Finding Text
HUD insured mortgage program Section 223(f), ALN 14.155 Criteria: Under HUD regulations, recipients are required to maintain and make available all records necessary to demonstrate compliance with program requirements. HUD requires documentation of tenant eligibility, income verification, and rent determination. The Uniform Guidance requires recipients to maintain records that adequately identify the source and application of funds. Statement of Condition: We reviewed 10% of the total population of tenant files. During our review, we noted that documentation to support tenant eligibility determination was missing or incomplete. We consider this condition to be a significant deficiency. Cause: The deficiencies occurred due to inconsistent file management practices and ineffective internal review procedures to ensure that all required eligibility documentation is obtained and retained. Effect: Missing or incomplete files increase the risk of improper eligibility determinations, inaccurate rent calculations, questioned costs, and HUD noncompliance. Recommendation: We recommend that management strengthen internal controls over tenant file documentation by conducting periodic supervisory reviews of files to ensure that all required documentation is present and complete and by providing staff training on HUD eligibility and documentation requirements. Views of Responsible Officials: We agree with the auditor’s finding. The audited files exist in the same timeframe as other issues noted in the previous audit, and therefore findings will be similar. Those files and documents were not properly managed or maintained and some cannot be located. Prior management did not implement established and required processes and failed to oversee the work to ensure accuracy. In the second quarter of 2025, we began exploring the issues that existed at that time and correcting procedures, changing software systems, establishing supervisors, training staff, and establishing tracking and monitoring systems and processes. Staff have made substantial progress and continue to do so.