Finding Text
Ref. No. Compliance and Internal Control over Compliance Findings Questioned Costs: $ -- 2024-002 Missing Third-Party Verification - 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 Partnerships Program Criteria: Per Department of Housing and Urban Development (HUD) Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, owners are required to maintain specific documentation on file at the project site, including third-party verifications received from independent sources. Condition: During our testing over eligibility, we discovered: • One (1) out of 15 samples did not have any third-party verification to substantiate reported gross annual income. • One (1) out of 15 samples contained only partial third-party verification to substantiate reported gross annual income. Cause: Certain tenant documentation was lost by the prior management company. After the transition, the new property manager reperformed the initial income certifications and the tenant certified their income. However, the independent third-party verification documents were either not obtained at all or not obtained in their entirety. Effect: Without the required third-party verification documentation, there is a risk that tenant eligibility determinations are not adequately supported, which may result in the admission of ineligible tenants 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.