Finding Text
Finding 2022-002 Type of Finding: Material weakness in internal control over compliance and noncompliance. Federal program: HUD Section 223(f) Insured Mortgage (Assistance Listing #14.134) Compliance Requirement: Eligibility Criteria: In accordance with DH, Incorporated?s regulatory agreement with HUD for its HUD Section 223(f) Insured Mortgage and HUD Section 8 Housing Assistance Payments contract, DH, Incorporated 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: DH, Incorporated did not perform recertifications for all tenants within the timeframe specified by HUD. 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 2021-003. Context: We selected a sample of 7 tenants from a population of 18. The sample size was determined based upon guidelines provided by the AICPA and was not a statistically valid sample. We performed procedures to determine whether the annual tenant recertification occurred within the timeframe specified by HUD. We noted two instances in our sample in which tenant recertifications had not been completed timely and were not completed several months after the required timeframe as specified by HUD. There were also indications of additional late tenant recertifications for tenants that fell outside of our sample. 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.