Finding Text
2025-002 Incomplete Transfer of Waitlist Information: Internal Control Weakness Impacting HUD Compliance (Repeat Findings: 2024-001) 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: HUD regulation states the following: a. 24 CFR 891.410 (a). Owners shall maintain a written, chronological waiting list showing the name, race, gender, ethnicity, and date of each person applying for the program. b. HUD Occupancy Handbook 4350.3 REV-1 (Chapter 4: Waiting List and Tenant Selection): Owners must develop a method to maintain documentation of the waiting list composition, application status, and actions taken. c. Compliance Supplement 2025 : Owners must document that participants selected from the waitlist met the preference criteria and were selected according to the admission policies in the administrative plan. (24 CFR section 891.410) d. 24 CFR 982.204: Except for special admissions, participants must be selected from the waiting list. The Project must select participants from the waiting list in accordance with admission policies. The Project must maintain information that permits to select participants from the waiting list in accordance with the admission policies. The waiting list must contain the following information for each applicant listed: (1) Applicant name; (2) Family unit size (number of bedrooms for which family qualifies under occupancy standards); (3) Date and time of application; (4) Qualification for any local preference; (5) Racial or ethnic designation of the head of household. Condition: During eligibility testing, we observed that the waitlist generated by the system contained no supporting notes or documentation for tenant selection. As a result, we were unable to verify that two tenants were selected in accordance with the documented application order or whether any deviations had a valid justification. Cause of Condition: This issue occurred due to an incomplete data transfer during the migration from RealPage to Fortress. Internal controls over the data migration process were insufficient to ensure that all required information, such as waitlist notes, was successfully transferred. Ongoing procedural weaknesses in maintaining proper documentation may also have contributed. Potential Effect of Condition: Noncompliance with HUD regulations for maintaining an accurate and chronological waitlist. Inability to demonstrate compliance with tenant selection requirements, which may result in findings of noncompliance, questioned costs, or penalties. Increased risk of unfair or improper tenant selection due to incomplete records. Questioned Costs: No questioned costs are identified at this time, as the issue primarily concerns documentation and internal controls rather than direct financial mismanagement. 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 that tenants be selected from a chronological waiting list in accordance with the project’s administrative plan and preference criteria, with proper documentation supporting all selections. During 2025 eligibility testing, we observed that the system-generated waitlist had no supporting notes or documentation, preventing verification of proper tenant selection. This condition is a repeat of 2024-001, which identified incomplete transfer of waitlist information during system migration. Recommendation: Implement a process to review and verify the accuracy and completeness of data during system migrations, including waitlist information and notes. Reconstruct missing waitlist data by reviewing available source records, if feasible. Develop and document a written policy for waitlist maintenance and data integrity to ensure ongoing compliance with HUD regulations. Management Response: Management has set up training to address all issues regarding the wait list and how to go about selecting those off the waitlist. This training will take place in January of 2026 And it will help those on site to have a full understanding of what is needed when it comes to our wait list.