Finding 525078 (2024-001)

Finding 2024-001 Program: Supportive Housing for Persons with Disabilities Federal Financial Assistance Listing: 14.181 Federal Grantor: Department of Housing and Urban Development Compliance Requirement: Eligibility Type of Finding: Material Weakness and Non-compliance Criteria: 24 CFR section 891.410 states that the owner 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. Assistance applicants shall submit signed consent forms upon initial application and at reexamination. Condition: The employee responsible for maintaining the documentation in the tenant files was terminated in December 2024 due to an allegation that the employee was falsifying the documentation in the tenant files. Management removed all questionable documentation from the tenant files, re-certified any affected tenants and obtained the required documentation for the tenant files prior to the conclusion of the October 31, 2024 audit. The testing of the updated tenant files noted no noncompliance related to eligibility documentation and no rent adjustments related to any of the affected recertifications. Cause: The Project's procedures did not consistently ensure that tenant files contained the required documentation supporting tenant eligibility. Effect: The tenant files did not contain the required documentation supporting tenant eligibility at the time of the move-in or recertification. The tenant files were updated with the required documentation subsequent to year-end and prior to the conclusion of the audit. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of 4 out of 17 tenants were selected for testing. Repeat Finding from Prior Year: No Recommendation: We recommend that management modify and strengthen its current policies and procedures to ensure that eligibility verification procedures are occurring and properly documented. Views of Responsible Officials and Planned Corrective Actions: See Separate Corrective Action Plan.