Criteria
Loans are not permitted to be made from project cash without prior authorization from HUD.
Condition
During the year ended June 30, 2024, the Project paid expenses in the amount of $3,896 on
behalf of an affiliate from project cash without HUD approval. The amount due to the Project
as of June 30, 2024 is $3,896.
Cause
Procedures were not in place to ensure that cash disbursements of project funds were
limited to project operating costs.
Effect or Potential Effect
Use of project funds for unauthorized loans may result in shortage of cash and default on
Project's own obligations.
Questioned Costs
The payments of $3,896 were unauthorized loans and therefore considered to be
questioned costs.
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendation
Management should immediately reimburse the amount due to the Project and establish
procedures to ensure payments of this nature are not made in the future.
Auditor Noncompliance Code: G. Unauthorized loans from project assets.
Finding Resolution Status: Resolved.
Views of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD
requirement for loans. Funds have been transferred and loans will not be permitted based
on HUD requirements going forward.
Criteria
Loans are not permitted to be made from project cash without prior authorization from HUD.
Condition
During the year ended June 30, 2024, the Project paid expenses in the amount of $3,896 on
behalf of an affiliate from project cash without HUD approval. The amount due to the Project
as of June 30, 2024 is $3,896.
Cause
Procedures were not in place to ensure that cash disbursements of project funds were
limited to project operating costs.
Effect or Potential Effect
Use of project funds for unauthorized loans may result in shortage of cash and default on
Project's own obligations.
Questioned Costs
The payments of $3,896 were unauthorized loans and therefore considered to be
questioned costs.
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendation
Management should immediately reimburse the amount due to the Project and establish
procedures to ensure payments of this nature are not made in the future.
Auditor Noncompliance Code: G. Unauthorized loans from project assets.
Finding Resolution Status: Resolved.
Views of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD
requirement for loans. Funds have been transferred and loans will not be permitted based
on HUD requirements going forward.
Criteria
In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs, HUD projects are required to establish and maintain at all
times a fully funded separate bank account for tenant security deposits collected. Condition
As of June 30, 2024, management has not fully funded the tenant security deposits cash
account. The tenant security deposits cash account was underfunded by $3,268.
Cause
The tenant security deposits liability exceeds the tenant security deposits cash account by
$3,268 as of June 30, 2024.
Effect or Potential Effect
Management commingled tenant security deposits with its operating cash and did not have
sufficient cash balance in the tenant security deposits cash account to cover the tenant
security deposits liability as of June 30, 2024.
Questioned Costs
N/A
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendations
Management should transfer $3,268 from the operating account in order to fully fund the
tenant security deposits account.
Auditor Noncompliance Code: M. Security deposits
Finding Resolution Status: Resolved.
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD
requirement for security funding. Funds have been transferred and will be maintained based
on HUD requirements in a separate account from operating funds.
Criteria
In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs, HUD projects are required to establish and maintain at all
times a fully funded separate bank account for tenant security deposits collected. Condition
As of June 30, 2024, management has not fully funded the tenant security deposits cash
account. The tenant security deposits cash account was underfunded by $3,268.
Cause
The tenant security deposits liability exceeds the tenant security deposits cash account by
$3,268 as of June 30, 2024.
Effect or Potential Effect
Management commingled tenant security deposits with its operating cash and did not have
sufficient cash balance in the tenant security deposits cash account to cover the tenant
security deposits liability as of June 30, 2024.
Questioned Costs
N/A
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendations
Management should transfer $3,268 from the operating account in order to fully fund the
tenant security deposits account.
Auditor Noncompliance Code: M. Security deposits
Finding Resolution Status: Resolved.
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD
requirement for security funding. Funds have been transferred and will be maintained based
on HUD requirements in a separate account from operating funds.
Tenant lease files are required to be maintained and tenant eligibility determined in
accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs.
Condition
In connection with our lease file review, we noted the following deficiencies: 1 out of 1 new
tenant tested had EIVs that were not performed in the correct period and that were not
performed outside of 90-day EIV window.
Cause
Management's policies with respect to the determination of eligibility and the maintenance of
tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of
Subsidized Multifamily Housing Programs were not consistently followed. Effect or Potential Effect
The procedures for eligibility and maintaining tenant lease files were not consistently applied
in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs. This could result in units being rented to ineligible tenants or
errors in the rent subsidies paid by HUD.
Questioned Costs
N/A
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendations
Management should establish procedures and monitor compliance with those procedures to
ensure that tenant eligibility is correctly determined and that tenant lease files are properly
maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy
Requirements of Subsidized Multifamily Housing Programs.
Auditor Noncompliance Code: R. Section 8 program administration
Finding Resolutions Status: Resolved.
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD
requirement for security funding. Funds have been transferred and will be maintained based
on HUD requirements in a separate account from operating funds.
Move in EIVs - All move in files will be sent to our in house compliance department and
Franklin Group has an EIV specialist how follows and tracks all moves for accuracy for all
move files and the EIV specialist also sends out the 90 day reminders for all move in.
Existing Tenant EIV - It is the policy that all existing tenant EIV and 120-day reports are run
per the 4350 guidelines. The Community Manager for Renaissance Gardens has been
provided the HUD Trainings and have noted on her daily task reminder from One Site to pull
all reports as required. The RM is required during monthly visits to spot check at least 5
existing tenants.
Gross Rent Change and Medical Reporting - The policy states that all Gross Rent Changes
are to be completed as approved by the new rent schedule - The Community Manager is
required to scheduled appointments with all residents to sign the effective gross rent change
and file in tenants files, it is also required that residents 50059s are signed and in the file,
the Community Manager has taken the latest HUD training with our in house HUD
Compliance Manager- The Regional Manager will also spot check files to be certain that all
Gross Rent Changes are in its 6 part file folders. Medical reporting records were discussed
in our HUD Compliance Training and all expenses must be in the 6-part file folder. Again,
the RM will continue to spot check files during the monthly required inspections. All HUD
Communities were required to participate in the HUD Training as a reminder tool.
Security Deposit - Franklin Companies has a policy that all security deposit refunds must be
submitted within the 3 days move out period. This situation was due to the changeover in
Management.
Tenant lease files are required to be maintained and tenant eligibility determined in
accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs.
Condition
In connection with our lease file review, we noted the following deficiencies: 1 out of 1 new
tenant tested had EIVs that were not performed in the correct period and that were not
performed outside of 90-day EIV window.
Cause
Management's policies with respect to the determination of eligibility and the maintenance of
tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of
Subsidized Multifamily Housing Programs were not consistently followed. Effect or Potential Effect
The procedures for eligibility and maintaining tenant lease files were not consistently applied
in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs. This could result in units being rented to ineligible tenants or
errors in the rent subsidies paid by HUD.
Questioned Costs
N/A
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendations
Management should establish procedures and monitor compliance with those procedures to
ensure that tenant eligibility is correctly determined and that tenant lease files are properly
maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy
Requirements of Subsidized Multifamily Housing Programs.
Auditor Noncompliance Code: R. Section 8 program administration
Finding Resolutions Status: Resolved.
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD
requirement for security funding. Funds have been transferred and will be maintained based
on HUD requirements in a separate account from operating funds.
Move in EIVs - All move in files will be sent to our in house compliance department and
Franklin Group has an EIV specialist how follows and tracks all moves for accuracy for all
move files and the EIV specialist also sends out the 90 day reminders for all move in.
Existing Tenant EIV - It is the policy that all existing tenant EIV and 120-day reports are run
per the 4350 guidelines. The Community Manager for Renaissance Gardens has been
provided the HUD Trainings and have noted on her daily task reminder from One Site to pull
all reports as required. The RM is required during monthly visits to spot check at least 5
existing tenants.
Gross Rent Change and Medical Reporting - The policy states that all Gross Rent Changes
are to be completed as approved by the new rent schedule - The Community Manager is
required to scheduled appointments with all residents to sign the effective gross rent change
and file in tenants files, it is also required that residents 50059s are signed and in the file,
the Community Manager has taken the latest HUD training with our in house HUD
Compliance Manager- The Regional Manager will also spot check files to be certain that all
Gross Rent Changes are in its 6 part file folders. Medical reporting records were discussed
in our HUD Compliance Training and all expenses must be in the 6-part file folder. Again,
the RM will continue to spot check files during the monthly required inspections. All HUD
Communities were required to participate in the HUD Training as a reminder tool.
Security Deposit - Franklin Companies has a policy that all security deposit refunds must be
submitted within the 3 days move out period. This situation was due to the changeover in
Management.
Management is responsible for the design, implementation, and maintenance of internal
controls relevant to the preparation and fair presentation of financial statements that are free
from material misstatement, whether due to fraud or error.
Management is responsible for timely submission of audited financial statements to Federal
Audit Clearinghouse ("FAC").
Condition
The accounting records required numerous material adjustments to be proposed and
recorded in order for the financial statements to be fairly presented in accordance with
generally accepted accounting principles in the United States of America.
Single Audit reports are required to be submitted to the FAC pursuant to the audit
requirement of Title 2 U.S. Code of Federal Regulations Part 200. Submission of June 30,
2023 financial statements was not completed within the specified time frame.
Cause
Management did not have sufficient controls over financial reporting.
Effect or Potential Effect
Condition 1 may lead to inaccurate financial reporting and potential misstatement of the
financial statements such that they are not in accordance with accounting principles
generally accepted in the United States of America. Condition 2 results in auditee being
designated as not a low-risk auditee, which may have an effect on future federal grants and
program eligibility.
Questioned Costs
N/A
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendation
Management should undertake a review of internal controls over financial reporting and
ensure that financial data is properly recorded in the books and records of the Project to
prevent misstatements from occurring in the future.
Management should implement procedures to ensure that required filing is completed
timely.
Auditor Noncompliance Code: S. Internal control deficiencies
Finding Resolution Status: Resolved.
Views of Responsible Officials
Management agrees with the finding and recommendation and had implemented reviews of
the financial statements by senior management prior to closing books to ensure accuracy of
information. Management agrees with the finding and recommendation and will ensure required filing is
completed timely.
Management is responsible for the design, implementation, and maintenance of internal
controls relevant to the preparation and fair presentation of financial statements that are free
from material misstatement, whether due to fraud or error.
Management is responsible for timely submission of audited financial statements to Federal
Audit Clearinghouse ("FAC").
Condition
The accounting records required numerous material adjustments to be proposed and
recorded in order for the financial statements to be fairly presented in accordance with
generally accepted accounting principles in the United States of America.
Single Audit reports are required to be submitted to the FAC pursuant to the audit
requirement of Title 2 U.S. Code of Federal Regulations Part 200. Submission of June 30,
2023 financial statements was not completed within the specified time frame.
Cause
Management did not have sufficient controls over financial reporting.
Effect or Potential Effect
Condition 1 may lead to inaccurate financial reporting and potential misstatement of the
financial statements such that they are not in accordance with accounting principles
generally accepted in the United States of America. Condition 2 results in auditee being
designated as not a low-risk auditee, which may have an effect on future federal grants and
program eligibility.
Questioned Costs
N/A
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendation
Management should undertake a review of internal controls over financial reporting and
ensure that financial data is properly recorded in the books and records of the Project to
prevent misstatements from occurring in the future.
Management should implement procedures to ensure that required filing is completed
timely.
Auditor Noncompliance Code: S. Internal control deficiencies
Finding Resolution Status: Resolved.
Views of Responsible Officials
Management agrees with the finding and recommendation and had implemented reviews of
the financial statements by senior management prior to closing books to ensure accuracy of
information. Management agrees with the finding and recommendation and will ensure required filing is
completed timely.
Criteria
In accordance with HUD Handbook 4530.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs, management must review and update the Affirmative Fair
Housing Marketing Plan at least every five years.
Condition
The property does not have a current Affirmative Fair Housing Marketing Plan.
Cause
Procedures were not in place to ensure proper documentation was maintained upon the
change of management.
Effect or Potential Effect
Absent these written documents, the Project could open itself up to mistakes in marketing
and leasing activity that could put their PRAC contract at risk upon renewal.
Questioned Costs
N/A
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendation
Management should maintain an Affirmative Fair Housing Marketing Plan and update it
every five years.
Auditor Noncompliance Code: Z. Other
Finding Resolution Status: Resolved.
View of Responsible Officials
Management has submitted their Affirmative Fair Housing Marketing Plan with an effective
date of September 27, 2024.
Criteria
In accordance with HUD Handbook 4530.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs, management must review and update the Affirmative Fair
Housing Marketing Plan at least every five years.
Condition
The property does not have a current Affirmative Fair Housing Marketing Plan.
Cause
Procedures were not in place to ensure proper documentation was maintained upon the
change of management.
Effect or Potential Effect
Absent these written documents, the Project could open itself up to mistakes in marketing
and leasing activity that could put their PRAC contract at risk upon renewal.
Questioned Costs
N/A
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendation
Management should maintain an Affirmative Fair Housing Marketing Plan and update it
every five years.
Auditor Noncompliance Code: Z. Other
Finding Resolution Status: Resolved.
View of Responsible Officials
Management has submitted their Affirmative Fair Housing Marketing Plan with an effective
date of September 27, 2024.
Criteria
Management fee payments are limited to amounts determined in accordance with the terms
of the HUD-approved management agreement.
Condition
During the year ended June 30, 2024, the Project paid management fees of $16,298 in
excess of the amount approved by HUD. Cause
There were two different management agreements and management did not follow the
HUD-approved management agreement when paying management fees from operations.
Effect or Potential Effect
The overpaid amount is an unauthorized distribution and therefore considered to be
questioned costs.
Questioned Costs
$16,298
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendation
The management company should reimburse the Project for overpaid management fee in
the amount of $16,298 and implement procedures to ensure that the management fee paid
does not exceed the amount determined in accordance with the HUD-approved
management agreement.
Auditor Noncompliance Code: J. Unauthorized management fees
Finding Resolution Status: In process.
View of Responsible Officials
Management agrees with the finding and is working with ownership on reimbursements to
the property. Management will collect in accordance with HUD going forward.
Criteria
Management fee payments are limited to amounts determined in accordance with the terms
of the HUD-approved management agreement.
Condition
During the year ended June 30, 2024, the Project paid management fees of $16,298 in
excess of the amount approved by HUD. Cause
There were two different management agreements and management did not follow the
HUD-approved management agreement when paying management fees from operations.
Effect or Potential Effect
The overpaid amount is an unauthorized distribution and therefore considered to be
questioned costs.
Questioned Costs
$16,298
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendation
The management company should reimburse the Project for overpaid management fee in
the amount of $16,298 and implement procedures to ensure that the management fee paid
does not exceed the amount determined in accordance with the HUD-approved
management agreement.
Auditor Noncompliance Code: J. Unauthorized management fees
Finding Resolution Status: In process.
View of Responsible Officials
Management agrees with the finding and is working with ownership on reimbursements to
the property. Management will collect in accordance with HUD going forward.
Criteria
Residual receipts reserve deposits should be made within 90 days of year end.
Condition
During the year ended June 30, 2024, management did not make the required residual
receipts deposit in the amount of $2,566 within 90 days of year end, as required by HUD.
Cause
Controls are not in place to ensure that required residual receipts reserve deposits are made
timely.
Effect or Potential Effect
The Organization is not in compliance with the requirements of the regulatory agreement.
Questioned Costs
$2,566
Identification as a Repeat Finding
This finding is not a repeat finding. Recommendation
Management should establish internal controls and procedures to ensure that required
residual receipts reserve deposits are made timely.
Auditor Noncompliance Code: B. Failure to make required residual receipts deposits.
Finding Resolution Status: Resolved.
View of Responsible Officials
Management agrees with the finding and has transferred the residual receipts.
Criteria
Residual receipts reserve deposits should be made within 90 days of year end.
Condition
During the year ended June 30, 2024, management did not make the required residual
receipts deposit in the amount of $2,566 within 90 days of year end, as required by HUD.
Cause
Controls are not in place to ensure that required residual receipts reserve deposits are made
timely.
Effect or Potential Effect
The Organization is not in compliance with the requirements of the regulatory agreement.
Questioned Costs
$2,566
Identification as a Repeat Finding
This finding is not a repeat finding. Recommendation
Management should establish internal controls and procedures to ensure that required
residual receipts reserve deposits are made timely.
Auditor Noncompliance Code: B. Failure to make required residual receipts deposits.
Finding Resolution Status: Resolved.
View of Responsible Officials
Management agrees with the finding and has transferred the residual receipts.
Criteria
Loans are not permitted to be made from project cash without prior authorization from HUD.
Condition
During the year ended June 30, 2024, the Project paid expenses in the amount of $3,896 on
behalf of an affiliate from project cash without HUD approval. The amount due to the Project
as of June 30, 2024 is $3,896.
Cause
Procedures were not in place to ensure that cash disbursements of project funds were
limited to project operating costs.
Effect or Potential Effect
Use of project funds for unauthorized loans may result in shortage of cash and default on
Project's own obligations.
Questioned Costs
The payments of $3,896 were unauthorized loans and therefore considered to be
questioned costs.
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendation
Management should immediately reimburse the amount due to the Project and establish
procedures to ensure payments of this nature are not made in the future.
Auditor Noncompliance Code: G. Unauthorized loans from project assets.
Finding Resolution Status: Resolved.
Views of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD
requirement for loans. Funds have been transferred and loans will not be permitted based
on HUD requirements going forward.
Criteria
Loans are not permitted to be made from project cash without prior authorization from HUD.
Condition
During the year ended June 30, 2024, the Project paid expenses in the amount of $3,896 on
behalf of an affiliate from project cash without HUD approval. The amount due to the Project
as of June 30, 2024 is $3,896.
Cause
Procedures were not in place to ensure that cash disbursements of project funds were
limited to project operating costs.
Effect or Potential Effect
Use of project funds for unauthorized loans may result in shortage of cash and default on
Project's own obligations.
Questioned Costs
The payments of $3,896 were unauthorized loans and therefore considered to be
questioned costs.
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendation
Management should immediately reimburse the amount due to the Project and establish
procedures to ensure payments of this nature are not made in the future.
Auditor Noncompliance Code: G. Unauthorized loans from project assets.
Finding Resolution Status: Resolved.
Views of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD
requirement for loans. Funds have been transferred and loans will not be permitted based
on HUD requirements going forward.
Criteria
In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs, HUD projects are required to establish and maintain at all
times a fully funded separate bank account for tenant security deposits collected. Condition
As of June 30, 2024, management has not fully funded the tenant security deposits cash
account. The tenant security deposits cash account was underfunded by $3,268.
Cause
The tenant security deposits liability exceeds the tenant security deposits cash account by
$3,268 as of June 30, 2024.
Effect or Potential Effect
Management commingled tenant security deposits with its operating cash and did not have
sufficient cash balance in the tenant security deposits cash account to cover the tenant
security deposits liability as of June 30, 2024.
Questioned Costs
N/A
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendations
Management should transfer $3,268 from the operating account in order to fully fund the
tenant security deposits account.
Auditor Noncompliance Code: M. Security deposits
Finding Resolution Status: Resolved.
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD
requirement for security funding. Funds have been transferred and will be maintained based
on HUD requirements in a separate account from operating funds.
Criteria
In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs, HUD projects are required to establish and maintain at all
times a fully funded separate bank account for tenant security deposits collected. Condition
As of June 30, 2024, management has not fully funded the tenant security deposits cash
account. The tenant security deposits cash account was underfunded by $3,268.
Cause
The tenant security deposits liability exceeds the tenant security deposits cash account by
$3,268 as of June 30, 2024.
Effect or Potential Effect
Management commingled tenant security deposits with its operating cash and did not have
sufficient cash balance in the tenant security deposits cash account to cover the tenant
security deposits liability as of June 30, 2024.
Questioned Costs
N/A
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendations
Management should transfer $3,268 from the operating account in order to fully fund the
tenant security deposits account.
Auditor Noncompliance Code: M. Security deposits
Finding Resolution Status: Resolved.
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD
requirement for security funding. Funds have been transferred and will be maintained based
on HUD requirements in a separate account from operating funds.
Tenant lease files are required to be maintained and tenant eligibility determined in
accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs.
Condition
In connection with our lease file review, we noted the following deficiencies: 1 out of 1 new
tenant tested had EIVs that were not performed in the correct period and that were not
performed outside of 90-day EIV window.
Cause
Management's policies with respect to the determination of eligibility and the maintenance of
tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of
Subsidized Multifamily Housing Programs were not consistently followed. Effect or Potential Effect
The procedures for eligibility and maintaining tenant lease files were not consistently applied
in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs. This could result in units being rented to ineligible tenants or
errors in the rent subsidies paid by HUD.
Questioned Costs
N/A
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendations
Management should establish procedures and monitor compliance with those procedures to
ensure that tenant eligibility is correctly determined and that tenant lease files are properly
maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy
Requirements of Subsidized Multifamily Housing Programs.
Auditor Noncompliance Code: R. Section 8 program administration
Finding Resolutions Status: Resolved.
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD
requirement for security funding. Funds have been transferred and will be maintained based
on HUD requirements in a separate account from operating funds.
Move in EIVs - All move in files will be sent to our in house compliance department and
Franklin Group has an EIV specialist how follows and tracks all moves for accuracy for all
move files and the EIV specialist also sends out the 90 day reminders for all move in.
Existing Tenant EIV - It is the policy that all existing tenant EIV and 120-day reports are run
per the 4350 guidelines. The Community Manager for Renaissance Gardens has been
provided the HUD Trainings and have noted on her daily task reminder from One Site to pull
all reports as required. The RM is required during monthly visits to spot check at least 5
existing tenants.
Gross Rent Change and Medical Reporting - The policy states that all Gross Rent Changes
are to be completed as approved by the new rent schedule - The Community Manager is
required to scheduled appointments with all residents to sign the effective gross rent change
and file in tenants files, it is also required that residents 50059s are signed and in the file,
the Community Manager has taken the latest HUD training with our in house HUD
Compliance Manager- The Regional Manager will also spot check files to be certain that all
Gross Rent Changes are in its 6 part file folders. Medical reporting records were discussed
in our HUD Compliance Training and all expenses must be in the 6-part file folder. Again,
the RM will continue to spot check files during the monthly required inspections. All HUD
Communities were required to participate in the HUD Training as a reminder tool.
Security Deposit - Franklin Companies has a policy that all security deposit refunds must be
submitted within the 3 days move out period. This situation was due to the changeover in
Management.
Tenant lease files are required to be maintained and tenant eligibility determined in
accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs.
Condition
In connection with our lease file review, we noted the following deficiencies: 1 out of 1 new
tenant tested had EIVs that were not performed in the correct period and that were not
performed outside of 90-day EIV window.
Cause
Management's policies with respect to the determination of eligibility and the maintenance of
tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of
Subsidized Multifamily Housing Programs were not consistently followed. Effect or Potential Effect
The procedures for eligibility and maintaining tenant lease files were not consistently applied
in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs. This could result in units being rented to ineligible tenants or
errors in the rent subsidies paid by HUD.
Questioned Costs
N/A
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendations
Management should establish procedures and monitor compliance with those procedures to
ensure that tenant eligibility is correctly determined and that tenant lease files are properly
maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy
Requirements of Subsidized Multifamily Housing Programs.
Auditor Noncompliance Code: R. Section 8 program administration
Finding Resolutions Status: Resolved.
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD
requirement for security funding. Funds have been transferred and will be maintained based
on HUD requirements in a separate account from operating funds.
Move in EIVs - All move in files will be sent to our in house compliance department and
Franklin Group has an EIV specialist how follows and tracks all moves for accuracy for all
move files and the EIV specialist also sends out the 90 day reminders for all move in.
Existing Tenant EIV - It is the policy that all existing tenant EIV and 120-day reports are run
per the 4350 guidelines. The Community Manager for Renaissance Gardens has been
provided the HUD Trainings and have noted on her daily task reminder from One Site to pull
all reports as required. The RM is required during monthly visits to spot check at least 5
existing tenants.
Gross Rent Change and Medical Reporting - The policy states that all Gross Rent Changes
are to be completed as approved by the new rent schedule - The Community Manager is
required to scheduled appointments with all residents to sign the effective gross rent change
and file in tenants files, it is also required that residents 50059s are signed and in the file,
the Community Manager has taken the latest HUD training with our in house HUD
Compliance Manager- The Regional Manager will also spot check files to be certain that all
Gross Rent Changes are in its 6 part file folders. Medical reporting records were discussed
in our HUD Compliance Training and all expenses must be in the 6-part file folder. Again,
the RM will continue to spot check files during the monthly required inspections. All HUD
Communities were required to participate in the HUD Training as a reminder tool.
Security Deposit - Franklin Companies has a policy that all security deposit refunds must be
submitted within the 3 days move out period. This situation was due to the changeover in
Management.
Management is responsible for the design, implementation, and maintenance of internal
controls relevant to the preparation and fair presentation of financial statements that are free
from material misstatement, whether due to fraud or error.
Management is responsible for timely submission of audited financial statements to Federal
Audit Clearinghouse ("FAC").
Condition
The accounting records required numerous material adjustments to be proposed and
recorded in order for the financial statements to be fairly presented in accordance with
generally accepted accounting principles in the United States of America.
Single Audit reports are required to be submitted to the FAC pursuant to the audit
requirement of Title 2 U.S. Code of Federal Regulations Part 200. Submission of June 30,
2023 financial statements was not completed within the specified time frame.
Cause
Management did not have sufficient controls over financial reporting.
Effect or Potential Effect
Condition 1 may lead to inaccurate financial reporting and potential misstatement of the
financial statements such that they are not in accordance with accounting principles
generally accepted in the United States of America. Condition 2 results in auditee being
designated as not a low-risk auditee, which may have an effect on future federal grants and
program eligibility.
Questioned Costs
N/A
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendation
Management should undertake a review of internal controls over financial reporting and
ensure that financial data is properly recorded in the books and records of the Project to
prevent misstatements from occurring in the future.
Management should implement procedures to ensure that required filing is completed
timely.
Auditor Noncompliance Code: S. Internal control deficiencies
Finding Resolution Status: Resolved.
Views of Responsible Officials
Management agrees with the finding and recommendation and had implemented reviews of
the financial statements by senior management prior to closing books to ensure accuracy of
information. Management agrees with the finding and recommendation and will ensure required filing is
completed timely.
Management is responsible for the design, implementation, and maintenance of internal
controls relevant to the preparation and fair presentation of financial statements that are free
from material misstatement, whether due to fraud or error.
Management is responsible for timely submission of audited financial statements to Federal
Audit Clearinghouse ("FAC").
Condition
The accounting records required numerous material adjustments to be proposed and
recorded in order for the financial statements to be fairly presented in accordance with
generally accepted accounting principles in the United States of America.
Single Audit reports are required to be submitted to the FAC pursuant to the audit
requirement of Title 2 U.S. Code of Federal Regulations Part 200. Submission of June 30,
2023 financial statements was not completed within the specified time frame.
Cause
Management did not have sufficient controls over financial reporting.
Effect or Potential Effect
Condition 1 may lead to inaccurate financial reporting and potential misstatement of the
financial statements such that they are not in accordance with accounting principles
generally accepted in the United States of America. Condition 2 results in auditee being
designated as not a low-risk auditee, which may have an effect on future federal grants and
program eligibility.
Questioned Costs
N/A
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendation
Management should undertake a review of internal controls over financial reporting and
ensure that financial data is properly recorded in the books and records of the Project to
prevent misstatements from occurring in the future.
Management should implement procedures to ensure that required filing is completed
timely.
Auditor Noncompliance Code: S. Internal control deficiencies
Finding Resolution Status: Resolved.
Views of Responsible Officials
Management agrees with the finding and recommendation and had implemented reviews of
the financial statements by senior management prior to closing books to ensure accuracy of
information. Management agrees with the finding and recommendation and will ensure required filing is
completed timely.
Criteria
In accordance with HUD Handbook 4530.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs, management must review and update the Affirmative Fair
Housing Marketing Plan at least every five years.
Condition
The property does not have a current Affirmative Fair Housing Marketing Plan.
Cause
Procedures were not in place to ensure proper documentation was maintained upon the
change of management.
Effect or Potential Effect
Absent these written documents, the Project could open itself up to mistakes in marketing
and leasing activity that could put their PRAC contract at risk upon renewal.
Questioned Costs
N/A
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendation
Management should maintain an Affirmative Fair Housing Marketing Plan and update it
every five years.
Auditor Noncompliance Code: Z. Other
Finding Resolution Status: Resolved.
View of Responsible Officials
Management has submitted their Affirmative Fair Housing Marketing Plan with an effective
date of September 27, 2024.
Criteria
In accordance with HUD Handbook 4530.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs, management must review and update the Affirmative Fair
Housing Marketing Plan at least every five years.
Condition
The property does not have a current Affirmative Fair Housing Marketing Plan.
Cause
Procedures were not in place to ensure proper documentation was maintained upon the
change of management.
Effect or Potential Effect
Absent these written documents, the Project could open itself up to mistakes in marketing
and leasing activity that could put their PRAC contract at risk upon renewal.
Questioned Costs
N/A
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendation
Management should maintain an Affirmative Fair Housing Marketing Plan and update it
every five years.
Auditor Noncompliance Code: Z. Other
Finding Resolution Status: Resolved.
View of Responsible Officials
Management has submitted their Affirmative Fair Housing Marketing Plan with an effective
date of September 27, 2024.
Criteria
Management fee payments are limited to amounts determined in accordance with the terms
of the HUD-approved management agreement.
Condition
During the year ended June 30, 2024, the Project paid management fees of $16,298 in
excess of the amount approved by HUD. Cause
There were two different management agreements and management did not follow the
HUD-approved management agreement when paying management fees from operations.
Effect or Potential Effect
The overpaid amount is an unauthorized distribution and therefore considered to be
questioned costs.
Questioned Costs
$16,298
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendation
The management company should reimburse the Project for overpaid management fee in
the amount of $16,298 and implement procedures to ensure that the management fee paid
does not exceed the amount determined in accordance with the HUD-approved
management agreement.
Auditor Noncompliance Code: J. Unauthorized management fees
Finding Resolution Status: In process.
View of Responsible Officials
Management agrees with the finding and is working with ownership on reimbursements to
the property. Management will collect in accordance with HUD going forward.
Criteria
Management fee payments are limited to amounts determined in accordance with the terms
of the HUD-approved management agreement.
Condition
During the year ended June 30, 2024, the Project paid management fees of $16,298 in
excess of the amount approved by HUD. Cause
There were two different management agreements and management did not follow the
HUD-approved management agreement when paying management fees from operations.
Effect or Potential Effect
The overpaid amount is an unauthorized distribution and therefore considered to be
questioned costs.
Questioned Costs
$16,298
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendation
The management company should reimburse the Project for overpaid management fee in
the amount of $16,298 and implement procedures to ensure that the management fee paid
does not exceed the amount determined in accordance with the HUD-approved
management agreement.
Auditor Noncompliance Code: J. Unauthorized management fees
Finding Resolution Status: In process.
View of Responsible Officials
Management agrees with the finding and is working with ownership on reimbursements to
the property. Management will collect in accordance with HUD going forward.
Criteria
Residual receipts reserve deposits should be made within 90 days of year end.
Condition
During the year ended June 30, 2024, management did not make the required residual
receipts deposit in the amount of $2,566 within 90 days of year end, as required by HUD.
Cause
Controls are not in place to ensure that required residual receipts reserve deposits are made
timely.
Effect or Potential Effect
The Organization is not in compliance with the requirements of the regulatory agreement.
Questioned Costs
$2,566
Identification as a Repeat Finding
This finding is not a repeat finding. Recommendation
Management should establish internal controls and procedures to ensure that required
residual receipts reserve deposits are made timely.
Auditor Noncompliance Code: B. Failure to make required residual receipts deposits.
Finding Resolution Status: Resolved.
View of Responsible Officials
Management agrees with the finding and has transferred the residual receipts.
Criteria
Residual receipts reserve deposits should be made within 90 days of year end.
Condition
During the year ended June 30, 2024, management did not make the required residual
receipts deposit in the amount of $2,566 within 90 days of year end, as required by HUD.
Cause
Controls are not in place to ensure that required residual receipts reserve deposits are made
timely.
Effect or Potential Effect
The Organization is not in compliance with the requirements of the regulatory agreement.
Questioned Costs
$2,566
Identification as a Repeat Finding
This finding is not a repeat finding. Recommendation
Management should establish internal controls and procedures to ensure that required
residual receipts reserve deposits are made timely.
Auditor Noncompliance Code: B. Failure to make required residual receipts deposits.
Finding Resolution Status: Resolved.
View of Responsible Officials
Management agrees with the finding and has transferred the residual receipts.