Finding 502086 (2024-001)

Material Weakness Repeat Finding
Requirement
E
Questioned Costs
-
Year
2024
Accepted
2024-10-09
Audit: 324275
Organization: Afiya Apartments INC (OR)
Auditor: Jones & Roth PC

AI Summary

  • Core Issue: Afiya Apartments, Inc. failed to recertify tenants on time, leading to a material weakness in compliance with HUD requirements.
  • Impacted Requirements: The eligibility compliance requirement under HUD's Section 811 program mandates annual tenant recertifications.
  • Recommended Follow-Up: Management should enhance internal controls to ensure timely tenant recertifications and prevent future non-compliance.

Finding Text

Finding 2024-001 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirement: Eligibility Criteria: In accordance with Afiya Apartments, Inc.’s regulatory agreement with HUD for its HUD Section 811 Capital Advance and HUD Section 811 Project Rental Assistance Contract (PRAC), Afiya Apartments, Inc. is required to annually recertify its tenants. It is the responsibility of management to design and implement internal controls to ensure the tenants are recertified within the applicable timeframe required by HUD. Condition: Afiya Apartments, Inc. did not perform recertifications for all tenants within the timeframe specified by HUD. We noted significant delays in tenant recertification procedures. Cause: There were not properly designed or implemented internal controls to ensure the tenant recertifications were performed in the timeframe required by HUD. Effect: The effect is material non-compliance with the terms of the HUD program listed above. Questioned Costs: None. Repeat Finding: Yes, see Finding 2023-001. Context: We noted from review of the Forms HUD-52670 Schedule of Tenant Assistance Payments Due and other client prepared schedules, several tenants had not been recertified during the fiscal year as required. From the total 16 tenants at June 30, 2024, the annual recertifications for 9 tenants were past due. We selected a sample of 7 tenants from a population of 16 for eligibility testing. The sample was not a statistically valid sample. Our sample of 7 tenants did not reveal any exceptions. Recommendation: We recommend management review the current internal control procedures and implement additional procedures to ensure annual recertifications are performed as required by HUD. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.

Corrective Action Plan

Management’s Response and Planned Corrective Actions: 1. The name of the contact person(s) responsible for the corrective action a. Dana Petersen, Sr. Director of Housing, ShelterCare b. Amanda Smith, Property Development Manager, ShelterCare 2. The corrective action planned: a. Pinehurst Management was overseeing property through 4/30/23. ShelterCare was assigned as new managing agent 5/1/2023. It took ShelterCare’s property management department some time to hire an Assistant Property Manager and for the department to determine just how they would tackle the number of recertifications that were delinquent. b. ShelterCare is working to ensure that the onsite manager will be trained in HUD compliance. Training started in October 2023 and continues. c. We are currently prioritizing recertifications by oldest first and getting the property recertifications back on track. d. Monthly review of TRACS to ensure recertifications are being completed in a timely manner. 3. The anticipated completion date: a. New onsite HUD compliance training was started in October 2023 and is ongoing. Monthly review of TRACS reports was implemented in October of 2023. b. Recertifications are expected to be completed by December 31, 2024.

Categories

HUD Housing Programs Eligibility Material Weakness Internal Control / Segregation of Duties

Other Findings in this Audit

  • 502087 2024-002
    Significant Deficiency Repeat
  • 502088 2024-003
    Material Weakness
  • 1078528 2024-001
    Material Weakness Repeat
  • 1078529 2024-002
    Significant Deficiency Repeat
  • 1078530 2024-003
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
14.181 Supportive Housing for Persons with Disabilities $2.06M