Audit 413880

Finding reference number: 2025-001 Assistance Listing (Federal award identification number and year): Section 8 Housing Assistance Program, Assistance Listing. No. 14.195, IL06M000196, 2012 Auditor non-compliance code: N. Special Tests and Provisions Finding resolutions status: In Process. Universe population size: 147 resident files. Sample size information: The sample size is not applicable to the finding. Statistically valid sample: Not applicable. Name of federal agency: U.S. Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: $0 Statement of condition 2025-001: During the year ended December 31, 2025, Villagebrook did not recertify all residents timely as required by HUD Handbook 4350.3. As of December 31, 2025, 55 of the units are not in compliance. Criteria: In accordance with the HAP Contract and HUD Handbook 4350.3, the Agent must certify and recertify residents and update other applicable forms in accordance with HUD regulations and contractual requirements. Effect: Villagebrook Apartments is not in compliance with the terms of the HAP Contract or HUD Handbook 4350.3. Current, future, and potentially prior funding under the HAP Contract could be impacted as a result of the recertifications not being completed timely. Cause: Villagebrook Apartments has suffered from staffing shortages beginning in 2022 and continuing during the year ended December 31, 2025. The employees responsible for completing recertifications were not doing so timely. Recommendation: The Agent should complete a review of all resident files and complete all recertifications that were not completed timely. The Agent should ensure that all residents are recertified timely in the future. Management's response: The Agent reported this concern and agrees with the finding and recommendation. The Agent is working to address the staffing issues at Villagebrook Apartments and to provide additional training to the employees regarding recertification requirements. As of December 31, 2025, the Agent has implemented the use of a third-party service to aid in the recertification process. Management intends to correct all noncompliance in 2026.

Finding reference number: 2025-002 Assistance Listing (Federal award identification number and year): Community Development Block Grants, Assistance Listing. No. 14.218 Auditor non-compliance code: N. Special Tests and Provisions Finding resolutions status: In Process. Universe population size: The universe population size is not applicable to the finding. Sample size population: The sample size information is not applicable to the finding. Statistically valid sample: Not applicable. Name of federal agency: U.S Department of Housing and Urban Development Pass-through entity: City of Detroit Questioned costs: $0 Statement of condition #2025-002: For the year ended December 31, 2025, the Corporation did not submit the Annual Reports to the City of Detroit in the time period required by Uniform Guidance. Criteria: Pursuant to 2 CFR 200.329, annual performance reports are required to be submitted to the pass-through entity (City of Detroit) no later than 90 calendar days after the end of the reporting period. Effect: The Corporation is not in compliance with Uniform Guidance performance reporting requirements. Late reporting may jeopardize future program funding or lead to increased oversight from pass-through agencies. Cause: A temporary tracking oversight during a transition between third-party property management agents left Corporation personnel initially unaware of the specific annual reporting requirement. Once the requirement was recognized, the Corporation’s efforts to submit the outstanding packages were further delayed by external administrative barriers, as the City of Detroit’s reporting portal was defunct and unassigned following the property management transition, preventing immediate subrecipient transmission. Recommendation: The Corporation should submit the required Annual Reports to the City of Detroit immediately and establish internal tracking systems to ensure all future reporting deadlines are met within the required 90-day timeframe. Management's response: Management concurs. Management has initiated outreach with the City of Detroit to resolve portal setup delays and will submit the 2025 annual reporting packages once portal access is granted. Management is also implementing internal review procedures to meet all reporting deadlines prospectively.