Finding Text
SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Ref. No. Internal Control over Compliance Findings Questioned Costs: $ -- 2024-001 Missing Signatures - Significant Deficiency Federal Agency: U.S. Department of Housing and Urban Development (HUD) Assistance Listing No.: 14.157; 14.239 Program: Supportive Housing for the Elderly; HOME Investment Parternships Program Criteria: The Uniform Guidance (2 CFR §200.332 - Internal controls) requires the Company to establish, document, and maintain effective internal controls that provide reasonable assurance of compliance with the Department of Housing and Urban Development (HUD) requirements. In order to verify the eligibility of applicants, the property management company’s policy is to complete the “Tenant Income Certification” (TIC) and “Owner’s Certification of Compliance with HUD’s Tenant Eligibility and Rent Procedures” (HUD-50059) form, with signatures from both the property manager and applicant. Condition: During our testing over eligibility, we discovered: • Eight (8) out of 15 samples did not have a property manager signature on the TIC form. • Four (4) out of 15 samples did not have a property manager signature on the HUD-50059 form. Cause: Certain tenant documentation was lost by the prior management company. The new property manager reperformed intake procedures and recreated the TIC and HUD-50059 forms but did not sign the TICs, citing lack of involvement in the original intake process. Effect: Incomplete documentation weakens the audit trail, diminishing confidence in eligibility determinations and potentially exposing the Project to risks such as noncompliance with program requirements and potential errors and disallowance in rent subsidies paid by HUD. Identification as a Repeat Finding, if applicable: Not applicable. Recommendation The Company should consider reevaluating their established procedures and controls currently in place to ensure full compliance with regard to eligibility and proper maintenance of tenant information, including policies for handling missing files during management transitions to ensure compliance with HUD requirements. Views of Responsible Officials and Planned Corrective Action The Company agrees with the finding and the recommendation. See Part V Corrective Action Plan.