Tuscan Brotherhood Homes IINon-Profit

Finding No. 2024-001 - Eligibility; Section 8 New Construction and Substantial Rehabilitation, Federal Assistance Listing Number 14.182 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 Compliance procedures were not followed regarding tenant security deposit refunds, annual certifications, and the mandatory and timely use of Enterprise Income Verification (EIV) system during annual recertification or initial certification process. Cause Management's policies with respect to income verification and the maintenance of tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Effect or Potential Effect The procedures for income verification 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. This could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Questioned Costs None. Context In connection with our lease file review, we noted the following deficiencies: - 3 out of 16 existing tenants tested did not have the Enterprise Income Verification (EIV) form completed within 120 days, as required by HUD. - 3 out of 16 existing tenants tested did not have the Enterprise Income Verification (EIV) form their tenant file and no other documentation was present that their income was verified. - 1 out of 16 existing tenants tested income reported on HUD Form 50059 did not agree to income verified using the Enterprise Income Verification (EIV). - 10 out of 16 existing tenants tested did not have the annual recertifications done timely. - 1 out of 2 former tenants tested did not have security deposit returned within 30 days of departure, as required by HUD. Identification as a Repeat Funding 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 ensure that tenant's income is properly verified, and tenant lease files are being 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: Completed. Views of Responsible Officials At the time of tenant file review, the current staff was not made aware of where EIV documents were stored in the office. This since has been corrected and the EIV information is now stored in the tenant files. Management has hired a Compliance Manager that monitors and helps the site with any questions to bring all tenants up to date.

Department of Housing and Urban Development Finding No. 2024-002 - Activities Allowed or Unallowed; Mortgage Insurance Rental Housing, Federal Assistance Listing Number 14.134 Criteria In accordance HUD Handbook 4571.3, Section 202 Supportive Housing for the Elderly, loans are not permitted to be made from project cash without prior authorization from HUD. Condition During the year ended December 31, 2024, the project paid payroll expenses in the amount of $4,342 on behalf of an affiliate from project cash without HUD approval. The amount due to the project as of December 31, 2024 is $4,342. Cause Procedures were not in place to ensure that cash disbursements of project funds were limited to project operating costs. Effect or Potential Effect The payment of $4,342 is an unauthorized loan and therefore considered to be questioned costs. Questioned Costs $4,342 Context During 2024, the project paid payroll expenses for another entity from the project’s cash account resulting in a receivable from the other entity in the amount of $4,342. Identification as a Repeat Funding This finding is not a repeat finding. Recommendation Management should immediately reimburse the amount due to the project and establish procedures to ensure payments of this nature are not made in the future. Auditor Noncompliance Code: G - Unauthorized loans from project assets. Finding Resolution Status: Completed Views of Responsible Officials Management reimbursed $4,324 on February 28, 2025 and $18 on May 18, 2025 to the project.

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: The Enterprise Income Verification (EIV) form in the existing tenant's file for 5 out of 15 tenants tested did not have the EIV completed within 120 days, as required by HUD. The Enterprise Income Verification (EIV) form in the existing tenant's file for 1 out of 15 tenants tested did not have documentation in their lease file that their income was verified. The Enterprise Income Verification (EIV) form in the new tenant's file for 1 out of 2 tenants tested did not have documentation in their lease file that their income was verified. Cause Management's policies with respect to income verification and the maintenance of tenant lease files were not consistently applied 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 income verification and the maintenance of tenant lease files 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 None. Context Compliance procedures were not followed regarding the mandatory and timely use of Enterprise Income Verification (EIV) system during annual recertification or initial certification process. Identification as a Repeat Funding This is a repeat finding (see prior year finding number 2022-001). Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that tenant's income is properly verified and tenant lease files are being 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 Management has implemented a monthly compliance file audit that will ensure that EIV’s are pulled and tenant income verified in a timely manner.

Department of Housing and Urban Development Finding No. 2022-001; Section 8 New Construction and Substantial Rehabilitation, Assistance Listing Number 14.182 Statement of Condition In connection with our lease file review, we noted the following deficiencies: The Enterprise Income Verification (EIV) form in the tenant's file for 2 out of 15 tenants tested did not have documentation in their lease file that their income was verified. The procedures applied to a sample of 1 out of 2 tenants tested did not have move out inspections in their lease files. The procedures applied to a sample of 1 out of 15 tenants tested did not have a signed HUD Form 50059 in their lease files. Cause Management's policies with respect to income verification, move out inspections, 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 income verification, move out inspections, and the maintenance of tenant lease files 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. 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. Recommendations Management should establish procedures and monitor compliance with those procedures to insure that tenant's income is properly verified and tenant lease files are being 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: In process Reporting Views of Responsible Officials The Organization agrees with the finding and management will implement and strengthen internal controls over compliance and tenant lease files.

Department of Housing and Urban Development Finding No. 2021-001; Federal Assistance Listing Number #14.157, Supportive Housing for the Elderly; Federal Assistance Listing Number #14.182, Section 8 New Construction and Substantial Rehabilitation Statement of Condition During the year ended December 31, 2021, cash received from project operations in the amount of$64,036 was deposited into another entity's bank account. Cause An administrative oversight in the deposit of receipts caused the amount to be deposited into an incorrect entity's bank account. Effect or Potential Effect The Project funds deposited to another entity's cash account are considered to be questioned costs. Criteria The terms of regulatory agreement and HAP contract prohibit loans from project assets without HUD approval. Questioned Costs $64,036 Recommendations The Project's operating cash account should be reimbursed for this amount. Additionally, the management company should implement procedures to ensure that cash generated from operations are only deposited into the Project's operating cash account. Auditor Noncompliance Code: G - Unauthorized loans from project assets Finding Resolution Status: Resolved Reporting Views of Responsible Officials The Organization agrees with the finding and the auditor?s recommendation was adopted. Subsequently, management has reimbursed the funds in the amount of $64,036 back into the project's operating cash account.

Finding 2019-1 Statement of Condition As of December 31, 2019, management has not fully funded the tenant security deposit cash account. The tenant security deposit cash account was underfunded by $3,718. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to establish and maintain at all times a fully funded separate bank account for tenant security deposits collected. Cause Due to the change of bank accounts and bank scanner deposit issues, the tenant security deposit liability exceeded the tenant security deposit cash account by $3,718 as of December 31, 2019. Since then, management replaced the bank scanner and transferred the funds into the tenant security deposit cash account. Effect or Potential Effect Management did not transfer funds from the operating account to the security deposit cash account in a timely manner leaving the security deposit account without sufficient funds to cover the tenant security liability at December 31, 2019. Recommendations Management should transfer $3,718 from the operating account in order to fully fund the tenant security deposits account. Auditor Noncompliance Code: D - Commingling of funds Reporting Views of Responsible Officials Subsequently, management transferred $3,718 from the operating account to fully fund the tenant security deposit account.

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