Audit 370521

Finding No. 2024-001 - Eligibility; Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 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 Compliance procedures were not followed regarding tenant security deposit refunds, annual certifications, and the mandatory and timely use of Enterprise Income Verification (EIV) system during annual recertification or initial certification process. Cause Management's policies with respect to income verification and the maintenance of tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Effect or Potential Effect The procedures for income verification and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs were not consistently followed. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Questioned Costs None. Context In connection with our lease file review, we noted the following deficiencies: - 3 out of 16 existing tenants tested did not have the Enterprise Income Verification (EIV) form completed within 120 days, as required by HUD. - 3 out of 16 existing tenants tested did not have the Enterprise Income Verification (EIV) form their tenant file and no other documentation was present that their income was verified. - 1 out of 16 existing tenants tested income reported on HUD Form 50059 did not agree to income verified using the Enterprise Income Verification (EIV). - 10 out of 16 existing tenants tested did not have the annual recertifications done timely. - 1 out of 2 former tenants tested did not have security deposit returned within 30 days of departure, as required by HUD. Identification as a Repeat Funding This finding is a repeat finding (see prior year finding number 2023-001). Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that tenant's income is properly verified, and tenant lease files are being 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: Completed. Views of Responsible Officials At the time of tenant file review, the current staff was not made aware of where EIV documents were stored in the office. This since has been corrected and the EIV information is now stored in the tenant files. Management has hired a Compliance Manager that monitors and helps the site with any questions to bring all tenants up to date.

Department of Housing and Urban Development Finding No. 2024-002 - Activities Allowed or Unallowed; Mortgage Insurance Rental Housing, Federal Assistance Listing Number 14.134 Criteria In accordance HUD Handbook 4571.3, Section 202 Supportive Housing for the Elderly, loans are not permitted to be made from project cash without prior authorization from HUD. Condition During the year ended December 31, 2024, the project paid payroll expenses in the amount of $4,342 on behalf of an affiliate from project cash without HUD approval. The amount due to the project as of December 31, 2024 is $4,342. Cause Procedures were not in place to ensure that cash disbursements of project funds were limited to project operating costs. Effect or Potential Effect The payment of $4,342 is an unauthorized loan and therefore considered to be questioned costs. Questioned Costs $4,342 Context During 2024, the project paid payroll expenses for another entity from the project’s cash account resulting in a receivable from the other entity in the amount of $4,342. Identification as a Repeat Funding This finding is not a repeat finding. Recommendation Management should immediately reimburse the amount due to the project and establish procedures to ensure payments of this nature are not made in the future. Auditor Noncompliance Code: G - Unauthorized loans from project assets. Finding Resolution Status: Completed Views of Responsible Officials Management reimbursed $4,324 on February 28, 2025 and $18 on May 18, 2025 to the project.