Audit 376456

Finding 2025-001: Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects, Federal Assistance Listing Number 14.155 Criteria: HUD Handbook 4350.3 REV-1, Chapter 5, and 24 CFR Part 5 require that all tenant certifications (HUD Form 50059) and leases be fully executed by the tenant and owner/agent prior to move-in or recertification to ensure compliance with program eligibility and rent calculation requirements. Condition: During the audit, a sample of 4 tenant files were tested. It was noted that the executed lease and HUD Form 50059 were not properly signed and dated by the tenant as required by HUD regulations. Context: A sample of 4 tenant files were reviewed. Cause: There were several adjustments made to this tenant’s HUD Form 50059 with additional information being received. Effect: Failure to obtain proper signatures and dates on the lease and HUD Form 50059 may result in noncompliance with HUD requirements, inaccurate tenant eligibility documentation, and potential disallowance of housing assistance payments. Recommendation: Sacred Heart Apartments should implement a control procedure to verify that all leases and HUD Form 50059 certifications are fully signed and dated by both parties prior to move-in or recertification. Views of management and planned corrective action: Sacred Heart Apartments agrees with the finding and is undertaking a review of all tenant files.

Finding 2025‑002: Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects, Federal Assistance Listing Number 14.155 and entity-wide Criteria: New York Not‑for‑Profit Corporation Law (N‑PCL) §519 requires non-profit organizations to have at least an annual meeting of the board of directors. Condition: Sacred Heart Apartments did not hold an annual meeting of the board of directors during the fiscal year ended March 31, 2025. Context: This issue was entity‑wide and not limited to a single federal program. Cause: The Board did not schedule the annual meeting due to competing operational priorities, and there were insufficient procedures to ensure compliance with statutory governance requirements (e.g., a corporate calendar with compliance checkpoints). Effect: Weakening of the control environment and governance oversight increases the risk that noncompliance, errors, or irregularities may go undetected. Noncompliance with state corporate law requirements regarding annual meetings and the annual report of directors. Potential reputational and regulatory risk, including scrutiny from state regulators (e.g., NY Charities Bureau) and possible challenges in demonstrating effective oversight to federal pass‑through entities or awarding agencies. Recommendation: Schedule and hold an annual meeting of the board of directors and document minutes and the annual report of directors. Additionally, Sacred Heart Apartments should adopt a board governance calendar with statutory checkpoints (annual meeting, director elections, policy reviews) and assign responsibility for compliance tracking. Views of management and planned corrective action: The Board agrees with the finding. The board secretary will convene an annual meeting as soon as possible, minutes will be recorded and the annual report of directors prepared and filed with the corporate records in accordance with N‑PCL §519. A governance calendar will be implemented and monitored monthly.