Audit 401484

Criteria: In accordance with the Uniform Guidance, the Single Audit report must be submitted to the designated Federal Audit Clearinghouse (FAC) within 30 days of receipt or 9 months after the end of the audit period, whichever is earlier Condition: The Single Audit report was not completed within 9 months after the end of the audit period. Cause: Personnel turnover within the Organization in addition to a delay in the prior year's audit being completed. Effect: Failing to file a Single Audit report on time can result in several consequences, including federal funding restrictions, penalties, and potential legal actions. These consequences can impact an Organization's ability to receive and utilize federal funds. Repeat Finding: Yes - The Single Audit report for the year ended September 30, 2022 was not completed within 9 months after the end of the audit period. Recommendation: The Organization should close out the year end on a timely basis so that there is adequate time to complete the Single Audit and corresponding report within the required timeframe. Response: The Organization has contracted with a public accounting firm to implement measures to strengthen its year-end close process, improve coordination with the external auditors and establish internal deadlines that ensure all reporting components are completed well in advance of the federal due date.

Criteria: When grants are used to pay for rent for all or a part of a structure, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. As part of their internal control policies, the Organization requires that the following documents are included within the tenant file: signed sublease agreement between the Organization and member/tenant and signed master lease agreement between the tenant and landlord. Condition: We were unable to obtain both the signed sublease agreement and master lease agreement for 11 of the 22 tenant files selected for testing. Of those 11 files, there was 1 file where we were unable to obtain either the signed sublease agreement or master lease agreement. The Compliance Supplement does not specify that lease agreements must be examined to verify the rent paid is reasonable in relation to rents being charged in the area for comparable space. In addition, allowable costs/cost principles and activities allowed or unallowed is not applicable to the Continuum of Care Program. Therefore, no instances of noncompliance were identified. Cause: There was a change in personnel within the housing department. Also, the department relocated to a new building during the prior fiscal year and were still getting organized. Effect: While we were able to validate for our selections the rent paid was reasonable in relation to rents being charged in the area for a comparable space for the population tested, there is the potential that the amount being paid on behalf of the tenant is not in line with the agreed upon rate if lease agreements are not retained. Repeat Finding: Prior year finding 2022-006. Recommendation: The Organization should implement procedures to ensure that tenant files include all of the required documentation to support that the rent paid is reasonable in relation to rents being charged in the area for comparable space. Response: To ensure both subleases and master leases are obtained and properly uploaded to each tenant’s electronic file, a standardized checklist is now used at lease signing and annual recertification. Additionally, the Organization has taken steps to strengthen its documentation and retention procedures to ensure all required lease documents are properly maintained and readily accessible going forward.

Criteria: Rents being charged to the program must be comparable to similar units, in addition to being below fair market rents. The Organization completes a rent reasonableness form for each unit, that evaluates the unit with other comparable units as well as determines if the rent being charged is not greater than the fair market rent. Condition: During our testing for rent reasonableness, we noted the Organization was retroactively completing the rent reasonableness form for each unit and making the determination as to whether or not comparable rent was being paid. Cause: The housing department experienced personnel turnover, alongside strained capacity in the accounting division. Effect: Rent being charged to the program could be in excess of rents for comparable units or greater than the fair market rent. Repeat Finding: N/A Recommendation: The Organization should implement procedures to ensure that rent reasonableness forms are being prepared timely, and that all rents being charged are comparable to similar units and below fair market rent. Response: As part of the standard operating procedures, management intends to implement the following: • Require Pre-Approval Completion of Rent Reasonableness Forms: Effective immediately, rent reasonableness forms must be completed and approved before any lease is executed or renewed. No unit may be approved for occupancy until this documentation is on file. • Implement a Standardized Intake Documentation: A mandatory rent reasonableness form, fair market rent comparison, and supporting documentation must be maintained. Files cannot be finalized without all required items. • Centralize Documentation Storage: All rent reasonableness forms will be stored in a centralized electronic repository organized by program and unit. This ensures timely retrieval for monitoring and audit purposes. • Staff Training: Housing program staff will receive training on the updated procedures, including when and how rent reasonableness forms must be completed. Refresher training will be incorporated into annual compliance training. • Ongoing Monitoring and Quality Review: The Director of Housing Programs will conduct quarterly reviews of tenant files to verify that rent reasonableness forms are completed prior to lease approval. Any deficiencies will be corrected immediately and reported to senior management.