Audit 353485

2024-001 – Tenant File Documentation Federal Program – U.S. Department of Housing and Urban Development Assistance Listing Number 14.157 – Supportive Housing for the Elderly (Section 202) Material Weakness & Noncompliance Category of Finding – Eligibility Criteria - The Compliance Supplement requires that tenant files contain all necessary documentation to verify eligibility, rent calculations, and compliance with federal regulations. Required documents include, but are not limited to, original applications, verified bank accounts, certification notices, resident screenings, Enterprise Income Verification (EIV) reports, unit inspections, and move-out documentation. Maintaining complete tenant files is essential for ensuring compliance with federal requirements and preventing improper subsidy payments. Condition - During the audit, a review of tenant files revealed that required documentation was either missing or incomplete. Specifically: • In 6 out of 6 tenant files reviewed, we were not provided evidence that all required documents were included in the tenant file. Missing documentation included Residents Rights and Responsibilities, certification notices, and moveout documentation. Context - Of the total population of 46 units, 6 were tested. Questioned costs are not applicable to this finding. Based on our sample and inquiry of employees, we understand this finding to be prevalent at the Organization throughout the year. Cause - The identified deficiencies appear to be due to inadequate file management and oversight. Contributing factors may include insufficient staff training on federal documentation requirements, staff turnover resulting in inconsistencies in maintaining tenant records, and not conducting routine internal file audits to ensure compliance. Effect - Failure to maintain complete tenant files can lead to significant compliance and financial risks, including inability to verify tenant eligibility, which may result in improper subsidy payments, increased risk of findings in HUD’s Management and Occupancy Reviews (MORs) or audits, potential financial penalties or loss of subsidy funding, and risk of tenant disputes due to missing documentation. Identification of repeat finding - Yes Recommendation - To ensure compliance with federal requirements for tenant documentation, property management should conduct periodic internal file audits to identify and correct missing or incomplete documentation; provide staff training on proper file management and federal compliance requirements; establish a document tracking system to prevent missing files and ensure timely updates; and assign responsibility to designated staff for reviewing and maintaining complete tenant records. Views of responsible officials and planned corrective actions - The Organization agrees with the finding. Currently, management plans to transition 50% of its real estate portfolio to new property management in 2025. Management is working with the new property managers to ensure they have procedures in place to document and maintain tenant files in accordance with the Compliance Supplement and will have routine internal audits of tenant files to ensure compliance with federal regulations. For properties not transitioning to new property management, management believes the reduced volume of properties at one property manager will reduce staff turnover and more efficiently provide the proper training to existing staff to improve compliance with tenant files.

2024-001 – Tenant File Documentation Federal Program – U.S. Department of Housing and Urban Development Assistance Listing Number 14.157 – Supportive Housing for the Elderly (Section 202) Material Weakness & Noncompliance Category of Finding – Eligibility Criteria - The Compliance Supplement requires that tenant files contain all necessary documentation to verify eligibility, rent calculations, and compliance with federal regulations. Required documents include, but are not limited to, original applications, verified bank accounts, certification notices, resident screenings, Enterprise Income Verification (EIV) reports, unit inspections, and move-out documentation. Maintaining complete tenant files is essential for ensuring compliance with federal requirements and preventing improper subsidy payments. Condition - During the audit, a review of tenant files revealed that required documentation was either missing or incomplete. Specifically: • In 6 out of 6 tenant files reviewed, we were not provided evidence that all required documents were included in the tenant file. Missing documentation included Residents Rights and Responsibilities, certification notices, and moveout documentation. Context - Of the total population of 46 units, 6 were tested. Questioned costs are not applicable to this finding. Based on our sample and inquiry of employees, we understand this finding to be prevalent at the Organization throughout the year. Cause - The identified deficiencies appear to be due to inadequate file management and oversight. Contributing factors may include insufficient staff training on federal documentation requirements, staff turnover resulting in inconsistencies in maintaining tenant records, and not conducting routine internal file audits to ensure compliance. Effect - Failure to maintain complete tenant files can lead to significant compliance and financial risks, including inability to verify tenant eligibility, which may result in improper subsidy payments, increased risk of findings in HUD’s Management and Occupancy Reviews (MORs) or audits, potential financial penalties or loss of subsidy funding, and risk of tenant disputes due to missing documentation. Identification of repeat finding - Yes Recommendation - To ensure compliance with federal requirements for tenant documentation, property management should conduct periodic internal file audits to identify and correct missing or incomplete documentation; provide staff training on proper file management and federal compliance requirements; establish a document tracking system to prevent missing files and ensure timely updates; and assign responsibility to designated staff for reviewing and maintaining complete tenant records. Views of responsible officials and planned corrective actions - The Organization agrees with the finding. Currently, management plans to transition 50% of its real estate portfolio to new property management in 2025. Management is working with the new property managers to ensure they have procedures in place to document and maintain tenant files in accordance with the Compliance Supplement and will have routine internal audits of tenant files to ensure compliance with federal regulations. For properties not transitioning to new property management, management believes the reduced volume of properties at one property manager will reduce staff turnover and more efficiently provide the proper training to existing staff to improve compliance with tenant files.