Audit of the Massachusetts Housing Finance Agency Objectives, Scope, and Methodology

An overview of the purpose and process of auditing the Massachusetts Housing Finance Agency.

Overview

In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has conducted a performance audit of certain activities of the Massachusetts Housing Finance Agency (MassHousing) for the period July 1, 2022 through June 30, 2024.

We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Below is a list of our audit objectives, indicating each question we intended our audit to answer; the conclusion we reached regarding each objective; and, if applicable, where each objective is discussed in the audit findings.

Objective	Conclusion
Did MassHousing conduct management and occupancy reviews (MORs) for properties financed by the US Department of Housing and Urban Development (HUD) in accordance Section 880.612 of Title 24 of the Code of Federal Regulations (CFR) and Sections 6-9, 6-12, 6-13, and 6-15 of Chapter 6, REV-1, of HUD handbook Multifamily Asset Management and Project Servicing (4350.1)?	Yes
Did MassHousing conduct asset management reviews (AMRs) for properties that it financed in accordance with Sections 1, 6–8, and 10 of MassHousing’s “Asset Management Review Guidelines”?	Yes
Did MassHousing monitor the availability of 3% Priority Program units and notify state referral agencies responsible for placing eligible applicants in accordance with Section 4 of the “Massachusetts 3% Priority Program Operations Manual”?	Yes; see Other Matters

To accomplish our objectives, we gained an understanding of the MassHousing internal control environment relevant to our objectives by reviewing applicable policies and procedures and interviewing officials at MassHousing. We evaluated the design and implementation of the internal controls related to our audit objectives. We also tested the operating effectiveness of controls, which included testing whether HUD approved the MORs scheduled to be completed by MassHousing on a monthly basis and whether the portfolio manager reviewed and approved the AMR reports prepared by the asset manager during the audit period.

To obtain sufficient, appropriate evidence to address our audit objectives, we performed the audit procedures described below.

MORs

To determine whether MassHousing conducted MORs for properties financed by HUD in accordance with 24 CFR 880.612 and Sections 6-9, 6-12, 6-13, and 6-15 of Chapter 6, REV-1, of HUD handbook Multifamily Asset Management and Project Servicing (4350.1), we selected a random, nonstatistical⁹ sample of 40 property developments from a population of 591 for our testing.

For each of the 40 property developments in our sample, we verified that an MOR was performed on the scheduled date that was approved by HUD. We compared the date that the MOR report was issued and the date of the on-site review to determine whether the report was issued within 30 days of the first day of the on-site review. For MOR reports with unsatisfactory or below-average ratings, we determined whether the asset manager reported them to the HUD project manager and/or referred them to the Departmental Enforcement Center. For MOR reports that contained a deficiency, we determined whether the asset manager received a response from the property manager within 30 days of the MOR reports. Further, we determined whether the asset manager updated the Integrated Real Estate Management System with completion dates of any corrective actions and MOR closure dates.

We did not identify any exceptions in our testing. Therefore, we concluded that, during the audit period, MassHousing conducted MORs for the properties financed by HUD in accordance with 24 CFR 880.612 and Sections 6-9; 6-12; 6-13; and 6-15 of Chapter 6, REV-1, of HUD handbook Multifamily Asset Management and Project Servicing (4350.1).

AMRs

To determine whether MassHousing conducted AMRs for properties that it financed in accordance with Sections 1, 6–8, and 10 of its “Asset Management Review Guidelines,” we selected a random, nonstatistical sample of 40 property developments from a population of 407 for our testing.

For each of the 40 property developments in our sample, we verified that the asset manager performed an AMR annually during the audit period. We compared the date that the AMR report was issued and the date of the site visit to determine whether the AMR report was issued within 30 days of the first day of the site visit. For AMR reports with unsatisfactory ratings, we determined whether the identified issues and the required corrective actions had been addressed.

We did not identify any exceptions in our testing. Therefore, we concluded that, during the audit period, MassHousing conducted AMRs for properties it financed in accordance with Sections 1, 6–8, and 10 of its “Asset Management Review Guidelines.”

3% Priority Program

To determine whether MassHousing monitored the availability of 3% Priority Program units and notified state referral agencies that were responsible for placing eligible applicants in accordance with Section 4 of the “Massachusetts 3% Priority Program Operations Manual,” we took the actions described below.

We selected a random, nonstatistical sample of 20 property developments from a population of 68 for our testing. For each of the 20 property developments in our sample, we determined whether MassHousing maintained an inventory of 3% Priority Program units. We determined whether the property manager maintained the list of available units in the MassAccess Housing Registry and whether MassHousing shared the list of available units with Executive Office of Health and Human Services contacts on a quarterly basis. In addition, we reviewed the AMR reports and, for the property developments in the 3% Priority Program with vacant units, we determined whether MassHousing provided corrective actions and whether the property developments complied with these corrective actions. See Other Matters for additional information.

We used nonstatistical sampling methods for testing and, therefore, did not project the results of our testing to any populations. 

Data Reliability Assessment

To determine the reliability of the list of properties that were subject to MORs that MassHousing provided us, we interviewed MassHousing management who were responsible for the source data. Further, we used electronic spreadsheet functionality to identify hidden cells and rows, duplicate records, and blank fields, and noted no exceptions. To determine the completeness and accuracy of the list, we selected a random sample of 20 properties from the list and compared the development names and property numbers from this list against the mortgage notes. Additionally, we reconciled the list that MassHousing provided us to the management occupancy work plan approved by HUD.

To determine the reliability of the list of properties subject to AMRs provided by MassHousing, we interviewed MassHousing management who were responsible for the source data. Further, we used electronic spreadsheet functionality to identify hidden cells and rows, duplicate records, and blank fields and noted no exceptions. To determine the completeness and accuracy of the list, we selected a random sample of 20 properties from the list and compared the development names and property numbers from this list against the mortgage notes. Additionally, we reconciled this list provided by MassHousing to the list of property developments reported in MassHousing’s annual financial report.

To determine the reliability of the list of development properties under the 3% Priority Program that MassHousing provided to us, we interviewed MassHousing management who were responsible for the source data. Further, we used electronic spreadsheet functionality to identify hidden cells and rows, duplicate records, and blank fields and noted no exceptions. To determine the completeness and accuracy of the list, we selected a random sample of 20 properties from the list and compared the development names and property numbers from the 3% Priority Program list against regulatory or ownership agreements. Additionally, we selected random samples of 20 regulatory or ownership agreements and compared the same information to the 3% Priority Program list that MassHousing provided to us.

Based on the results of the data reliability assessment procedures described above, we determined that the information we obtained was sufficiently reliable for the purposes of our audit.

Conclusion

Our audit revealed no significant findings that must be reported under generally accepted government auditing standards.

9.    Auditors use nonstatistical sampling to select items for audit testing when a population is very small, the population items are not similar enough, or there are specific items in the population that the auditors want to review.

Date published:	October 30, 2025