Audit 399384

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 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 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 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 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 required monthly deposits during the year. Cause of condition: The Organization received notice of approval to increase the required reserve deposit effective February 1, 2025 in March 2025 before year end. The Organization had made the required deposits based on the previously required amount but did not make the additional deposits required based on the approval of new rate. 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 that all required monthly deposits are made to the reserve for replacement. The Organization should ensure that funds are deposited to the reserve to correct the shortage. 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.