ALAW Ogden Gardens, Inc.Non-Profit

Criteria: Under Tenant Application, Eligibility, and Recertification requirements from HUD, management is required to submit monthly HAP vouchers by the tenth day of preceding month for which the request is being made. Condition: Management has been unable to submit monthly HAP vouchers by the required timeline due to significant contract rent increases at the Entity during the year. This required manual review of the HAP vouchers from HUD to be complete prior to being able to submit future HAP vouchers. The following Entity had late HAP vouchers during the year ended June 30, 2024: ALAW Ogden Gardens, Inc. – 10 vouchers late. Cause: Management could not submit HAP vouchers after the contract rent increases since the HAP vouchers required a manual review from HUD. Once the HAP voucher was manually reviewed by HUD, management could begin submitting the previously missed monthly HAP vouchers. Effect or potential effect: A delay in submitting monthly HAP vouchers prevents the Entity from being in compliance with the requirements from HUD. Recommendation: Management should communicate with HUD to determine a plan to get the monthly HAP voucher submissions current. Questioned costs: None identified. Views of responsible officials: For a period of 8 years, management had not sought budget-based rent increases (BBRI) for the Section 811 properties. This caused the properties to not have sufficient cash to operate at breakeven basis. Management addressed the systemic issues that prevented properties from receiving these important increases. For FY24, Management received substantial rent increases from HUD. Because of the percentage increase in this one year, HUD practices require that vouchers need to be reviewed by hand and HUD will only take vouchers one month at a time. This resulted in the late vouchers that you see above. Because we sought a regular annual BBRI in FY25, the late vouchering will not happen again.

Criteria: The Capital Advance Regulatory Agreement requires management to complete monthly deposits of a prescribed amount to the reserves for replacement account. Condition: Monthly deposits to the reserves for replacement account were not completed for the following Entity during the year ended June 30, 2024: ALAW Ogden Gardens, Inc. - four of twelve monthly deposits not completed. Cause: Management did not believe there was adequate operating cash on hand to facilitate the monthly deposits. Effect or potential effect: Not completing monthly deposits prevents the Entity from being in compliance with the requirements from HUD. Recommendation: Management should communicate with HUD to waive monthly deposits to the reserves for replacement account when there is insufficient operating cash to facilitate the deposit. Documentation of this communication should be maintained. Questioned costs: None identified. Views of responsible officials: Subsequent to report issuance management has addressed all shortfalls identified.

Criteria: Management should have an internal control system in place to ensure compliance requirements of the HUD program are completed and reviewed in a timely manner. Condition: Management did not timely update recertifications and requests to HUD for tenant assistance payments for six of the ten tenants sampled. Five tenant assistance payments were subsequently adjusted on the HAP voucher. Cause: A lack of oversight and review as a result of resource constraints over internal controls over recertifications resulted in delays to timely completion of recertification requirements. Effect or potential effect: Lack of oversight of regulatory requirements could increase the risk of loss of funding and default on the HUD loan. Recommendation: Management should provide adequate resources to ensure internal control over compliance is maintained. Staff should receive necessary compliance training, and those charged with governance review compliance periodically during the year. Questioned costs: None identified. Views of responsible officials: Management is reviewing the internal controls over compliance of all HUD programs to ensure appropriate procedures are in place. Additionally, Management will be closely monitoring the timeliness of recertification to ensure accuracy in the HAP voucher.