Finding 2023-001 – Special Tests and Provisions – Material Weakness and Material Instances of Noncompliance
Federal program information:
Federal Agency/Pass-through Entity: U.S. Department of Housing and Urban Development/ Office of Community Planning and Development
Program Name/Cluster: Continuum of Care Program
ALN number: 14.267
Award number: WA0101L0T012115, WA0500Y0T012100, WA0575Y0T012100
Award period: 11/1/2022 – 11/30/2025
Criteria: Federal regulations and grant and contract conditions specify where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units taking into account relevant features. In addition, the rents may not exceed rents currently being charged by the same owner for comparable unassisted units, and the portion of rents paid with grant funds may not exceed HUD-determined fair market rents.
Condition and context: Each of the 9 landlords/property managers who received rental payments from the Organization during the fiscal year ended December 31, 2023 were selected for reasonable rental rate testing. For 5 landlords/property managers, a signed certification letter from the landlord/property manager was provided stating the locations and each month’s rent payments received from the Organization were residential units with rent comparable to other units operated by the landlords/property managers and the Organization was not asked to pay more in rent than other tenants in comparable units. For 4 landlords/property managers, no documentation supporting compliance with federal reasonable rental rates was provided.
Questioned costs: Known questioned costs were $43,236 of rent paid to landlords/property managers that it was unknown whether rent was over or under charged. Likely questioned costs are believed to be above the questioned cost threshold and program materiality for this program.
Cause: Policies and procedures have not been implemented properly to ensure compliance with federal reasonable rental rates compliance requirements. The Organization did not have an effective control system in place to ensure that documentation was retained to support the reasonableness of the rents being paid to landlords/property managers to house the Organization’s clients.
Repeat finding: This is a repeat finding from the prior year. See prior year finding 2022-001.
Effect: The Organization may be out of compliance with special tests and provisions requirements.
Recommendation: The Organization should improve the controls over the reasonable rental rates compliance requirements, which includes the documentation, review, and approval of reasonableness of all rental rates charged by landlords to house the Organization’s clients.
Management’s Response: Management concurs with this finding. See the corrective action plan.
Finding 2023-001 – Special Tests and Provisions – Material Weakness and Material Instances of Noncompliance
Federal program information:
Federal Agency/Pass-through Entity: U.S. Department of Housing and Urban Development/ Office of Community Planning and Development
Program Name/Cluster: Continuum of Care Program
ALN number: 14.267
Award number: WA0101L0T012115, WA0500Y0T012100, WA0575Y0T012100
Award period: 11/1/2022 – 11/30/2025
Criteria: Federal regulations and grant and contract conditions specify where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units taking into account relevant features. In addition, the rents may not exceed rents currently being charged by the same owner for comparable unassisted units, and the portion of rents paid with grant funds may not exceed HUD-determined fair market rents.
Condition and context: Each of the 9 landlords/property managers who received rental payments from the Organization during the fiscal year ended December 31, 2023 were selected for reasonable rental rate testing. For 5 landlords/property managers, a signed certification letter from the landlord/property manager was provided stating the locations and each month’s rent payments received from the Organization were residential units with rent comparable to other units operated by the landlords/property managers and the Organization was not asked to pay more in rent than other tenants in comparable units. For 4 landlords/property managers, no documentation supporting compliance with federal reasonable rental rates was provided.
Questioned costs: Known questioned costs were $43,236 of rent paid to landlords/property managers that it was unknown whether rent was over or under charged. Likely questioned costs are believed to be above the questioned cost threshold and program materiality for this program.
Cause: Policies and procedures have not been implemented properly to ensure compliance with federal reasonable rental rates compliance requirements. The Organization did not have an effective control system in place to ensure that documentation was retained to support the reasonableness of the rents being paid to landlords/property managers to house the Organization’s clients.
Repeat finding: This is a repeat finding from the prior year. See prior year finding 2022-001.
Effect: The Organization may be out of compliance with special tests and provisions requirements.
Recommendation: The Organization should improve the controls over the reasonable rental rates compliance requirements, which includes the documentation, review, and approval of reasonableness of all rental rates charged by landlords to house the Organization’s clients.
Management’s Response: Management concurs with this finding. See the corrective action plan.
Finding 2023-001 – Special Tests and Provisions – Material Weakness and Material Instances of Noncompliance
Federal program information:
Federal Agency/Pass-through Entity: U.S. Department of Housing and Urban Development/ Office of Community Planning and Development
Program Name/Cluster: Continuum of Care Program
ALN number: 14.267
Award number: WA0101L0T012115, WA0500Y0T012100, WA0575Y0T012100
Award period: 11/1/2022 – 11/30/2025
Criteria: Federal regulations and grant and contract conditions specify where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units taking into account relevant features. In addition, the rents may not exceed rents currently being charged by the same owner for comparable unassisted units, and the portion of rents paid with grant funds may not exceed HUD-determined fair market rents.
Condition and context: Each of the 9 landlords/property managers who received rental payments from the Organization during the fiscal year ended December 31, 2023 were selected for reasonable rental rate testing. For 5 landlords/property managers, a signed certification letter from the landlord/property manager was provided stating the locations and each month’s rent payments received from the Organization were residential units with rent comparable to other units operated by the landlords/property managers and the Organization was not asked to pay more in rent than other tenants in comparable units. For 4 landlords/property managers, no documentation supporting compliance with federal reasonable rental rates was provided.
Questioned costs: Known questioned costs were $43,236 of rent paid to landlords/property managers that it was unknown whether rent was over or under charged. Likely questioned costs are believed to be above the questioned cost threshold and program materiality for this program.
Cause: Policies and procedures have not been implemented properly to ensure compliance with federal reasonable rental rates compliance requirements. The Organization did not have an effective control system in place to ensure that documentation was retained to support the reasonableness of the rents being paid to landlords/property managers to house the Organization’s clients.
Repeat finding: This is a repeat finding from the prior year. See prior year finding 2022-001.
Effect: The Organization may be out of compliance with special tests and provisions requirements.
Recommendation: The Organization should improve the controls over the reasonable rental rates compliance requirements, which includes the documentation, review, and approval of reasonableness of all rental rates charged by landlords to house the Organization’s clients.
Management’s Response: Management concurs with this finding. See the corrective action plan.
Finding 2023-001 – Special Tests and Provisions – Material Weakness and Material Instances of Noncompliance
Federal program information:
Federal Agency/Pass-through Entity: U.S. Department of Housing and Urban Development/ Office of Community Planning and Development
Program Name/Cluster: Continuum of Care Program
ALN number: 14.267
Award number: WA0101L0T012115, WA0500Y0T012100, WA0575Y0T012100
Award period: 11/1/2022 – 11/30/2025
Criteria: Federal regulations and grant and contract conditions specify where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units taking into account relevant features. In addition, the rents may not exceed rents currently being charged by the same owner for comparable unassisted units, and the portion of rents paid with grant funds may not exceed HUD-determined fair market rents.
Condition and context: Each of the 9 landlords/property managers who received rental payments from the Organization during the fiscal year ended December 31, 2023 were selected for reasonable rental rate testing. For 5 landlords/property managers, a signed certification letter from the landlord/property manager was provided stating the locations and each month’s rent payments received from the Organization were residential units with rent comparable to other units operated by the landlords/property managers and the Organization was not asked to pay more in rent than other tenants in comparable units. For 4 landlords/property managers, no documentation supporting compliance with federal reasonable rental rates was provided.
Questioned costs: Known questioned costs were $43,236 of rent paid to landlords/property managers that it was unknown whether rent was over or under charged. Likely questioned costs are believed to be above the questioned cost threshold and program materiality for this program.
Cause: Policies and procedures have not been implemented properly to ensure compliance with federal reasonable rental rates compliance requirements. The Organization did not have an effective control system in place to ensure that documentation was retained to support the reasonableness of the rents being paid to landlords/property managers to house the Organization’s clients.
Repeat finding: This is a repeat finding from the prior year. See prior year finding 2022-001.
Effect: The Organization may be out of compliance with special tests and provisions requirements.
Recommendation: The Organization should improve the controls over the reasonable rental rates compliance requirements, which includes the documentation, review, and approval of reasonableness of all rental rates charged by landlords to house the Organization’s clients.
Management’s Response: Management concurs with this finding. See the corrective action plan.