Finding 2025-001- Eligibility Information on Federal Program Federal Grantor: U.S. Department of Housing and Urban Development Program: Section 202 Capital Advance, Project Rental Assistance Payments (PRAC) Assistance Listing #: 14.157 Title: Supportive Housing for the Elderly Audit Period: July 1, 2024- June 30, 2025 Criteria- Section 202 of the Housing Act of 1959 provides housing for the elderly. To qualify as elderly, one or more members of the household must be 62 years of age or more at the time of initial occupancy. Residents must also qualify as very low income households, i.e., 50% of Area Median Income or below, to be eligible (24 CFR section 891.205 and section 891.105). The owner verifies the eligibility of applicants by (a) obtaining signed applications that contain the information needed to determine eligibility (including designation as elderly, disabled, or homeless, if applicable), income, rent, and order of selection; (b) conducting verifications of family income and other pertinent information (such as assets, full time student and immigration status, and unusual medical expenses) through third parties; (c) documenting inspections and tenant certifications, as appropriate; and, (d) determining that tenant income did not exceed the maximum limit set by HUD for the PHA’s jurisdiction, as shown in HUD’s published notice transmitting the Limits for Low-Income and Very Low-Income Families Under the Housing Act of 1937. Owners need to reexamine family income and composition at least once every 12 months and adjust the total rent payment and housing assistance payment, as necessary (24 CFR section 891.410). The owner is responsible for annually reexamining incomes of households occupying assisted units and making appropriate adjustments to the tenant payment and the project rental assistance payment (24 CFR section 891.410). Additionally, Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, (2 CFR 200) section 303(a) states that a nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition- During our testing of 7 tenants, we noted that management did not complete or process the annual recertification of tenant eligibility for 1 existing tenant. Further we noted that there were not adequate controls in place to ensure annual recertifications are completed timely. Cause- Management indicated that turnover within the property manager role contributed to the annual recertification not being performed timely. In addition, management does not have formal internal controls designed or implemented to ensure annual recertifications are completed and processed. Effect or Potential Effect- A tenant occupied a rental assistance unit after their anniversary date of August 1, 2024, without recertification of compliance with tenant eligibility and reexamination of household income and rent calculation. Questioned Costs- None Repeat Finding- A similar finding was not reported in the prior year. Recommendation- We recommend that management establish internal controls to ensure annual recertifications are completed and processed timely. We also recommend that targeted training be provided to the individuals responsible for processing annual tenant recertifications. View of Responsible Official: - Management agrees with the finding and recommendation set forth within and has completed its annual recertification of the tenant effective August 1, 2025. In addition, management has developed a corrective action plan to address the lapse in internal controls.