When a 227-unit layered Section 8 and Low-Income Housing Tax Credit (LIHTC) property needed to prepare for a potential upcoming HUD Management and Occupancy Review (MOR), the management team knew that a traditional sample audit would not provide enough confidence. Because the property operated under both HUD Section 8 and LIHTC compliance requirements, each household had two compliance files requiring review—one Section 8 file and one LIHTC file. That meant Housing Consultants of America (HCA) was brought onsite to conduct a 100% affordable housing file audit of 454 individual compliance files, reviewing documentation going back one full year.
HCA deployed two experienced affordable housing compliance consultants onsite to perform the comprehensive Section 8 and LIHTC file audit. The team reviewed certifications, annual and interim recertifications, income and asset documentation, verifications, calculations, signatures, required forms, effective dates, and other HUD and LIHTC compliance requirements. Despite the size and complexity of the layered property, HCA completed the 100% file audit and delivered the final compliance audit report in just 2.5 weeks.
The Audit Revealed Significant Compliance Issues
The purpose of a 100% affordable housing file audit is not simply to determine whether a few randomly selected files look good. It provides owners and management companies with a much clearer picture of the property's actual compliance condition.
Of the 454 Section 8 and LIHTC files reviewed, HCA identified:
- 371 files requiring compliance corrections
- 32 files with minor administrative corrections that were unlikely to result in an audit finding, such as missing manager signatures or similar easily correctable documentation issues
- 48 files approved without corrections
- 3 files denied because of significant eligibility concerns
- 2 denied files involved households determined to be over-income (OI) in the year following move-in
- 1 denied file involved an over-income concern at initial move-in
Rather than simply providing the property with a long list of findings, HCA's final affordable housing compliance audit report identified the status of each file and provided direction regarding the corrections needed.
HCA Stayed to Help Fix the Problems
Finding compliance problems was only the first phase of the engagement.
After completing the 100% Section 8 and LIHTC file audit, the same two HCA compliance consultants remained onsite for an additional four weeks to help the property correct the deficiencies identified during the review.
HCA worked alongside the property team to bring resident files back into compliance, obtain and organize missing documentation, address file findings, complete outstanding corrections, organize tenant files into proper order, and ensure documentation was consistent and easy to review.
The consultants also assisted with late and outstanding annual recertifications while helping the onsite staff understand why corrections were necessary and how similar compliance issues could be prevented in the future.
Because the property was preparing for a potential HUD MOR, file organization was also a major priority. HCA helped transform files into clean, consistent, audit-ready records so that documentation could be located and reviewed efficiently during a future Management and Occupancy Review.
The Results
By the conclusion of HCA's onsite engagement, approximately 93% of the identified file corrections had been completed.
The property's files were cleaner, better organized, and substantially closer to audit-ready condition. Outstanding recertification work had been addressed, significant compliance concerns had been identified before an outside reviewer discovered them, and the onsite team had gained a stronger understanding of both Section 8 compliance and LIHTC compliance requirements.
Most importantly, the property team reported feeling more knowledgeable, better prepared, and significantly more confident about its potential upcoming HUD MOR.
Project Results at a Glance
227 affordable housing units
454 Section 8 and LIHTC files reviewed
100% of applicable files audited
2 HCA compliance consultants onsite
2.5 weeks to complete the audit and final report
371 files requiring compliance corrections
32 files requiring only minor administrative corrections
48 files approved without corrections
3 files denied due to significant eligibility concerns
4 additional weeks of onsite correction assistance
93% of identified file corrections completed before HCA's departure
More Than a File Audit—A Compliance Recovery Plan
This project demonstrates why a 100% Section 8 and LIHTC file audit can provide significantly greater insight than reviewing only a small sample of resident files. For this 227-unit layered affordable housing property, reviewing all 454 Section 8 and LIHTC files uncovered hundreds of items that could be addressed proactively rather than waiting for a HUD MOR, LIHTC monitoring review, investor audit, or other regulatory review to identify them.
Housing Consultants of America provides onsite and remote 100% affordable housing file audits, Section 8 file audits, LIHTC file audits, HUD compliance reviews, MOR preparation, recertification backlog recovery, compliance correction assistance, and layered affordable housing compliance consulting nationwide. HCA can review the files, provide a detailed final report, explain how deficiencies should be corrected, and—when additional support is needed—deploy experienced affordable housing compliance consultants to help your team complete the corrections and prepare for its next audit or monitoring review.
Don't wait for the auditor to tell you what's wrong with your files. Find it. Fix it. Be ready.
