Audit 7016

FINDING No. 2023-001: Section 202 Supportive Housing for the Elderly, ALN 14.157 Finding Resolution Status: Unresolved. Information on Universe Population Size: Total assistance revenue. Sample Size Information: All monthly PRAC requests. Identification of Repeat Finding and Finding Reference Number: No. Criteria: As required by HUD regulations, applications for renewal of PRAC contracts must be completed 120 days prior to the PRAC expiration date. Requests for monthly subsidy must adhere to contracted rental rates approved by HUD. Statement of Condition: The Project did not complete the renewal process 120 days prior to the PRAC expiration date. In addition, the Project requested $46,934 of subsidies in excess of contracted rental rates for eight months of the year. Cause: The Project did not follow HUD regulations for timely contract renewal. Effect or Potential Effect: Not adhering to HUD regulations resulting in the delay of HUD funding and excess rent subsidies being requested and received, materially overstating authorized federal awards. Additionally, the Project had to take a short-term loan from the replacement reserve account to cover the operating shortfall while awaiting HUD approval of the new PRAC. Auditor Non-Compliance Code: R – Section 8 Program Administration. Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations will be adopted. Recommendation: The Project should comply with HUD regulations for timely renewal of the PRAC contract to ensure no interruptions in funding and ensure the monthly subsidy requests agree with HUD approved c ontracted rental rates. Response Indicator: Agree. Completion Date: 03/31/2024 Response: The Compliance Department is monitoring and tracking PRAC contract renewals. Going forward, reminders and follow-ups to deadlines will be sent to ensure the contract renewal is completed timely. Questioned Costs: $ 46,934 Total Questioned Costs: $ 46,934

FINDING No. 2023-002: Section 202 Supportive Housing for the Elderly, ALN 14.157 Finding Resolution Status: Unresolved. Information on Universe Population Size: Seventy-one tenants. Sample Size Information: Ten tenants. Identification of Repeat Finding and Finding Reference Number: Yes, finding 2022-001. Criteria: HUD regulations require timely verification of initial income through the use of Enterprise Income Verification (EIV) reports and annual unit inspections performed in a timely manner and the corresponding documentation maintained. Statement of Condition: The Project did not perform and/or maintain the initial EIV for nine tenants or perform an annual unit inspection for one tenant. Cause: The manager did not maintain appropriate tenant eligibility documentation in accordance with HUD requirements. Effect or Potential Effect: Unable to verify tenant eligibility and cost of assistance, residency may be disallowed. Unable to determine and assess whether the property has sustained any damages that require repairs. Auditor Non-Compliance Code: R – Section 8 Program Administration. Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations will be adopted. Recommendation: Management should verify initial tenant income through the EIV system in a timely manner and perform annual unit inspections and maintain all required documentation in the tenant files. Response Indicator: Agree. Completion Date: 03/31/2024 Response: Managers have been trained that EIV Income Reports must be pulled timely, reviewed, and action taken, if needed. They have also been instructed to maintain a checklist to ensure unit inspections are done annually. Alerts have been turned on in One Site to remind managers to pull EIV 90- day reports.

FINDING No. 2023-001: Section 202 Supportive Housing for the Elderly, ALN 14.157 Finding Resolution Status: Unresolved. Information on Universe Population Size: Total assistance revenue. Sample Size Information: All monthly PRAC requests. Identification of Repeat Finding and Finding Reference Number: No. Criteria: As required by HUD regulations, applications for renewal of PRAC contracts must be completed 120 days prior to the PRAC expiration date. Requests for monthly subsidy must adhere to contracted rental rates approved by HUD. Statement of Condition: The Project did not complete the renewal process 120 days prior to the PRAC expiration date. In addition, the Project requested $46,934 of subsidies in excess of contracted rental rates for eight months of the year. Cause: The Project did not follow HUD regulations for timely contract renewal. Effect or Potential Effect: Not adhering to HUD regulations resulting in the delay of HUD funding and excess rent subsidies being requested and received, materially overstating authorized federal awards. Additionally, the Project had to take a short-term loan from the replacement reserve account to cover the operating shortfall while awaiting HUD approval of the new PRAC. Auditor Non-Compliance Code: R – Section 8 Program Administration. Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations will be adopted. Recommendation: The Project should comply with HUD regulations for timely renewal of the PRAC contract to ensure no interruptions in funding and ensure the monthly subsidy requests agree with HUD approved c ontracted rental rates. Response Indicator: Agree. Completion Date: 03/31/2024 Response: The Compliance Department is monitoring and tracking PRAC contract renewals. Going forward, reminders and follow-ups to deadlines will be sent to ensure the contract renewal is completed timely. Questioned Costs: $ 46,934 Total Questioned Costs: $ 46,934

FINDING No. 2023-002: Section 202 Supportive Housing for the Elderly, ALN 14.157 Finding Resolution Status: Unresolved. Information on Universe Population Size: Seventy-one tenants. Sample Size Information: Ten tenants. Identification of Repeat Finding and Finding Reference Number: Yes, finding 2022-001. Criteria: HUD regulations require timely verification of initial income through the use of Enterprise Income Verification (EIV) reports and annual unit inspections performed in a timely manner and the corresponding documentation maintained. Statement of Condition: The Project did not perform and/or maintain the initial EIV for nine tenants or perform an annual unit inspection for one tenant. Cause: The manager did not maintain appropriate tenant eligibility documentation in accordance with HUD requirements. Effect or Potential Effect: Unable to verify tenant eligibility and cost of assistance, residency may be disallowed. Unable to determine and assess whether the property has sustained any damages that require repairs. Auditor Non-Compliance Code: R – Section 8 Program Administration. Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations will be adopted. Recommendation: Management should verify initial tenant income through the EIV system in a timely manner and perform annual unit inspections and maintain all required documentation in the tenant files. Response Indicator: Agree. Completion Date: 03/31/2024 Response: Managers have been trained that EIV Income Reports must be pulled timely, reviewed, and action taken, if needed. They have also been instructed to maintain a checklist to ensure unit inspections are done annually. Alerts have been turned on in One Site to remind managers to pull EIV 90- day reports.