Audit 327746

Condition: Mary Lee Flagship (the Organization) did not consistently use the Enterprise Income Verification (EIV) system, as required by HUD. We noted four tenants file did not contain a timely run EIV report. Client had obtained and used third-party documentation of income and assets for the initial certifications/recertifications. Criteria: Per 24 CFR § 5.233 Mandated Use of HUD’s Enterprise Income Verification (EIV) System, entities administering assistance under Section 202 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 8013) must use HUD’s EIV system in its entirety as a third-party source to verify tenant employment and income information during mandatory reexaminations or recertifications of family composition and income. Cause: Inadequate monitoring of internal controls in place over use of EIV reports in recertifications and inadequate internal monitoring of tenant files noted during the current year. Effect: Failure to use the EIV system in its entirety may result in the imposition of sanctions and/or the assessment of disallowed costs associated with any resulting incorrect subsidy or tenant rent calculations, or both. Questioned costs: $-0- Context: We noted no timely run EIV reports in examination of four tenant files on two new tenants and two continuing tenants. Repeat Finding: Yes Recommendation: We recommend a second person in the housing office review and certify in writing that the documentation for each initial certification or recertification is complete and in compliance with HUD documentation requirements prior to admitting a new tenant and prior to each continuing tenant’s annual recertification date going forward. Additionally, we recommend that an outside housing consultant conduct a review of all current tenant files to ensure completeness and compliance with HUD documentation requirements within the next 30 days and corrective actions, as needed, by the Organization occur as soon as possible thereafter. Reporting Views of Responsible Officials: Management agrees with the finding and commits to following the provided recommendations.

Condition: The Organization did not comply with the HUD requirement to obtain one continuing tenant’s signatures on consent forms and verification documents during the recertification process. Criteria: Per 24 CFR § 5.230, each member of the family of an assistance applicant or participant who is at least 18 years of age, and each family head and spouse regardless of age, shall sign one or more consent forms. Per 24 CFR § 5.232, In accordance with the provisions governing the program involved, if the assistance applicant or participant, or any member of the assistance applicant's or participant's family, does not sign and submit the consent form as required in § 5.230, then: (1) The processing entity shall deny assistance to and admission of an assistance applicant; (2) Assistance to, and the tenancy of, a participant may be terminated. Cause: Failure to follow internal control procedures during recertification of this tenant. Effect: Failure to follow these requirements may result in the imposition of sanctions and/or the assessment of disallowed costs. Questioned costs: $5,952 Context: We examined four tenant files on two new tenants and two continuing tenants out of a population of 24 residents in this project in fiscal year 2024 for this compliance attribute and this condition was noted in one of the selected continuing tenants. Repeat Finding: No Recommendation: We recommend a second person in the housing office review and certify in writing that the documentation for each initial certification or recertification is complete and in compliance with HUD documentation requirements prior to admitting a new tenant and prior to each continuing tenant’s annual recertification date going forward. Additionally, we recommend that an outside housing consultant conduct a review of all current tenant files to ensure completeness and compliance with HUD documentation requirements within the next 30 days and corrective actions to include termination of assistance to and tenancy of any noncompliant tenants as soon as possible thereafter. Reporting Views of Responsible Officials: Management agrees with the finding and commits to following the provided recommendations.

Condition: Mary Lee Flagship (the Organization) did not consistently use the Enterprise Income Verification (EIV) system, as required by HUD. We noted four tenants file did not contain a timely run EIV report. Client had obtained and used third-party documentation of income and assets for the initial certifications/recertifications. Criteria: Per 24 CFR § 5.233 Mandated Use of HUD’s Enterprise Income Verification (EIV) System, entities administering assistance under Section 202 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 8013) must use HUD’s EIV system in its entirety as a third-party source to verify tenant employment and income information during mandatory reexaminations or recertifications of family composition and income. Cause: Inadequate monitoring of internal controls in place over use of EIV reports in recertifications and inadequate internal monitoring of tenant files noted during the current year. Effect: Failure to use the EIV system in its entirety may result in the imposition of sanctions and/or the assessment of disallowed costs associated with any resulting incorrect subsidy or tenant rent calculations, or both. Questioned costs: $-0- Context: We noted no timely run EIV reports in examination of four tenant files on two new tenants and two continuing tenants. Repeat Finding: Yes Recommendation: We recommend a second person in the housing office review and certify in writing that the documentation for each initial certification or recertification is complete and in compliance with HUD documentation requirements prior to admitting a new tenant and prior to each continuing tenant’s annual recertification date going forward. Additionally, we recommend that an outside housing consultant conduct a review of all current tenant files to ensure completeness and compliance with HUD documentation requirements within the next 30 days and corrective actions, as needed, by the Organization occur as soon as possible thereafter. Reporting Views of Responsible Officials: Management agrees with the finding and commits to following the provided recommendations.

Condition: The Organization did not comply with the HUD requirement to obtain one continuing tenant’s signatures on consent forms and verification documents during the recertification process. Criteria: Per 24 CFR § 5.230, each member of the family of an assistance applicant or participant who is at least 18 years of age, and each family head and spouse regardless of age, shall sign one or more consent forms. Per 24 CFR § 5.232, In accordance with the provisions governing the program involved, if the assistance applicant or participant, or any member of the assistance applicant's or participant's family, does not sign and submit the consent form as required in § 5.230, then: (1) The processing entity shall deny assistance to and admission of an assistance applicant; (2) Assistance to, and the tenancy of, a participant may be terminated. Cause: Failure to follow internal control procedures during recertification of this tenant. Effect: Failure to follow these requirements may result in the imposition of sanctions and/or the assessment of disallowed costs. Questioned costs: $5,952 Context: We examined four tenant files on two new tenants and two continuing tenants out of a population of 24 residents in this project in fiscal year 2024 for this compliance attribute and this condition was noted in one of the selected continuing tenants. Repeat Finding: No Recommendation: We recommend a second person in the housing office review and certify in writing that the documentation for each initial certification or recertification is complete and in compliance with HUD documentation requirements prior to admitting a new tenant and prior to each continuing tenant’s annual recertification date going forward. Additionally, we recommend that an outside housing consultant conduct a review of all current tenant files to ensure completeness and compliance with HUD documentation requirements within the next 30 days and corrective actions to include termination of assistance to and tenancy of any noncompliant tenants as soon as possible thereafter. Reporting Views of Responsible Officials: Management agrees with the finding and commits to following the provided recommendations.