Audit 303500

Criteria: The Corporation’s tenant files are required to be maintained in accordance with HUD guidelines to ensure eligibility and accurate calculations of tenant rent and rental subsidy. Statement of Condition: The tenant files are incomplete and lacking required documentation indicating verification of eligibility and resident rights. Form 50059 to calculate tenant rent and reported to HUD was not completed timely or accurately in accordance with HUD guidelines. Cause of Condition: The Corporation’s internal controls to ensure tenant files are complete and that the calculation of tenant rent is completed timely and accurately, and that the required documentation for tenant eligibility screening is maintained, were not effective. Effect of Condition: In the tenant file sampled, documentation was missing to include 1) letter of notification to tenant of notification of rent increase and 2) initial notice sent at time of certification. It was also noted that the Form 50059 was not completed and signed and dated within the time requirements; in fact, the Form 50059 was not signed and processed until January 2024 for an effective date of June 2023. Discrepancies were also noted in the completion of the Form 50059 to include 1) the improper inclusion of a STABLE account and 2) inaccurate medical expenses computed. The discrepancy resulted in the tenant underpaying their share of the monthly rent by $36 per month. Recommendation: The design of the current controls should be reviewed to ensure tenant files are accurate, complete, and orderly, and include a checklist of required documentation. Procedures should also be established to ensure that the Form 50059 is completed timely and properly executed. The documentation in the files should support the data used in preparing the Form 50059 and calculating the tenant’s share of the rent. In addition, management should review all files and report any discrepancies to HUD in a timely manner. Views of Responsible Officials: Management agrees with the findings and will implement procedures to ensure tenant’s files are maintained in accordance with HUD guidelines.

Criteria: Withdrawals from reserve for replacements account should be executed timely. Statement of Condition: Withdrawals approved in October 2022 and March 2023 were not transferred from the reserve for replacements account until February 2024. Cause of Condition: The Corporation’s internal controls to ensure the proper tracking of reserve for replacements requests, approvals and withdrawals were not effective. Effect of Condition: Due to the delay in transfer of funds from the reserve for replacements account there was a shortage of cash available for operating needs. Recommendation: Procedures should be established to properly track requests, approvals and withdrawals of reserve for replacements funds. Views of Responsible Officials: Management agrees with the findings and will implement procedures to ensure that reserve for replacements funds are handled in accordance with HUD guidelines.

Criteria: The Corporation’s tenant files are required to be maintained in accordance with HUD guidelines to ensure eligibility and accurate calculations of tenant rent and rental subsidy. Statement of Condition: The tenant files are incomplete and lacking required documentation indicating verification of eligibility and resident rights. Form 50059 to calculate tenant rent and reported to HUD was not completed timely or accurately in accordance with HUD guidelines. Cause of Condition: The Corporation’s internal controls to ensure tenant files are complete and that the calculation of tenant rent is completed timely and accurately, and that the required documentation for tenant eligibility screening is maintained, were not effective. Effect of Condition: In the tenant file sampled, documentation was missing to include 1) letter of notification to tenant of notification of rent increase and 2) initial notice sent at time of certification. It was also noted that the Form 50059 was not completed and signed and dated within the time requirements; in fact, the Form 50059 was not signed and processed until January 2024 for an effective date of June 2023. Discrepancies were also noted in the completion of the Form 50059 to include 1) the improper inclusion of a STABLE account and 2) inaccurate medical expenses computed. The discrepancy resulted in the tenant underpaying their share of the monthly rent by $36 per month. Recommendation: The design of the current controls should be reviewed to ensure tenant files are accurate, complete, and orderly, and include a checklist of required documentation. Procedures should also be established to ensure that the Form 50059 is completed timely and properly executed. The documentation in the files should support the data used in preparing the Form 50059 and calculating the tenant’s share of the rent. In addition, management should review all files and report any discrepancies to HUD in a timely manner. Views of Responsible Officials: Management agrees with the findings and will implement procedures to ensure tenant’s files are maintained in accordance with HUD guidelines.

Criteria: Withdrawals from reserve for replacements account should be executed timely. Statement of Condition: Withdrawals approved in October 2022 and March 2023 were not transferred from the reserve for replacements account until February 2024. Cause of Condition: The Corporation’s internal controls to ensure the proper tracking of reserve for replacements requests, approvals and withdrawals were not effective. Effect of Condition: Due to the delay in transfer of funds from the reserve for replacements account there was a shortage of cash available for operating needs. Recommendation: Procedures should be established to properly track requests, approvals and withdrawals of reserve for replacements funds. Views of Responsible Officials: Management agrees with the findings and will implement procedures to ensure that reserve for replacements funds are handled in accordance with HUD guidelines.