Finding Text
Federal Program – U.S. Department of Housing and Urban Development Assistance Listing Number 14.157 – Supportive Housing for the Elderly (Section 202) Material Weakness & Noncompliance Category of Finding – Eligibility Criteria - The Compliance Supplement requires that tenant files contain all necessary documentation to verify eligibility, rent calculations, and compliance with federal regulations. Required documents include, but are not limited to, original applications, verified bank accounts, resident screenings, Enterprise Income Verification (EIV) reports, unit inspections, and move-out documentation. Maintaining complete tenant files is essential for ensuring compliance with federal requirements and preventing improper subsidy payments. Condition - During the audit, a review of tenant files revealed that required documentation was either missing or incomplete. Specifically: In 1 out of 5 tenant files reviewed, we were not provided evidence that all required documents were included in the tenant file. Missing documentation included original application, Social Security Number verification, security deposit documentation, and inspection forms. Context - Of the total population of 49 units, 5 units were tested. Questioned costs are not applicable to this finding. Based on our sample and inquiry of employees, we understand this finding to be prevalent at the Organization throughout the year. Cause - The identified deficiencies appear to be due to inadequate file management and oversight. Contributing factors may include insufficient staff training on federal documentation requirements, staff turnover resulting in inconsistencies in maintaining tenant records, and not conducting routine internal file audits to ensure compliance. Effect (Potential Effect) - Missing documentation in tenant files reduces the project’s ability to demonstrate that tenant income, assets, and eligibility were properly determined in accordance with HUD requirements. This increases the risk of ineligible tenants receiving assistance or incorrect assistance amounts and may result in questioned costs or other compliance actions by HUD. Identification of repeat finding - No Recommendation - To ensure compliance with federal requirements for tenant documentation, property management should conduct periodic internal file audits to identify and correct missing or incomplete documentation; provide staff training on proper file management and federal compliance requirements; establish a document tracking system to prevent missing files and ensure timely updates; and assign responsibility to designated staff for reviewing and maintaining complete tenant records. Views of responsible officials and planned corrective actions - The Organization agrees with the finding. To address this finding, ownership has moved its portfolio, with the exception of one project, to third party property managers as of January 1, 2026. These agents have a track record of completing, documenting, and retaining certifications in accordance with applicable regulations. Ownership periodically reviews the agents’ procedures to ensure that they document and maintain tenant files in accordance with HUD and have routine internal audits of tenant files to ensure compliance with HUD regulations.