Finding Text
Finding 2026-002: Tenant Certifications and PRAC Renewal Not Completed Timely Federal Program: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181, U.S. Department of Housing and Urban Development; Capital Advance No. 032-HD019 and PRAC No. DE26Q981001; year ended March 31, 2026 Compliance Requirements: Special Tests and Provisions; Eligibility Type of Finding: Noncompliance Repeat Finding: No Criteria: HUD guidance and the Project’s PRAC require the owner to maintain current certifications for each assisted household, to transmit those certifications to HUD’s Tenant Rental Assistance Certification System (TRACS) in a timely manner, and to renew the PRAC timely. HUD holds rental assistance payments when fewer than 90% of assisted units have current certifications in TRACS, or when the PRAC has expired. Condition: The Project’s compliance percentage in TRACS fell below 90% beginning with the March 2026 voucher, and HUD held the March and April 2026 payments. The Project’s PRAC then expired on April 30, 2026 before a renewal was executed, and HUD held rental assistance payments beginning with the May 2026 voucher. The PRAC was renewed on October 19, 2026, retroactive to May 1, 2026. The Project’s certifications have since been brought current, and HUD released the held payments for March through October 2026. Unpaid rental assistance of $9,852 was recorded as subsidy receivable at March 31, 2026, and was received in August 2026. Context: We reviewed PRAC vouchers and receipts for each month of the year, the TRACS voucher list, HUD correspondence, and the PRAC renewal, and discussed the conditions with management. Cause: Management did not have an effective process to track certification due dates and PRAC renewal deadlines, or to confirm that certifications were successfully transmitted to TRACS. The lack of compliance monitoring described in Finding 2026-001 contributed to the condition. Effect: The Project did not comply with its certification and PRAC renewal requirements, and HUD withheld rental assistance. This strained the Project’s cash flow and its ability to meet operating obligations. Questioned Costs: None Recommendations: Management should track certification and PRAC renewal due dates, confirm that certifications are successfully transmitted to TRACS, reconcile TRACS submissions monthly, and require documented supervisory review of the Project’s compliance percentage before each voucher is submitted. Views of Responsible Officials: We concur with this finding. The PRAC has been renewed, we have brought tenant certifications current in TRACS, and HUD has released the held rental assistance payments. We will track future certification and PRAC renewal due dates to ensure they are completed timely.