Audit 402913

Finding No. 2025-001 – Compliance over Eligibility Requirements to Perform Annual Recertification Finding #: 2025-001 Assistance Listing #: 14.239 Program (or Cluster) Name: HOME Investment Partnerships Program Compliance Requirement: Eligibility Project Title: Development Loan Agreement Award Date: July 27, 1997 Award Period of Performance: July 1997 to July 2039 Federal Agency: U.S. Department of Housing and Urban Development Criteria or specific requirement: The U.S. Department of Housing and Urban Development (HUD) regulations require the annual income recertification of tenants to be performed by the anniversary date of when the tenants were initially qualified at the move-in. The annual income recertification includes the reexamination of tenant income level, completing HUD Form 50059 and making appropriate adjustments to the tenant portion payment and the project rental assistance payment. Condition: When reperforming the tenant eligibility verification procedures, the auditor noted that annual recertifications selected for testing, including but not limited to supporting income certifications, verification of income, lease addenda, and unit inspections, were not available and might have not been performed during the year under audit. Context: The auditor noted that requested documents for both of the two sample annual recertifications were not available for review. Questioned costs: None. Effect: Dwight Way was not deemed properly complied with the HUD eligibility compliance requirement. It also caused a delay in the determination of the adjustment between the tenant portion payment and the project rental assistance payment, or potential suspension of the project rental assistance payment. Cause: Management acknowledge that Dwight Way experienced delays in completing timely recertifications. These delays were largely the result of staffing turnover and vacancies. Repeat finding from prior year: No. Recommendation: Dwight Way should develop an operating plan in order to ensure that recertifications are performed on time each year, despite of staff shortages. Views of responsible officials and planned corrective actions: The property management company hired a new Property Manager for Dwight Way, who has worked diligently to complete outstanding recertifications, and this property is back on track. All recertifications are now current, with one exception due to a lack of tenant cooperation, which is being properly managed with legal action. To ensure that staff changes and vacancies do not result in late recertifications in the future, the property management company has employed Property Operations Specialists (roving personnel) to provide coverage if there is staff turnover. The property management company has also increased oversight by the Regional Manager to ensure roving staff remain on track and that recertifications are completed timely. Additionally, senior leadership at the John Stewart Company has implemented enhanced tracking of recertifications across the full portfolio and conducts monthly progress meetings with the management team to monitor compliance, identify risks early, and ensure accountability. The property management company is confident that these corrective actions will result in sustained improvement and ongoing compliance. Whether sampling was statistically valid: Sampling was not statistically valid for this finding.