Finding 2022-002 - Tenant Eligibility - Material Weakness Repeat of prior year finding 2021-002 Assistance Listing Number: 14.181 Federal Agency: U.S. Department of Housing and Urban Development Federal Award Number: Not applicable Federal Award Year: July 1, 2021 - June 30, 2022 Pass-Through Entity: Not applicable Criteria: The Corporation is responsible for annually reexamining incomes of households occupying assisted units and make appropriate adjustments to the tenant payment and the project rental assistance payment (24 CFR section 891.410). Assistance applicants shall submit signed consent forms upon initial application and at reexamination (24 CFR section 5.230). Questioned Cost: None reported Condition/Context: We identified a lack of timeliness of completion and review of tenant files for eligibility requirements. Two of two tenant files reviewed had no recertification completed during the year and no extenuating circumstances documented as to why. In addition, one of two files was missing proper move-out documentation of the inspection and no return of the security deposit. Our population included all tenants. Our sample included two tenant files. This was not a statistically valid sample. Effect: Insufficient documentation of tenant eligibility and late recertifications. Similar issues over tenant recertification have caused delays in obtaining renewal of the Corporation?s PRAC contract. As a result of not renewing the PRAC contract timely there were operating cash flow deficiencies resulting in significant growth in related party balances due to the parent entity and unpaid subsidies at June 30, 2022. Cause: Lack of management oversight due to turnover. Recommendation: The Corporation should have procedures in place to ensure tenant recertifications are completed timely and extenuating circumstances formally documented in the TRACS system and on HUD form 50059. Management should ensure move-out inspections are completed and tenant deposits are returned timely or documented as to why they are maintained.
Finding 2022-003 - Required Monthly Deposits to the Replacement Reserve - Significant Deficiency Assistance Listing Number: 14.181 Federal Agency: U.S. Department of Housing and Urban Development Federal Award Number: Not applicable Federal Award Year: July 1, 2021 - June 30, 2022 Pass-Through Entity: Not applicable Criteria: The Corporation shall establish and maintain a replacement reserve to aid in funding extraordinary maintenance and repair and replacement of capital items. The replacement reserve funds must be deposited in a federally insured depository in an interest-bearing account. All earnings including interest on the reserve must be added to the reserve. An amount as required by HUD will be deposited monthly in the reserve fund (Regulatory Agreement, item 5 (a)). All disbursements from the reserve must be approved by HUD (24 CFR section 891.405). Questioned Cost: None reported Condition/Context: There were seven months where required deposits were missed. Our sample included all 12 months of required deposits and therefore, the entire population was subject to testing. Effect: Seven months of deposits were missed to the reserve for replacement account. Cause: Lack of management oversight due to turnover and delay in rental revenue. Recommendation: The Corporation should have procedures in place to ensure all required monthly deposits are made.
Finding 2022-002 - Tenant Eligibility - Material Weakness Repeat of prior year finding 2021-002 Assistance Listing Number: 14.181 Federal Agency: U.S. Department of Housing and Urban Development Federal Award Number: Not applicable Federal Award Year: July 1, 2021 - June 30, 2022 Pass-Through Entity: Not applicable Criteria: The Corporation is responsible for annually reexamining incomes of households occupying assisted units and make appropriate adjustments to the tenant payment and the project rental assistance payment (24 CFR section 891.410). Assistance applicants shall submit signed consent forms upon initial application and at reexamination (24 CFR section 5.230). Questioned Cost: None reported Condition/Context: We identified a lack of timeliness of completion and review of tenant files for eligibility requirements. Two of two tenant files reviewed had no recertification completed during the year and no extenuating circumstances documented as to why. In addition, one of two files was missing proper move-out documentation of the inspection and no return of the security deposit. Our population included all tenants. Our sample included two tenant files. This was not a statistically valid sample. Effect: Insufficient documentation of tenant eligibility and late recertifications. Similar issues over tenant recertification have caused delays in obtaining renewal of the Corporation?s PRAC contract. As a result of not renewing the PRAC contract timely there were operating cash flow deficiencies resulting in significant growth in related party balances due to the parent entity and unpaid subsidies at June 30, 2022. Cause: Lack of management oversight due to turnover. Recommendation: The Corporation should have procedures in place to ensure tenant recertifications are completed timely and extenuating circumstances formally documented in the TRACS system and on HUD form 50059. Management should ensure move-out inspections are completed and tenant deposits are returned timely or documented as to why they are maintained.
Finding 2022-003 - Required Monthly Deposits to the Replacement Reserve - Significant Deficiency Assistance Listing Number: 14.181 Federal Agency: U.S. Department of Housing and Urban Development Federal Award Number: Not applicable Federal Award Year: July 1, 2021 - June 30, 2022 Pass-Through Entity: Not applicable Criteria: The Corporation shall establish and maintain a replacement reserve to aid in funding extraordinary maintenance and repair and replacement of capital items. The replacement reserve funds must be deposited in a federally insured depository in an interest-bearing account. All earnings including interest on the reserve must be added to the reserve. An amount as required by HUD will be deposited monthly in the reserve fund (Regulatory Agreement, item 5 (a)). All disbursements from the reserve must be approved by HUD (24 CFR section 891.405). Questioned Cost: None reported Condition/Context: There were seven months where required deposits were missed. Our sample included all 12 months of required deposits and therefore, the entire population was subject to testing. Effect: Seven months of deposits were missed to the reserve for replacement account. Cause: Lack of management oversight due to turnover and delay in rental revenue. Recommendation: The Corporation should have procedures in place to ensure all required monthly deposits are made.
Finding 2022-002 - Tenant Eligibility - Material Weakness Repeat of prior year finding 2021-002 Assistance Listing Number: 14.181 Federal Agency: U.S. Department of Housing and Urban Development Federal Award Number: Not applicable Federal Award Year: July 1, 2021 - June 30, 2022 Pass-Through Entity: Not applicable Criteria: The Corporation is responsible for annually reexamining incomes of households occupying assisted units and make appropriate adjustments to the tenant payment and the project rental assistance payment (24 CFR section 891.410). Assistance applicants shall submit signed consent forms upon initial application and at reexamination (24 CFR section 5.230). Questioned Cost: None reported Condition/Context: We identified a lack of timeliness of completion and review of tenant files for eligibility requirements. Two of two tenant files reviewed had no recertification completed during the year and no extenuating circumstances documented as to why. In addition, one of two files was missing proper move-out documentation of the inspection and no return of the security deposit. Our population included all tenants. Our sample included two tenant files. This was not a statistically valid sample. Effect: Insufficient documentation of tenant eligibility and late recertifications. Similar issues over tenant recertification have caused delays in obtaining renewal of the Corporation?s PRAC contract. As a result of not renewing the PRAC contract timely there were operating cash flow deficiencies resulting in significant growth in related party balances due to the parent entity and unpaid subsidies at June 30, 2022. Cause: Lack of management oversight due to turnover. Recommendation: The Corporation should have procedures in place to ensure tenant recertifications are completed timely and extenuating circumstances formally documented in the TRACS system and on HUD form 50059. Management should ensure move-out inspections are completed and tenant deposits are returned timely or documented as to why they are maintained.
Finding 2022-003 - Required Monthly Deposits to the Replacement Reserve - Significant Deficiency Assistance Listing Number: 14.181 Federal Agency: U.S. Department of Housing and Urban Development Federal Award Number: Not applicable Federal Award Year: July 1, 2021 - June 30, 2022 Pass-Through Entity: Not applicable Criteria: The Corporation shall establish and maintain a replacement reserve to aid in funding extraordinary maintenance and repair and replacement of capital items. The replacement reserve funds must be deposited in a federally insured depository in an interest-bearing account. All earnings including interest on the reserve must be added to the reserve. An amount as required by HUD will be deposited monthly in the reserve fund (Regulatory Agreement, item 5 (a)). All disbursements from the reserve must be approved by HUD (24 CFR section 891.405). Questioned Cost: None reported Condition/Context: There were seven months where required deposits were missed. Our sample included all 12 months of required deposits and therefore, the entire population was subject to testing. Effect: Seven months of deposits were missed to the reserve for replacement account. Cause: Lack of management oversight due to turnover and delay in rental revenue. Recommendation: The Corporation should have procedures in place to ensure all required monthly deposits are made.
Finding 2022-002 - Tenant Eligibility - Material Weakness Repeat of prior year finding 2021-002 Assistance Listing Number: 14.181 Federal Agency: U.S. Department of Housing and Urban Development Federal Award Number: Not applicable Federal Award Year: July 1, 2021 - June 30, 2022 Pass-Through Entity: Not applicable Criteria: The Corporation is responsible for annually reexamining incomes of households occupying assisted units and make appropriate adjustments to the tenant payment and the project rental assistance payment (24 CFR section 891.410). Assistance applicants shall submit signed consent forms upon initial application and at reexamination (24 CFR section 5.230). Questioned Cost: None reported Condition/Context: We identified a lack of timeliness of completion and review of tenant files for eligibility requirements. Two of two tenant files reviewed had no recertification completed during the year and no extenuating circumstances documented as to why. In addition, one of two files was missing proper move-out documentation of the inspection and no return of the security deposit. Our population included all tenants. Our sample included two tenant files. This was not a statistically valid sample. Effect: Insufficient documentation of tenant eligibility and late recertifications. Similar issues over tenant recertification have caused delays in obtaining renewal of the Corporation?s PRAC contract. As a result of not renewing the PRAC contract timely there were operating cash flow deficiencies resulting in significant growth in related party balances due to the parent entity and unpaid subsidies at June 30, 2022. Cause: Lack of management oversight due to turnover. Recommendation: The Corporation should have procedures in place to ensure tenant recertifications are completed timely and extenuating circumstances formally documented in the TRACS system and on HUD form 50059. Management should ensure move-out inspections are completed and tenant deposits are returned timely or documented as to why they are maintained.
Finding 2022-003 - Required Monthly Deposits to the Replacement Reserve - Significant Deficiency Assistance Listing Number: 14.181 Federal Agency: U.S. Department of Housing and Urban Development Federal Award Number: Not applicable Federal Award Year: July 1, 2021 - June 30, 2022 Pass-Through Entity: Not applicable Criteria: The Corporation shall establish and maintain a replacement reserve to aid in funding extraordinary maintenance and repair and replacement of capital items. The replacement reserve funds must be deposited in a federally insured depository in an interest-bearing account. All earnings including interest on the reserve must be added to the reserve. An amount as required by HUD will be deposited monthly in the reserve fund (Regulatory Agreement, item 5 (a)). All disbursements from the reserve must be approved by HUD (24 CFR section 891.405). Questioned Cost: None reported Condition/Context: There were seven months where required deposits were missed. Our sample included all 12 months of required deposits and therefore, the entire population was subject to testing. Effect: Seven months of deposits were missed to the reserve for replacement account. Cause: Lack of management oversight due to turnover and delay in rental revenue. Recommendation: The Corporation should have procedures in place to ensure all required monthly deposits are made.