Audit 399378

Criteria: The Organization is required to perform an annual recertification of all tenants by the tenant’s recertification anniversary date. The Organization is required to inform tenants, through written notice, of their responsibility to provide information needed to complete the recertification process and copies of these notices should be maintained in the tenant files, along with required supporting documentation. Tenants must be provided 30-day notice of an increase in tenant portion of rent upon completion of recertification procedures. Statement of Condition: The Organization did not maintain copies of notices of recertification or all supporting documentation, such as the EIV reports, in the tenant files and did not complete the recertification process in a timely manner. In one instance, tenant was not provided 30-day notice of rent increase. Cause of condition: The Organization did not pursue tenant compliance after initial recertification notices were mailed to the tenants. Effect of condition: Annual recertifications are not completed on time. Recommendation: The design of the current controls should be reviewed to ensure tenants receive proper notice of the annual recertification process and that the process is completed by the tenants certification anniversary date. Additionally, tenant files should be reviewed to ensure all supporting documentation is included. Views of Responsible Officials: Management agrees with the finding and will implement procedures to ensure tenant recertifications are completed in a timely manner and supporting documentation is maintained in tenant files in accordance with HUD guidelines.

Criteria: The Organization is required to make adjustments to monthly billings as a result of recertifications. Statement of Condition: The Organization did not properly adjust monthly PRAC billings as a result of completed recertifications, resulting in overpayment of subsidy from HUD. Cause of condition: The Organization processed annual recertifications for seven tenants on the same voucher as the gross rent increase. The gross increase amounts were improperly calculated based on the assistance payments before annual recertifications causing overpayment of subsidy for several months. Effect of condition: For seven tenants, the Organization received five to six months of incorrect subsidy. Recommendation: The design of the current controls should be reviewed to ensure adjustments made to the monthly billings are accurate before submission. Excess subsidy payments should be repaid to HUD. Views of Responsible Officials: Management agrees with the finding and will implement procedures to ensure that all adjustments made to the monthly billings are reviewed for accuracy before submission. Overpayment of subsidy will be repaid to HUD through adjustments to monthly billings.

Criteria: The Organization is required to hold all tenant security deposits in a separate interest bearing account. Statement of Condition: The Organization withdrew funds from security deposit account in the current year, leaving the amount of cash in the security deposit account lower than the total liability for current tenants’ security deposits. Cause of condition: The Organization does not keep an active listing to track the payment of tenant deposits and allocated interest earned on account. Effect of condition: Security deposit bank account is underfunded. Recommendation: The design of the current controls should be reviewed to ensure all tenant security deposits are properly tracked. Management should make transfers to the security deposit account to cover all deposits currently on hand. Views of Responsible Officials: Management agrees with the finding and will implement procedures to ensure proper tracking of security deposits and will make the necessary transfer to fund the security deposit account.