Finding Text
Finding 2023-001: Tenant Eligibility - Material Weakness - Material Noncompliance
Repeat of prior year findings: 2021-002 and 2022-002
Assistance Listing Number: 14.181
Federal Agency: U.S. Department of Housing and Urban Development
Federal Award Number: Not applicable
Federal Award Year: July 1, 2022 - June 30, 2023
Pass-Through Entity: Not applicable
Criteria: Section 811 of the National Affordable Housing Act provides funding for housing for persons with
disabilities. To qualify as disabled, the household must consist of at least one person who is an adult (18
years or older) with a disability, two or more persons with disabilities living together, or a surviving
household member under certain circumstances (42 USC 1437a(b)(3); 24 CFR section 891.505).
Residents must also qualify as very low-income households to be eligible (42 USC 8013). Eligibility is only
determined at move-in or at initial certification except in circumstances whereas family composition
changes after initial occupancy a determination must be made as to whether the remaining member of the
household will be eligible to receive assistance. Eligibility requirements are found in HUD’s regulations at
24 CFR Part 5.
The Corporation is responsible for annually reexamining incomes of households occupying assisted units
and make appropriate adjustments to the tenant payment and the project rental assistance payment (24
CFR section 891.410). Assistance applicants shall submit signed consent forms upon initial application
and at reexamination (24 CFR section 5.230).
Questioned Cost: Not determinable.
Condition/Context: During our risk assessment procedures and follow-up on the prior year findings, we
noted that the tenant eligibility issues that were identified in the prior years persisted and worsened. The
issues affecting tenant eligibility include missing documentation to support the eligibility requirements and
tenant recertification. As a result, we did not select a sample from the population for testing.
Effect: Insufficient documentation of tenant eligibility and late recertifications. Similar issues over tenant
recertification have caused delays in obtaining renewal of the Corporation’s PRAC contract. As a result of
not renewing the PRAC contract timely there were operating cash flow deficiencies resulting in significant
growth in related party balances due to the parent entity and unpaid subsidies at June 30, 2023.
Cause: Lack of management oversight due to turnover. As a result, management has not been able to
implement their planned corrective actions in a timely fashion.
Recommendation: The Corporation should have procedures in place to ensure documentation is
maintained accordance with its requirements.