CEDAR LAKE - MONTICELLO INCNon-Profit

Finding No. 2023-001: CFDA 14.181 – Section 811 Capital Advance and Section 811 Project Rental Assistance - Significant Deficiency: Criteria: The Corporation’s tenant files are required to be maintained in accordance with HUD guidelines to ensure eligibility and accurate calculations of tenant rent and rental subsidy. Statement of Condition: The tenant files are incomplete and lacking required documentation indicating verification of eligibility and resident rights. Form 50059 to calculate tenant rent and reported to HUD was not completed timely in accordance with HUD guidelines. In addition, one file requested for review related to a move-out could not be located. Cause of Condition: The Corporation’s internal controls to ensure tenant files are complete and that the calculation of tenant rent is completed timely, and that the required documentation for tenant eligibility screening is maintained, were not effective. Effect of Condition: In the tenant file sampled, documentation was missing to include 1) EIV Existing Tenant Search; 2) acknowledgement of receipt of the Resident Rights and Responsibilities brochure, EIV & You brochure and Fact Sheet on How Your Rent is Determined; 3) EIV reports for income verification or social security validation; 4) verification of student status and age of tenant; 5) evidence of criminal background and sex offender registry checks and 6) initial notice sent at time of certification. It was also noted that the Form 50059 and lease agreement were not completed and signed before move-in and were actually completed almost a month late. Due to relocation of the management office, former tenant files were moved to storage and upon inquiry, the move-out file selected for testing could not be located within storage. Recommendation: The design of the current controls should be reviewed to ensure tenant files are accurate, complete, and orderly and include a checklist of required documentation and retention guidelines. Procedures should also be established to ensure that the Form 50059 are completed timely and properly executed. The documentation in the files should support the data used in preparing the Form 50059 and calculating the tenant’s share of the rent. Views of Responsible Officials: Management agrees with the findings and will implement procedures to ensure tenant files are maintained in accordance with HUD guidelines.

Department of Housing and Urban Development Finding No. 2020-001: CFDA 14.181- Section 811 Capital Advance and Section 811 Project Rental Assistance Criteria: The Corporation must make monthly required deposits into the Reserve for Replacements account. Statement of Condition: During the year, a deposit for one month in the amount of $361.33 was omitted from the Reserve for Replacements account. Cause of Condition: At the time the automatic electronic transfer between the operating account and the Reserve for Replacements account was scheduled, the operating account was lacking sufficient funds to complete the transaction. There are no procedures established to ensure transfers are completed and corrected if necessary. Effect of Condition: The required annual deposits were short by one month of $361.33. Recommendation: The Corporation should review and consider its process over the Reserve for Replacement to ensure that all deposits are made timely. The omitted deposit should be made as soon as possible. Views of Responsible Officials: Management understands and accepts the recommendation as outlined in the Corrective Action Plan and the deposit was made on March 1, 2021 making the Reserve for Replacements account whole.

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