GILBERT STRAUB PLAZA, INC.

FINDING: 2023-001 Eligibility Federal Agency: U.S. Department of Housing and Urban Development Program: Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects – Section 223(f)/207 ALN 14.155. Condition: Six tenant files were selected for audit of the certification of the proper calculation of tenant rent. The test found that for two tenants, the submitted Form HUD-50059 was not properly completed. The first tenant’s calculation included incorrect income that should have been reported at a higher amount. The second tenant’s submitted Form HUD-50059 included incorrect medical expenses that should have been reported at a higher amount. The property did not have internal controls in place for review of the third-party tenant rent calculations. Criteria: Management is responsible for establishing internal controls to ensure the accuracy of yearly completion and submission of the HUD-50059 of households occupying assisted units and making appropriate adjustments to the tenant payment and the project rental assistance payment (24 CFR section 891.410). Cause: Gilbert Straub Plaza, Inc. (Property) did not have internal controls in place for review of the third-party tenant rent calculations. Effect: The Property’s rent for the two tenants tested was improperly allocated between the tenant portion and subsidy portion. Questioned Costs: Unknown Recommendation: The Property should have internal controls in place to review Form HUD-50059 to ensure all documentation used to calculate the tenant rent and assistance payment is supported and properly calculated. Views of Responsible Official and Planned Corrective Action: Management agrees with finding; see separate corrective action plan.