Audit 382588

2025-001 Noncompliance With Tenant Eligibility and Recertification Requirements Program Name/Assistance Listing Title: Supportive Elderly Housing - Section 202 Federal Assistance Listing No: 14.157 Federal Agency: U.S. Department of Housing and Urban Development Type of Finding: Significant Deficiency Compliance Requirements: Eligibility Population Size and Sample Size Information: Out of total 36 tenants, 7 samples were selected. Criteria: Section 202 of the Housing Act of 1959 and related HUD regulations require owners to ensure that only eligible households receive housing assistance. Specifically:  24 CFR § 5.230 – Applicants and tenants must submit signed consent forms at initial application and annual reexaminations.  24 CFR § 891.410 – Requires proper selection of tenants from the waiting list in accordance with admission policies, annual reexamination of tenant income and household composition at least once every 12 months, and documentation to support eligibility determinations, tenant certifications, and rent calculations.  OMB Compliance Supplement (2025) – Requires maintaining complete and accurate tenant files supporting eligibility, income verification, recertifications, waiting list selection, and move-out documentation, with evidence that eligibility determinations were made timely and prior to assistance being provided. Condition: Based on a review of tenant files, the following inconsistencies were noted:  Untimely or Missing Eligibility Documentation: For four (4) tenant files, required supporting eligibility documentation or updates were not completed at the time of move in.  Unsigned Annual Recertification Documents: For one (1) tenant file, documentation related to the annual recertification was not signed by the tenant.  Missing Move-Out Documentation: For one (1) tenant file, required move-out documentation was not available at the time of the audit visit.  Cause of Condition: The following were identified as the causes of the condition:  Untimely or Missing Eligibility Documentation: Lack of timely updates to tenant eligibility files at move-in and during annual recertifications appears to result from insufficient monitoring and follow-up, and in one case, challenges related to the tenant’s mental health may have contributed to delays in obtaining documentation.  Unsigned Annual Recertification Documents: Annual recertification documents were not signed due to incomplete execution of the recertification process, possibly caused by oversight or inadequate tracking of tenant signatures.  Missing Move-Out Documentation: Required move-out documentation was not maintained in the tenant file, likely due to procedural gaps in handling move-out records, especially in cases of tenant death. Potential Effect of Condition: Failure to maintain complete and timely eligibility documentation increases the risk that ineligible tenants may have been admitted or retained, potentially resulting in noncompliance with HUD program requirements and exposure to questioned costs, repayment demands, or other corrective actions by HUD. Questioned Costs: None - Since all the findings are procedural/documentation deficiencies without proof of improper financial benefit, no questioned costs are identified. Reporting Views of Responsible Officials: The Organization agrees with the findings and recommendations and will adhere to the corrective action plan. Context: HUD regulations require tenants to be selected from a chronological waiting list in accordance with the project’s administrative plan and preference criteria. Supporting eligibility documentation must be obtained at initial occupancy and updated annually, with tenants signing annual recertification forms. Based on testing of tenant files, instances were noted where documentation was missing or incomplete, and move-out documentation was absent, indicating incomplete adherence to HUD eligibility and occupancy requirements. Recommendation: We recommend that management: a. Strengthen controls to ensure all eligibility documentation is completed and verified prior to tenant move-in. b. Ensure annual recertifications are fully executed, including required tenant signatures. c. Implement procedures to ensure complete move-out documentation is retained for all vacated units. d. Conduct periodic internal reviews of tenant files to ensure ongoing compliance with HUD and OMB requirements. Management’s Response: Management have put together a recertification team that will oversee our recertifications and we will bring staff on site in to train going forward in the future This will help to ensure that all documents are signed all consent forms there will also be training that deals with tenant selection on the wait list as well as training with maintaining tenant files.

2025-002 Incomplete Transfer of Waitlist Information: Internal Control Weakness Impacting HUD Compliance (Repeat Findings: 2024-001) Program Name/Assistance Listing Title: Supportive Elderly Housing - Section 202 Federal Assistance Listing No: 14.157 Federal Agency: U.S. Department of Housing and Urban Development Type of Finding: Significant Deficiency Compliance Requirements: Eligibility Population Size and Sample Size Information: Out of total 36 tenants, 7 samples were selected. Criteria: HUD regulation states the following: a. 24 CFR 891.410 (a). Owners shall maintain a written, chronological waiting list showing the name, race, gender, ethnicity, and date of each person applying for the program. b. HUD Occupancy Handbook 4350.3 REV-1 (Chapter 4: Waiting List and Tenant Selection): Owners must develop a method to maintain documentation of the waiting list composition, application status, and actions taken. c. Compliance Supplement 2025 : Owners must document that participants selected from the waitlist met the preference criteria and were selected according to the admission policies in the administrative plan. (24 CFR section 891.410) d. 24 CFR 982.204: Except for special admissions, participants must be selected from the waiting list. The Project must select participants from the waiting list in accordance with admission policies. The Project must maintain information that permits to select participants from the waiting list in accordance with the admission policies. The waiting list must contain the following information for each applicant listed: (1) Applicant name; (2) Family unit size (number of bedrooms for which family qualifies under occupancy standards); (3) Date and time of application; (4) Qualification for any local preference; (5) Racial or ethnic designation of the head of household. Condition: During eligibility testing, we observed that the waitlist generated by the system contained no supporting notes or documentation for tenant selection. As a result, we were unable to verify that two tenants were selected in accordance with the documented application order or whether any deviations had a valid justification. Cause of Condition: This issue occurred due to an incomplete data transfer during the migration from RealPage to Fortress. Internal controls over the data migration process were insufficient to ensure that all required information, such as waitlist notes, was successfully transferred. Ongoing procedural weaknesses in maintaining proper documentation may also have contributed. Potential Effect of Condition:  Noncompliance with HUD regulations for maintaining an accurate and chronological waitlist.  Inability to demonstrate compliance with tenant selection requirements, which may result in findings of noncompliance, questioned costs, or penalties.  Increased risk of unfair or improper tenant selection due to incomplete records. Questioned Costs: No questioned costs are identified at this time, as the issue primarily concerns documentation and internal controls rather than direct financial mismanagement. Reporting Views of Responsible Officials: The Organization agrees with the findings and recommendations and will adhere to the corrective action plan. Context: HUD regulations require that tenants be selected from a chronological waiting list in accordance with the project’s administrative plan and preference criteria, with proper documentation supporting all selections. During 2025 eligibility testing, we observed that the system-generated waitlist had no supporting notes or documentation, preventing verification of proper tenant selection. This condition is a repeat of 2024-001, which identified incomplete transfer of waitlist information during system migration. Recommendation:  Implement a process to review and verify the accuracy and completeness of data during system migrations, including waitlist information and notes.  Reconstruct missing waitlist data by reviewing available source records, if feasible.  Develop and document a written policy for waitlist maintenance and data integrity to ensure ongoing compliance with HUD regulations. Management Response: Management has set up training to address all issues regarding the wait list and how to go about selecting those off the waitlist. This training will take place in January of 2026 And it will help those on site to have a full understanding of what is needed when it comes to our wait list.