Audit 378388

Finding 2025-002: Compliance finding Information on universe: Total population was 57 tenant files. Sample Size: Ten tenant files were tested. Identification of repeat finding: Yes, 2024-002 Condition: Tenant rent and tenant assistance were not calculated correctly and or lacked recertification paperwork. Criteria: HUD requires that tenant income and expenses be recertified annually to determine tenant and HUD portions of rent and all recertification paperwork be kept in the file. Effect: Tenant portion and HUD portion of rent were inaccurate or couldn’t be supported. Context: Auditor selected tenant files to test the tenant eligibility, income and allowable expenses and noted multiple files in which the income and or expenses were not calculated correctly and or back up documentation was missing from the files. Cause: Oversight by property manager. Recommendation: A procedure be implemented to ensure that all tenant income and expenses are reviewed by a second individual to ensure accuracy.

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 2025-003: Compliance finding Information on universe: Total population was 57 tenant files. Sample Size: Ten tenant files were tested. Identification of repeat finding: Yes, 2024-003 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. 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 the 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.

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 and 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 did not utilize the Replacement Reserve. 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 no withdrawals. Cause: Lack of monitoring at the management agent. Recommendation: The management agent should consider using the Replacement Reserve for applicable expenditures.