Audit 399381

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 recertification process and these copies of these notices should be maintained in the tenant files, along with required supporting documentation. Tenant 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 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 billings as a result of recertification. Cause of condition: The Organization processed an adjustment to a monthly billing as a correction of the rent for one month instead of a change in rental rate as a result of the annual recertification. Effect of condition: The Organization received the incorrect subsidy for two of its tenants for 12 months. Recommendation: The design of the current controls should be reviewed to ensure that all adjustments to monthly billings are reviewed before processing. The Organization should repay the overpayment of subsidy to HUD. Views of Responsible Officials: Management agrees with the finding and will implement procedures to ensure that all adjustments to monthly billings are reviewed to ensure they are processed correctly. Overpayment of the subsidy will be repaid to HUD through adjustments to monthly billings.

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 incorrectly calculated tenant payment during annual recertification. Cause of condition: The Organization used the incorrect social security income on the Form 50059 for one tenant leading to an overpayment of subsidy. Effect of condition: An overpayment of subsidy was received on behalf of tenant for five months during the year. Recommendation: The design of the current controls should be reviewed to ensure that information used on Form 50059 in the calculation of tenant payments should agree to the supporting documentation maintained in tenant files. Overpayment of subsidy should be repaid to HUD. Views of Responsible Officials: Management agrees with the finding and will implement procedures to ensure that information used on Form 50059 in the calculation of tenant payments should agree to the supporting documentation maintained in tenant files. The 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 the 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.

Criteria: The Organization is required to receive written approval from HUD prior to withdrawing any funds from the reserve for replacements. Statement of Condition: The Organization withdrew an amount from the reserve for replacements that did not agree to the amount approved by HUD. Cause of condition: The Organization requests all internal bank transfers by phone. An error was made in making the transfer and the amount withdrawn did not agree to the approved amount. Effect of condition: Funds withdrawn from the reserve for replacement by the Organization exceeded the amount approved by HUD. Recommendation: The design of the current controls should be reviewed to ensure that all withdrawals from the reserve for replacement agree to the amount approved by HUD. The Organization should return the excess funds withdrawn and lost interest to the reserve. Views of Responsible Officials: Management agrees with the finding and will implement procedures to ensure that all withdrawals from the reserve for replacement agree to the amount approved by HUD. The excess funds withdrawn will be returned to the reserve.