The Quality Assurance Division (QAD) and the HUD Vendor Support Team (VST) continue to conduct on-site and remote reviews of EHV programs around the country.  The focus of these reviews is compliance with EHV program and financial reporting requirements.  Areas reviewed include Memoranda of Understanding (MOU), Referrals, Eligibility, Reconciliation and Validation of Service Fee Usage and Reporting, Reconciliation and Validation of the EHV Restricted Net Position (RNP), and Reconciliation of the EHV Unrestricted Net Position (UNP), and Review and Validation of EHV Administrative Expenses.  Reviews are conducted based upon risk and your agency may be reviewed in any or all of the review areas.

To help you prepare for potential reviews, we have created a list of common findings and concerns that have been identified during reviews.  Below, please find the most common findings and concerns.

Section 5 of Notice PIH 2021-25 (HA) states:

The PHA must maintain complete and accurate accounts and other records for the EHV program and provide HUD and the Comptroller General of the United States full and free access to them in accordance with the HCV program requirements at 24 CFR 982.158.

This language is mirrored in Section 14 of the Consolidated Annual Contributions Contract (form HUD-52520).

Section 8a of Notice PIH 2021-25 (HA) also states:

HUD’s Uniform Financial Reporting Standards (UFRS) Rule (24 CFR § 5.801) requires PHAs that administer the Section 8 and/or Section 9 programs to submit annual financial data to HUD. Specifically, UFRS requires that the financial data is: (1) prepared in accordance with Generally Accepted Accounting Principles (GAAP) as further defined by HUD in supplementary guidance; (2) submitted electronically to HUD through the internet; and (3) submitted in such form and substance as prescribed by HUD.

The regulations at 2 CFR § 200.302 states:

1. Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. See also § 200.450.
    
2. The financial management system of each non-Federal entity must provide for the following (see also §§ 200.334, 200.335, 200.336, and 200.337):
   1. Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any.
   2. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. If a Federal awarding agency requires reporting on an accrual basis from a recipient that maintains its records on other than an accrual basis, the recipient must not be required to establish an accrual accounting system. This recipient may develop accrual data for its reports on the basis of an analysis of the documentation on hand. Similarly, a pass-through entity must not require a subrecipient to establish an accrual accounting system and must allow the subrecipient to develop accrual data for its reports on the basis of an analysis of the documentation on hand.
   3. Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation.
   4. Effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. See § 200.303.
   5. Comparison of expenditures with budget amounts for each Federal award.
   6. Written procedures to implement the requirements of § 200.305.
   7. Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award.

For PHAs, this effectively means that PHAs must keep a separate subledger for the EHV program and not combine EHV with any other program.  For example, maintaining EHV financial information in the same subledger as HCV or Mainstream will not permit a speedy and effective audit – in general, this circumstance would require us to review all the programs in the subledger rather than just the EHV program. 

Section 9(m) of Notice PIH 2021-15, Emergency Housing Voucher – Operating Requirements, states the initial search term must be at least 120 days. Specifically:

While the EHV program provides the PHA with funding designed to help increase the success rate of EHV families in obtaining housing (such as security deposit assistance, landlord incentives, and housing search assistance), these families may still face significant challenges with their housing search. An initial search term of 60 days may be inadequate for EHV families. Consequently, HUD is waiving § 982.303(a), which provides that the initial search term must be at least 60 days and is establishing an alternative requirement that the initial term for an EHV must be at least 120 days. Any extensions, suspensions, and progress reports will remain under the policies in the PHA’s administrative plan but will apply after the minimum 120-day initial search term.

Regardless of the reason, even if it is a software issue, Vouchers must be issued with a term of 120 days – simply adding an extension onto the initial 60 or 90-day issuance is insufficient.  Any extension must take place after 120 days.

Section 9(b) of PIH Notice 2021-15, Emergency Housing Voucher – Operating Requirements, states that the PHA must enter into a Memorandum of Understanding (“MOU”) with the [Continuum of Care, “CoC”] CoC to establish a partnership for the administration of the EHVs. The primary responsibility of the CoC under the MOU is to make direct referrals of qualifying individuals and families to the PHA. There are seven components that must be included in the MOU:

• The PHA’s and CoC’s commitment to administering the EHVs in partnership.
• The goals and standards of success in administering the EHVs.
• The staff position for each organization that will serve as the lead EHV liaison.
• A statement that all parties agree to cooperate with any program evaluation efforts undertaken by HUD, or a HUD-approved contractor, including compliance with HUD evaluation protocols and data sharing requests.
• The specific population eligible for the EHV assistance that will be referred to the PHA by the CoC or other partnering referral agency.
• The services, including financial assistance, that will be provided to assist EHV applicants and participants and who will provide them. 
• The roles and responsibilities of the PHA and CoC, including but not limited to the CoC making direct referrals of families to the PHA through the CE system.

Failure to execute a MOU that contains all of the required items constitutes a finding and will require corrective action.

HUD regulations at 24 CFR § 982.52 Section 8 Tenant Based Assistance: Housing Choice Voucher Program, state:

The PHA must comply with the consolidated ACC, HUD regulations and other requirements for the program, issued by HUD headquarters, as regulations, Federal Register notices or other binding program directives as well as PHA's HUD[1]approved applications for program funding.

HUD regulation at 24 CFR § 982.156 Depositary for Program Funds, provides that:

(a) Unless otherwise required or permitted by HUD, all program receipts must be promptly deposited with a financial institution selected as depositary by the PHA in accordance with HUD requirements.

(b) The PHA may only withdraw deposited program receipts for use in connection with the program in accordance with HUD requirements.

(c) The PHA must enter into an agreement with the depositary in the form required by HUD.

Section 13, Paragraph b of form HUD-52520, the “Consolidated Annual Contributions Contract”  (CACC) requires PHAs to enter into an agreement with the depository institution, on the form required by HUD.

For this reason, all EHV funds must be held in accounts covered by the General Depository Agreement (GDA).  Any variation or change to the GDA must be approved in advance by HUD.