Finding 26176 (2022-001)

S3800-010: Finding Reference Number 2022-001 (Material Weakness) S3800-011: Program Information Federal Program: Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects (Sec 207/223(F) Federal Agency: Department of Housing and Urban Development (HUD) Assistance Listing #: 14.155 Pass-through Entity: None Federal Award Identification Number and Year: N/A Type of Compliance Finding: N ? Special Tests and Provisions S3800-015: Type of Finding Federal Awards S3800-016: Finding Resolution Status In Process S3800-017: Information on Universe Population Size Unknown; 276 with predecessor management company S3800-018: Sample Size Information 25 S3800-019: Identification of Repeat Finding and Finding Reference Number N/A S3800-020: Criteria The HUD Management Agent Handbook (4381.5) requires owners of multifamily housing to follow specific guidelines and determine requirements are being met for residents requesting maintenance of property via a work order system in compliance with management?s procedures. S3800-030: Statement of Condition During our audit of the Organization?s fiscal year ended December 31, 2022 federal award program, we noted that HUD requirements related to housing quality standards were not properly followed. We tested a sample of eighteen work orders from the predecessor management company and noted compliance. However, we noted that a work order system was not in place for the new management company as of September 1, 2022. The property manager was not inputting work orders in the system until January 2023. S3800-032: Cause The Organization did not follow HUD required procedures for housing quality standards. S3800-033: Effect or Potential Effect The Organization was not in compliance with the requirements of HUD related to ensuring a properly functioning work order system is in place. S3800-035: Auditor Non-Compliance Code S ? Internal control deficiencies S3800-040: Questioned Costs None S3800-045: Reporting Views of Responsible Officials Management agrees with the finding. S3800-050: Context The Organization is required to maintain a work order system. S3800-080: Recommendation The Organization should adopt a policy to ensure tenants requesting maintenance of property via work orders is being maintained properly in the work order system and management is reviewing the accuracy of the documentation being processed in the work order system on a periodic basis. S3800-090: Auditor?s Summary of the Auditee?s Comments on the Findings and Recommendations Auditee agreed with our recommendation. S3800-130: Response Indicator Agree S3800-140: Completion Date or Proposed Completion Date June 30, 2023 S3800-150: Response See Corrective Action Plan