Audit 335320

Condition: The Authority failed to substantiate the rate difference incurred in the current fiscal year. Criteria: Per 24 CFR section 982.517, the Authority must review utility rate data for each utility category each year and must adjust its utility allowance schedule if there has been a rate change of 10% or more for a utility category or fuel type since the last time the utility allowance schedule was revised. Context: While reviewing the utility allowance studies to determine whether there was a 10% or more change in utility costs, we were unable to gather backup documentation from the PHA to analyze the utility costs. Effect: Due to the inability to determine the amount of change in utility costs, the PHA may have implemented inaccurate utility allowances which may have resulted in incorrect HAP payments. Recommendation: We recommend that the Authority list the required procedure on their annual calendar to verify that the utility rate data is analyzed, documented, and change as necessary. Documentation must include the comparison of the rates of the established utility rates to the current utility rates and the percent of change. Response: We will establish processes to gather utility information to be used to support our conclusion as to whether utility allowances have varied by more than 10%.

2024-003 Contract Rent Reasonableness Condition: The Authority failed to substantiate that contract rents are reasonable for new admissions. Criteria: Per 24 CFR section 982.4, the Authority must determine and the document that the rent to an owner is reasonable at the initial leasing. Context: From our sample 13 new admissions, six files indicated that rent was not considered to be reasonable compared to the existing data in the software system. Effect: Without the ability to verify that the contract rent amounts are reasonable, a potential exists for HAP payments to be higher than permitted. Recommendation: We recommend that the Authority contact their software provider to determine whether there is an option to update the contract rent amounts to permit a better rent reasonable comparison. Otherwise, the Authority will need to review their procedures to determine a new approach to determine that new contract rents are reasonable. Response: All HAP payments are considered reasonable. We will implement processes to ensure that current rent data is entered into the software system so that rent reasonableness can be calculated correctly.

Condition: The Authority failed to substantiate the rate difference incurred in the current fiscal year. Criteria: Per 24 CFR section 982.517, the Authority must review utility rate data for each utility category each year and must adjust its utility allowance schedule if there has been a rate change of 10% or more for a utility category or fuel type since the last time the utility allowance schedule was revised. Context: While reviewing the utility allowance studies to determine whether there was a 10% or more change in utility costs, we were unable to gather backup documentation from the PHA to analyze the utility costs. Effect: Due to the inability to determine the amount of change in utility costs, the PHA may have implemented inaccurate utility allowances which may have resulted in incorrect HAP payments. Recommendation: We recommend that the Authority list the required procedure on their annual calendar to verify that the utility rate data is analyzed, documented, and change as necessary. Documentation must include the comparison of the rates of the established utility rates to the current utility rates and the percent of change. Response: We will establish processes to gather utility information to be used to support our conclusion as to whether utility allowances have varied by more than 10%.

2024-003 Contract Rent Reasonableness Condition: The Authority failed to substantiate that contract rents are reasonable for new admissions. Criteria: Per 24 CFR section 982.4, the Authority must determine and the document that the rent to an owner is reasonable at the initial leasing. Context: From our sample 13 new admissions, six files indicated that rent was not considered to be reasonable compared to the existing data in the software system. Effect: Without the ability to verify that the contract rent amounts are reasonable, a potential exists for HAP payments to be higher than permitted. Recommendation: We recommend that the Authority contact their software provider to determine whether there is an option to update the contract rent amounts to permit a better rent reasonable comparison. Otherwise, the Authority will need to review their procedures to determine a new approach to determine that new contract rents are reasonable. Response: All HAP payments are considered reasonable. We will implement processes to ensure that current rent data is entered into the software system so that rent reasonableness can be calculated correctly.