Finding Text
Finding 2024-001: U.S. Department of Housing and Urban Development, HOME Investments Partnerships Program Statement of Condition: During the fiscal year ended June 30, 2024, required annual tenant income recertifications were not properly conducted. A review of 22 tenant files revealed multiple instances of noncompliance with HOME program requirements related to tenant eligibility, income verification, utility allowance calculations, and lease documentation. Specifically: 1) 9 tenants in the program were not recertified during the fiscal year, violating the requirement under 24 CFR §92.203 requiring a tenant's income to be recertified at least annually. 2) 4 tenants in the program were not timely recertified prior to the effective date of thei lease, potentially resulting in ineligible assistance periods. 3) 3 of the tenant's files did not contain documentation supporting the tenant's income, or the documentation provided did not agree with the completed Tenant Income Certification (TIC), violating income verification standards under 24 CFR §92.203(d). 4) 5 of the tenant's files did not contain documentation supporting the tenant's utility allowance, or the documentation provided did not agree with the completed Tenant Income Certification (TIC), which is required to ensure accurate rent determinations under 24 CFR §92.252. 5) 3 of the tenant's files did not contain the HOME lease addendum, violating leasing requirements under 24 CFR §92.253. 6) 2 of the tenant's files did not contain documentation supporting the tenant's disability or homelessness status upon entry to the program, which is required by the HOME loan or grant agreement for the unit the tenant has leased. 7) 2 of the tenant's files did not contain background checks prior to entry into the program, which is required by the HOME loan or grant agreement for the unit the tenant has leased. Criteria: The HOME program requires participates to ensure that tenant eligibility is properly documented and maintain, specifically as it relates to income determinations and annual recertifications (24 CFR §92.203), rent limitations and utility allowances (24 CFR §92.252), and tenant protections and leasing requirements (24 CFR §92.253). Cause: The deficiencies stem from high employee turnover in the leasing department, inadequate file management, and lack of internal control in tracking tenants' annual recertification dates to ensure timely completion of the recertification. Effect: Failure to timely recertify tenants' income on an annual basis and maintain complete and accurate documentation as required under the HOME program requirements may result in leasing units to ineligible tenants, miscalculation of rents, and noncompliance with federal regulations. Context: The population size is 155 units, which were constructed using funds from the HOME program. Questioned costs: $0 Recommendation: Management should implement procedures to track tenant's annual recertification dates to ensure timely recertification; utilize checklists to ensure all required documentation, including income verification, disability and homelessness statuses, utility allowance calculations, background checks, and HOME lease addendums are properly maintained; conduct periodic internal audits of tenant's files; and evaluate staffing capacity of the leasing department. Management's Response and Corrective Action Plan: Management agrees with the recommendation and has already adjusted procedures to track annual recertification dates, supported by checklists to ensure all required documentation is complete and accurate. Periodic internal audits of tenant files will be conducted to maintain compliance. Additionally, a newly hired Senior Director of Operations will have total oversight of this process to ensure all recommendations are followed. Leasing staff continue to complete training to develop their knowledge and abilities.