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 that comply with the guidance of the HUD Handbook 4350.3 related to leases and that ensure signed leases and lease amendments are available for inspection. Condition: Per the HUD Handbook 4350.3, leases are to be signed by the tenant and owner and include the attachment of certain forms. When a tenant recertification is performed, amendments to the lease are prepared after the recertification and the amendments are signed by both the tenant and owner. The name of the HUD Project is to be listed in the lease. 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 costs were computed: N/A Context: Only three of the six total tenants had a signed lease. The rest of the tenant leases were either not signed by both the tenant and owner or there was no lease provided. Not all of the required forms were attached to the lease. The HUD approved mandatory meals program was not provided. Cause: Internal controls were not adequately followed. Effect: Leases and lease amendments were not properly signed and required forms were not attached to the lease as required by HUD. Recommendation: We recommend that the Organization review its internal controls related to leases 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 leases are signed by the tenants going forward.