Audit 399440

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: 5 out of 7 tenants tested did not utilize the Enterprise Income Verification (EIV) system timely. 5 out of 7 tenants tested did not prepare the HUD Form 50059 timely. Cause The Project failed to follow the policies and procedures which have been established for proper tenant file maintenance and determining tenant eligibility in accordance with HUD guidelines. Effect or Potential Effect The procedures for determining tenant security deposits and eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Noncompliance with HUD guidelines could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Questioned Costs None Context A sample of 7 tenant files from a population of 60 were selected. We identified exceptions in 7 out of the 7 files tested. The sample in not a statistically valid sample. Identification as a Repeat Finding This finding is not a repeat finding. Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that tenant security deposits are correctly recorded, 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 Management compliance is addressing the generating of EIV reports to align with verification dates (<120 days) rather than when annual recertification notices are generated/sent (at least 120 days). Delays in recertification completion have improved; a majority of the certifications reviewed were effective within first 6 months of transition while the site was still adjusting to new software and management. Additional training has been provided to emphasize the importance of timely reporting and completion.

Criteria Any withdrawal from the replacement reserve account requires HUD approval in accordance with the HUD regulatory agreement. Condition During the year ended December 31, 2025, management withdrew $3,169 from the replacement reserve account without HUD approval. Cause The amount was withdrawn from the replacement reserve account in error. Effect or Potential Effect The withdrawal of $3,169 is an unauthorized withdrawal from the replacement reserve account. Questioned Costs $3,169 Context Isolated instance which was not part of a statistical sample. Identification as a Repeat Finding This finding is not a repeat finding. Recommendation Management should immediately deposit $3,169 into the replacement reserve account. Auditor Noncompliance Code: A - Unauthorized withdrawals from replacement reserve account Finding Resolution Status: In-process Views of Responsible Officials On March 4, 2026, management corrected this issue by depositing $3,169 into the replacement reserve account. Furthermore, management has implemented a strengthened internal control process requiring a three-level review and approval of all replacement reserve withdrawals. Specifically, the Vice President of Operations, Regional Manager, and Controller must each review and approve the request prior to any transfer of funds to ensure compliance with HUD approved withdrawals.

Criteria Any balance in Manor's residual receipts reserve account greater than $250 per unit must be remitted to HUD's Accounting Center upon termination of the PRAC, in accordance with the Consolidated Appropriations Act, 2016 enacted on December 18, 2015 applicable for projects with PRAC expiration dates through September 30, 2026. Termination is defined as expiration of the contract term which for most PRACs is the annual contract anniversary date. Manor's PRAC contract expired on April 30, 2025. Condition During the year ended December 31, 2025, management did not submit Form HUD-9250, "Fund Authorization" to HUD upon termination of the PRAC. As a result, management did not remit excess residual receipts of $418 as of April 30, 2025, to HUD. Cause The amount held in the residual receipts reserve was not returned to HUD due to management not submitting Form HUD-9250 on a timely basis. Effect or Potential Effect The holding of excess funds in the residual receipts reserve is a violation of HUD's required release of funds above the declared threshold of $250 per unit. Questioned Costs None. Context Isolated instance which was not part of a statistical sample. Identification as a Repeat Finding This finding is not a repeat finding. Recommendation Management should immediately submit the Form HUD-9250, "Fund Authorization" and disburse any excess funds from the residual receipts reserve to HUD upon approval of Form HUD-9250. Auditor Noncompliance Code: Z- Other Finding Resolution Status: In-process Views of Responsible Officials The 2025 Manor renewal was submitted to HUD before the excess income was in the account. A 9250 for $584.59 has been submitted to HUD for approval of returning in excess residual receipts.