Finding Text
2025-001 Noncompliance With Tenant Eligibility and Recertification Requirements Program Name/Assistance Listing Title: Supportive Elderly Housing - Section 202 Federal Assistance Listing No: 14.157 Federal Agency: U.S. Department of Housing and Urban Development Type of Finding: Significant Deficiency Compliance Requirements: Eligibility Population Size and Sample Size Information: Out of total 36 tenants, 7 samples were selected. Criteria: Section 202 of the Housing Act of 1959 and related HUD regulations require owners to ensure that only eligible households receive housing assistance. Specifically: 24 CFR § 5.230 – Applicants and tenants must submit signed consent forms at initial application and annual reexaminations. 24 CFR § 891.410 – Requires proper selection of tenants from the waiting list in accordance with admission policies, annual reexamination of tenant income and household composition at least once every 12 months, and documentation to support eligibility determinations, tenant certifications, and rent calculations. OMB Compliance Supplement (2025) – Requires maintaining complete and accurate tenant files supporting eligibility, income verification, recertifications, waiting list selection, and move-out documentation, with evidence that eligibility determinations were made timely and prior to assistance being provided. Condition: Based on a review of tenant files, the following inconsistencies were noted: Untimely or Missing Eligibility Documentation: For four (4) tenant files, required supporting eligibility documentation or updates were not completed at the time of move in. Unsigned Annual Recertification Documents: For one (1) tenant file, documentation related to the annual recertification was not signed by the tenant. Missing Move-Out Documentation: For one (1) tenant file, required move-out documentation was not available at the time of the audit visit. Cause of Condition: The following were identified as the causes of the condition: Untimely or Missing Eligibility Documentation: Lack of timely updates to tenant eligibility files at move-in and during annual recertifications appears to result from insufficient monitoring and follow-up, and in one case, challenges related to the tenant’s mental health may have contributed to delays in obtaining documentation. Unsigned Annual Recertification Documents: Annual recertification documents were not signed due to incomplete execution of the recertification process, possibly caused by oversight or inadequate tracking of tenant signatures. Missing Move-Out Documentation: Required move-out documentation was not maintained in the tenant file, likely due to procedural gaps in handling move-out records, especially in cases of tenant death. Potential Effect of Condition: Failure to maintain complete and timely eligibility documentation increases the risk that ineligible tenants may have been admitted or retained, potentially resulting in noncompliance with HUD program requirements and exposure to questioned costs, repayment demands, or other corrective actions by HUD. Questioned Costs: None - Since all the findings are procedural/documentation deficiencies without proof of improper financial benefit, no questioned costs are identified. Reporting Views of Responsible Officials: The Organization agrees with the findings and recommendations and will adhere to the corrective action plan. Context: HUD regulations require tenants to be selected from a chronological waiting list in accordance with the project’s administrative plan and preference criteria. Supporting eligibility documentation must be obtained at initial occupancy and updated annually, with tenants signing annual recertification forms. Based on testing of tenant files, instances were noted where documentation was missing or incomplete, and move-out documentation was absent, indicating incomplete adherence to HUD eligibility and occupancy requirements. Recommendation: We recommend that management: a. Strengthen controls to ensure all eligibility documentation is completed and verified prior to tenant move-in. b. Ensure annual recertifications are fully executed, including required tenant signatures. c. Implement procedures to ensure complete move-out documentation is retained for all vacated units. d. Conduct periodic internal reviews of tenant files to ensure ongoing compliance with HUD and OMB requirements. Management’s Response: Management have put together a recertification team that will oversee our recertifications and we will bring staff on site in to train going forward in the future This will help to ensure that all documents are signed all consent forms there will also be training that deals with tenant selection on the wait list as well as training with maintaining tenant files.