Finding Text
Inadequate Controls over Tenant Selection and Waiting List Management:
Internal Control Weakness Impacting HUD Compliance
Findings Resolution Status: In Process
Information on Universe Population Size: 32 Tenants
Sample Size Information: 3 Samples
Auditor Non-Compliance Code Drop-Down: Eligibility
Criteria:
- HUD Occupancy Handbook 4350.3 REV-1 (Chapter 4: Waiting List and Tenant
Selection) Owners must develop a method to maintain documentation of the waiting list
composition, application status, and actions taken. Once unit size and preference order
are determined, owners must select applicants from the waiting list in chronological order
to fill vacancies.
- Ohio Housing Finance Agency (OHFA) Program Compliance Handbook – The
marketing requirement for low-income units can be met through various strategies, one of
which is maintaining a waiting list and selecting residents from the list in accordance
with established procedures.
Condition: During eligibility testing, we were unable to verify compliance with HUD
regulations requiring selection from the waiting list in accordance with the administrative plan
(24 CFR section 891.410 and 24 CFR 982.204). The waitlist application dates generated from
the Project’s software reflect the initial data load from RealPage to Fortress and did not include
essential waitlist notes. This lack of documentation prevented us from verifying that tenant
selection adhered to HUD requirements and selected from waiting list in correct order.
Cause of Condition: The issue occurred due to an incomplete data transfer during the migration
from RealPage to Fortress. Internal controls over the data migration process were insufficient to
ensure that all required information, such as waitlist notes, was successfully transferred.
Potential Effect of Condition:
- Noncompliance with HUD regulations for maintaining an accurate and chronological
waitlist.
- Inability to demonstrate compliance with tenant selection requirements, which may result
in findings of noncompliance, questioned costs, or penalties.
- Increased risk of unfair or improper tenant selection due to incomplete records.
Questioned costs: The auditors have identified questioned costs of $8,510 for annual rental
subsidies. These questioned costs pertain only to the sample tested.
Reporting Views of Responsible Officials: The Organization agrees with the findings and
recommendations and will adhere to the corrective action plan.
Context: In all 3 cases reviewed (100% of the sample), auditors were unable to verify
compliance with HUD's requirements regarding tenant selection from the waiting list due to
incomplete data. The underlying issue stemmed from a system migration from RealPage to
Fortress, during which key documentation—specifically waitlist notes and chronological
application data—was not properly transferred. As a result, the project lacked adequate evidence
to demonstrate that tenant selection was made in accordance with HUD regulations and the
organization’s administrative plan. This indicates a potentially systemic issue with data integrity
and control procedures during software transitions, rather than isolated instances of
noncompliance.
Recommendation:
1. Implement a process to review and verify the accuracy and completeness of data during
system migrations, including waitlist information and notes.
2. Reconstruct missing waitlist data by reviewing available source records, if feasible.
3. Develop and document a written policy for waitlist maintenance and data integrity to
ensure ongoing compliance with HUD regulations.
Management Response: Management is currently conducting a comprehensive review of the
process to ensure alignment with compliance requirements and identify areas for improvement.