Audit 371113

Statement of Condition: As a result of our audit procedures, we noted that High Street Homes, Inc. used Project funds to pay for unallowable costs. (Repeat Finding #2024-003) Criteria: All Project costs must be used only for expenses that are reasonable and necessary for the operation of the Project as provided for in the HUD agreement. Cause: There was significant turnover of key personnel in the Finance department during the year, causing new personnel who were inexperienced with the HUD agreement to have to assume recording of Project expenses. Effect: The Project used HUD funding to pay for unallowable costs. Questioned Costs: $2,261. Recommendation: The Project should review the HUD agreement and approved budget to obtain a better understanding of the type of costs that are allowable, and ensure they are only using HUD funds for allowable costs. Views of Responsible Officials and Planned Corrective Actions: High Street Homes, Inc. concurs with this finding. The questioned costs resulted from staff unfamiliarity with the HUD agreement due to turnover in the Finance Department. Corrective measures taken include:  Reimbursement of the unallowable costs identified ($2,261) with non-federal funds.  Ongoing training for Finance staff regarding HUD cost principles, allowable costs, and budget compliance.  Regular review of expenditures by the Director of Finance to ensure costs are reasonable, necessary, and allowable under the HUD agreement. These corrective actions will strengthen compliance with HUD cost requirements and prevent future occurrences.

Statement of Condition: As a result of our audit procedures, we noted one instance whereby High Street Homes, Inc. did not obtain a signed lease agreement for the tenant. Criteria: All required HUD forms must be properly signed by the Project and the tenant, as applicable. Cause: Management did not obtain a lease signed by the tenant and Project management prior to tenant moving in. Effect: The Project had incomplete documentation on file for the tenant. Recommendation: The Project should perform a review of all tenant files to ensure all tenant files are complete with required documentation. Views of Responsible Officials and Planned Corrective Actions: High Street Homes, Inc. acknowledges the deficiency related to tenant eligibility documentation . Management recognizes the importance of maintaining complete tenant files to ensure compliance with HUD requirements. Corrective actions taken include: mmediate review of all current tenant files to confirm lease agreements and all required HUD forms are properly executed and on file.  Establishment of a tenant file checklist to ensure all required documentation is obtained and reviewed prior to tenant move-in.  Implementation of supervisory review of tenant files to verify completeness before occupancy is finalized.  Staff training on HUD eligibility and documentation requirements to reinforce compliance. High Street Homes, Inc. is committed to ensuring full compliance with HUD tenant eligibility documentation requirements.