Audit 378387

Finding 2025-002: Compliance finding Information on universe: Total population was 43 units. Sample Size: 5 files were selected for testing. Identification of repeat finding: Yes, 2024-002 Condition: Missing required documentation. Enterprise Income Verification (EIV) reports were not able to be run due to the license expiring and the person with the license no longer working at the organization. Criteria: HUD requires EIV forms to be run, monthly, quarterly and annually. Source documentation should be maintained in files. Effect: Required documents were not in the files. Context: Auditor reviewed tenant files noting the form was not present in the tenant files. Cause: Lack of oversight by management agent. The one individual with the EIV license was no longer working at the Organization. Recommendation: A system should be in place requiring more than one individual to have an EIV license and ensure the license does not lapse. Additionally, there should be a review process in place to ensure completeness and accuracy of tenant files.

Finding 2025-003: Compliance finding Information on universe/sample size: Management Occupancy Review (MOR) Identification of repeat finding: Yes, 2024-003 Condition: HUD performed an MOR in September of 2023 for which a response is required within 30 days. The response was not completed timely and the MOR is still open. Criteria: A response is due within 30 days of the MOR. Effect: Findings by HUD have not been resolved. Context: Auditor noted the MOR is still open. Cause: Significant turnover and lack of staff at the management agent. Recommendation: Once the management agent is fully staffed, they must make all efforts to reply to the MOR findings within the required 30 days.

Finding 2025-004: Significant Deficiency Information on universe/sample size: It was noted during testing that some of the HUD form certifiers were not updated in a timely manner. Identification of repeat finding: Yes, 2024-004 Condition: HUD forms must be certified by an authorized user. Criteria: The certifier for HUD forms should be a current employee with oversight in the area the form pertains to. Effect: The forms were not certified by the correct individual. Context: Auditor reviewed source documents noting incorrect certifier. Cause: Lack of oversight by management agent. Recommendation: A procedure be implemented to ensure that the Project changes the certifier on forms, when applicable, in a timely manner.

Finding 2025-005: Material Weakness and compliance Information on universe/sample size: It was noted during testing that the management agent was not able to perform management duties in a timely manner. Identification of repeat finding: Yes, 2024-005 Condition: All management agent duties should be performed timely. Criteria: Tenant units should be filled in a timely manner; existing tenants need to be recertified annually. Effect: There were significant vacancies, some tenant’s subsidies had expired. Context: Auditor noted the vacancies and file issues during testing. Cause: Significant turnover at the management agent. Recommendation: The management agent should hire a consultant to assist with performing the necessary management agent duties until they are fully staffed.

Finding 2025-006: Significant deficiency Information on universe: Payroll control testing. Sample size: Three employees selected for internal control testing. Identification of repeat finding: No Condition: Lack of review and approvals on time allocated and charged to the property. Criteria: Allocation sheets should be reviewed and approved. Effect: The property could be charged the wrong amounts for payroll. Context: Auditor selected timesheets for payroll control testing. Cause: Lack of review and approvals. Recommendation: Allocation sheets should be reviewed in detail and approved.

Finding 2025-007: Significant deficiency Information on universe: It was noted during testing that the management agent could be withdrawing more funds from the reserve for replacement account. Sample size: Monthly reserve activity is tested for compliance. Identification of repeat finding: No Condition: The property is not utilizing the Replacement Reserve as intended and is instead paying for costs out of the operating account. Criteria: Significant replacement costs should be submitted for approval to be paid for with Replacement Reserve funds. Effect: Low operating cash balances and cash flow issues. Context: Auditor reviewed the Replacement Reserve activity and noted minimal withdrawals. Cause: Lack of monitoring at the management agent. Recommendation: The management agent should consider using the Replacement Reserve for applicable expenditures.