Finding Text
Finding 2022-002 - Tenant Eligibility - Material Weakness Repeat of prior year finding 2021-002 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, 2021 - June 30, 2022 Pass-Through Entity: Not applicable Criteria: 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: None reported Condition/Context: We identified a lack of timeliness of completion and review of tenant files for eligibility requirements. Two of two tenant files reviewed had no recertification completed during the year and no extenuating circumstances documented as to why. In addition, one of two files was missing proper move-out documentation of the inspection and no return of the security deposit. Our population included all tenants. Our sample included two tenant files. This was not a statistically valid sample. 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, 2022. Cause: Lack of management oversight due to turnover. Recommendation: The Corporation should have procedures in place to ensure tenant recertifications are completed timely and extenuating circumstances formally documented in the TRACS system and on HUD form 50059. Management should ensure move-out inspections are completed and tenant deposits are returned timely or documented as to why they are maintained.