Audit 399370

Criteria: The Organization is required to perform an annual recertification of all tenants, which requires verifying tenant income and documenting eligibility with HUD Form 50059. Tenants are required to sign the form, and it must be maintained within the Organization’s tenant file, along with required supporting documentation. Additionally, the Organization should obtain an updated Form 9887/9887-A annually as part of the recertification process. Statement of Condition: The Organization did not obtain signed annual recertification forms for the tenant files tested during the audit and did not maintain all of the required information, such as the EIV reports, in the files to support the data used in its preparation. Cause of condition: The Organization did not pursue tenant compliance after initial recertification notices were mailed to the tenants. Effect of condition: There is no evidence of a tenant’s eligibility for rent assistance maintained by the Organization in the tenant file. Recommendation: The design of the current controls should be reviewed to ensure tenant files are complete and accurate. The Organization should fill out and maintain HUD Form 50059 for each annual recertification and keep information in the files that support the data used in its preparation. Tenants should sign the recertification form and also an updated Form 9887/9887-A. In addition, management should review all files and report and discrepancies to HUD in a timely manner. Views of Responsible Officials: Management agrees with the finding and will implement procedures to ensure tenant recertifications are documented in accordance with HUD guidelines and that proper documentation is maintained within the tenant files.

Criteria: The Organization is required to make monthly deposits to a reserve for replacements account which is to be used for replacements to structural elements or mechanical equipment in the facility. Statement of Condition: The Organization did not make all of its monthly deposits during the year. Cause of condition:The Organization did not properly reconcile its deposits during the year and incorrectly thought it had too many deposits. The Organization returned one deposit during the year due to this, resulting in the reserve for replacement receiving one too few deposits. Effect of condition: The reserve for replacement did not receive all the deposits required by the Regulatory agreement. Recommendation: The design of the current controls should be reviewed to ensure proper reconciliation of the reserve for replacement is performed. The Organization should ensure that all required deposits to the reserve for replacement are made during the year. Views of Responsible Officials: Management agrees with the finding and will implement procedures to ensure that all required deposits are made to the reserve for replacement. A deposit has been made to correct this shortage.

Criteria: The Organization’s tenant files are required to be maintained in accordance with HUD guidelines to ensure accurate calculations of tenant rent and rental subsidy. Statement of Condition: The Organization did not include all tenant assets in rent calculation on Form 50059. Cause of condition: The Organization did not pursue verification of tenant assets after initial tenant response. Effect of condition: Of the three tenant files sampled for the Organization, we noted discrepancies in one tenant file between the information reported on the Form 50059 and the information in the file for assets to be reported for the tenant. Tenant verified checking account was not included in the rent calculation on Form 50059 as the Organization was unable to obtain all six months of statements from tenant. Recommendation: The design of the current controls should be reviewed to ensure tenant assets are complete and accurate. The information in the files should support the tenant assets used in preparing the Form 50059 and calculating the corresponding tenant’s share of the rent. Views of Responsible Officials: Management agrees with the finding and will implement procedures to ensure tenant assets are verified in accordance with HUD guidelines.