Finding Text
Finding 2022-002 Type of Finding: Material weakness in internal control over compliance and noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirement: Eligibility Criteria: In accordance with Afiya Apartments, Inc.?s regulatory agreement with HUD for its HUD Section 811 Capital Advance and HUD Section 811 Project Rental Assistance Contract (PRAC), Afiya Apartments, Inc. 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: Afiya Apartments, Inc. did not perform recertifications for all tenants within the timeframe specified by HUD. We noted significant delays in tenant recertification procedures. 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: No. Context: We selected a sample of 4 tenants from a population of 16. 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 one instance 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.