Audit 24115

FINDING 2022-1 (CORRECTIVE ACTION COMPLETED) Questioned Costs: Not quantifiable given the nature of the finding Population Size: 111 tenants total, 88 subsidized tenants total Sample Size: 20 subsidized tenants Noncompliance Information: 2 subsidized tenants Condition: Enterprise Income Verification (EIV) Income Reports for recertification of tenant family composition and income were not documented in some of the tenant files for the year. This is a finding of noncompliance and a finding of significant deficiencies in internal control over this compliance area. Criteria: HUD Handbook 4350.3 REV-1 requires that the Organization must use EIV Income Report as a third-party source to verify a tenant?s employment and income during mandatory recertifications (annual and interim) of family composition and income. The EIV Income Report is required to be in the tenant file to demonstrate the owner?s compliance with mandated use of EIV as the third-party source to verify tenant employment and income information. Cause: Management inadvertently misfiled the hard copies of the EIV Income Reports at the time of (re)certification instead of retaining them in the tenant file. Effect or Potential Effect: The Organization was not in compliance with the requirements of HUD. The risk of receiving an improper subsidy was increased, accordingly. Recommendations (2022-1-a): We recommend that management implement procedures and controls to ensure that the EIV system is used during reexaminations and recertifications and that documentation of such is retained in the tenant files going forward. View of Responsible Officials: Management concurs with this finding and agrees with the auditor?s recommendation. Management will reevaluate its system to ensure future compliance.

FINDING 2022-2 (CORRECTIVE ACTION COMPLETED) Questioned Costs: Not quantifiable given the nature of the finding Population Size: 24 monthly EIV reports Sample Size: 24 monthly EIV reports Noncompliance Information: 8 monthly EIV reports Condition: The Organization did not retain a printed and dated copy of the Failed Verification and Failed EIV Prescreen reports for four out of twelve months of the year. This is a finding of noncompliance and a finding of significant deficiencies in internal control over this compliance area. Criteria: HUD Handbook 4350.3 REV-1 requires that the Organization, on a monthly basis, use the Failed Verification and Failed EIV Prescreen reports from the EIV system. It also requires that the Organization print and retain these reports in a master file. Cause: Management experienced staff turnover and the reports were not properly run and retained for some months while the lead administrator position, which would oversee this process, was vacant. Effect or Potential Effect: The Organization was not in compliance with the requirements of HUD, and the risk of not having timely subsidy-related information from the EIV system was increased. Accordingly, the risk of an improper housing assistance payment was potentially increased. Recommendations (2022-2-a): We recommend that management reevaluate its system and procedures to ensure that the required reports are printed and retained on the required schedule with clear dates of printing, going forward. View of Responsible Officials: Management concurs with this finding and agrees with the auditor?s recommendation. Management will reevaluate its system to ensure future compliance and considers corrective action to be completed.

FINDING 2022-1 (CORRECTIVE ACTION COMPLETED) Questioned Costs: Not quantifiable given the nature of the finding Population Size: 111 tenants total, 88 subsidized tenants total Sample Size: 20 subsidized tenants Noncompliance Information: 2 subsidized tenants Condition: Enterprise Income Verification (EIV) Income Reports for recertification of tenant family composition and income were not documented in some of the tenant files for the year. This is a finding of noncompliance and a finding of significant deficiencies in internal control over this compliance area. Criteria: HUD Handbook 4350.3 REV-1 requires that the Organization must use EIV Income Report as a third-party source to verify a tenant?s employment and income during mandatory recertifications (annual and interim) of family composition and income. The EIV Income Report is required to be in the tenant file to demonstrate the owner?s compliance with mandated use of EIV as the third-party source to verify tenant employment and income information. Cause: Management inadvertently misfiled the hard copies of the EIV Income Reports at the time of (re)certification instead of retaining them in the tenant file. Effect or Potential Effect: The Organization was not in compliance with the requirements of HUD. The risk of receiving an improper subsidy was increased, accordingly. Recommendations (2022-1-a): We recommend that management implement procedures and controls to ensure that the EIV system is used during reexaminations and recertifications and that documentation of such is retained in the tenant files going forward. View of Responsible Officials: Management concurs with this finding and agrees with the auditor?s recommendation. Management will reevaluate its system to ensure future compliance.

FINDING 2022-2 (CORRECTIVE ACTION COMPLETED) Questioned Costs: Not quantifiable given the nature of the finding Population Size: 24 monthly EIV reports Sample Size: 24 monthly EIV reports Noncompliance Information: 8 monthly EIV reports Condition: The Organization did not retain a printed and dated copy of the Failed Verification and Failed EIV Prescreen reports for four out of twelve months of the year. This is a finding of noncompliance and a finding of significant deficiencies in internal control over this compliance area. Criteria: HUD Handbook 4350.3 REV-1 requires that the Organization, on a monthly basis, use the Failed Verification and Failed EIV Prescreen reports from the EIV system. It also requires that the Organization print and retain these reports in a master file. Cause: Management experienced staff turnover and the reports were not properly run and retained for some months while the lead administrator position, which would oversee this process, was vacant. Effect or Potential Effect: The Organization was not in compliance with the requirements of HUD, and the risk of not having timely subsidy-related information from the EIV system was increased. Accordingly, the risk of an improper housing assistance payment was potentially increased. Recommendations (2022-2-a): We recommend that management reevaluate its system and procedures to ensure that the required reports are printed and retained on the required schedule with clear dates of printing, going forward. View of Responsible Officials: Management concurs with this finding and agrees with the auditor?s recommendation. Management will reevaluate its system to ensure future compliance and considers corrective action to be completed.