Finding 39336 (2022-001)

Material Weakness Repeat Finding
Requirement
E
Questioned Costs
-
Year
2022
Accepted
2022-11-02
Audit: 45776
Organization: Building Dreams, Inc. (KY)

AI Summary

  • Core Issue: Tenant files are not maintained according to HUD guidelines, leading to inaccurate rent calculations.
  • Impacted Requirements: Compliance with HUD regulations for tenant file management and accurate reporting on Form 50059.
  • Recommended Follow-Up: Review and improve internal controls, ensure all tenant files are complete, and promptly report any discrepancies to HUD.

Finding Text

Finding 2022-001: FALN 14.181 ? Supportive Housing for Persons with Disabilities Criteria: The Project?s tenant files are required to be maintained in accordance with HUD guidelines to ensure accurate calculations of tenant rent and rental subsidy. Statement of Condition: Certain tenant rent calculated on the Form 50059 and reported to HUD is inaccurate due to tenant files not being maintained in accordance with HUD guidelines. Cause of Condition: The Project?s internal controls to ensure tenant files are complete and that the calculation of tenant rent is accurate were not effective. Effect of Condition: Of the two (out of eight) tenant files sampled for the Project, we noted discrepancies in one tenant file between the information reported on the Form 50059 and the information in the file for the income and medical expenses to be reported for the tenant. This resulted in the tenant overpaying their share of the monthly rent by $125 per month. Identification of Repeat Finding: This finding is a repeat of finding 2021-001 noted in the audit for the year ended June 30, 2021. Recommendation: The design of the current controls should be reviewed to ensure tenant files are complete and accurate. The information in the files should support the data used in preparing the Form 50059 and calculating the corresponding tenant?s share of the rent. In addition, management should review all files and report any discrepancies to HUD in a timely manner. Views of Responsible Officials: Management agrees with the findings and will implement procedures to ensure tenant files are maintained in accordance with HUD guidelines.

Corrective Action Plan

Department of Housing and Urban Development Building Dreams, Inc. respectfully submits the following corrective action plan for the year ended June 30, 2022. Name and address of the independent public accounting firm: Deming, Malone, Livesay & Ostroff, PSC, 9300 Shelbyville Road, Suite 1100, Louisville, Kentucky 40222. Audit period: July 1, 2021 through June 30, 2022. The findings from the June 30, 2022 schedule of findings and questioned costs is discussed below. The findings are numbered consistently with the number assigned in the schedule. Findings ? Federal Awards Finding 2022-001: FALN14.181 ? Supportive Housing for Persons with Disabilities Recommendation: The design of the current controls should be reviewed to ensure tenant files are accurate and complete. The information in the files should support the data used in preparing the Form 50059 and calculating the corresponding tenant?s share of the rent. The information in files should also support that the proper screening procedures have been completed. In addition, management should review all files and report any discrepancies to HUD in a timely manner. Action Taken: The management of Building Dreams, Inc. accepts the recommendation of Deming, Malone, Livesay & Ostroff and, accordingly, management will review all tenant files and report any discrepancies to HUD and make the necessary adjustments to tenant rent and rental subsidy calculations on the 50059 forms as soon as possible. If the United States Department of Housing and Urban Development has questions regarding this plan, please call Ms. Jenifer Frommeyer at 502-459-4647. Sincerely yours, Jenifer Frommeyer Executive Director Building Dreams, Inc.

Categories

HUD Housing Programs Internal Control / Segregation of Duties

Other Findings in this Audit

  • 615778 2022-001
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
14.181 Supportive Housing for Persons with Disabilities $712,825
14.239 Home Investment Partnerships Program $426,995