MARY LEE FLAGSHIPNon-Profit

Condition: Mary Lee Flagship (the Organization) did not consistently use the Enterprise Income Verification (EIV) system, as required by HUD. We noted four tenants file did not contain a timely run EIV report. Client had obtained and used third-party documentation of income and assets for the initial certifications/recertifications. Criteria: Per 24 CFR § 5.233 Mandated Use of HUD’s Enterprise Income Verification (EIV) System, entities administering assistance under Section 202 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 8013) must use HUD’s EIV system in its entirety as a third-party source to verify tenant employment and income information during mandatory reexaminations or recertifications of family composition and income. Cause: Inadequate monitoring of internal controls in place over use of EIV reports in recertifications and inadequate internal monitoring of tenant files noted during the current year. Effect: Failure to use the EIV system in its entirety may result in the imposition of sanctions and/or the assessment of disallowed costs associated with any resulting incorrect subsidy or tenant rent calculations, or both. Questioned costs: $-0- Context: We noted no timely run EIV reports in examination of four tenant files on two new tenants and two continuing tenants. Repeat Finding: Yes Recommendation: We recommend a second person in the housing office review and certify in writing that the documentation for each initial certification or recertification is complete and in compliance with HUD documentation requirements prior to admitting a new tenant and prior to each continuing tenant’s annual recertification date going forward. Additionally, we recommend that an outside housing consultant conduct a review of all current tenant files to ensure completeness and compliance with HUD documentation requirements within the next 30 days and corrective actions, as needed, by the Organization occur as soon as possible thereafter. Reporting Views of Responsible Officials: Management agrees with the finding and commits to following the provided recommendations.

Condition: The Organization did not comply with the HUD requirement to obtain one continuing tenant’s signatures on consent forms and verification documents during the recertification process. Criteria: Per 24 CFR § 5.230, each member of the family of an assistance applicant or participant who is at least 18 years of age, and each family head and spouse regardless of age, shall sign one or more consent forms. Per 24 CFR § 5.232, In accordance with the provisions governing the program involved, if the assistance applicant or participant, or any member of the assistance applicant's or participant's family, does not sign and submit the consent form as required in § 5.230, then: (1) The processing entity shall deny assistance to and admission of an assistance applicant; (2) Assistance to, and the tenancy of, a participant may be terminated. Cause: Failure to follow internal control procedures during recertification of this tenant. Effect: Failure to follow these requirements may result in the imposition of sanctions and/or the assessment of disallowed costs. Questioned costs: $5,952 Context: We examined four tenant files on two new tenants and two continuing tenants out of a population of 24 residents in this project in fiscal year 2024 for this compliance attribute and this condition was noted in one of the selected continuing tenants. Repeat Finding: No Recommendation: We recommend a second person in the housing office review and certify in writing that the documentation for each initial certification or recertification is complete and in compliance with HUD documentation requirements prior to admitting a new tenant and prior to each continuing tenant’s annual recertification date going forward. Additionally, we recommend that an outside housing consultant conduct a review of all current tenant files to ensure completeness and compliance with HUD documentation requirements within the next 30 days and corrective actions to include termination of assistance to and tenancy of any noncompliant tenants as soon as possible thereafter. Reporting Views of Responsible Officials: Management agrees with the finding and commits to following the provided recommendations.

Finding 2023-01: Condition: Mary Lee Flagship (the Organization) did not consistently use the Enterprise Income Verification (EIV) system, as required by HUD. We noted two tenants file did not contain a timely run EIV report. Client had obtained and used third-party documentation of income and assets for the initial certification/recertifications. Criteria: Per 24 CFR 5.233 Mandated Use of HUD’s Enterprise Income Verification (EIV) System, entities administering assistance under Section 202 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 8013) must use HUD’s EIV system in its entirety as a third-party source to verify tenant employment and income information during mandatory reexaminations or recertifications of family composition and income. Cause: Inconsistent monitoring of internal controls in place over use of EIV reports in recertifications and inadequate internal monitoring of tenant files noted during the current year. Effect: Failure to use the EIV system in its entirety may result in the imposition of sanctions and/or the assessment of disallowed costs associated with any resulting incorrect subsidy or tenant rent calculations, or both. Questioned costs: $-0- Context: We examined three tenant files of which one file contained relevant EIV report and two files did not contain a timely run EIV report. Repeat Finding: Yes Recommendation: We recommend that the Organization require any personnel performing initial certifications or recertifications to undergo HUD 202 training regarding the intake process prior to performing any initial certifications or recertifications. Additionally, we recommend a second person in the housing office review the tenant file to ensure completeness and compliance with HUD 202 documentation requirements prior to signing the new/amended lease agreement. Reporting Views of Responsible Officials: Management agrees with the finding and will begin an independent review of each tenant file to include examination of EIV reports to determine if there are any discrepancies and take corrective measures. Leasing office staff will undergo additional HUD 202 training regarding the initial and recertification process. Additionally, management is staffing the property with a dedicated property manager that will be responsible for reviewing tenant files for compliance with HUD procedures including uses of EIV reports and ensure supporting documentation is maintained in each tenant’s file prior to signing new or amended leases.

Condition: Mary Lee Flagship (the Organization) did not consistently used the Enterprise Income Verification (EIV) system, as required by HUD. We noted three tenants file did not contain a timely run EIV report. Client had obtained and used third-party documentation of income and assets for the initial certification/recertifications. Criteria: Per 24 CFR 5.233 Mandated Use of HUD?s Enterprise Income Verification (EIV) System, entities administering assistance under Section 811 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 8013) must use HUD?s EIV system in its entirety as a third-party source to verify tenant employment and income information during mandatory reexaminations or recertifications of family composition and income. Cause: Inconsistent monitoring of internal controls in place over use of EIV reports in recertifications and inadequate internal monitoring of tenant files noted during the current year. Effect: Failure to use the EIV system in its entirety may result in the imposition of sanctions and/or the assessment of disallowed costs associated with any resulting incorrect subsidy or tenant rent calculations, or both. Questioned costs: $-0- Context: We examined five tenant files of which two files contained relevant EIV reports and three files did not contain a timely run EIV report. Repeat Finding: No Recommendation: We recommend that an independent review of each tenant file to include examination of EIV reports be conducted at initial or recertification by a person not directly involved in the intake or recertification process. Any discrepancies noted in this internal file review could then be corrected in a timely manner. Management should ensure that internal control procedures over use of EIV reports in initial and recertification processes are strictly followed and required EIV reports and other supporting documentation is maintained in each tenant?s file.

Condition: The Organization did not obtain signed Forms 9887 - Notice and Consent for the Release of Information or 9887A - Applicant's/Tenant's Consent to the Release of Information and instead used an internally generated verification form in initial certification/recertifications that did not contain the language required by HUD for such consent forms. Criteria: Per HUD Handbook 4350.3, a tenant must sign/submit required consent and verification forms (Form HUD-9887 and Form HUD-9887-A) prior to recertification. Any owner-generated consent forms must include certain language required by HUD as detailed in the HUD Handbook 4350.3. Cause: Organizational personnel did not review the HUD Handbook 4350.3 prior to changing their process from obtaining signed Forms 9887 and 9887-A to using their internally generated consent form. Effect: Failure to use specified forms results in potential legal claims of improper access to tenant?s personal identifiable information, income data and asset information. Questioned costs: $-0- Context: We examined five tenant files which all contained a signed, internally generated verification form that did not contain the language required by HUD for such consent forms. Repeat Finding: No Recommendation: We recommend that the Organization discontinue use of the internally generated verification form immediately and obtain signed HUD Forms 9887 and 9887-A from tenant and family members prior to accessing EIV or obtaining written third-party verification of income. We also recommend an independent review of each tenant file to include examination of signed HUD Forms 9887 and 9887-A be conducted at initial or recertification by a person not directly involved in the intake or recertification process. Any discrepancies noted in this internal file review could then be corrected in a timely manner. Management should ensure that internal control procedures over use of signed, authorized consent and verification forms initial and recertification processes are strictly followed and required signed HUD Forms 9887 and 9887-A, EIV reports and other supporting documentation is maintained in each tenant?s file.

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