Casa Otonal Housing Corporation

Finding No. 2025-002 Mortgage Insurance-Rental Housing, Assistance Listing 14.134 Section 8 Project-Based Cluster, Assistance Listing 14.195 Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition In connection with our lease file review, we noted the following deficiencies: For one out of one new tenants tested, the Project did not maintain evidence in the lease file that the Enterprise Income Verification ("EIV") system was utilized within 90 days of the tenant's initial certification date of April 1, 2025. For two out of ten existing tenants tested, the Project did not maintain evidence in the lease files that the EIV system was utilized within 120 days of the tenant's annual certification dates of August 1, 2024. For one out of one new tenants tested, the Project did not maintain evidence in the lease file that a move-in inspection was performed. Cause Management's policies with respect to the determination of tenant eligibility and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs were not consistently followed. Effect or Potential Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Questioned Costs $0 Context We noted 3 of the 11 required Enterprise Income Verification (EIV) reports were not completed within HUD’s required timeframes. 2 were not performed by the prior management agent and 1 was not performed by the current management agent. We noted 1 out of 1 move-in inspection was not performed by the prior management agent. Identification as a Repeat Finding This is not a repeat finding. Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Auditor Noncompliance Code: R - Section 8 program administration Finding Resolution Status: In process Views of Responsible Officials Casa Otonal Housing Corporation agrees with the finding and the auditor's recommendations. During the transition of a new site from prior management company, the Property Manager, Regional Manager, and Director of Compliance must collaborate closely to conduct a thorough review of all tenant files. This coordinated effort helps ensure accuracy, identify any discrepancies early, and supports a more effective and efficient use of the EIV system for tenant file testing.

Federal Assistance Listing #14.134 Mortgage Insurance - Rental Housing Federal Assistance Listing #14.195 Section 8 Housing Assistance Payments Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition During the procedures applied to a sample of 2 new tenant lease files, we noted 1 instance where the tenant tested did not have the tenant and subsidy rent portions calculated correctly. Cause Management's policies with respect to the determination of tenant eligibility and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs were not consistently followed. Effect or Potential Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Questioned Costs $261 Context A sample of 2 new tenant lease files. We noted 1 instance where the tenant tested did not have the tenant and subsidy rent portions calculated correctly. Identification as a Repeat Finding This finding is a repeat finding (See prior year finding number: 2023-001). Recommendation Management should establish procedures and monitor compliance with those procedures to insure that tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Auditor Noncompliance Code: R - Section 8 program administration Finding Resolution Status: Resolved Views of Responsible Officials Management agrees with the finding. Documentation was submitted showing that the 50059 was corrected to include accurate information. Management will monitor compliance with its established procedures to ensure tenant eligibility is correctly determined and that the tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs.

Finding No. 2023-001 Federal Assistance Listing #14.134 Mortgage Insurance - Rental Housing Federal Assistance Listing #14.195 Section 8 Housing Assistance Payments Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Condition During the procedures applied to a sample of 2 new tenant lease files, we noted 1 instance where the tenant tested did not have the tenant and subsidy rent portions calculated correctly. Cause Management's policies with respect to the determination of tenant security deposits and eligibility and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs were not consistently followed. Effect or Potential Effect The procedures for determining tenant security deposits and eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Questioned Costs $216 - $27 discrepancy for 8 months of the fiscal year Recommendation Management should establish procedures and monitor compliance with those procedures to insure that tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Auditor Noncompliance Code: R - Section 8 program administration Finding Resolution Status: Resolved Views of Responsible Officials Management agrees with the finding. Documentation was submitted showing that the 50059 was corrected to include accurate information. Management will monitor compliance with its established procedures to ensure tenant eligibility is correctly determined and that the tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs.

Finding No. 2022-001 (repeats 2009-1) Federal Assistance Listing #14.134 Mortgage Insurance - Rental Housing Federal Assistance Listing #14.195 Section 8 Housing Assistance Payments Criteria The Organization is restricted by the Regulatory Agreement as to the use of Project funds, which prohibits the loan of Project funds to an affiliate. Condition As a result of the HUD OIG audit dated August 9, 2009, HUD quantified ineligible costs that are required to be repaid by Casa Otonal, Inc., an affiliate of Casa Otonal Housing Corporation. The Organization is working with both the local HUD office and Casa Otonal, Inc. to work out the repayment as Casa Otonal, Inc. has limited assets available for repayment. Cause Prior year ineligible costs resulted in a loan to an affiliate. Effect or Potential Effect Prior year ineligible costs resulted in a loan to an affiliate. Questioned Costs None Context There were no current year questioned costs or unauthorized loans. Recommendation We recommend that the Board of Directors continues to work with HUD to resolve the outstanding balance. Auditor Noncompliance Code Z ? Other ? prior year unauthorized loans from Project funds Finding Resolution Status: In process Views of Responsible Officials and Planned Corrective Actions The management agent is not involved in the resolution of this finding. The Board of Directors is working directly with HUD as the finding occurred prior to engaging the current management company.

Criteria In accordance with the regulatory agreement, residual receipts reserve deposits should be made within 90 days of year end. Condition During the year ended June 30, 2022, management did not make the required residual receipts reserve deposit in the amount of $107,888 within 90 days of year end, as required by the HUD regulatory agreement. The residual receipts amount was deposited on October 5, 2021. Cause Controls are not in place to ensure that required residual receipts reserve deposits are made timely. Effect or Potential Effect The Organization is not in compliance with the requirements of the regulatory agreement. Questioned Costs None Context There error was made in the surplus cash required to be deposited within 90 days of year end. Recommendation Management should establish internal controls and procedures to ensure that required residual receipts reserve deposits are made timely. Auditor Noncompliance Code: B - Failure to make required residual receipts deposits Views of Responsible Officials and Planned Corrective Actions While the residual receipts reserve deposit was made within 3 business days of receipt of the final audit, it exceeded the HUD 90-day requirement. In the future, management will calculate and make an estimated deposit so that the deposit can be made timely and then make any necessary adjustment once the final audit has been issued.

CFDA Number 14.134 Mortgage Insurance - Rental Housing CFDA Number 14.195 Section 8 Housing Assistance Payments Program S3800-010 Finding 2021-001 (repeats 2009-1) S3800-015 Type of Finding: Federal Award Finding S3800-020 Criteria: The Organization is restricted by the Regulatory Agreement as to the use of Project funds, which prohibits the loan of Project funds to an affiliate. S3800-030 Condition: As a result of the HUD OIG audit dated August 9, 2009, HUD quantified ineligible costs that are required to be repaid by Casa Otonal, Inc., an affiliate of Casa Otonal Housing Corporation. The Organization is working with both the local HUD office and Casa Otonal, Inc. to work out the repayment as Casa Otonal, Inc. has limited assets available for repayment. S3800-035 Auditor Noncompliance Code: G - Unauthorized loans from Project funds S3800-040 Questioned Cost: None S3800-050 Context: There were no current year questioned costs or unauthorized loans. S3800-032 Cause: Prior year ineligible costs resulted in a loan to an affiliate. S3800-033 Effect: Prior year ineligible costs resulted in a loan to an affiliate. S3800-080 Recommendation: We recommend that the Board of Directors continues to work with HUD to resolve the outstanding balance. S3800-090 Auditor's Summary: There were no current year questioned costs or unauthorized loans. S3800-045 Views of Responsible Officials and Planned Corrective Actions: The management agent is not involved in the resolution of this finding. The Board of Directors is working directly with HUD as the finding occurred prior to engaging the current management company.

CFDA Number 14.134 Mortgage Insurance - Rental Housing CFDA Number 14.195 Section 8 Housing Assistance Payments Program S3800-010 Finding 2020-001 (repeats 2009-1) S3800-015 Type of Finding: Federal Award Finding S3800-020 Criteria: The Organization is restricted by the Regulatory Agreement as to the use of Project funds, which prohibits the loan of Project funds to an affiliate. S3800-030 Condition: As a result of the HUD OIG audit dated August 9, 2009, HUD quantified ineligible costs that are required to be repaid by Casa Otonal, Inc., an affiliate of Casa Otonal Housing Corporation. The Organization is working with both the local HUD office and Casa Otonal, Inc. to work out the repayment as Casa Otonal, Inc. has limited assets available for repayment. S3800-035 Auditor Noncompliance Code: G - Unauthorized loans from Project funds S3800-040 Questioned Cost: None S3800-050 Context: There were no current year questioned costs or unauthorized loans. S3800-060 Effect: Prior year ineligible costs resulted in a loan to an affiliate. S3800-070 Cause: Prior year ineligible costs resulted in a loan to an affiliate. S3800-080 Recommendation: We recommend that the Board of Directors continues to work with HUD to resolve the outstanding balance. S3800-090 Auditor's Summary: There were no current year questioned costs or unauthorized loans. S3800-080 Views of Responsible Officials and Planned Corrective Actions: The management agent is not involved in the resolution of this finding. The Board of Directors is working directly with HUD as the finding occurred prior to engaging the current management company.

CFDA Number 14.134 Mortgage Insurance ? Rental Housing CFDA Number 14.195 Section 8 Housing Assistance S3800-010 Finding 2018-001 (repeats 2009-1) S3800-015 Type of Finding: Federal Award Finding S3800-020 Criteria: The Organization is restricted by the regulatory agreement as to the use of Project funds, which prohibits the loan of Project funds to an affiliate. S3800-030 Condition: As a result of the HUD OIG audit dated August 9, 2009, HUD quantified ineligible costs that are required to be repaid by Casa Otonal, Inc., an affiliate of Casa Otonal Housing Corporation. The Organization is working with both the local HUD office and Casa Otonal, Inc. to workout the repayment as Casa Otonal, Inc. has limited assets available for repayment. S3800-035 Auditor Non compliance Code: G - Unauthorized loans from Project funds S3800-040 Questioned Cost: None S3800-050 Context: There were no current year questioned costs or unauthorized loans. S3800-060 Effect: Prior year ineligible costs resulted in a loan to an affiliate. S3800-070 Cause: Prior year ineligible costs resulted in a loan to an affiliate. S3800-080 Recommendation: We recommend that the Board of Directors continues to work with HUD to resolve the outstanding balance. S3800-090 Auditor's Summary: There were no current year questioned costs or unauthorized loans. S3800-080 Views of Responsible Officials and Planned Corrective Actions: The management agent is not involved in the resolution of this finding. The Board of Directors is working directly with HUD as the finding occurred prior to engaging the current management company.