Finding Text
Assistance Listing Number, Federal Agency, and Program Name: 14.181, U.S. Department of Housing and Urban Development, Section 811 Project Rental Assistance Contract. Federal Award Identification Number and year: N/A Pass-through entity: N/A Finding type: Significant deficiency Repeat finding: No Criteria or specific requirement: Internal controls should exist to ensure adequate documentation to support eligibility determinations. Condition: HUD Form 50059 is filed electronically with HUD and per the HUD Handbook 4350.3, Form 50059 is to be printed, signed by the tenant and owner, and kept on file by the owner for each month the owner receives assistance payments. When the tenant’s income increases or decreases by $200 or more per month, an interim recalculation is to be performed. Questioned costs: N/A If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported: N/A Identification of how Questioned Cost were Computed: N/A Context: Imagine! had a total of 6 tenants during the fiscal year ended June 30, 2025. The HUD Form 50059 was signed by two of the tenants but not signed by the owner and the HUD Form 50059 was not signed by the tenant or the owner for the other 4 tenants. One tenant had an increase in income of more than $200 and no interim recertification was performed. Cause: Internal controls were not adequately followed. Effect: Forms provided for testing were not properly signed as required by HUD. In addition, recertification was not properly performed as required by HUD. Recommendation: We recommend that the Organization review its internal controls related to HUD Form 50059 and revise procedures to ensure the Organization is following the HUD Handbook 4350.3 requirements. Views of responsible officials and planned corrective action: Management agrees with the finding. Imagine! brought in a HUD consultant to assist with HUD training, compliance and processes. Imagine! has put in place proper workflows to ensure Form 50059s are signed by the tenant and owner going forward.