Victory Crest, Inc.Non-Profit

Criteria - Eligibility 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: Seven out of seven tenants tested did not utilize the Enterprise Income Verification (EIV) system timely. 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: N/A Context The sample is not considered a statistically valid sample. Identification as a Repeat Finding Finding is a repeat finding of 2022-002. 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: In-process Views of Responsible Officials The onsite team members have received refresher training and have the EIV binder available. They have also set calendar reminders to make sure that EIV reports are pulled in a timely manner. The regional manager will be following up with the onsite staff to make sure they are in compliance.

Criteria - Eligibility 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: 1 out of 7 tenants tested did not utilize the Enterprise Income Verification (EIV) system timely. 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: N/A Context The sample is not considered a statistically valid sample. Identification as a Repeat Finding Not a repeat finding 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: In-process Views of Responsible Officials The onsite team members have received refresher training and have the EIV binder available. They have also set calendar reminders to make sure that EIV reports are pulled in a timely manner. The regional manager will be following up with the onsite staff to make sure they are in compliance.

Criteria - Eligibility Management is responsible for adhering to the EIV Rules of Behavior in accordance with Section 4.1.1 of the EIV Multifamily Program User Manual. Condition During the procedures applied to a sample of seven tenant lease files, we noted the following instances of noncompliance with HUD regulations regarding dissemination of EIV information. One instance where EIV information was provided in electronic format to the independent public accountant was noted. Cause Management company employees failed to follow the policies and procedures which have been established for the proper dissemination of EIV information in accordance with guidelines specified by HUD. Effect or Potential Effect Noncompliance with HUD guidelines could result in tenant personal information being disseminated to unauthorized individuals. Questioned Costs: N/A Identification as a Repeat Finding Not a repeat finding. Recommendation Management should establish additional procedures and monitor compliance with those procedures to ensure proper dissemination of EIV information in accordance with guidelines specified by HUD. Auditor Noncompliance Code: R - Section 8 program administration Finding Resolution Status: In-process Views of Responsible Officials The onsite team members have received refresher training and policies and procedures regarding the handling of EIV reports have been reviewed with the team so that they will remain in compliance so the EIV reports do not leave the property. The regional manager will be following up with the onsite staff to make sure they are in compliance.

Criteria - Eligibility In accordance with HUD program guidelines under which Victory Crest operates, the annual tenant recertification Form 50059 is required to be signed by the tenant prior to the required annual recertification date. Condition In connection with lease file testing, we noted three out of six tenant files did not have annual tenant recertification Form 50059 completed timely. Cause Personnel responsible for tenant recertifications failed to obtain signatures on three of six Form 50059s selected for testing prior to the required annual recertification date. Effect or Potential Effect Noncompliance with HUD guidelines could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Identification as a Repeat Finding Victory Crest has received the same finding for the two previous years which were documented in findings 2020-001 and 2021-001, respectively. Recommendation Victory Crest should ensure that all Form 50059s are signed by the tenant prior to the required annual recertification date. Auditor Noncompliance Code: R - Section 8 program administration Finding Resolution Status: In-process Views of Responsible Officials In 2022 management hired additional oversight staff at the corporate level and changed the procedure for reviewing and approving annual certifications. The new Directors of Operations (along with the Compliance Specialists) are responsible for reviewing the certification process to ensure that certifications are completed timely. In addition, any property that has late certifications consistently are required to submit an Action Plan to the Regional Manager and update weekly on the progress to address the outstanding certifications. Management?s regional team and director of operations are focused on timely completion of certifications and review reports daily to make sure this is on task.

Statement of Condition In connection with lease file testing, we noted five out of six tenant files did not have annual tenant recertification Form 50059 completed timely. Criteria - Eligibility In accordance with HUD program guidelines under which Victory Crest operates, the annual tenant recertification Form 50059 is required to be signed by the tenant prior to the required annual recertification date. Effect Noncompliance with HUD guidelines could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Cause Personnel responsible for tenant recertifications failed to obtain signatures on all Forms 50059 prior to the required annual recertification date. Recommendation Victory Crest should ensure that all Form 50059s are signed by the tenant prior to the required annual recertification date. Auditor Noncompliance Code: Z - Other Finding Resolution Status: Resolved Reporting Views of the Responsible Officials Victory Crest had a turnover in office personnel and the late certifications were addressed by the new staff. The new office staff have been trained in the correct policy and procedures and are being monitored by our Compliance Department to ensure compliance with HUD regulations.

Findings and Questioned Costs - Major Federal Award Program Audit Department of Housing and Urban Development Finding No. 2020-001; CFDA 14.157 ? Supportive Housing for the Elderly Section 2020 Capital Advance (with Project Rental Assistance Contract) Statement of condition In connection with our lease file review, we noted the following deficiencies: One out of six units selected for lease testing did not have a move-in inspection performed. Three out of six units selected for lease testing did not perform the required tenant annual recertifications (HUD-50059) timely. One out of six units selected for testing did not have a tenant signature on the annual recertification (HUD-50059). Criteria - Eligibility Tenant lease files are required to be maintained and eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Effect The procedures for maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Cause Management's policies with respect to the maintenance of lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, were not consistently followed. Recommendation Management should establish procedures and monitor compliance with those procedures to ensure that 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: Z - Other Finding Resolution Status: Resolved Reporting Views of Responsible Officials Management obtained the signature for the annual HUD-50059. The missing move-in inspection was for a move-in from April of 2013. The site staff has recently inspected the unit for due diligence and a copy of that inspection has been put in the resident's file. The three late certifications were completed and signed within 30 days of the certification date. The property was short staffed during the timeframe that the findings occurred (except for the move-in inspection from 2013). In December 2019, an assistant was hired and trained on all HUD regulations. The Compliance Department will continue to monitor the files and provide training and support as needed.

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