Housing Authority of the City of Mineral Wells. Texas

Finding 2025-001

ALN Number: 14.871

Name of Federal Agency: U.S. Department of Housing & Urban Development

Type of Finding – Single Audit Material Weakness Compliance Finding

Responsible Official: Rachel Shultz, Executive Director

Criteria: HUD regulations at 24 CFR § 5.233 require public housing authorities to use the Enterprise Income Verification system for all program participants and to maintain EIV reports in the tenant file as part of the mandatory verification hierarchy. Regulations at 24 CFR § 982.516 require housing authorities to obtain and verify income information and correctly calculate family rent and Housing Assistance Payments. Additionally, 24 CFR § 982.517 requires the use of a current, HUD‑approved utility allowance schedule and mandates that the correct utility allowance be applied when determining tenant rent and HAP. Uniform Guidance at 2 CFR § 200.303 requires non‑federal entities to maintain effective internal controls to ensure compliance with federal program requirements.

Cause: These issues occurred because the Housing Authority did not consistently follow its procedures for running and retaining EIV reports and did not ensure that staff applied the correct utility allowance schedule during rent calculations. Supervisory review processes were not sufficiently designed or implemented to detect missing EIV documentation or incorrect utility allowance amounts before the finalization of tenant rent and HAP determinations.

Effect: Because the required EIV reports were not obtained and incorrect utility allowances were applied, the Housing Authority could not demonstrate full compliance with HUD verification and rent calculation requirements. As a result, Housing Assistance Payments and tenant rent amounts may have been misstated, creating the potential for both overpayments and underpayments. These conditions increase the risk of HUD monitoring findings, SEMAP score impacts, and possible repayment obligations if incorrect payments are confirmed.

Recommendation: The Housing Authority should strengthen its internal controls to ensure that EIV reports are consistently run, reviewed, and retained in every tenant file as required by HUD regulations. The Authority should also implement a more robust supervisory review process to verify that the correct utility allowance is applied for each household based on the current utility allowance schedule. Staff should receive additional training on EIV requirements, verification procedures, and proper application of utility allowances. Periodic internal file reviews should be conducted to confirm ongoing compliance, and any identified HAP or tenant rent errors should be corrected with adjustments or repayments as necessary.

View of Responsible Official and Planned Corretive Action: We acknowledge the failure of the Authority to maintain appropriate tenant files. This is partially the result of hiring a new employee having difficulties in getting the proper authorization for them to access EIV, which time and training will correct. I will work to ensure that tenant files are in compliance before the 9/30/2026 FYE.

Condition: During our testing of seventeen recertification tenant files under the Housing Choice Voucher Program, we found that the Housing Authority did not run or retain the required Enterprise Income Verification (EIV) reports for twelve of the files reviewed. We also noted that the Housing Authority applied an incorrect utility allowance in nine of the files where a utility allowance was required. Both the EIV report and the correct utility allowance are essential components of determining eligibility and accurately calculating the Housing Assistance Payment and tenant rent. The absence of required EIV documentation and the use of incorrect utility allowances demonstrate that established procedures were not consistently followed and that supervisory review controls were not sufficient to detect these errors.