DEVELOPMENTAL DISABILITIES CENTER d.b.a. IMAGINE!

Assistance Listing Number, Federal Agency, and Program Name: 14.181, U.S. Department of Housing and Urban Development, Section 811 Project Rental Assistance Contract.

Federal Award Identification Number and year: N/A

Pass-through entity: N/A

Finding type: Significant deficiency

Repeat finding: No

Criteria or specific requirement: Internal controls should exist to ensure adequate documentation to support eligibility determinations.

Condition: HUD Form 50059 is filed electronically with HUD and per the HUD Handbook 4350.3, Form 50059 is to be printed, signed by the tenant and owner, and kept on file by the owner for each month the owner receives assistance payments. When the tenant’s income increases or decreases by $200 or more per month, an interim recalculation is to be performed.

Questioned costs: N/A

If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported: N/A

Identification of how Questioned Cost were Computed: N/A

Context: Imagine! had a total of 6 tenants during the fiscal year ended June 30, 2025. The HUD Form 50059 was signed by two of the tenants but not signed by the owner and the HUD Form 50059 was not signed by the tenant or the owner for the other 4 tenants. One tenant had an increase in income of more than $200 and no interim recertification was performed.

Cause: Internal controls were not adequately followed.

Effect: Forms provided for testing were not properly signed as required by HUD. In addition, recertification was not properly performed as required by HUD.

Recommendation: We recommend that the Organization review its internal controls related to HUD Form 50059 and revise procedures to ensure the Organization is following the HUD Handbook 4350.3 requirements.

Views of responsible officials and planned corrective action: Management agrees with the finding. Imagine! brought in a HUD consultant to assist with HUD training, compliance and processes. Imagine! has put in place proper workflows to ensure Form 50059s are signed by the tenant and owner going forward.

Assistance Listing Number, Federal Agency, and Program Name: 14.181, U.S. Department of Housing and Urban Development, Section 811 Project Rental Assistance Contract.

Federal Award Identification Number and year: N/A

Pass-through entity: N/A

Finding type: Significant deficiency

Repeat finding: No

Criteria or specific requirement: Internal controls should exist that comply with the guidance of the HUD Handbook 4350.3 related to leases and that ensure signed leases and lease amendments are available for inspection.

Condition: Per the HUD Handbook 4350.3, leases are to be signed by the tenant and owner and include the attachment of certain forms. When a tenant recertification is performed, amendments to the lease are prepared after the recertification and the amendments are signed by both the tenant and owner. The name of the HUD Project is to be listed in the lease.

Questioned costs: N/A

If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported: N/A

Identification of how questioned costs were computed: N/A

Context: Only three of the six total tenants had a signed lease. The rest of the tenant leases were either not signed by both the tenant and owner or there was no lease provided. Not all of the required forms were attached to the lease. The HUD approved mandatory meals program was not provided.

Cause: Internal controls were not adequately followed.

Effect: Leases and lease amendments were not properly signed and required forms were not attached to the lease as required by HUD.

Recommendation: We recommend that the Organization review its internal controls related to leases and revise procedures to ensure the Organization is following the HUD Handbook 4350.3 requirements.

Views of responsible officials and planned corrective action: Management agrees with the finding. Imagine! brought in a HUD consultant to assist with HUD training, compliance and processes. Imagine! has put in place proper workflows to ensure leases are signed by the tenants going forward.

Assistance Listing Number, Federal Agency, and Program Name: 14.181, U.S. Department of Housing and Urban Development, Section 811 Project Rental Assistance Contract.

Federal Award Identification Number and year: N/A

Pass-through entity: N/A

Finding type: Significant deficiency

Repeat finding: No

Criteria or specific requirement: Internal controls should exist to ensure adequate support is maintained for disbursements.

Condition: All disbursements need either an approved invoice or credit card receipt for the amount charged to the grant.

Questioned costs: Questioned costs were below the $25,000 threshold.

If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported: N/A

Identification of how questioned costs were computed: N/A

Context: Of the 42 disbursements tested, there were 2 credit card charges for which no supporting receipts could be provided. The total of all disbursements tested was $30,227 and the missing receipts totaled $1,666. The total population of disbursements was $118,317. The calculated projected error was $6,521 which was determined by dividing the missing receipt total by the population tested total, multiplied by the total disbursements available for testing.

Cause: Internal controls were not adequately followed.

Effect: Cost may not be necessary, reasonable, or allowable per grant guidelines.

Recommendation: We recommend that the Organization review its internal controls related to disbursements to ensure all invoices or credit card receipts are maintained.

Views of responsible officials and planned corrective action: Management agrees with the finding. Imagine! will send out a communication to all employees reviewing the current internal control process that requires receipts and/or invoices from vendors to be attached to credit card disbursements. Employees who do not abide by the process are subject to losing credit card privileges.