New Hope Housing, Inc.

Finding #2025-002 – Significant Deficiency and Other Noncompliance. Federal Awards: U. S. Department of Housing and Urban Development, Passed through City of Houston, Assistance Listing #: 14.239, Contract number: 4600016100, 4600008347, 4600015112, 4600013379, 460000866, 4600009893, 4600010749, and 03-0774/FC55324, Contract period: Grant agreement expires 15-30 years from the date of completion. U. S. Department of Housing and Urban Development, Passed through Texas Department of Housing and Community Affairs, Assistance Listing #: 14.239, Contract number: 92230123418 and 1000084, Contract period: Grant agreement expires 20-30 years from the date of completion. Criteria: Management of New Hope Housing, Inc. and Affiliates is responsible for establishing and maintaining an effective system of internal control over tenant rent files. This system must ensure that monthly rental income in the property management system is in agreement with the base rent terms in the signed lease agreements and amendments. Condition and context: In a sample of 40 tenant files, we noted four instances where the monthly rental rate recorded on the property’s rent roll did not match the rate authorized in the signed lease contract. Cause: There are no consistent processes in place for a secondary review of the rental rates in the lease agreement to those actually invoiced in the property management system. Effect: Potential understatement or overstatement of scheduled rental revenue and errors of rent charged to tenants. Recommendation: Implement a secondary review of rental agreements and rates per the property management system. Consider periodic reconciliation compliance procedures that compares a sample of active rent rolls directly against executed lease files. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.

Finding #2024-001 – Significant Deficiency and Other Noncompliance. Federal Award: U. S. Department of Housing and Urban Development, Passed through Texas Department of Housing and Community Affairs, Assistance Listing #: 14.239, Contract number: 92230123418, Contract period: 07/14/23 – Grant agreement expires 30 years from the date of completion. Criteria: Contracts for the construction of affordable housing with 12 or more HOME-assisted units are required to comply with the Wage Rate Requirements (42 USC 12836). All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by Federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (40 USC 3141-3144, 3146, and 3147). Condition and context: Our testing included a sample of 5 of the 31 subcontractors for two months of the year for timely submission of weekly certified payroll reports. Two of the five subcontractors did not submit certified payroll reports in a timely manner. Cause: One of the subcontractors was delayed in making payroll payments and submitted the required reports late, while the other subcontractor had login issues to the portal system for uploading the reports and uploaded them late. The subcontractors were not being regularly monitored for compliance. Effect: The weekly certified payroll reports were not submitted timely. Recommendation: Provide additional oversight of the submission of certified payroll reports by subcontractors to ensure compliance. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.