Finding Text
Finding # 2024-004
Federal Grantor: U.S. Department of Housing and Urban Development
AL# / Program: 14.181 - Supportive Housing for Persons with Disabilities
Type of Finding: Federal Award Finding - Activates Allowed and Unallowed and Special Tests and Provisions
Finding Resolution Status: In Process
Information on Universe Population Size: N/A
Sample size information: N/A
Criteria: HUD Handbook 4381.5_Rev.2 - Chapter 3 identifies allowed management fees and special fees allowed to be paid. Management Agent has a HUD-9839-B that was for a fixed-term ending 8/31/2010. The allowed management percentage fee is 9.30% with a yield of $51.90 PUPM. In addition expenses for bookkeeping attributable to the Agent's company are paid out of the fee. HUD Multifamily West Region maximum fee per unit per month is $13.
Statement of Condition / Context: Management fees paid to the management agent exceed the yield of $51.90 PUPM. Management has not obtained a renewed HUD-9839-B to support a yield of greater than $51.90 PUPM. Bookkeeping fee paid to agent exceeded the maximum fee per unit per month of $13.
Cause: Internal controls over compliance are insufficient to maintain compliance with HUD Handbook 4.81.5_Rev.2 The design or operation of controls over the calculation and payment of allowed management fees are not sufficient to prevent or detect or correct unallowed payments.
Effect or Potential Effect: The Project is not in compliance with the Housing for Persons with Disabilities Section 811 of the Housing Act of 1959 Regulatory Agreement.
Auditor Non-Compliance Code: J - Unauthorized Management Fees.
Questioned Costs: $17,616
Recommendations: We recommend that Management refund the overpayments and establish procedures to ensure that the management fees and bookkeeping fees do not exceed the maximum PUPM fee allowed by HUD.
Response Indicator Agree
Completion Date 3/7/2025
Reporting Views of Responsible Officials and Planned Corrective Action: HCEB will submit annual Management Agent Certifications reflecting the approved Property Management Fee annually once the PRAC budget is approved by HUD. For the current fiscal year, HCEB will submit the Management Agent Certification to HUD for approval by March 7, 2025.