Finding 35579 (2022-001)

Significant Deficiency
Requirement
E
Questioned Costs
-
Year
2022
Accepted
2023-08-22
Audit: 32776
Organization: Ingleside Homes, INC (DE)

AI Summary

  • Core Issue: The project failed to obtain necessary third-party verification for tenant assets, income, and deductions during eligibility checks.
  • Impacted Requirements: Noncompliance with 24 CFR 5.659, which mandates third-party verification or documentation of its absence for tenant certifications.
  • Recommended Follow-Up: Implement stricter procedures to ensure third-party verifications are obtained and documented for all tenant eligibility certifications.

Finding Text

U.S. Department of Housing and Urban Development Reference Number: 2022-001 Program: Section 8 Housing Assistance Payments Program - CFDA No. 14.195 Type of Finding: Noncompliance and Internal Control; Eligibility Compliance Requirement: Eligibility Condition: Audit procedures determined that documentation to evidence third-party verification of the value of tenants? assets, income, and deductions was not available for 5 of 20 tenant eligibility certifications selected for testing. Tenant certifications were completed using documentation provided by the tenants. The tenant files did not include documentation of attempts to obtain third-party verifications or documentation of the reason third-party verification was not available. For one tenant, there was indication of home equity line of credit with no evaluation of potential related real property assets. Criteria: 24 CFR 5.659 (d) & (e) (included below) require the project to obtain third-party verification of the value of tenants? assets, income, and deductions as part of the re-certification processes. If third-party verification is not available, the project is required to utilize alternative documentation to verify tenants? assets, income, and deductions and document the reason why third-party verification was not available. 24 CFR 5.659 (d): Owner responsibility for verification. Except as allowed under paragraph (e), the owner must obtain and document in the family file third-party verification of the following factors, or must document in the file why third-party verification was not available: (1) Reported family annual income; (2) the value of assets; (3) expenses related to deductions from annual income; and (4) other factors that affect the determination of adjusted income. 24 CFR 5.659 (e): Verification of assets. For a family with net assets equal to or less than $5,000, an owner may accept, for purposes of recertification of income, a family's declaration that it has net assets equal to or less than $5,000 without taking additional steps to verify the accuracy of the declaration, except as required in paragraph (e)(2) of this section. (1) The declaration must state the amount of income the family expects to receive from such assets; this amount must be included in the family's income. (2) An owner must obtain third-party verification of all family assets every three years.HUD Handbook 4350.3: Occupancy Requirements of Subsidized Multifamily Housing Programs - Section 5-12 Verification Requirements - Paragraph B - Timeframe for Conducting Verifications: Owners conduct verifications at the following three times: 1. Owners must verify income, assets, expenses, and deductions and all eligibility requirements prior to move-in. 2. Owners must verify each family?s income, assets, expenses, and deductions as part of the annual recertification process. Refer to Chapter 7, Section 1 for information on annual recertifications. 3. Owners must verify changes in income, allowances, or family characteristics reported between annual recertifications. Refer to Chapter 7, Section 2 for information on interim recertifications. Effect: The project did not comply with HUD?s requirement to obtain third-party verification of tenant assets, income and deductions as part of the move in certification process. Cause: Procedures in place to ensure that third-party verification was obtained prior to the tenant eligibility move in were not followed. Questioned Cost: None

Corrective Action Plan

Ingleside Homes, Inc.?s responsible staff will properly verify all income, assets, and deductions. The responsible staff will document attempts to obtain third-party verification and keep this record in the resident?s file. Responsible Person(s): Facility HUD Bookkeeper Anticipated Completion Date: Completion of the documented attempts for third-party verification for the 5 residents noted in the finding will be accomplished by April 30, 2023.

Categories

HUD Housing Programs Eligibility Equipment & Real Property Management Internal Control / Segregation of Duties

Other Findings in this Audit

  • 612021 2022-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.157 Supportive Housing for the Elderly $5.68M
14.195 Section 8 Housing Assistance Payments Program $3.69M
21.027 Coronavirus State and Local Fiscal Recovery Funds $159,177
14.191 Multifamily Housing Service Coordinators $111,012
14.218 Community Development Block Grants/entitlement Grants $13,482