Audit 373870

Finding 2025-002: Internal Control Structure Mortgage Insurance for the Purpose of Refinancing of Existing Multifamily Housing Projects – 14.155 Project-Based Rental Assistance – 14.195 Material Weakness - Eligibility, Reporting and Special Tests and Provisions Criteria: The Project is responsible for establishing an effective internal control process to ensure the Project complies with the federal requirements. Condition: The Project only had one administrative employee that oversees the tenant file process including verification of income and deductions, calculation of rent and reporting tenant data to HUD. As a result, we noted the Project had a lack of segregation of duties related to all applicable compliance requirements. Cause: The Project has not adequately reviewed its internal controls over federal programs. Effect or Potential Effect: The control deficiencies are deficiencies that result in more than a reasonable possibility that material noncompliance with program requirements could occur and not be prevented or detected. Recommendation: The Project should review where it could utilize additional staff to establish controls over these areas. View of the Responsible Officials of the Auditee: The auditee's management agrees with the finding.