report. Concern No. 3: Fraud Recovery was incorrectly reported in VMS Condition: The Fraud Recovery Collected This Month category was under reported by $12. (See Table 12). 7 On-Site VMS Validation Report -CA077 Fraud Recovery Collected this Month Table 12 Reoorted Validated Difference Aor-18 1,166 1,166 0 Mav-18 440 440 0 Jun-18 968 968 0 Jul-18 629 629 0 Aua-18 522 522 0 Seo-18 406 406 0 Oct-18 1,842 1,842 0 Nov-18 1,523 1,535 -12 Dec-18 0 0 0 Jan-19 668 668 0 Feb-19 354 354 0 Mar-19 273 273 0 12 Month Total 8,791 8,803 -12 Cause: A variance occurred in one month of the review period. The source documentation provided by the PHA did not match what was reported in VMS in November 2018. HUD authorizes PHAs to retain a portion of fraud recoveries for use in support of their HCV program in accordance with PIH Notice 2006-3 and program regulations at 24 §CFR Part 792.202, which govern tenant or owner fraud recoveries under the Housing Choice Voucher program. HUD clarifies that the PHA portion of the fraud recovery (i.e., the higher of the 50 percent of the amount collected or the reasonable and necessary costs the PHA incurred related to the collection) from the HCV program must continue to be used for activities related to the provision of voucher assistance authorized under Section 8 of the United States Housing Act of 1937. Any unused amounts must be maintained in the Unrestricted Net Position (UNP) account as excess administrative fees. The balance of the recovery amount must be maintained in the Restricted Net Position (RNP) account as excess HAP. The VMS User's Manual instructs PHAs to report Fraud Recovery as, "Total dollar amount recouped by the HA as fraud recoveries during the month that is applied to the RNP account. This consists of the lesser of one-half the amount recovered or the total recovery minus the costs incurred by the PHA in the recovery. This amount should NOT be deducted from the HAP expenses as reported for the month in the HAP expenses section. Note: Total dollar amount recouped "is cash collected-not revenue recorded." Effect: The PHA failed to provide HUD with information required in determining available HAP resources by incorrectly reporting Fraud Recovery. Fraud Recovery amounts impact the calculation of the RNP balance. HUD provides renewal funding for each public housing agency based on validated leasing and cost data in VMS. For these reasons, it is essential that VMS reported data are both timely and accurate. 8 On-Site VMS Validation Report -CA077 Recommended Corrective Action No. 5: Correct all entries referenced in the above Table 12 to the QAD validated amounts. The PHA should correct VMS as soon as possible but no later than 30 days from the date of this report. Concern No. 4: The Number of Vouchers Issued but Not Under HAP on the Last Day of the Month could not be validated. Condition: The Number of Vouchers Issued but Not Under HAP Contract on the Last Day of the Month could not be validated (see Table 13). VO Issued but not Under HAP on Last Day of Month Table 13 Reported Validated Difference Apr-18 6 Unvalidated 6 Mav-18 5 Unvalidated 5 Jun-18 8 Unvalidated 8 Jul-18 6 Unvalidated 6 AUC!-18 5 Unvalidated 5 Sep-18 4 Unvalidated 4 Oct-18 6 Unvalidated 6 Nov-18 5 Unvalidated 5 Dec-18 4 Unvalidated 4 Jan-19 6 Unvalidated 6 Feb-19 6 Unvalidated 6 Mar-19 0 Unvalidated 0 12 Month Total 61 Unvalidated 61 Cause: Over the review period, the PHA reported active vouchers on the street each month. However, the PHA was not maintaining an auditable record of the number of voucher issuances at the end of each month. The VMS User's Manual defines Number of Vouchers Issued but Not Under HAP Contract as of the Last Day of the Month as "the total cumulative number of new vouchers issued for all categories listed above and not yet under a HAP contract as of the last day of the reporting period. This figure excludes vouchers issued to participants who are currently under a HAP contract in one unit but have been issued a voucher to search for another unit to which they intend to move with continued voucher assistance." This is commonly known as "vouchers on the street." Effect: HUD utilizes this information to identify potential HAP obligations for HCV utilization and leasing monitoring. Furthermore, this information is used in the HCV Two-Year Forecasting tool to identify potential HCV funding shortfalls. It is extremely important these reported vouchers can be validated. Recommended Corrective Action No. 6: The PHA must develop a methodology to accurately track the Number of Vouchers Issued but Not Under HAP Contract as of the Last Day of the 9 On-Site VMS Validation Report -CA077 Month. PHA is encouraged to coordinate with the software vendor to ensure their system is properly configured so that it generates reports that are categorized according to the VMS User's Manual. In absence of a system generated report, the PHA at a minimum should establish a spreadsheet to allow tracking of vouchers on the street. The spreadsheet should include the issuance date; the date the voucher was leased up; voucher extension date and voucher expiration date to allow the PHA to support the data entered in VMS under this category: The PHA should retain supporting documentation to support the data entered in VMS under this category. Concern No. 5: HAP and UML totals for the Portable Units Administered were incorrectly reported. Condition: The HAP and UML for Portable Units Administered were under reported by four UMLs and the HAP for the port-ins were under reported by $1153 (see Tables 14 and 15). Portable Units Administered I UML) HAP for Portable Units Administered Table 14 Reoorted Validated Difference Table 15 Reported Validated Difference Aor-1 8 5 5 0 Apr-18 5,653 5,653 0 May-18 6 6 0 May-18 7,835 7,835 0 Jun-18 6 6 0 Jun-18 8,279 7,829 450 Jul-1 8 6 6 0 Jul-18 7,829 7,829 0 Aug-18 7 11 -4 Aug-18 12,464 12,464 0 Sep-18 11 11 0 Sep-18 14,359 14,359 0 Oct-18 13 13 0 Oct-18 17,004 17,004 0 Nov-18 14 14 0 Nov-18 16,878 18,481 -1 ,603 Dec-18 13 13 0 Dec-18 16,878 16,878 0 Jan-19 13 12 1 Jan-19 15,409 15,409 0 Feb-19 12 12 0 Feb-19 15,313 15,313 0 Mar-19 11 12 -1 Mar-19 15,430 15,430 0 12 Month Total 117 121 -4 12 Month Total 153,331 154,484 -1, 153 Cause: The PHA's source documentation for Portable Units Administered did not match what was reported in VMS for some months of the review period. In some instances, the PHA was not including leasing and expense information for tenants who began their HAP contract in the middle of the month. Unlike the other HAP and UML categories in VMS, information for Portable Units Administered should include information for the entire month, rather than as of the first day of the month. The VMS User's Manual defines these categories as follows: Portable Units Administered: Total number of vouchers for the entire month which the HA is administering on behalf of an Initial HA under the portability provisions; the HA is billing the initial HA and has not absorbed the voucher participants into the HA's own program. A household reported in this category is NOT reported as a voucher participant for this HA in any other category. These are commonly referred to as "Port-Ins." 10 On-Site VMS Validation Report -CA077 Total HAP for Portable Units Administered: HAP expenses attributable to the Portable Units Administered as reported above. These expenses are NOT included in the HA's total voucher HAP expenses elsewhere reported in VMS. Effect: One of the main goals of the HCV program is to increase the geographic opportunities available to participating families. The portability provisions serve to promote that goal. Without accurate portability reporting in VMS, HUD is unable to accurately track the mobility of participating families and accurately report on the mobility aspect of the program to Congress. HUD relies on VMS data to monitor the state of each PHA's HCV Program and to calculate the funding PHAs receive each year. Misreporting port-in HAP data negatively affects HUD's ability to determine accurate expenses for the Agency. Since HUD provides renewal funding for each public housing agency based on validated leasing and cost data in VMS, it is essential that VMS reported data are both timely and accurate. Recommended Corrective Action No 7: The PHA should implement a procedure to ensure accurate portability data is reported in VMS. The PHA must correct all VMS entries to the QAD amounts validated in the above Table 14 and 15. Tenant File Review As part of the QAD review protocol, QAD staff is required to conduct a comparison between HAP expenses as reported in PIC on HUD Form 50058 and the PHA's check register. The QAD reviewer randomly selected a sample of eighteen (18) files to determine the accuracy of HAP paid to landlords and utility reimbursements made to tenants. For all the case files, the PHA's HAP payment records were used as supporting documentation to verify the amount of HAP paid to the landlords and the amount of utility allowance reimbursements paid to the participating voucher holder. In one instance, a tenant's current 50058 reported in PIC listed a $24 HAP payment. The PHA indicated that this tenant went to zero-HAP and requested their voucher be terminated. The tenant subsequently requested the voucher be reinstated in case the family suffered a decrease in income. An updated 50058 reflecting the current status of this tenant was not submitted. This error did not seem systemic, and no erroneous HAP payments were made. Otherwise upon review of the records, the HAP and Utility reimbursements were determined to be accurate and consistent with HAP amounts reported in PIC. The PHA should make necessary VMS corrections within 30 days from the date of this report and notify Ray Phung at Raymond.Phung@hud.gov when the identified discrepancies have been corrected. If identified reporting discrepancies and their cause are not corrected they may result in a finding(s) which could subsequently initiate funding recalculation. The QAD validated columns represent the amount that should have been reported in VMS based on source documents provided at the time of the review. It is understood these totals could change if subsequent accrual adjustments are made. 11