Finding 1130142 (2024-001)

FINDING: 2024-001 Eligibility Federal Agency: U.S. Department of Housing and Urban Development Program: Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects – Section 223(f)/207, ALN 14.155. Condition: Four tenant files were selected for audit of the certification of the proper calculation of tenant rent. The test found that for one tenant, the submitted Form HUD-50059 was not properly completed. The tenant’s calculation excluded social security medical insurance expense, which then resulted in the tenant’s payment being overstated by $53 and the HAP payment to be understated by $53. The property did follow their internal controls in place for review of the third-party tenant rent calculations. Criteria: Management is responsible for adhering to the established internal controls to ensure the accuracy of yearly completion and submission of the HUD 50059 of households occupying assisted units and making appropriate adjustments to the tenant payment and the project rental assistance payment (24 CFR section 891.410). Cause: The property did not follow the internal controls in place for review of the third-party tenant rent calculations. Effect: Germaine Harbor, Inc. (Property) rent for the one tenant tested was improperly allocated between the tenant portion and subsidy portion. Questioned Costs: Unknown Recommendation: The Property should have procedures in place to ensure the internal controls established to review Form HUD-50059 ensuring all documentation used to calculate the tenant rent and assistance payment is supported and properly calculated. Views of Responsible Official and Planned Corrective Action: Management agrees with finding; see separate corrective action plan.