Inadequate Control Over Tenants File Documentation
Findings Resolution Status: In Process
Information on Universe Population Size: 50 Tenants
Sample Size Information: 5 Samples
Auditor Non-Compliance Code Drop-Down: Eligibility
Criteria: The U.S. Department of Housing and Urban Development (HUD) requires that tenant files
be properly maintained to ensure compliance with federal regulations. Specifically HUD Handbook 4350.3: Occupancy Requirements of Subsidized Multifamily
Housing Programs state that owners and managers must maintain complete and
accurate tenant files to verify eligibility, income, and compliance with program
requirements. This includes obtaining signed applications from applicants to
ensure all necessary information is provided for eligibility determination. HUD's Tenant File Organization and Retention Guidelines emphasize the
importance of proper record-keeping and require that all necessary certifications,
verifications, and supporting documents be available for review.
Furthermore, according to the Ohio Housing Finance Agency (OHFA) Program Compliance
Handbook, maintaining complete and well-organized tenant files is a key compliance requirement.
As outlined in Section 1.42-5 (Record-Keeping Provision), project owners are required to retain
records for each qualified low-income resident and building for every year of the compliance period.
These files must be available for review, including the original qualification documents used for the
Tax Credit program.
At a minimum, resident files should contain the following documents:
1. Lease – The initial lease, any addenda, and subsequent-year leases.
2. OHFA Sworn Income and Asset Statement (SIAS).
3. Supporting documentation for income and assets reported on the SIAS.
4. OHFA Tenant Income Certification (TIC).
5. Other relevant documentation as needed to verify household eligibility.
To ensure compliance, tenant files should be organized consistently and maintained in an accessible
manner to facilitate site reviews and audits.
Condition: During eligibility testing, the following issues concerning the tenant file’s documentation
were noted: Unit 1261- Missing Recertification and no tenant’s signature affixed in Security
Deposit Agreement Unit 1330- Missing Recertification and no tenant’s signature affixed in Security
Deposit Agreement, Ethnicity, HUD Form 9887 and Move-In document Unit 1062, 1174- Missing Recertification
Cause of Condition: The inadequacy in control over tenant file documentation is primarily due to
the lack of standardized procedures for managing these documents and insufficient training for staff
responsible for them. Additionally, there is an absence of a systematic approach for periodic reviews
and audits of the filing system.
Potential Effect of Condition: Without a standardized procedure in managing the tenants file and
review process, there is an increased risk of non-compliance with regulatory requirements, delays in
tenant eligibility verification, and inefficiencies in record retrieval. This could lead to audit findings,
regulatory reviews, or challenges in maintaining accurate tenant records.
Questioned Costs: $35,892
Reporting Views of Responsible Officials: The Organization agrees with the findings and
recommendations and will adhere to the corrective action plan.
Recommendation: To address the issues identified, we recommend the following actions:
1. Develop and Implement Standardized Filing Procedures - Establish clear, written guidelines
for the filing and management of tenant documents. Ensure these procedures are
comprehensive and include steps for document handling, storage, and retrieval.
2. Train Staff - Conduct training sessions for all relevant staff members on the new filing
procedures and the importance of maintaining accurate and up-to-date tenant records. Include
periodic refresher training to address any updates or changes in procedures.
3. Conduct Regular Reviews and Audits - Establish a routine schedule for reviewing and
auditing tenant files to ensure compliance with filing procedures and to identify any
discrepancies or issues early. Implement corrective actions promptly when issues are
identified.
Management Response: Management is currently conducting a comprehensive review of the process
to ensure alignment with compliance requirements and identify areas for improvement.
Untimely Update of Tenant Rent Records between HUD 50059 and Rent Roll
Findings Resolution Status: In Process
Information on Universe Population Size: 50 Tenants
Sample Size Information: 5 Samples
Auditor Non-Compliance Code Drop-Down: Eligibility
Criteria: According to HUD regulations, property owners are required to maintain accurate and up_x0002_to-date rent records. This is essential for ensuring compliance with HUD's requirements and avoiding
discrepancies that could lead to improper subsidy payments, audit findings, or regulatory non_x0002_compliance. Specifically, HUD Handbook 4350.3 outlines the need for accurate tenant rent records
and rent calculations to accurately match with the HUD Form 50059.
Additionally, HUD emphasizes the importance of timely updates to tenant rent records to reflect any
changes in rent amounts. Failure to comply with these requirements, even for a short period, needs to
be documented to ensure transparency and accountability.
Condition: During the review, discrepancies were identified in all five (5) sampled units where the
contract rent per HUD Form 50059 did not match the current leased rate per the Rent Roll. The
discrepancies appear to have resulted from the Rent Roll not being updated, at the time of the testing,
to reflect the approved rent increase indicated in the rent schedule, effective December 1, 2024. This
rent increase is correctly reflected in Form 50059, leading to the noted variance.
Additionally, 1 out 5 of the sampled units have a discrepancy between the subsidy amount recorded
in HUD Form 50059 and the Rent Roll:
Unit 1062 – Subsidy per HUD 50059: $949, Subsidy per Rent Roll: $1,113
Cause of Condition: The discrepancies were primarily due to:
a) Lack of timely updates to of Rent Roll after rent adjustments in Rent Schedule and HUD
Form 50059.
b) Insufficient review procedures to ensure consistency between Form 50059 and the Rent Roll.
c) Absence of internal controls or periodic reconciliations to identify and correct discrepancies.
Potential Effect of Condition: Failure to maintain accurate and up-to-date rent adjustments in the Rent
Roll, it may result in the ff:
Incorrect rent collection, misstatements in financial records, and challenges in reconciling tenant
payments.
Improper subsidy calculations and tenant billing, leading to potential financial adjustments or
repayments
HUD non-compliance, which could trigger audit findings, corrective actions, or potential
penalties.
Questioned Costs: $4,613
Reporting Views of Responsible Officials: The Organization agrees with the findings and
recommendations and will adhere to the corrective action plan.
Recommendation: To address the identified discrepancies and improve compliance, we recommend
the following actions:
1. Establish a Routine Rent Roll Update Process – Implement a formal process to ensure that all
rent adjustments, including those reflected in HUD Form 50059, are promptly and accurately
updated in the Rent Roll.
2. Enhance Oversight and Internal Controls – Strengthen review and approval procedures for rent
adjustments by designating responsible personnel to verify updates before finalizing financial
records.
3. Conduct Periodic Reconciliations – Regularly reconcile the Rent Roll with HUD Form
50059 and the approved rent schedule to identify and correct discrepancies in a timely
manner.
4. Provide Staff Training – Offer ongoing training for staff responsible for rent administration
to reinforce the importance of maintaining accurate and up-to-date rental records in
compliance with HUD regulations.
5. Implement Monitoring and Audit Procedures – Establish periodic internal audits and
management reviews to detect and address discrepancies early, reducing financial reporting
risks and ensuring compliance with subsidy requirements.
Management Response: Management is currently conducting a comprehensive review of the process
to ensure alignment with compliance requirements and identify areas for improvement.
Inadequate Control Over Tenants File Documentation
Findings Resolution Status: In Process
Information on Universe Population Size: 50 Tenants
Sample Size Information: 5 Samples
Auditor Non-Compliance Code Drop-Down: Eligibility
Criteria: The U.S. Department of Housing and Urban Development (HUD) requires that tenant files
be properly maintained to ensure compliance with federal regulations. Specifically HUD Handbook 4350.3: Occupancy Requirements of Subsidized Multifamily
Housing Programs state that owners and managers must maintain complete and
accurate tenant files to verify eligibility, income, and compliance with program
requirements. This includes obtaining signed applications from applicants to
ensure all necessary information is provided for eligibility determination. HUD's Tenant File Organization and Retention Guidelines emphasize the
importance of proper record-keeping and require that all necessary certifications,
verifications, and supporting documents be available for review.
Furthermore, according to the Ohio Housing Finance Agency (OHFA) Program Compliance
Handbook, maintaining complete and well-organized tenant files is a key compliance requirement.
As outlined in Section 1.42-5 (Record-Keeping Provision), project owners are required to retain
records for each qualified low-income resident and building for every year of the compliance period.
These files must be available for review, including the original qualification documents used for the
Tax Credit program.
At a minimum, resident files should contain the following documents:
1. Lease – The initial lease, any addenda, and subsequent-year leases.
2. OHFA Sworn Income and Asset Statement (SIAS).
3. Supporting documentation for income and assets reported on the SIAS.
4. OHFA Tenant Income Certification (TIC).
5. Other relevant documentation as needed to verify household eligibility.
To ensure compliance, tenant files should be organized consistently and maintained in an accessible
manner to facilitate site reviews and audits.
Condition: During eligibility testing, the following issues concerning the tenant file’s documentation
were noted: Unit 1261- Missing Recertification and no tenant’s signature affixed in Security
Deposit Agreement Unit 1330- Missing Recertification and no tenant’s signature affixed in Security
Deposit Agreement, Ethnicity, HUD Form 9887 and Move-In document Unit 1062, 1174- Missing Recertification
Cause of Condition: The inadequacy in control over tenant file documentation is primarily due to
the lack of standardized procedures for managing these documents and insufficient training for staff
responsible for them. Additionally, there is an absence of a systematic approach for periodic reviews
and audits of the filing system.
Potential Effect of Condition: Without a standardized procedure in managing the tenants file and
review process, there is an increased risk of non-compliance with regulatory requirements, delays in
tenant eligibility verification, and inefficiencies in record retrieval. This could lead to audit findings,
regulatory reviews, or challenges in maintaining accurate tenant records.
Questioned Costs: $35,892
Reporting Views of Responsible Officials: The Organization agrees with the findings and
recommendations and will adhere to the corrective action plan.
Recommendation: To address the issues identified, we recommend the following actions:
1. Develop and Implement Standardized Filing Procedures - Establish clear, written guidelines
for the filing and management of tenant documents. Ensure these procedures are
comprehensive and include steps for document handling, storage, and retrieval.
2. Train Staff - Conduct training sessions for all relevant staff members on the new filing
procedures and the importance of maintaining accurate and up-to-date tenant records. Include
periodic refresher training to address any updates or changes in procedures.
3. Conduct Regular Reviews and Audits - Establish a routine schedule for reviewing and
auditing tenant files to ensure compliance with filing procedures and to identify any
discrepancies or issues early. Implement corrective actions promptly when issues are
identified.
Management Response: Management is currently conducting a comprehensive review of the process
to ensure alignment with compliance requirements and identify areas for improvement.
Untimely Update of Tenant Rent Records between HUD 50059 and Rent Roll
Findings Resolution Status: In Process
Information on Universe Population Size: 50 Tenants
Sample Size Information: 5 Samples
Auditor Non-Compliance Code Drop-Down: Eligibility
Criteria: According to HUD regulations, property owners are required to maintain accurate and up_x0002_to-date rent records. This is essential for ensuring compliance with HUD's requirements and avoiding
discrepancies that could lead to improper subsidy payments, audit findings, or regulatory non_x0002_compliance. Specifically, HUD Handbook 4350.3 outlines the need for accurate tenant rent records
and rent calculations to accurately match with the HUD Form 50059.
Additionally, HUD emphasizes the importance of timely updates to tenant rent records to reflect any
changes in rent amounts. Failure to comply with these requirements, even for a short period, needs to
be documented to ensure transparency and accountability.
Condition: During the review, discrepancies were identified in all five (5) sampled units where the
contract rent per HUD Form 50059 did not match the current leased rate per the Rent Roll. The
discrepancies appear to have resulted from the Rent Roll not being updated, at the time of the testing,
to reflect the approved rent increase indicated in the rent schedule, effective December 1, 2024. This
rent increase is correctly reflected in Form 50059, leading to the noted variance.
Additionally, 1 out 5 of the sampled units have a discrepancy between the subsidy amount recorded
in HUD Form 50059 and the Rent Roll:
Unit 1062 – Subsidy per HUD 50059: $949, Subsidy per Rent Roll: $1,113
Cause of Condition: The discrepancies were primarily due to:
a) Lack of timely updates to of Rent Roll after rent adjustments in Rent Schedule and HUD
Form 50059.
b) Insufficient review procedures to ensure consistency between Form 50059 and the Rent Roll.
c) Absence of internal controls or periodic reconciliations to identify and correct discrepancies.
Potential Effect of Condition: Failure to maintain accurate and up-to-date rent adjustments in the Rent
Roll, it may result in the ff:
Incorrect rent collection, misstatements in financial records, and challenges in reconciling tenant
payments.
Improper subsidy calculations and tenant billing, leading to potential financial adjustments or
repayments
HUD non-compliance, which could trigger audit findings, corrective actions, or potential
penalties.
Questioned Costs: $4,613
Reporting Views of Responsible Officials: The Organization agrees with the findings and
recommendations and will adhere to the corrective action plan.
Recommendation: To address the identified discrepancies and improve compliance, we recommend
the following actions:
1. Establish a Routine Rent Roll Update Process – Implement a formal process to ensure that all
rent adjustments, including those reflected in HUD Form 50059, are promptly and accurately
updated in the Rent Roll.
2. Enhance Oversight and Internal Controls – Strengthen review and approval procedures for rent
adjustments by designating responsible personnel to verify updates before finalizing financial
records.
3. Conduct Periodic Reconciliations – Regularly reconcile the Rent Roll with HUD Form
50059 and the approved rent schedule to identify and correct discrepancies in a timely
manner.
4. Provide Staff Training – Offer ongoing training for staff responsible for rent administration
to reinforce the importance of maintaining accurate and up-to-date rental records in
compliance with HUD regulations.
5. Implement Monitoring and Audit Procedures – Establish periodic internal audits and
management reviews to detect and address discrepancies early, reducing financial reporting
risks and ensuring compliance with subsidy requirements.
Management Response: Management is currently conducting a comprehensive review of the process
to ensure alignment with compliance requirements and identify areas for improvement.