Audit 336250

Finding No. 2024-001: Section 202 Supportive Housing for the Elderly, ALN 14.157 Finding Resolution Status: Unresolved. Information on Universe Population Size: Seventy-eight tenants. Sample Size Information: Ten tenants. Identification of Repeat Finding and Finding Reference Number: No. Criteria: HUD regulations require all initial and ongoing tenant eligibility documentation to be appropriately executed and maintained. Additionally, HUD requires timely verification of the tenant’s current income through the use of Enterprise Income Verification (EIV) reports. Statement of Condition: Missing documentation in tenant files or incorrect income utilized: • Two tenant files did not have an application stamp on the application for housing. • One tenant file did not contain a background check. • One tenant file contained a background check ran after move-in date. • Four tenant files did not contain verification of current income through the use of EIV reports. • Four tenant files contained verification of current income through the use of EIV reports after the 90 days requirement. • Three tenant files had the House rules signed after the move in date. • One tenant file was missing an annual unit inspection. • One tenant file did not have the move in inspection signed by the tenant. • One tenant file had income excluded from the form HUD-50059 in excess of $2,400 annually. Cause: The Project did not maintain appropriate tenant eligibility documentation as required by HUD. Effect or Potential Effect: Unable to properly verify the tenant's income, eligibility of residency, and cost of assistance and residency may be disallowed. Auditor Non-Compliance Code: R – Section 8 Program Administration Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations will be adopted. Recommendation: The Project should implement procedures to ensure that tenant eligibility is verified, tenant files are properly maintained, and correct income amounts are utilized in the calculation of tenant rent. Response Indicator: Agree. Completion Date: 06/30/2025 Response: Staff training has been provided with additional HUD training, inclusive of EIV reporting and tenant file maintenance and included in monthly reporting procedures.

Finding No. 2024-002: Section 202 Supportive Housing for the Elderly, ALN 14.157 Finding Resolution Status: Resolved. Information on Universe Population Size: Seven move-out tenants. Sample Size Information: Three move-out tenants. Identification of Repeat Finding and Finding Reference Number: No. Criteria: HUD rules require the owner to return the full security deposit plus accrued interest or provide the tenant with an itemized statement with any applicable deductions and any remaining deposit within the lesser of 30 days or the state’s law of 21 days after the move-out date. Statement of Condition: Three tenants were not refunded their security deposits within the state’s law of 21 days after move-out. Cause: The manager did not adhere to requirements for returning security deposits resulting in the untimely refund of security deposits. Effect or Potential Effect: The Project is not in compliance regarding the returning of security deposits within the required timeframe. Auditor Non-Compliance Code: M – Security Deposits Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations have been adopted. Recommendation: The Project should implement procedures to ensure the manager complies with the requirements for timely refunding of security deposits. Response Indicator: Agree. Completion Date: 11/28/2023 Response: Staff training has been provided and included in monthly reporting procedures.

Finding No. 2024-003: Section 202 Supportive Housing for the Elderly, ALN 14.157 Finding Resolution Status: Resolved. Information on Universe Population Size: Total assistance revenue. Sample Size Information: All monthly PRAC requests. Identification of Repeat Finding and Finding Reference Number: No. Criteria: As required by HUD regulations, applications for renewal of the PRAC contracts must be completed 120 days prior to the PRAC expiration date. Statement of Condition: The Project did not complete the renewal process 120 days prior to the PRAC expiration date. The Project made three withdrawals from the replacement reserve account for HAP loans totaling $71,863. Cause: The Project did not follow HUD regulations for a timely contract renewal resulting in a delay of HUD funding. Effect or Potential Effect: The Project is not in compliance with HUD regulations for timely renewal of PRAC contract resulting in delayed receipt of HAP funds. Additionally, having less funds available for potential replacements needed by the Project due to taking a loan from the replacement reserve account. Auditor Non-Compliance Code: R – Section 8 Program Administration Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations have been adopted. Recommendation: The Project should comply with HUD regulations for timely renewal of the PRAC contract to ensure no interruption in funding. Response Indicator: Agree. Completion Date: 06/18/2024 Response: New staff have been put in place to monitor and submit all renewals in a timely manner.

Finding No. 2024-001: Section 202 Supportive Housing for the Elderly, ALN 14.157 Finding Resolution Status: Unresolved. Information on Universe Population Size: Seventy-eight tenants. Sample Size Information: Ten tenants. Identification of Repeat Finding and Finding Reference Number: No. Criteria: HUD regulations require all initial and ongoing tenant eligibility documentation to be appropriately executed and maintained. Additionally, HUD requires timely verification of the tenant’s current income through the use of Enterprise Income Verification (EIV) reports. Statement of Condition: Missing documentation in tenant files or incorrect income utilized: • Two tenant files did not have an application stamp on the application for housing. • One tenant file did not contain a background check. • One tenant file contained a background check ran after move-in date. • Four tenant files did not contain verification of current income through the use of EIV reports. • Four tenant files contained verification of current income through the use of EIV reports after the 90 days requirement. • Three tenant files had the House rules signed after the move in date. • One tenant file was missing an annual unit inspection. • One tenant file did not have the move in inspection signed by the tenant. • One tenant file had income excluded from the form HUD-50059 in excess of $2,400 annually. Cause: The Project did not maintain appropriate tenant eligibility documentation as required by HUD. Effect or Potential Effect: Unable to properly verify the tenant's income, eligibility of residency, and cost of assistance and residency may be disallowed. Auditor Non-Compliance Code: R – Section 8 Program Administration Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations will be adopted. Recommendation: The Project should implement procedures to ensure that tenant eligibility is verified, tenant files are properly maintained, and correct income amounts are utilized in the calculation of tenant rent. Response Indicator: Agree. Completion Date: 06/30/2025 Response: Staff training has been provided with additional HUD training, inclusive of EIV reporting and tenant file maintenance and included in monthly reporting procedures.

Finding No. 2024-002: Section 202 Supportive Housing for the Elderly, ALN 14.157 Finding Resolution Status: Resolved. Information on Universe Population Size: Seven move-out tenants. Sample Size Information: Three move-out tenants. Identification of Repeat Finding and Finding Reference Number: No. Criteria: HUD rules require the owner to return the full security deposit plus accrued interest or provide the tenant with an itemized statement with any applicable deductions and any remaining deposit within the lesser of 30 days or the state’s law of 21 days after the move-out date. Statement of Condition: Three tenants were not refunded their security deposits within the state’s law of 21 days after move-out. Cause: The manager did not adhere to requirements for returning security deposits resulting in the untimely refund of security deposits. Effect or Potential Effect: The Project is not in compliance regarding the returning of security deposits within the required timeframe. Auditor Non-Compliance Code: M – Security Deposits Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations have been adopted. Recommendation: The Project should implement procedures to ensure the manager complies with the requirements for timely refunding of security deposits. Response Indicator: Agree. Completion Date: 11/28/2023 Response: Staff training has been provided and included in monthly reporting procedures.

Finding No. 2024-003: Section 202 Supportive Housing for the Elderly, ALN 14.157 Finding Resolution Status: Resolved. Information on Universe Population Size: Total assistance revenue. Sample Size Information: All monthly PRAC requests. Identification of Repeat Finding and Finding Reference Number: No. Criteria: As required by HUD regulations, applications for renewal of the PRAC contracts must be completed 120 days prior to the PRAC expiration date. Statement of Condition: The Project did not complete the renewal process 120 days prior to the PRAC expiration date. The Project made three withdrawals from the replacement reserve account for HAP loans totaling $71,863. Cause: The Project did not follow HUD regulations for a timely contract renewal resulting in a delay of HUD funding. Effect or Potential Effect: The Project is not in compliance with HUD regulations for timely renewal of PRAC contract resulting in delayed receipt of HAP funds. Additionally, having less funds available for potential replacements needed by the Project due to taking a loan from the replacement reserve account. Auditor Non-Compliance Code: R – Section 8 Program Administration Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations have been adopted. Recommendation: The Project should comply with HUD regulations for timely renewal of the PRAC contract to ensure no interruption in funding. Response Indicator: Agree. Completion Date: 06/18/2024 Response: New staff have been put in place to monitor and submit all renewals in a timely manner.