Finding No. 2024-003 – Special Tests and Provisions U.S. Department of Housing and Urban Development Federal Program Name: Section 202 Supportive Housing for the Elderly Assistance Listing Number: 14.157 Criteria: The Section 202 Project Rental Assistance Contract (PRAC contract) requires that the project make monthly deposits to its replacement reserve. Condition: During the year ended September 30, 2024, the project did not make the required monthly deposits to the replacement reserve in the amount of $74,376. The project is required to make monthly deposits to the reserve in the amount of $6,198 per month, or $74,376 for the year. Cause: The project does not generate sufficient cash flow to make the required monthly deposits, due to significant delays in receipt of PRAC funds for over a year. Effect or Potential Effect: Failure to make monthly payments resulted in an underfunding the replacement reserve and a violation of the PRAC subsidy contract. Questioned Costs: Twelve months of missing replacement reserve deposits of $6,198 per month - $74,376 Context: Due to significant delays in receipt of PRAC funds for over a year, management suspended making the deposits to the reserve until PRAC funding was replenished. Management also borrowed funds from the replacement reserve which funds were repaid during the year ended September 30, 2024 once past-due PRAC funds were received. Identification as a Repeat Finding: No Recommendation: Management should review the project budget to determine if nonessential costs can be cut (or request a loan from the owner) to ensure that the replacement reserve is funded in accordance with the terms of the regulatory agreement. Management should obtain from HUD a waiver for the missing replacement reserve deposits if possible. If not granted, management should fund the missing deposits. Auditor Noncompliance Code: N – Replacement reserve deposits Finding Resolution Status: In process Views of Responsible Officials: Due to significant delays in receipt of PRAC funds for over a year, management suspended making the deposits to the reserve until PRAC funding was replenished. Management also borrowed funds from the replacement reserve which funds were repaid during the year ended September 30, 2024 once past-due PRAC funds were received.
Finding No. 2024-004 – Special Tests and Provisions U.S. Department of Housing and Urban Development Federal Program Name: Section 202 Supportive Housing for the Elderly Assistance Listing Number: 14.157 Criteria: Any withdrawal from the replacement reserve account requires evidence of HUD approval. Condition: During the year ended September 30, 2024, management withdrew $189,293 from the replacement reserve, for which $139,292 was not supported with a form 9250 signed by the HUD account executive. Cause: The project did not obtain or retain HUD-signed copies of the form HUD-9250 for all replacement reserve withdrawals and was therefore unable to provide evidence of HUD approval to the auditor. Effect or Potential Effect: Failure to retain documentation of HUD approval results in the conclusion the withdrawal was an unauthorized withdrawal from the replacement reserve account. Questioned Costs: Three withdrawals totaling $139,292 were missing HUD’s signature on the Form HUD-9250 Context: Due to significant delays in receipt of PRAC funds for over a year, management borrowed funds from the replacement reserve, which funds were repaid during the year ended September 30, 2024 once past-due PRAC funds were received. Management received an email from their HUD Account Executive explaining how to request the withdrawals, however, management did not retain signed copies of the form 9250 signed by HUD for their records. Identification as a Repeat Finding: No Recommendation: Management should implement procedures to ensure every request for a replacement reserve withdrawal is supported with a HUD-signed form 9250, or management should repay the remaining unsupported $39,292. Auditor Noncompliance Code: A – Unauthorized withdrawals from the replacement reserve account Finding Resolution Status: In process Views of Responsible Officials: Management repaid $250,000 of PRAC loans during the year ended September 30, 2024, including repayment of $100,000 of 2024 PRAC loans that did not have signed HUD-9250 support. The remaining replacement reserve withdrawal without evidence of HUD approval of $39,292 should either be repaid or management should obtain from the HUD Account Executive documentation they approved the withdrawal.
Finding No. 2024-005 – Eligibility U.S. Department of Housing and Urban Development Federal Program Name: Section 202 Supportive Housing for the Elderly Assistance Listing Number: 14.157 Criteria: Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition: During the procedures applied to a sample of 8 tenant lease files, we noted the following instances of noncompliance with HUD regulations regarding tenant eligibility and the maintenance of lease files. 1. 2 instances where the project did not maintain the move in/ move out inspection forms in the lease files. 2. 1 instance where the project was unable to provide evidence of the 50059 for the tenant file. Cause: Management’s policies with respect to the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs were not consistently followed. Effect or Potential Effect: The procedures for maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Questioned Costs: None Context: Management has had some issues with accessing HUD’s systems, as well as issues with the set up of the third party vendor software used to interact with HUD’s systems. This has resulted in their inability to obtain required documentation for certain tenant lease files. Additionally, not all tenants return move in / move out forms. Identification as a Repeat Finding: No Recommendation: Management should establish procedures and monitor compliance with those procedures to ensure that tenant eligibility is correctly determined and fully documented, and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Auditor Noncompliance Code: R – Section 8 program administration Finding Resolution Status: In process Views of Responsible Officials: Management will review the processes and procedures with site personnel to strengthen controls over the maintenance of tenant lease files.
Finding No. 2024-006 – Special Tests and Provisions U.S. Department of Housing and Urban Development Federal Program Name: Section 202 Supportive Housing for the Elderly Assistance Listing Number: 14.157 Criteria: In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, within 30 days after the move-out date (or shorter time if required by state and/or local laws), management must either: refund the full security deposit plus accrued interest to a tenant that does not owe any amounts under the lease; or provide the tenant with an itemized list of any unpaid rent, damages to the unit, and an estimated cost for repair, along with a statement of the tenant’s rights under state and local laws. Condition: In connection with the procedures applied to a sample of 7 tenants that moved out of the project during the year, we noted 2 instances where management failed to refund the tenant security deposit and/or provide the tenant with an itemized list of charges deducted from the deposit within thirty days after the move-out date. Cause: Management did not have procedures in place regarding timely refunding of tenant security deposits which require refunds or notice to occur within the 30-day requirement established by HUD. Effect or Potential Effect: Management failed to comply with the HUD occupancy requirement to timely refund the tenant security deposits or to provide the tenant with a list of charges. Questioned Costs: None Context: Management did not have monitoring procedures in place to ensure timely refunding of tenant security deposits to the tenant or to their estate. Identification as a Repeat Finding: No Recommendation: Management should change its policies and procedures related to refunding of tenant security deposits to comply with the thirty-day timeline required by HUD regulations. Auditor Noncompliance Code: M – Security Deposits Finding Resolution Status: In process Views of Responsible Officials: Management will review the processes and procedures with site personnel to strengthen controls over the refunding of tenant security deposits.
Finding No. 2024-003 – Special Tests and Provisions U.S. Department of Housing and Urban Development Federal Program Name: Section 202 Supportive Housing for the Elderly Assistance Listing Number: 14.157 Criteria: The Section 202 Project Rental Assistance Contract (PRAC contract) requires that the project make monthly deposits to its replacement reserve. Condition: During the year ended September 30, 2024, the project did not make the required monthly deposits to the replacement reserve in the amount of $74,376. The project is required to make monthly deposits to the reserve in the amount of $6,198 per month, or $74,376 for the year. Cause: The project does not generate sufficient cash flow to make the required monthly deposits, due to significant delays in receipt of PRAC funds for over a year. Effect or Potential Effect: Failure to make monthly payments resulted in an underfunding the replacement reserve and a violation of the PRAC subsidy contract. Questioned Costs: Twelve months of missing replacement reserve deposits of $6,198 per month - $74,376 Context: Due to significant delays in receipt of PRAC funds for over a year, management suspended making the deposits to the reserve until PRAC funding was replenished. Management also borrowed funds from the replacement reserve which funds were repaid during the year ended September 30, 2024 once past-due PRAC funds were received. Identification as a Repeat Finding: No Recommendation: Management should review the project budget to determine if nonessential costs can be cut (or request a loan from the owner) to ensure that the replacement reserve is funded in accordance with the terms of the regulatory agreement. Management should obtain from HUD a waiver for the missing replacement reserve deposits if possible. If not granted, management should fund the missing deposits. Auditor Noncompliance Code: N – Replacement reserve deposits Finding Resolution Status: In process Views of Responsible Officials: Due to significant delays in receipt of PRAC funds for over a year, management suspended making the deposits to the reserve until PRAC funding was replenished. Management also borrowed funds from the replacement reserve which funds were repaid during the year ended September 30, 2024 once past-due PRAC funds were received.
Finding No. 2024-004 – Special Tests and Provisions U.S. Department of Housing and Urban Development Federal Program Name: Section 202 Supportive Housing for the Elderly Assistance Listing Number: 14.157 Criteria: Any withdrawal from the replacement reserve account requires evidence of HUD approval. Condition: During the year ended September 30, 2024, management withdrew $189,293 from the replacement reserve, for which $139,292 was not supported with a form 9250 signed by the HUD account executive. Cause: The project did not obtain or retain HUD-signed copies of the form HUD-9250 for all replacement reserve withdrawals and was therefore unable to provide evidence of HUD approval to the auditor. Effect or Potential Effect: Failure to retain documentation of HUD approval results in the conclusion the withdrawal was an unauthorized withdrawal from the replacement reserve account. Questioned Costs: Three withdrawals totaling $139,292 were missing HUD’s signature on the Form HUD-9250 Context: Due to significant delays in receipt of PRAC funds for over a year, management borrowed funds from the replacement reserve, which funds were repaid during the year ended September 30, 2024 once past-due PRAC funds were received. Management received an email from their HUD Account Executive explaining how to request the withdrawals, however, management did not retain signed copies of the form 9250 signed by HUD for their records. Identification as a Repeat Finding: No Recommendation: Management should implement procedures to ensure every request for a replacement reserve withdrawal is supported with a HUD-signed form 9250, or management should repay the remaining unsupported $39,292. Auditor Noncompliance Code: A – Unauthorized withdrawals from the replacement reserve account Finding Resolution Status: In process Views of Responsible Officials: Management repaid $250,000 of PRAC loans during the year ended September 30, 2024, including repayment of $100,000 of 2024 PRAC loans that did not have signed HUD-9250 support. The remaining replacement reserve withdrawal without evidence of HUD approval of $39,292 should either be repaid or management should obtain from the HUD Account Executive documentation they approved the withdrawal.
Finding No. 2024-005 – Eligibility U.S. Department of Housing and Urban Development Federal Program Name: Section 202 Supportive Housing for the Elderly Assistance Listing Number: 14.157 Criteria: Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition: During the procedures applied to a sample of 8 tenant lease files, we noted the following instances of noncompliance with HUD regulations regarding tenant eligibility and the maintenance of lease files. 1. 2 instances where the project did not maintain the move in/ move out inspection forms in the lease files. 2. 1 instance where the project was unable to provide evidence of the 50059 for the tenant file. Cause: Management’s policies with respect to the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs were not consistently followed. Effect or Potential Effect: The procedures for maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Questioned Costs: None Context: Management has had some issues with accessing HUD’s systems, as well as issues with the set up of the third party vendor software used to interact with HUD’s systems. This has resulted in their inability to obtain required documentation for certain tenant lease files. Additionally, not all tenants return move in / move out forms. Identification as a Repeat Finding: No Recommendation: Management should establish procedures and monitor compliance with those procedures to ensure that tenant eligibility is correctly determined and fully documented, and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Auditor Noncompliance Code: R – Section 8 program administration Finding Resolution Status: In process Views of Responsible Officials: Management will review the processes and procedures with site personnel to strengthen controls over the maintenance of tenant lease files.
Finding No. 2024-006 – Special Tests and Provisions U.S. Department of Housing and Urban Development Federal Program Name: Section 202 Supportive Housing for the Elderly Assistance Listing Number: 14.157 Criteria: In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, within 30 days after the move-out date (or shorter time if required by state and/or local laws), management must either: refund the full security deposit plus accrued interest to a tenant that does not owe any amounts under the lease; or provide the tenant with an itemized list of any unpaid rent, damages to the unit, and an estimated cost for repair, along with a statement of the tenant’s rights under state and local laws. Condition: In connection with the procedures applied to a sample of 7 tenants that moved out of the project during the year, we noted 2 instances where management failed to refund the tenant security deposit and/or provide the tenant with an itemized list of charges deducted from the deposit within thirty days after the move-out date. Cause: Management did not have procedures in place regarding timely refunding of tenant security deposits which require refunds or notice to occur within the 30-day requirement established by HUD. Effect or Potential Effect: Management failed to comply with the HUD occupancy requirement to timely refund the tenant security deposits or to provide the tenant with a list of charges. Questioned Costs: None Context: Management did not have monitoring procedures in place to ensure timely refunding of tenant security deposits to the tenant or to their estate. Identification as a Repeat Finding: No Recommendation: Management should change its policies and procedures related to refunding of tenant security deposits to comply with the thirty-day timeline required by HUD regulations. Auditor Noncompliance Code: M – Security Deposits Finding Resolution Status: In process Views of Responsible Officials: Management will review the processes and procedures with site personnel to strengthen controls over the refunding of tenant security deposits.