Audit 33620

Condition: Mary Lee Flagship (the Organization) did not consistently used the Enterprise Income Verification (EIV) system, as required by HUD. We noted three 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 certification/recertifications. Criteria: Per 24 CFR 5.233 Mandated Use of HUD?s Enterprise Income Verification (EIV) System, entities administering assistance under Section 811 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: Inconsistent 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 examined five tenant files of which two files contained relevant EIV reports and three files did not contain a timely run EIV report. Repeat Finding: No Recommendation: We recommend that an independent review of each tenant file to include examination of EIV reports be conducted at initial or recertification by a person not directly involved in the intake or recertification process. Any discrepancies noted in this internal file review could then be corrected in a timely manner. Management should ensure that internal control procedures over use of EIV reports in initial and recertification processes are strictly followed and required EIV reports and other supporting documentation is maintained in each tenant?s file.

Condition: The Organization did not obtain signed Forms 9887 - Notice and Consent for the Release of Information or 9887A - Applicant's/Tenant's Consent to the Release of Information and instead used an internally generated verification form in initial certification/recertifications that did not contain the language required by HUD for such consent forms. Criteria: Per HUD Handbook 4350.3, a tenant must sign/submit required consent and verification forms (Form HUD-9887 and Form HUD-9887-A) prior to recertification. Any owner-generated consent forms must include certain language required by HUD as detailed in the HUD Handbook 4350.3. Cause: Organizational personnel did not review the HUD Handbook 4350.3 prior to changing their process from obtaining signed Forms 9887 and 9887-A to using their internally generated consent form. Effect: Failure to use specified forms results in potential legal claims of improper access to tenant?s personal identifiable information, income data and asset information. Questioned costs: $-0- Context: We examined five tenant files which all contained a signed, internally generated verification form that did not contain the language required by HUD for such consent forms. Repeat Finding: No Recommendation: We recommend that the Organization discontinue use of the internally generated verification form immediately and obtain signed HUD Forms 9887 and 9887-A from tenant and family members prior to accessing EIV or obtaining written third-party verification of income. We also recommend an independent review of each tenant file to include examination of signed HUD Forms 9887 and 9887-A be conducted at initial or recertification by a person not directly involved in the intake or recertification process. Any discrepancies noted in this internal file review could then be corrected in a timely manner. Management should ensure that internal control procedures over use of signed, authorized consent and verification forms initial and recertification processes are strictly followed and required signed HUD Forms 9887 and 9887-A, EIV reports and other supporting documentation is maintained in each tenant?s file.

Condition: Mary Lee Flagship (the Organization) did not consistently used the Enterprise Income Verification (EIV) system, as required by HUD. We noted three 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 certification/recertifications. Criteria: Per 24 CFR 5.233 Mandated Use of HUD?s Enterprise Income Verification (EIV) System, entities administering assistance under Section 811 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: Inconsistent 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 examined five tenant files of which two files contained relevant EIV reports and three files did not contain a timely run EIV report. Repeat Finding: No Recommendation: We recommend that an independent review of each tenant file to include examination of EIV reports be conducted at initial or recertification by a person not directly involved in the intake or recertification process. Any discrepancies noted in this internal file review could then be corrected in a timely manner. Management should ensure that internal control procedures over use of EIV reports in initial and recertification processes are strictly followed and required EIV reports and other supporting documentation is maintained in each tenant?s file.

Condition: The Organization did not obtain signed Forms 9887 - Notice and Consent for the Release of Information or 9887A - Applicant's/Tenant's Consent to the Release of Information and instead used an internally generated verification form in initial certification/recertifications that did not contain the language required by HUD for such consent forms. Criteria: Per HUD Handbook 4350.3, a tenant must sign/submit required consent and verification forms (Form HUD-9887 and Form HUD-9887-A) prior to recertification. Any owner-generated consent forms must include certain language required by HUD as detailed in the HUD Handbook 4350.3. Cause: Organizational personnel did not review the HUD Handbook 4350.3 prior to changing their process from obtaining signed Forms 9887 and 9887-A to using their internally generated consent form. Effect: Failure to use specified forms results in potential legal claims of improper access to tenant?s personal identifiable information, income data and asset information. Questioned costs: $-0- Context: We examined five tenant files which all contained a signed, internally generated verification form that did not contain the language required by HUD for such consent forms. Repeat Finding: No Recommendation: We recommend that the Organization discontinue use of the internally generated verification form immediately and obtain signed HUD Forms 9887 and 9887-A from tenant and family members prior to accessing EIV or obtaining written third-party verification of income. We also recommend an independent review of each tenant file to include examination of signed HUD Forms 9887 and 9887-A be conducted at initial or recertification by a person not directly involved in the intake or recertification process. Any discrepancies noted in this internal file review could then be corrected in a timely manner. Management should ensure that internal control procedures over use of signed, authorized consent and verification forms initial and recertification processes are strictly followed and required signed HUD Forms 9887 and 9887-A, EIV reports and other supporting documentation is maintained in each tenant?s file.