Audit 367616

Finding Reference Number: 2024-003 Type of Finding: Noncompliance and Significant Deficiency in Internal Control over Compliance Major Program: 14.275 - Housing Trust Fund (Grantor - Department of Housing and Urban Development) Compliance Requirement: Eligibility Criteria: The Compliance Supplement and the loan agreements with Delaware State Housing Authority require that all units at House of Joseph Residence be rented to extremely low-income families. Title 24 of the U.S. Code of Federal Regulations (CFR) Part 93 defines extremely low-income families as those whose annual income does not exceed 30 percent of the area median income, as determined by HUD. Condition: During the year ended December 31, 2024, one of the seven units at the House of Joseph Residence was occupied by a tenant whose income exceeded 30 percent of the area median income, and therefore, did not qualify as extremely low-income. Cause: Oversight of compliance requirement by program staff. Effect: The Organization was not in full compliance with program requirements, as one unit was rented to an ineligible tenant. Recommendation: We recommend the Organization strengthen its tenant intake procedures by implementing formal controls to verify and document income eligibility prior to approving residency at the House of Joseph Residence.

Finding Reference Number: 2024-004 Type of Finding: Significant Deficiency in Internal Control over Compliance Major Program: 14.275 - Housing Trust Fund (Grantor - Department of Housing and Urban Development) Compliance Requirement: Eligibility Criteria: Title 24 of the U.S. Code of Federal Regulations (CFR) Part 93 and the loan agreements with Delaware State Housing Authority require that tenant files include the following documentation: • Proof that tenant was chronically homeless. • For the initial determination of annual income, at least two months of source documents evidencing annual income. • Documentation showing that household income was properly determined, using either 1) annual income as defined in 24 CFR 5.609 or 2) adjusted gross income as defined by IRS form 1040. The Organization must choose one of the definitions to use for the entire residence. • A written statement from the family attesting to their annual income and family size. • Documentation that a subsequent income determination was performed annually, either through updated source documents or a written family certification. Additionally, as a documented internal control, there should be evidence that the program manager reviewed and certified each tenant file to confirm income eligibility and the presence of required documentation. Condition: We reviewed the files for all seven tenants who reside at House of Joseph Residence. While only one tenant was determined to be ineligible based on their income level (refer to finding 2024-003), we noted the following deficiencies in file documentation: • Five files did not contain evidence of the program manager’s certification. • One file lacked documentation to support the social security income reported by the tenant. • Three files contained outdated documentation. Specifically, files for tenants who had transferred from the Organization’s emergency shelters contained original intake documentation but did not include evidence that a subsequent income certification had been performed when they became residents of House of Joseph Residence. Cause: Oversight of compliance requirements by program staff. Controls over tenant eligibility documentation were not consistently applied. Effect: The files did not contain all the information required by program requirements. In addition, the absence of documented program manager certifications indicates that key internal controls over compliance were not operating effectively. Recommendation: We recommend the Organization strengthen its internal control procedures by requiring program manager review and certification of all tenant files. In addition, management should implement procedures to ensure that all required source documents and annual recertifications are obtained and retained in tenant files to demonstrate compliance with program requirements.