Audit 404487

Finding 2025-002: Eligibility – Untimely Recertifications - Significant Deficiency Condition: During testing of tenant files, the auditor noted fourteen instances where the 2025 annual recertifications were not done timely. Recertifications were performed in the subsequent year, and the effective dates were backdated to reflect the current year. Criteria: The Company must administer the HAP contract in compliance with federal regulations. Annual tenant recertifications must be conducted annually and timely in accordance with 24 CFR § 982.516, with effective dates properly aligned to the tenant anniversary date. Backdating of effective dates is not permitted. The Company must ensure documentation in tenant files supports the rent and subsidy amounts reported to the public housing authority. Effect: The lack of timely recertifications increases the risk of inaccurate rent and housing assistance payments (HAP), improper HAP disbursements, and potential questioned costs. Cause: Inadequate internal controls and oversight over the tenant file and recertification process, including lack of timely monitoring and supervisory review. Recommendation: We recommend that management strengthen internal controls over tenant files by implementing a formalized tracking system for annual recertifications to ensure recertifications are completed timely and with correct effective dates. Supervisory review and approval procedures should be strengthened prior to finalizing tenant rent changes. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. Management will implement a recertification tracking system with due date reminders and strengthen supervisory reviews to ensure all annual recertifications are completed timely with accurate effective dates.

Finding 2025-003: Eligibility – Utility Allowance (UA) not in agreement with UA Schedule - Significant Deficiency Condition: During testing of tenant files, we noted one instance where the utility allowance on the Tenant Income Certification (TIC) form did not agree to the Utility Allowance Schedule. Criteria: The utility allowance used in tenant rent calculations must agree with the public housing authority’s current approved Utility Allowance Schedule in accordance with 24 CFR § 982.517. Effect: This item could result in inaccurate tenant rent calculations, improper housing assistance payments, and potential questioned costs. Cause: Inadequate internal controls and insufficient supervisory review and reconciliation procedures between tenant documentation and the approved Utility Allowance Schedule. Recommendation: We recommend management implement a procedure requiring verification of the utility allowance on the TIC matches the current public housing authority approved Utility Allowance Schedule before finalizing each tenant certification. Further, we recommend management has ensured the Company has access to the up-to-date and approved Utility Allowance Schedule. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. Management will update procedures to require a documented comparison of the utility allowance on the TIC to the current PHA-approved schedule as part of the certification process.

Finding 2025-004: Eligibility – Inconsistent Tenant Rent Across Documentation – Significant Deficiency Condition: During testing of tenant files, two instances where the tenant rent on the rent roll / rent change notice (Subsidy Adjustment Notice) did not agree to the tenant rent on the Tenant Income Certification (TIC). Criteria: Tenant rent and subsidy amounts must be consistent across all tenant file documentation, including the TIC, rent roll, and subsidy adjustment notices, in accordance with 24 CFR Part 982 and the HAP contract. Effect: This issue increases the risk of incorrect tenant rent, improper subsidy payments, and potential questioned costs. Cause: Inadequate internal controls and insufficient supervisory review to ensure agreement between related tenant documents. Recommendation: We recommend management establish a review process to ensure tenant rent amounts are reconciled and consistent across the TIC, rent roll, and all subsidy adjustment notices prior to submission to the public housing authority. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. Management will implement a secondary review process to reconcile tenant rent amounts across all documentation before finalizing rent changes or submitting files to the PHA.