Finding Text
Reference Number 2022-004 - Eligibility Finding Reference Number Reference Number 2022-004 - Eligibility Federal Awards Finding – Material Weakness - Failure to Maintain Tenant Files with Adequate Documentation Response: HOMECorp will make use of Yardi Breeze Premier Affordable Property Management CRM feature which allows both HOMECorp and our tenants to track their program compliance, maintenance requests, leases, lease renewals and annual recertifications. This information will be saved/stored in the cloud. This was implemented on 05/01/23 through coordination of the Yardi Implementation Team and the executive director. During 2021 – 2022, HOMECorp’s management team was significantly impacted by COVID and despite PPP loan retention efforts we lost all our staff and transitioned our HUD Certified Housing Counselor to Property Manager. During this time, the executive Director left as well as two (2) interim Executive Directors, who responsibilities were general management. They lacked the training and experience in Affordable Housing Management to help our property manager to maintain our program compliance procedures. Since the new Executive Director, onboarded in April 2023, the property manager has been trained on our policy and procedure for verifying tenant eligibility and calculating rent amounts in compliance with HOME program requirements, tenant intake, income verification, and rent calculations to ensure compliance with federal regulations. This is done in Yardi Affordable compliance worksheet. Quarterly periodic reviews and audits of tenant files and rent schedules are performed to ensure ongoing compliance. 2022-004 - Eligibility Finding Federal Awards Finding – Material Weakness - Failure to Maintain Tenant Files with Adequate Documentation Federal Programs: National Housing Trust Program Assistance Listing Number 14.275 Department of Housing and Urban Development Effect: The Organization does not maintain required documentation in compliance with the requirements listed above. Noncompliance with NHTF Program eligibility standards jeopardizes the program’s ability to achieve its intended purpose of serving extremely lowincome families. This failure may lead to ineligible tenants occupying HTF-assisted units, exposing the organization to potential repayment of funds or loss of future program funding. This affects compliance with the loan agreement from the New Jersey Department of Consumer Affairs. Recommendation: We recommend that the Organization: 1. Develop and implement a comprehensive policy and procedure for verifying tenant eligibility in compliance with NHTF program requirements. 2. Standardize income determination methods across all NHTFassisted programs and projects, ensuring compliance with either 24 CFR 5.609 or IRS Form 1040 definitions. 3. Require and retain all necessary source documentation (minimum of two months) and signed certifications for all tenant files. 4. Conduct annual income and family size verifications in accordance with NHTF requirements. 5. Periodically review and audit tenant files to identify and correct deficiencies. 6. Provide training to staff responsible for tenant intake, income verification, and tenant certification to ensure compliance with federal regulations. Federal Awards Finding – Material Weakness - Failure to Maintain Tenant Files with Adequate Documentation Federal Programs: National Housing Trust Program Assistance Listing Number 14.275 Department of Housing and Urban Development Condition: During the audit, it was noted that the Organization did not comply with the eligibility requirement of the National Housing Trust Fund Program "NHTF program". The Organization did not maintain adequate documentation as follows: 1). to verify income eligibility 2). signed tenant certifications attesting to income and family size 3). annual attestation from the administrator of the program attesting to the family size and annual income or alternatively, indicate the current dollar limit for very low or low-income families for the family size of the tenant and state that the tenant's annual income does not exceed this limit. We noted this for 1 out of 1 families receiving housing under the NHTF Program. The missing or incomplete records included income verification forms, household composition details, and supporting income documentation (e.g., pay stubs, tax returns, or third-party verification) as well as signed tenant and administrator certifications. Criteria: The National Housing Trust Fund Program, "HTF program" requires strict compliance with income-targeting requirements, ensuring that only extremely low-income families, as defined in 24 CFR 93.2, occupy HTF-assisted units. Income determination must be conducted using one consistent method—either “annual income” as defined in 24 CFR 5.609 or “adjusted gross income” as defined by the IRS Form 1040 series. The grantee must examine at least two months of source documentation evidencing annual income and obtain written certification from the family regarding income and family size. Program administrators must annually confirm compliance through proper documentation or certification. Cause: The organization lacks sufficient internal controls and oversight to ensure compliance with the NHTF Program eligibility requirements. Staff administering the program were either unaware of or did not adhere to the income documentation and certification standards.