Audit 398860

Finding No. 2025-002 Mortgage Insurance-Rental Housing, Assistance Listing 14.134 Section 8 Project-Based Cluster, Assistance Listing 14.195 Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review, we noted the following deficiencies: For one out of one new tenants tested, the Project did not maintain evidence in the lease file that the Enterprise Income Verification ("EIV") system was utilized within 90 days of the tenant's initial certification date of April 1, 2025. For two out of ten existing tenants tested, the Project did not maintain evidence in the lease files that the EIV system was utilized within 120 days of the tenant's annual certification dates of August 1, 2024. For one out of one new tenants tested, the Project did not maintain evidence in the lease file that a move-in inspection was performed. Cause Management's policies with respect to the determination of tenant eligibility and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs were not consistently followed. Effect or Potential Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Questioned Costs $0 Context We noted 3 of the 11 required Enterprise Income Verification (EIV) reports were not completed within HUD’s required timeframes. 2 were not performed by the prior management agent and 1 was not performed by the current management agent. We noted 1 out of 1 move-in inspection was not performed by the prior management agent. Identification as a Repeat Finding This is not a repeat finding. Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Auditor Noncompliance Code: R - Section 8 program administration Finding Resolution Status: In process Views of Responsible Officials Casa Otonal Housing Corporation agrees with the finding and the auditor's recommendations. During the transition of a new site from prior management company, the Property Manager, Regional Manager, and Director of Compliance must collaborate closely to conduct a thorough review of all tenant files. This coordinated effort helps ensure accuracy, identify any discrepancies early, and supports a more effective and efficient use of the EIV system for tenant file testing.