Finding 11919 (2023-001)

U.S. Department of Housing and Urban Development Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects ALN 14.155 Eligibility Condition: During our review of HUD-50059, Owner’s Certification of Compliance with HUD’s Tenant Eligibility and Rent Procedures (OMB No. 2502-0204) (HUD-50059) forms, we noted one form out of a sample of 40 that did not contain support for the income reported on the HUD-50059. The Company did not have internal controls in place to identify the lack of supporting documentation for the income included. Criteria: Management is responsible for establishing internal controls to ensure the accuracy of yearly completion and submission of the HUD-50059 of households occupying assisted units and making appropriate adjustments to the tenant and housing assistance payment (24 CFR section 891.410). Cause: During the year, the Company experienced turnover with personnel in the property manager roles responsible for the completion of the HUD-50059 and internal controls were not in place for proper review of the HUD-50059. Effect: There was no support for the income amount used. If the income amount used was incorrect, the Company’s rent charged could be improperly allocated between the tenant portion and the housing assistance portion. Questioned Costs: Unknown Recommendation: The Company should have internal controls in place to review form HUD-50059 to ensure all documentation used to calculate the tenant rent and housing assistance payment is supported and properly calculated. Views of responsible officials and planned corrective action: Management agrees with the finding. See separate corrective action plan.