Finding 509371 (2024-001)

Section III – Federal Award Findings and Questioned Costs Finding No. 2024-001 – Compliance over Eligibility Requirements to Perform Annual Recertification Finding # 2024-001 Assistance Listing # 14.157 Program (or Cluster) Name Section 202 Supportive Housing for Elderly Persons Compliance Requirement Eligibility Criteria or specific requirement: The U.S. Department of Housing and Urban Development (HUD) regulations require the annual income recertification of tenants to be performed by the anniversary date of when the tenants were initially qualified at the move-in. The annual income recertification includes the reexamination of tenant income level, completing HUD Form 50059 and making appropriate adjustments to the tenant portion payment and the project rental assistance payment. Condition: When reperforming the tenant eligibility verification procedures, the auditor noted that annual recertifications selected for testing, including but not limited to supporting income certifications, verification of income, lease addenda, and unit inspections, were not available and might have not been performed during the year under audit. Context: The auditor noted that requested documents for the two (2) of the three (3) sample annual recertifications were not available for review. Questioned costs: None. Effect: Jubilee was not deemed properly complied with the HUD eligibility compliance requirements. It also caused a delay in the determination of the adjustment between the tenant portion payment and the project rental assistance payment, or increased the risk of potential suspension of the project rental assistance payment for the relevant units. Cause: During the third quarter of 2023, it became evident that the onsite property manager was struggling to meet critical deadlines, largely due to ongoing health concerns which resulted in significant time away from work. As a result of these challenges, performance began to fall below the required standards. In response, progressive disciplinary action was taken to address job performance, including delinquent recertifications. During this process, senior management staff believed that the employee was capable and willing to correct the performance issues as a tenured employee with a record of more than nine years of successful service. Unfortunately, performance did not improve, and it became necessary to separate employment. Repeat finding from prior year: No. Recommendation: Jubilee should develop an operating plan in order to ensure that recertifications are performed timely each year, despite staff shortages. Views of responsible officials and planned corrective actions: Senior management now recognizes that additional resources must be utilized during periods of progressive discipline with a frontline employee, to ensure the timely completion of recertifications. A new manager was hired for Jubilee through an internal transfer and this individual is in the process of catching up on all needed paperwork as a top priority. The John Stewart Company’s Compliance Department will perform a 100% file audit upon completion of the outstanding certifications. Additionally, the assigned Regional Manager is performing monthly spot checks on files and reviewing a recertification status report for monitoring of progress and ongoing compliance. Senior management has implemented a roving support team that will assist managers who are struggling to meet their deadlines, ensuring compliance and helping to maintain performance standards moving forward. The roving support team was established in 2024, partly due to our commitment to ensure HUD deadlines are met. Senior management has also implemented monthly monitoring at the corporate office by The John Stewart Company’s Property Management Document Information Specialist and HUD Secure Coordinator. This individual is monitoring monthly submissions to TRACs by all properties, and flagging underperformance on annual recertifications in addition to other HUD key performance metrics. The report of data from TRACs is circulated to Regional Managers, Directors, and senior leadership every month. Whether sampling was statistically valid: Sampling was not statistically valid for this finding.