Finding 59768 (2022-001)

Significant Deficiency
Requirement
E
Questioned Costs
-
Year
2022
Accepted
2023-02-16

AI Summary

  • Core Issue: There are significant deficiencies in internal controls over tenant file documentation, leading to improper calculations and missing required documentation.
  • Impacted Requirements: Compliance with HUD guidelines for tenant assistance payments, including verification of income and timely disbursement of funds.
  • Recommended Follow-Up: Strengthen internal controls, implement a documented review process for tenant files, and ensure all supporting documentation is maintained and calculations are accurate.

Finding Text

2022-001 ? Eligibility - Tenant File Documentation Finding Type. Immaterial noncompliance; Significant deficiency in internal control over compliance (Eligibility) Federal program U.S. Department of Housing and Urban Development ? Supportive Housing for the Elderly (ALN# 14.157) Criteria. Under Section 202 of the National Housing Act of 1959, Project management is responsible for performing an examination of and obtaining support for items of income, assets, and expenses, for proper calculation of tenant assistance payments of applying residents, and annual recertification and calculation of such information thereafter, and for obtaining signed and properly completed forms. Condition. Out of a sample of 6 tenant files, we noted: 1) Two out of six instances where the resident's cash balance was verified using the ending balance; however, the 6 month average balance should have been used; 2) One out of six instances where the resident's medical expenses were improperly calculated; 3) One out of six instances where the tenant's security deposit and/or prorated rent were not disbursed to them in the required 30 days; 4) One out of six instances where there was no verification of pension income performed on the most recent recertification. Cause. Management does not appear to have sufficient internal control procedures in place to properly implement all of HUD's program requirements. Effect. As a result of this condition, certain tenant files did not contain all required supporting documentation. In addition, employees did not follow HUD guideline procedures, and/or did not properly calculate the tenant subsidy in HUD Form 50059. While there were no significant differences in the amount of subsidies allowed compared to subsidies received, the lack of effective internal controls could lead to future significant noncompliance. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend that management should strengthen their current policies and follow a documented review process for all new and existing resident files and ensure that this review occurs on a timely basis. Further, we recommend that management ensure all proper supporting documentation is maintained in the residents' files, HUD guideline procedures be followed, and tenant subsidies be appropriately calculated. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.

Corrective Action Plan

2022-001 ? Eligibility - Tenant File Documentation Finding Type. Immaterial noncompliance, Significant deficiency in internal controls over compliance (Eligibility) Federal programs U.S. Department of Housing and Urban Development ? Supportive Housing for the Elderly (ALN# 14.157) Condition. Out of a sample of 6 tenant files, it was noted: 1. Two out of six instances where the resident's cash balance was verified using the ending balance; however, the 6-month average balance should have been used; 2. One out of six instances where the resident's medical expenses were improperly calculated; 3. One out of six instances where the tenant's security deposit and/or prorated rent were not disbursed to them in the required 30 days; 4. One out of six instances where there was no verification of pension income performed on the most recent recertification. Effect. As a result of this condition, certain tenant files did not contain all required supporting documentation. In addition, employees did not follow HUD guideline procedures, and/or did not properly calculate the tenant subsidy in HUD Form 50059. While there were no significant differences in the amount of subsidies allowed compared to subsidies received, the lack of effective internal controls could lead to future significant noncompliance. Plan. Management agrees with finding 2022-001. All files are to be inspected in the current fiscal year to ensure compliance with HUD regulations. File maintenance will be competed following each move in and annual recertification. In addition to one-on-one training, the housing administrator has signed up for additional training including a WebEx on annual recertification and a basic EIV course. Additional training sessions are forthcoming. Contact Person Responsible for This Corrective Action: Laura Maisevich, Senior Housing Manager Anticipated completion date: December 31, 2022

Categories

Allowable Costs / Cost Principles Eligibility HUD Housing Programs Significant Deficiency Internal Control / Segregation of Duties

Other Findings in this Audit

  • 59769 2022-001
    Significant Deficiency
  • 636210 2022-001
    Significant Deficiency
  • 636211 2022-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.157 Supportive Housing for the Elderly $356,055