Audit 398227

U.S. Department of Housing and Urban Development Federal Financial Assistance Listing 14.181 Section 811 Eligibility Significant Deficiency in Internal Control over Compliance Criteria: Tenant files should include a properly completed and signed initial applications to evidence management’s review and approval of tenant eligibility in accordance with HUD requirements and the entity’s internal control procedures. Effective internal controls require documentation to be complete, accurate, and retained to support compliance and financial reporting. Condition: One tenant file selected for testing did not include a signed initial application from 2010. Cause: The exception appears to be due to staff oversight and insufficient secondary review of tenant files to ensure all required eligibility documents were executed and retained prior to move-in. Effect: The absence of required tenant eligibility documentation increases the risk that tenant eligibility determinations are not consistently supported, which could result in noncompliance with HUD requirements and an increased risk of unsupported rental revenue or subsidy amounts in the financial statements. Questioned Costs: None reported Context/Sampling: A nonstatistical sample of 4 participants out of 14 participants were selected for eligibility testing. Repeat Finding from Prior Year(s): No Recommendation: We recommend management strengthen tenant file review procedures to ensure all required eligibility documentation, including signed initial applications, is completed and retained in accordance with HUD requirements prior to tenant move-in. Views of Responsible Officials: Management agrees with the finding.