Finding Text
FINDINGS - MAJOR FEDERAL AWARD PROGRAM AUDIT (CONTINUED)
Department of Housing and Urban Development Finding, 2024-006: Major Programs: Capital Advance Program, Federal Assistance Listing Number 14.U01 and Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182
STATEMENT OF CONDITION
30 tenant files, out of 38 files reviewed, had the following items noted:
• 21 files, including 4 move-ins, did not properly generate the Enterprise Income Verification (EIV) report timely;
• 28 files had late tenant signatures on the recertifications;
• 4 files did not use the 6-month average to calculate the checking account balances;
• 1 file charged the tenant the wrong security deposit;
• 4 files did not contain the date and time-stamp on the tenant applications;
• 3 files did not contain the original lease in the file;
• 3 files did not contain the tenant application in the file;
• 3 files did not include move-in inspection reports.
CRITERIA
HUD Handbook 4350.3 Revision 1 for HUD Subsidized Multifamily Housing Programs requires owners to have appropriate documents on file for tenants, including the original 90-day EIV, a date and time-stamped application, original lease, inspections and security deposits. Owners are required to obtain timely signatures for all recertifications. Owners are also required to use the six-month average in computing the tenant’s checking account balance.
EFFECT OF CONDITION
30 tenant files, out of 38 files reviewed, had the above items noted.
CONTEXT
During audit fieldwork, 38 tenant files from a statistically valid sample were examined for compliance with tenant eligibility criteria. Of the 38 tenant files examined, 30 tenant files contained one or more of the items noted above.
CAUSE OF CONDITION
Management mistakenly excluded the required documentation noted above. In addition, timely signatures were not obtained on 28 recertifications and 4 files did not use the 6-month average to calculate the checking account balances. RECOMMENDATION
The auditor recommends the Project and management review and attend training on the HUD Handbook 4350.3 Revision 1 requirements for tenant files including eligibility and income calculations. In addition, the auditor recommends the Project obtain necessary recertification signatures timely.
VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS
Carrasquillo Management LLC acknowledges the findings and is taking the following corrective actions to ensure compliance with HUD Handbook 4350.3 requirements:
1. Enterprise Income Verification (EIV) Reports
Management has implemented an internal checklist to ensure that the initial EIV reports are generated within the required 90 days for all move-ins. Staff has been retrained on EIV protocols and timelines to ensure timely compliance going forward.
2. Timely Tenant Signatures on Recertifications
A new recertification specialist has been hired, who is fully trained and qualified in HUD income certifications. Carrasquillo Management LLC has implemented a new tracking system and notification schedule to ensure that all recertification documents are signed by tenants on or before the effective date. Management is also increasing tenant engagement through reminder letters and calls.
3. Bank Account Balance Calculations
Staff has received additional training on income and asset calculations per HUD guidance. A verification template has been implemented to ensure all checking account balances are calculated using the six-month average, as required.
4. Security Deposit Charges
The error identified regarding the incorrect security deposit has been corrected. Going forward, all move-ins will include a verification step to ensure that the correct deposit is charged in accordance with lease and program guidelines.
5. Date and Time-Stamped Applications
Management has implemented a new policy requiring staff to date-and time-stamp all tenant applications upon receipt. Staff has been trained accordingly and periodic file reviews will be conducted to ensure compliance.
6. Missing Lease and Application Documents
Management has begun a full file audit to identify and correct any remaining deficiencies. Procedures have been updated to ensure original leases and completed applications are filed immediately upon move-in and scanned into the electronic system as a backup.
7. Move -Inspections
A revised move-in protocol has been established that includes a checklist confirming inspection completion and file documentation. A copy of the move-in inspection form is now required to be signed by both tenant and management and scanned into the file on the same day of move-in.
8. Training and Oversight
Carrasquillo Management LLC will continue to provide regular staff training and compliance reviews to ensure that all HUD file requirements are met. In addition, quarterly internal audits will be conducted to verify proper documentation and adherence to timelines.
We are committed to maintaining full compliance with HUD regulations and ensuring tenant file accuracy moving forward.