Finding 1078531 (2024-002)

Finding 2024-002 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirement: Eligibility Criteria: In accordance with River Kourt Apartments’ regulatory agreement with HUD for its HUD Section 811 Capital Advance and HUD Section 811 Project Rental Assistance Contract (PRAC), River Kourt Apartments is required to annually recertify its tenants. It is the responsibility of management to design and implement internal controls to ensure the tenants are recertified within the applicable timeframe required by HUD. Condition: River Kourt Apartments did not perform recertifications for all tenants within the timeframe specified by HUD. We noted significant delays in tenant recertification procedures. Cause: There were not properly designed or implemented internal controls to ensure the tenant recertifications were performed in the timeframe required by HUD. Effect: The effect is material non-compliance with the terms of the HUD program listed above. Questioned Costs: None. Repeat Finding: Yes, see Finding 2023-001. Context: We noted from review of the Forms HUD-52670 Schedule of Tenant Assistance Payments Due and other client prepared schedules, several tenants had not been recertified during the fiscal year as required. From the total 17 tenants at June 30, 2024, the annual recertifications for 15 tenants were past due. We selected a sample of 2 tenants from a population of 21 total tenants for the fiscal year for eligibility testing. The sample was not a statistically valid sample. Our sample of 2 tenants did not reveal any exceptions. Recommendation: We recommend management review the current internal control procedures and implement additional procedures to ensure annual recertifications are performed as required by HUD. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.