2023-003 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization performed rent comparisons to the HUD fair market rent rates when determining if the rent was in excess of the allowable rents. If excess rent was calculated, the excess was used to determine the participants share.
Criteria: Per 24 CFR Section 578.51(g), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents charged for comparable units taking into consideration relevant features. In addition, the portion of rents paid with the grant funds may not exceed HUD-determined fair market rents for the current year.
Context: Of the 10 cases selected for testing using leasing funds, 3 tenant’s rents paid exceeded the published fair market rent allowed for 2023. Of the 10 cases selected for testing using rental assistance funds, 3 tenant’s rents paid exceeded the published fair market rates. The program operated using these calculations throughout the year. Prior to the close of the year, adjustments were made to correct the effect of the incorrect calculations.
Cause: The Organization is properly calculating the excess rent charge, however under the leasing program, the excess must be paid from other than HUD leasing funds.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates throughout most of the year.
Identification of a This is a repeat finding from the immediate previous audit, 2022-001.
Repeat Finding
Recommendation: We recommend that the Organization download and use the COC Program Rent Determination Worksheets for Leasing and Rental Assistance provided by HUD for each recipient. The leasing worksheet will determine the Non COC and leveraged portion of the rent if allowable. We recommend that the completed document be signed and dated by the preparer and the reviewer. Any subsequent changes or updates should be saved as a separate document.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-004 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization used rent calculation worksheets which had not been updated for the published utility rates for the area, or calculated based on HUD’s Utility Allowance Handbook.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: 20 cases from a total population of 39 were selected for testing. The utility rates were out of date on 2 of the worksheets. On 5 worksheets, the utility calculation was noted but the supporting worksheet was not included in the workbook presented for audit. The remaining files had updated utility information.
Cause: The Organization did not update their records and calculation worksheets for the change in the published utility rates or self- calculate the rates based on the Utility Allowance Handbook at the beginning of the year.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates. The calculation of the correct tenant’s portion impacts the balance paid by the Organization and subsequently charged to the HUD grants.
Identification of a This is a repeat finding from the immediate previous audit, 2022-002.
Repeat Finding
Recommendation: We recommend that written procedures addressing internal controls with respect to tracking changes in program requirements be implemented and that procedures to update any worksheets for the effect of those requirements be performed and verified to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-005 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization uses an electronic workbook to assist in the calculation of verified income, rent share of the participant, utility charges and allowances. Our testing of the workbooks found that several input errors were present but not detected and corrected in a reasonable time. There is no evidence of supervisory review in the document.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: Our review of the workbooks found:
10 of the 20 selected did not contain a date prepared or effective date.
A 2-bedroom unit was entered as a 3-bedroom unit, the lease exceeded the Fair Market Rent
An income calculation was not annualized properly, the income from all sources was understated by 25%.
Cause: The Organization uses an excel workbook to track and calculate the information needed to determine rent and utility shares for the participants in the COC programs. The forms are not being completed properly. Information is omitted or entered in the incorrect section of the workbook. There is no evidence in the workbook that it is being verified by someone other than the preparer.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program.
Recommendation: We recommend that written procedures addressing internal controls with respect to preparation of the workbooks be reviewed and should include that verification and approval procedures are evident to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-003 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization performed rent comparisons to the HUD fair market rent rates when determining if the rent was in excess of the allowable rents. If excess rent was calculated, the excess was used to determine the participants share.
Criteria: Per 24 CFR Section 578.51(g), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents charged for comparable units taking into consideration relevant features. In addition, the portion of rents paid with the grant funds may not exceed HUD-determined fair market rents for the current year.
Context: Of the 10 cases selected for testing using leasing funds, 3 tenant’s rents paid exceeded the published fair market rent allowed for 2023. Of the 10 cases selected for testing using rental assistance funds, 3 tenant’s rents paid exceeded the published fair market rates. The program operated using these calculations throughout the year. Prior to the close of the year, adjustments were made to correct the effect of the incorrect calculations.
Cause: The Organization is properly calculating the excess rent charge, however under the leasing program, the excess must be paid from other than HUD leasing funds.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates throughout most of the year.
Identification of a This is a repeat finding from the immediate previous audit, 2022-001.
Repeat Finding
Recommendation: We recommend that the Organization download and use the COC Program Rent Determination Worksheets for Leasing and Rental Assistance provided by HUD for each recipient. The leasing worksheet will determine the Non COC and leveraged portion of the rent if allowable. We recommend that the completed document be signed and dated by the preparer and the reviewer. Any subsequent changes or updates should be saved as a separate document.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-004 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization used rent calculation worksheets which had not been updated for the published utility rates for the area, or calculated based on HUD’s Utility Allowance Handbook.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: 20 cases from a total population of 39 were selected for testing. The utility rates were out of date on 2 of the worksheets. On 5 worksheets, the utility calculation was noted but the supporting worksheet was not included in the workbook presented for audit. The remaining files had updated utility information.
Cause: The Organization did not update their records and calculation worksheets for the change in the published utility rates or self- calculate the rates based on the Utility Allowance Handbook at the beginning of the year.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates. The calculation of the correct tenant’s portion impacts the balance paid by the Organization and subsequently charged to the HUD grants.
Identification of a This is a repeat finding from the immediate previous audit, 2022-002.
Repeat Finding
Recommendation: We recommend that written procedures addressing internal controls with respect to tracking changes in program requirements be implemented and that procedures to update any worksheets for the effect of those requirements be performed and verified to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-005 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization uses an electronic workbook to assist in the calculation of verified income, rent share of the participant, utility charges and allowances. Our testing of the workbooks found that several input errors were present but not detected and corrected in a reasonable time. There is no evidence of supervisory review in the document.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: Our review of the workbooks found:
10 of the 20 selected did not contain a date prepared or effective date.
A 2-bedroom unit was entered as a 3-bedroom unit, the lease exceeded the Fair Market Rent
An income calculation was not annualized properly, the income from all sources was understated by 25%.
Cause: The Organization uses an excel workbook to track and calculate the information needed to determine rent and utility shares for the participants in the COC programs. The forms are not being completed properly. Information is omitted or entered in the incorrect section of the workbook. There is no evidence in the workbook that it is being verified by someone other than the preparer.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program.
Recommendation: We recommend that written procedures addressing internal controls with respect to preparation of the workbooks be reviewed and should include that verification and approval procedures are evident to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-003 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization performed rent comparisons to the HUD fair market rent rates when determining if the rent was in excess of the allowable rents. If excess rent was calculated, the excess was used to determine the participants share.
Criteria: Per 24 CFR Section 578.51(g), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents charged for comparable units taking into consideration relevant features. In addition, the portion of rents paid with the grant funds may not exceed HUD-determined fair market rents for the current year.
Context: Of the 10 cases selected for testing using leasing funds, 3 tenant’s rents paid exceeded the published fair market rent allowed for 2023. Of the 10 cases selected for testing using rental assistance funds, 3 tenant’s rents paid exceeded the published fair market rates. The program operated using these calculations throughout the year. Prior to the close of the year, adjustments were made to correct the effect of the incorrect calculations.
Cause: The Organization is properly calculating the excess rent charge, however under the leasing program, the excess must be paid from other than HUD leasing funds.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates throughout most of the year.
Identification of a This is a repeat finding from the immediate previous audit, 2022-001.
Repeat Finding
Recommendation: We recommend that the Organization download and use the COC Program Rent Determination Worksheets for Leasing and Rental Assistance provided by HUD for each recipient. The leasing worksheet will determine the Non COC and leveraged portion of the rent if allowable. We recommend that the completed document be signed and dated by the preparer and the reviewer. Any subsequent changes or updates should be saved as a separate document.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-004 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization used rent calculation worksheets which had not been updated for the published utility rates for the area, or calculated based on HUD’s Utility Allowance Handbook.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: 20 cases from a total population of 39 were selected for testing. The utility rates were out of date on 2 of the worksheets. On 5 worksheets, the utility calculation was noted but the supporting worksheet was not included in the workbook presented for audit. The remaining files had updated utility information.
Cause: The Organization did not update their records and calculation worksheets for the change in the published utility rates or self- calculate the rates based on the Utility Allowance Handbook at the beginning of the year.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates. The calculation of the correct tenant’s portion impacts the balance paid by the Organization and subsequently charged to the HUD grants.
Identification of a This is a repeat finding from the immediate previous audit, 2022-002.
Repeat Finding
Recommendation: We recommend that written procedures addressing internal controls with respect to tracking changes in program requirements be implemented and that procedures to update any worksheets for the effect of those requirements be performed and verified to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-005 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization uses an electronic workbook to assist in the calculation of verified income, rent share of the participant, utility charges and allowances. Our testing of the workbooks found that several input errors were present but not detected and corrected in a reasonable time. There is no evidence of supervisory review in the document.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: Our review of the workbooks found:
10 of the 20 selected did not contain a date prepared or effective date.
A 2-bedroom unit was entered as a 3-bedroom unit, the lease exceeded the Fair Market Rent
An income calculation was not annualized properly, the income from all sources was understated by 25%.
Cause: The Organization uses an excel workbook to track and calculate the information needed to determine rent and utility shares for the participants in the COC programs. The forms are not being completed properly. Information is omitted or entered in the incorrect section of the workbook. There is no evidence in the workbook that it is being verified by someone other than the preparer.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program.
Recommendation: We recommend that written procedures addressing internal controls with respect to preparation of the workbooks be reviewed and should include that verification and approval procedures are evident to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-003 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization performed rent comparisons to the HUD fair market rent rates when determining if the rent was in excess of the allowable rents. If excess rent was calculated, the excess was used to determine the participants share.
Criteria: Per 24 CFR Section 578.51(g), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents charged for comparable units taking into consideration relevant features. In addition, the portion of rents paid with the grant funds may not exceed HUD-determined fair market rents for the current year.
Context: Of the 10 cases selected for testing using leasing funds, 3 tenant’s rents paid exceeded the published fair market rent allowed for 2023. Of the 10 cases selected for testing using rental assistance funds, 3 tenant’s rents paid exceeded the published fair market rates. The program operated using these calculations throughout the year. Prior to the close of the year, adjustments were made to correct the effect of the incorrect calculations.
Cause: The Organization is properly calculating the excess rent charge, however under the leasing program, the excess must be paid from other than HUD leasing funds.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates throughout most of the year.
Identification of a This is a repeat finding from the immediate previous audit, 2022-001.
Repeat Finding
Recommendation: We recommend that the Organization download and use the COC Program Rent Determination Worksheets for Leasing and Rental Assistance provided by HUD for each recipient. The leasing worksheet will determine the Non COC and leveraged portion of the rent if allowable. We recommend that the completed document be signed and dated by the preparer and the reviewer. Any subsequent changes or updates should be saved as a separate document.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-004 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization used rent calculation worksheets which had not been updated for the published utility rates for the area, or calculated based on HUD’s Utility Allowance Handbook.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: 20 cases from a total population of 39 were selected for testing. The utility rates were out of date on 2 of the worksheets. On 5 worksheets, the utility calculation was noted but the supporting worksheet was not included in the workbook presented for audit. The remaining files had updated utility information.
Cause: The Organization did not update their records and calculation worksheets for the change in the published utility rates or self- calculate the rates based on the Utility Allowance Handbook at the beginning of the year.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates. The calculation of the correct tenant’s portion impacts the balance paid by the Organization and subsequently charged to the HUD grants.
Identification of a This is a repeat finding from the immediate previous audit, 2022-002.
Repeat Finding
Recommendation: We recommend that written procedures addressing internal controls with respect to tracking changes in program requirements be implemented and that procedures to update any worksheets for the effect of those requirements be performed and verified to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-005 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization uses an electronic workbook to assist in the calculation of verified income, rent share of the participant, utility charges and allowances. Our testing of the workbooks found that several input errors were present but not detected and corrected in a reasonable time. There is no evidence of supervisory review in the document.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: Our review of the workbooks found:
10 of the 20 selected did not contain a date prepared or effective date.
A 2-bedroom unit was entered as a 3-bedroom unit, the lease exceeded the Fair Market Rent
An income calculation was not annualized properly, the income from all sources was understated by 25%.
Cause: The Organization uses an excel workbook to track and calculate the information needed to determine rent and utility shares for the participants in the COC programs. The forms are not being completed properly. Information is omitted or entered in the incorrect section of the workbook. There is no evidence in the workbook that it is being verified by someone other than the preparer.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program.
Recommendation: We recommend that written procedures addressing internal controls with respect to preparation of the workbooks be reviewed and should include that verification and approval procedures are evident to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-003 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization performed rent comparisons to the HUD fair market rent rates when determining if the rent was in excess of the allowable rents. If excess rent was calculated, the excess was used to determine the participants share.
Criteria: Per 24 CFR Section 578.51(g), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents charged for comparable units taking into consideration relevant features. In addition, the portion of rents paid with the grant funds may not exceed HUD-determined fair market rents for the current year.
Context: Of the 10 cases selected for testing using leasing funds, 3 tenant’s rents paid exceeded the published fair market rent allowed for 2023. Of the 10 cases selected for testing using rental assistance funds, 3 tenant’s rents paid exceeded the published fair market rates. The program operated using these calculations throughout the year. Prior to the close of the year, adjustments were made to correct the effect of the incorrect calculations.
Cause: The Organization is properly calculating the excess rent charge, however under the leasing program, the excess must be paid from other than HUD leasing funds.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates throughout most of the year.
Identification of a This is a repeat finding from the immediate previous audit, 2022-001.
Repeat Finding
Recommendation: We recommend that the Organization download and use the COC Program Rent Determination Worksheets for Leasing and Rental Assistance provided by HUD for each recipient. The leasing worksheet will determine the Non COC and leveraged portion of the rent if allowable. We recommend that the completed document be signed and dated by the preparer and the reviewer. Any subsequent changes or updates should be saved as a separate document.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-004 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization used rent calculation worksheets which had not been updated for the published utility rates for the area, or calculated based on HUD’s Utility Allowance Handbook.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: 20 cases from a total population of 39 were selected for testing. The utility rates were out of date on 2 of the worksheets. On 5 worksheets, the utility calculation was noted but the supporting worksheet was not included in the workbook presented for audit. The remaining files had updated utility information.
Cause: The Organization did not update their records and calculation worksheets for the change in the published utility rates or self- calculate the rates based on the Utility Allowance Handbook at the beginning of the year.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates. The calculation of the correct tenant’s portion impacts the balance paid by the Organization and subsequently charged to the HUD grants.
Identification of a This is a repeat finding from the immediate previous audit, 2022-002.
Repeat Finding
Recommendation: We recommend that written procedures addressing internal controls with respect to tracking changes in program requirements be implemented and that procedures to update any worksheets for the effect of those requirements be performed and verified to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-005 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization uses an electronic workbook to assist in the calculation of verified income, rent share of the participant, utility charges and allowances. Our testing of the workbooks found that several input errors were present but not detected and corrected in a reasonable time. There is no evidence of supervisory review in the document.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: Our review of the workbooks found:
10 of the 20 selected did not contain a date prepared or effective date.
A 2-bedroom unit was entered as a 3-bedroom unit, the lease exceeded the Fair Market Rent
An income calculation was not annualized properly, the income from all sources was understated by 25%.
Cause: The Organization uses an excel workbook to track and calculate the information needed to determine rent and utility shares for the participants in the COC programs. The forms are not being completed properly. Information is omitted or entered in the incorrect section of the workbook. There is no evidence in the workbook that it is being verified by someone other than the preparer.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program.
Recommendation: We recommend that written procedures addressing internal controls with respect to preparation of the workbooks be reviewed and should include that verification and approval procedures are evident to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-003 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization performed rent comparisons to the HUD fair market rent rates when determining if the rent was in excess of the allowable rents. If excess rent was calculated, the excess was used to determine the participants share.
Criteria: Per 24 CFR Section 578.51(g), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents charged for comparable units taking into consideration relevant features. In addition, the portion of rents paid with the grant funds may not exceed HUD-determined fair market rents for the current year.
Context: Of the 10 cases selected for testing using leasing funds, 3 tenant’s rents paid exceeded the published fair market rent allowed for 2023. Of the 10 cases selected for testing using rental assistance funds, 3 tenant’s rents paid exceeded the published fair market rates. The program operated using these calculations throughout the year. Prior to the close of the year, adjustments were made to correct the effect of the incorrect calculations.
Cause: The Organization is properly calculating the excess rent charge, however under the leasing program, the excess must be paid from other than HUD leasing funds.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates throughout most of the year.
Identification of a This is a repeat finding from the immediate previous audit, 2022-001.
Repeat Finding
Recommendation: We recommend that the Organization download and use the COC Program Rent Determination Worksheets for Leasing and Rental Assistance provided by HUD for each recipient. The leasing worksheet will determine the Non COC and leveraged portion of the rent if allowable. We recommend that the completed document be signed and dated by the preparer and the reviewer. Any subsequent changes or updates should be saved as a separate document.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-004 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization used rent calculation worksheets which had not been updated for the published utility rates for the area, or calculated based on HUD’s Utility Allowance Handbook.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: 20 cases from a total population of 39 were selected for testing. The utility rates were out of date on 2 of the worksheets. On 5 worksheets, the utility calculation was noted but the supporting worksheet was not included in the workbook presented for audit. The remaining files had updated utility information.
Cause: The Organization did not update their records and calculation worksheets for the change in the published utility rates or self- calculate the rates based on the Utility Allowance Handbook at the beginning of the year.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates. The calculation of the correct tenant’s portion impacts the balance paid by the Organization and subsequently charged to the HUD grants.
Identification of a This is a repeat finding from the immediate previous audit, 2022-002.
Repeat Finding
Recommendation: We recommend that written procedures addressing internal controls with respect to tracking changes in program requirements be implemented and that procedures to update any worksheets for the effect of those requirements be performed and verified to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-005 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization uses an electronic workbook to assist in the calculation of verified income, rent share of the participant, utility charges and allowances. Our testing of the workbooks found that several input errors were present but not detected and corrected in a reasonable time. There is no evidence of supervisory review in the document.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: Our review of the workbooks found:
10 of the 20 selected did not contain a date prepared or effective date.
A 2-bedroom unit was entered as a 3-bedroom unit, the lease exceeded the Fair Market Rent
An income calculation was not annualized properly, the income from all sources was understated by 25%.
Cause: The Organization uses an excel workbook to track and calculate the information needed to determine rent and utility shares for the participants in the COC programs. The forms are not being completed properly. Information is omitted or entered in the incorrect section of the workbook. There is no evidence in the workbook that it is being verified by someone other than the preparer.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program.
Recommendation: We recommend that written procedures addressing internal controls with respect to preparation of the workbooks be reviewed and should include that verification and approval procedures are evident to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-003 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization performed rent comparisons to the HUD fair market rent rates when determining if the rent was in excess of the allowable rents. If excess rent was calculated, the excess was used to determine the participants share.
Criteria: Per 24 CFR Section 578.51(g), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents charged for comparable units taking into consideration relevant features. In addition, the portion of rents paid with the grant funds may not exceed HUD-determined fair market rents for the current year.
Context: Of the 10 cases selected for testing using leasing funds, 3 tenant’s rents paid exceeded the published fair market rent allowed for 2023. Of the 10 cases selected for testing using rental assistance funds, 3 tenant’s rents paid exceeded the published fair market rates. The program operated using these calculations throughout the year. Prior to the close of the year, adjustments were made to correct the effect of the incorrect calculations.
Cause: The Organization is properly calculating the excess rent charge, however under the leasing program, the excess must be paid from other than HUD leasing funds.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates throughout most of the year.
Identification of a This is a repeat finding from the immediate previous audit, 2022-001.
Repeat Finding
Recommendation: We recommend that the Organization download and use the COC Program Rent Determination Worksheets for Leasing and Rental Assistance provided by HUD for each recipient. The leasing worksheet will determine the Non COC and leveraged portion of the rent if allowable. We recommend that the completed document be signed and dated by the preparer and the reviewer. Any subsequent changes or updates should be saved as a separate document.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-004 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization used rent calculation worksheets which had not been updated for the published utility rates for the area, or calculated based on HUD’s Utility Allowance Handbook.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: 20 cases from a total population of 39 were selected for testing. The utility rates were out of date on 2 of the worksheets. On 5 worksheets, the utility calculation was noted but the supporting worksheet was not included in the workbook presented for audit. The remaining files had updated utility information.
Cause: The Organization did not update their records and calculation worksheets for the change in the published utility rates or self- calculate the rates based on the Utility Allowance Handbook at the beginning of the year.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates. The calculation of the correct tenant’s portion impacts the balance paid by the Organization and subsequently charged to the HUD grants.
Identification of a This is a repeat finding from the immediate previous audit, 2022-002.
Repeat Finding
Recommendation: We recommend that written procedures addressing internal controls with respect to tracking changes in program requirements be implemented and that procedures to update any worksheets for the effect of those requirements be performed and verified to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-005 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization uses an electronic workbook to assist in the calculation of verified income, rent share of the participant, utility charges and allowances. Our testing of the workbooks found that several input errors were present but not detected and corrected in a reasonable time. There is no evidence of supervisory review in the document.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: Our review of the workbooks found:
10 of the 20 selected did not contain a date prepared or effective date.
A 2-bedroom unit was entered as a 3-bedroom unit, the lease exceeded the Fair Market Rent
An income calculation was not annualized properly, the income from all sources was understated by 25%.
Cause: The Organization uses an excel workbook to track and calculate the information needed to determine rent and utility shares for the participants in the COC programs. The forms are not being completed properly. Information is omitted or entered in the incorrect section of the workbook. There is no evidence in the workbook that it is being verified by someone other than the preparer.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program.
Recommendation: We recommend that written procedures addressing internal controls with respect to preparation of the workbooks be reviewed and should include that verification and approval procedures are evident to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-003 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization performed rent comparisons to the HUD fair market rent rates when determining if the rent was in excess of the allowable rents. If excess rent was calculated, the excess was used to determine the participants share.
Criteria: Per 24 CFR Section 578.51(g), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents charged for comparable units taking into consideration relevant features. In addition, the portion of rents paid with the grant funds may not exceed HUD-determined fair market rents for the current year.
Context: Of the 10 cases selected for testing using leasing funds, 3 tenant’s rents paid exceeded the published fair market rent allowed for 2023. Of the 10 cases selected for testing using rental assistance funds, 3 tenant’s rents paid exceeded the published fair market rates. The program operated using these calculations throughout the year. Prior to the close of the year, adjustments were made to correct the effect of the incorrect calculations.
Cause: The Organization is properly calculating the excess rent charge, however under the leasing program, the excess must be paid from other than HUD leasing funds.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates throughout most of the year.
Identification of a This is a repeat finding from the immediate previous audit, 2022-001.
Repeat Finding
Recommendation: We recommend that the Organization download and use the COC Program Rent Determination Worksheets for Leasing and Rental Assistance provided by HUD for each recipient. The leasing worksheet will determine the Non COC and leveraged portion of the rent if allowable. We recommend that the completed document be signed and dated by the preparer and the reviewer. Any subsequent changes or updates should be saved as a separate document.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-004 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization used rent calculation worksheets which had not been updated for the published utility rates for the area, or calculated based on HUD’s Utility Allowance Handbook.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: 20 cases from a total population of 39 were selected for testing. The utility rates were out of date on 2 of the worksheets. On 5 worksheets, the utility calculation was noted but the supporting worksheet was not included in the workbook presented for audit. The remaining files had updated utility information.
Cause: The Organization did not update their records and calculation worksheets for the change in the published utility rates or self- calculate the rates based on the Utility Allowance Handbook at the beginning of the year.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates. The calculation of the correct tenant’s portion impacts the balance paid by the Organization and subsequently charged to the HUD grants.
Identification of a This is a repeat finding from the immediate previous audit, 2022-002.
Repeat Finding
Recommendation: We recommend that written procedures addressing internal controls with respect to tracking changes in program requirements be implemented and that procedures to update any worksheets for the effect of those requirements be performed and verified to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-005 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization uses an electronic workbook to assist in the calculation of verified income, rent share of the participant, utility charges and allowances. Our testing of the workbooks found that several input errors were present but not detected and corrected in a reasonable time. There is no evidence of supervisory review in the document.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: Our review of the workbooks found:
10 of the 20 selected did not contain a date prepared or effective date.
A 2-bedroom unit was entered as a 3-bedroom unit, the lease exceeded the Fair Market Rent
An income calculation was not annualized properly, the income from all sources was understated by 25%.
Cause: The Organization uses an excel workbook to track and calculate the information needed to determine rent and utility shares for the participants in the COC programs. The forms are not being completed properly. Information is omitted or entered in the incorrect section of the workbook. There is no evidence in the workbook that it is being verified by someone other than the preparer.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program.
Recommendation: We recommend that written procedures addressing internal controls with respect to preparation of the workbooks be reviewed and should include that verification and approval procedures are evident to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-003 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization performed rent comparisons to the HUD fair market rent rates when determining if the rent was in excess of the allowable rents. If excess rent was calculated, the excess was used to determine the participants share.
Criteria: Per 24 CFR Section 578.51(g), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents charged for comparable units taking into consideration relevant features. In addition, the portion of rents paid with the grant funds may not exceed HUD-determined fair market rents for the current year.
Context: Of the 10 cases selected for testing using leasing funds, 3 tenant’s rents paid exceeded the published fair market rent allowed for 2023. Of the 10 cases selected for testing using rental assistance funds, 3 tenant’s rents paid exceeded the published fair market rates. The program operated using these calculations throughout the year. Prior to the close of the year, adjustments were made to correct the effect of the incorrect calculations.
Cause: The Organization is properly calculating the excess rent charge, however under the leasing program, the excess must be paid from other than HUD leasing funds.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates throughout most of the year.
Identification of a This is a repeat finding from the immediate previous audit, 2022-001.
Repeat Finding
Recommendation: We recommend that the Organization download and use the COC Program Rent Determination Worksheets for Leasing and Rental Assistance provided by HUD for each recipient. The leasing worksheet will determine the Non COC and leveraged portion of the rent if allowable. We recommend that the completed document be signed and dated by the preparer and the reviewer. Any subsequent changes or updates should be saved as a separate document.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-004 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization used rent calculation worksheets which had not been updated for the published utility rates for the area, or calculated based on HUD’s Utility Allowance Handbook.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: 20 cases from a total population of 39 were selected for testing. The utility rates were out of date on 2 of the worksheets. On 5 worksheets, the utility calculation was noted but the supporting worksheet was not included in the workbook presented for audit. The remaining files had updated utility information.
Cause: The Organization did not update their records and calculation worksheets for the change in the published utility rates or self- calculate the rates based on the Utility Allowance Handbook at the beginning of the year.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates. The calculation of the correct tenant’s portion impacts the balance paid by the Organization and subsequently charged to the HUD grants.
Identification of a This is a repeat finding from the immediate previous audit, 2022-002.
Repeat Finding
Recommendation: We recommend that written procedures addressing internal controls with respect to tracking changes in program requirements be implemented and that procedures to update any worksheets for the effect of those requirements be performed and verified to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-005 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization uses an electronic workbook to assist in the calculation of verified income, rent share of the participant, utility charges and allowances. Our testing of the workbooks found that several input errors were present but not detected and corrected in a reasonable time. There is no evidence of supervisory review in the document.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: Our review of the workbooks found:
10 of the 20 selected did not contain a date prepared or effective date.
A 2-bedroom unit was entered as a 3-bedroom unit, the lease exceeded the Fair Market Rent
An income calculation was not annualized properly, the income from all sources was understated by 25%.
Cause: The Organization uses an excel workbook to track and calculate the information needed to determine rent and utility shares for the participants in the COC programs. The forms are not being completed properly. Information is omitted or entered in the incorrect section of the workbook. There is no evidence in the workbook that it is being verified by someone other than the preparer.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program.
Recommendation: We recommend that written procedures addressing internal controls with respect to preparation of the workbooks be reviewed and should include that verification and approval procedures are evident to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-003 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization performed rent comparisons to the HUD fair market rent rates when determining if the rent was in excess of the allowable rents. If excess rent was calculated, the excess was used to determine the participants share.
Criteria: Per 24 CFR Section 578.51(g), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents charged for comparable units taking into consideration relevant features. In addition, the portion of rents paid with the grant funds may not exceed HUD-determined fair market rents for the current year.
Context: Of the 10 cases selected for testing using leasing funds, 3 tenant’s rents paid exceeded the published fair market rent allowed for 2023. Of the 10 cases selected for testing using rental assistance funds, 3 tenant’s rents paid exceeded the published fair market rates. The program operated using these calculations throughout the year. Prior to the close of the year, adjustments were made to correct the effect of the incorrect calculations.
Cause: The Organization is properly calculating the excess rent charge, however under the leasing program, the excess must be paid from other than HUD leasing funds.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates throughout most of the year.
Identification of a This is a repeat finding from the immediate previous audit, 2022-001.
Repeat Finding
Recommendation: We recommend that the Organization download and use the COC Program Rent Determination Worksheets for Leasing and Rental Assistance provided by HUD for each recipient. The leasing worksheet will determine the Non COC and leveraged portion of the rent if allowable. We recommend that the completed document be signed and dated by the preparer and the reviewer. Any subsequent changes or updates should be saved as a separate document.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-004 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization used rent calculation worksheets which had not been updated for the published utility rates for the area, or calculated based on HUD’s Utility Allowance Handbook.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: 20 cases from a total population of 39 were selected for testing. The utility rates were out of date on 2 of the worksheets. On 5 worksheets, the utility calculation was noted but the supporting worksheet was not included in the workbook presented for audit. The remaining files had updated utility information.
Cause: The Organization did not update their records and calculation worksheets for the change in the published utility rates or self- calculate the rates based on the Utility Allowance Handbook at the beginning of the year.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates. The calculation of the correct tenant’s portion impacts the balance paid by the Organization and subsequently charged to the HUD grants.
Identification of a This is a repeat finding from the immediate previous audit, 2022-002.
Repeat Finding
Recommendation: We recommend that written procedures addressing internal controls with respect to tracking changes in program requirements be implemented and that procedures to update any worksheets for the effect of those requirements be performed and verified to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-005 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization uses an electronic workbook to assist in the calculation of verified income, rent share of the participant, utility charges and allowances. Our testing of the workbooks found that several input errors were present but not detected and corrected in a reasonable time. There is no evidence of supervisory review in the document.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: Our review of the workbooks found:
10 of the 20 selected did not contain a date prepared or effective date.
A 2-bedroom unit was entered as a 3-bedroom unit, the lease exceeded the Fair Market Rent
An income calculation was not annualized properly, the income from all sources was understated by 25%.
Cause: The Organization uses an excel workbook to track and calculate the information needed to determine rent and utility shares for the participants in the COC programs. The forms are not being completed properly. Information is omitted or entered in the incorrect section of the workbook. There is no evidence in the workbook that it is being verified by someone other than the preparer.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program.
Recommendation: We recommend that written procedures addressing internal controls with respect to preparation of the workbooks be reviewed and should include that verification and approval procedures are evident to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-003 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization performed rent comparisons to the HUD fair market rent rates when determining if the rent was in excess of the allowable rents. If excess rent was calculated, the excess was used to determine the participants share.
Criteria: Per 24 CFR Section 578.51(g), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents charged for comparable units taking into consideration relevant features. In addition, the portion of rents paid with the grant funds may not exceed HUD-determined fair market rents for the current year.
Context: Of the 10 cases selected for testing using leasing funds, 3 tenant’s rents paid exceeded the published fair market rent allowed for 2023. Of the 10 cases selected for testing using rental assistance funds, 3 tenant’s rents paid exceeded the published fair market rates. The program operated using these calculations throughout the year. Prior to the close of the year, adjustments were made to correct the effect of the incorrect calculations.
Cause: The Organization is properly calculating the excess rent charge, however under the leasing program, the excess must be paid from other than HUD leasing funds.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates throughout most of the year.
Identification of a This is a repeat finding from the immediate previous audit, 2022-001.
Repeat Finding
Recommendation: We recommend that the Organization download and use the COC Program Rent Determination Worksheets for Leasing and Rental Assistance provided by HUD for each recipient. The leasing worksheet will determine the Non COC and leveraged portion of the rent if allowable. We recommend that the completed document be signed and dated by the preparer and the reviewer. Any subsequent changes or updates should be saved as a separate document.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-004 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization used rent calculation worksheets which had not been updated for the published utility rates for the area, or calculated based on HUD’s Utility Allowance Handbook.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: 20 cases from a total population of 39 were selected for testing. The utility rates were out of date on 2 of the worksheets. On 5 worksheets, the utility calculation was noted but the supporting worksheet was not included in the workbook presented for audit. The remaining files had updated utility information.
Cause: The Organization did not update their records and calculation worksheets for the change in the published utility rates or self- calculate the rates based on the Utility Allowance Handbook at the beginning of the year.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates. The calculation of the correct tenant’s portion impacts the balance paid by the Organization and subsequently charged to the HUD grants.
Identification of a This is a repeat finding from the immediate previous audit, 2022-002.
Repeat Finding
Recommendation: We recommend that written procedures addressing internal controls with respect to tracking changes in program requirements be implemented and that procedures to update any worksheets for the effect of those requirements be performed and verified to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-005 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization uses an electronic workbook to assist in the calculation of verified income, rent share of the participant, utility charges and allowances. Our testing of the workbooks found that several input errors were present but not detected and corrected in a reasonable time. There is no evidence of supervisory review in the document.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: Our review of the workbooks found:
10 of the 20 selected did not contain a date prepared or effective date.
A 2-bedroom unit was entered as a 3-bedroom unit, the lease exceeded the Fair Market Rent
An income calculation was not annualized properly, the income from all sources was understated by 25%.
Cause: The Organization uses an excel workbook to track and calculate the information needed to determine rent and utility shares for the participants in the COC programs. The forms are not being completed properly. Information is omitted or entered in the incorrect section of the workbook. There is no evidence in the workbook that it is being verified by someone other than the preparer.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program.
Recommendation: We recommend that written procedures addressing internal controls with respect to preparation of the workbooks be reviewed and should include that verification and approval procedures are evident to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-003 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization performed rent comparisons to the HUD fair market rent rates when determining if the rent was in excess of the allowable rents. If excess rent was calculated, the excess was used to determine the participants share.
Criteria: Per 24 CFR Section 578.51(g), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents charged for comparable units taking into consideration relevant features. In addition, the portion of rents paid with the grant funds may not exceed HUD-determined fair market rents for the current year.
Context: Of the 10 cases selected for testing using leasing funds, 3 tenant’s rents paid exceeded the published fair market rent allowed for 2023. Of the 10 cases selected for testing using rental assistance funds, 3 tenant’s rents paid exceeded the published fair market rates. The program operated using these calculations throughout the year. Prior to the close of the year, adjustments were made to correct the effect of the incorrect calculations.
Cause: The Organization is properly calculating the excess rent charge, however under the leasing program, the excess must be paid from other than HUD leasing funds.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates throughout most of the year.
Identification of a This is a repeat finding from the immediate previous audit, 2022-001.
Repeat Finding
Recommendation: We recommend that the Organization download and use the COC Program Rent Determination Worksheets for Leasing and Rental Assistance provided by HUD for each recipient. The leasing worksheet will determine the Non COC and leveraged portion of the rent if allowable. We recommend that the completed document be signed and dated by the preparer and the reviewer. Any subsequent changes or updates should be saved as a separate document.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-004 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization used rent calculation worksheets which had not been updated for the published utility rates for the area, or calculated based on HUD’s Utility Allowance Handbook.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: 20 cases from a total population of 39 were selected for testing. The utility rates were out of date on 2 of the worksheets. On 5 worksheets, the utility calculation was noted but the supporting worksheet was not included in the workbook presented for audit. The remaining files had updated utility information.
Cause: The Organization did not update their records and calculation worksheets for the change in the published utility rates or self- calculate the rates based on the Utility Allowance Handbook at the beginning of the year.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates. The calculation of the correct tenant’s portion impacts the balance paid by the Organization and subsequently charged to the HUD grants.
Identification of a This is a repeat finding from the immediate previous audit, 2022-002.
Repeat Finding
Recommendation: We recommend that written procedures addressing internal controls with respect to tracking changes in program requirements be implemented and that procedures to update any worksheets for the effect of those requirements be performed and verified to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-005 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization uses an electronic workbook to assist in the calculation of verified income, rent share of the participant, utility charges and allowances. Our testing of the workbooks found that several input errors were present but not detected and corrected in a reasonable time. There is no evidence of supervisory review in the document.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: Our review of the workbooks found:
10 of the 20 selected did not contain a date prepared or effective date.
A 2-bedroom unit was entered as a 3-bedroom unit, the lease exceeded the Fair Market Rent
An income calculation was not annualized properly, the income from all sources was understated by 25%.
Cause: The Organization uses an excel workbook to track and calculate the information needed to determine rent and utility shares for the participants in the COC programs. The forms are not being completed properly. Information is omitted or entered in the incorrect section of the workbook. There is no evidence in the workbook that it is being verified by someone other than the preparer.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program.
Recommendation: We recommend that written procedures addressing internal controls with respect to preparation of the workbooks be reviewed and should include that verification and approval procedures are evident to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-003 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization performed rent comparisons to the HUD fair market rent rates when determining if the rent was in excess of the allowable rents. If excess rent was calculated, the excess was used to determine the participants share.
Criteria: Per 24 CFR Section 578.51(g), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents charged for comparable units taking into consideration relevant features. In addition, the portion of rents paid with the grant funds may not exceed HUD-determined fair market rents for the current year.
Context: Of the 10 cases selected for testing using leasing funds, 3 tenant’s rents paid exceeded the published fair market rent allowed for 2023. Of the 10 cases selected for testing using rental assistance funds, 3 tenant’s rents paid exceeded the published fair market rates. The program operated using these calculations throughout the year. Prior to the close of the year, adjustments were made to correct the effect of the incorrect calculations.
Cause: The Organization is properly calculating the excess rent charge, however under the leasing program, the excess must be paid from other than HUD leasing funds.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates throughout most of the year.
Identification of a This is a repeat finding from the immediate previous audit, 2022-001.
Repeat Finding
Recommendation: We recommend that the Organization download and use the COC Program Rent Determination Worksheets for Leasing and Rental Assistance provided by HUD for each recipient. The leasing worksheet will determine the Non COC and leveraged portion of the rent if allowable. We recommend that the completed document be signed and dated by the preparer and the reviewer. Any subsequent changes or updates should be saved as a separate document.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-004 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization used rent calculation worksheets which had not been updated for the published utility rates for the area, or calculated based on HUD’s Utility Allowance Handbook.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: 20 cases from a total population of 39 were selected for testing. The utility rates were out of date on 2 of the worksheets. On 5 worksheets, the utility calculation was noted but the supporting worksheet was not included in the workbook presented for audit. The remaining files had updated utility information.
Cause: The Organization did not update their records and calculation worksheets for the change in the published utility rates or self- calculate the rates based on the Utility Allowance Handbook at the beginning of the year.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates. The calculation of the correct tenant’s portion impacts the balance paid by the Organization and subsequently charged to the HUD grants.
Identification of a This is a repeat finding from the immediate previous audit, 2022-002.
Repeat Finding
Recommendation: We recommend that written procedures addressing internal controls with respect to tracking changes in program requirements be implemented and that procedures to update any worksheets for the effect of those requirements be performed and verified to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-005 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization uses an electronic workbook to assist in the calculation of verified income, rent share of the participant, utility charges and allowances. Our testing of the workbooks found that several input errors were present but not detected and corrected in a reasonable time. There is no evidence of supervisory review in the document.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: Our review of the workbooks found:
10 of the 20 selected did not contain a date prepared or effective date.
A 2-bedroom unit was entered as a 3-bedroom unit, the lease exceeded the Fair Market Rent
An income calculation was not annualized properly, the income from all sources was understated by 25%.
Cause: The Organization uses an excel workbook to track and calculate the information needed to determine rent and utility shares for the participants in the COC programs. The forms are not being completed properly. Information is omitted or entered in the incorrect section of the workbook. There is no evidence in the workbook that it is being verified by someone other than the preparer.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program.
Recommendation: We recommend that written procedures addressing internal controls with respect to preparation of the workbooks be reviewed and should include that verification and approval procedures are evident to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-003 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization performed rent comparisons to the HUD fair market rent rates when determining if the rent was in excess of the allowable rents. If excess rent was calculated, the excess was used to determine the participants share.
Criteria: Per 24 CFR Section 578.51(g), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents charged for comparable units taking into consideration relevant features. In addition, the portion of rents paid with the grant funds may not exceed HUD-determined fair market rents for the current year.
Context: Of the 10 cases selected for testing using leasing funds, 3 tenant’s rents paid exceeded the published fair market rent allowed for 2023. Of the 10 cases selected for testing using rental assistance funds, 3 tenant’s rents paid exceeded the published fair market rates. The program operated using these calculations throughout the year. Prior to the close of the year, adjustments were made to correct the effect of the incorrect calculations.
Cause: The Organization is properly calculating the excess rent charge, however under the leasing program, the excess must be paid from other than HUD leasing funds.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates throughout most of the year.
Identification of a This is a repeat finding from the immediate previous audit, 2022-001.
Repeat Finding
Recommendation: We recommend that the Organization download and use the COC Program Rent Determination Worksheets for Leasing and Rental Assistance provided by HUD for each recipient. The leasing worksheet will determine the Non COC and leveraged portion of the rent if allowable. We recommend that the completed document be signed and dated by the preparer and the reviewer. Any subsequent changes or updates should be saved as a separate document.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-004 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization used rent calculation worksheets which had not been updated for the published utility rates for the area, or calculated based on HUD’s Utility Allowance Handbook.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: 20 cases from a total population of 39 were selected for testing. The utility rates were out of date on 2 of the worksheets. On 5 worksheets, the utility calculation was noted but the supporting worksheet was not included in the workbook presented for audit. The remaining files had updated utility information.
Cause: The Organization did not update their records and calculation worksheets for the change in the published utility rates or self- calculate the rates based on the Utility Allowance Handbook at the beginning of the year.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates. The calculation of the correct tenant’s portion impacts the balance paid by the Organization and subsequently charged to the HUD grants.
Identification of a This is a repeat finding from the immediate previous audit, 2022-002.
Repeat Finding
Recommendation: We recommend that written procedures addressing internal controls with respect to tracking changes in program requirements be implemented and that procedures to update any worksheets for the effect of those requirements be performed and verified to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-005 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization uses an electronic workbook to assist in the calculation of verified income, rent share of the participant, utility charges and allowances. Our testing of the workbooks found that several input errors were present but not detected and corrected in a reasonable time. There is no evidence of supervisory review in the document.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: Our review of the workbooks found:
10 of the 20 selected did not contain a date prepared or effective date.
A 2-bedroom unit was entered as a 3-bedroom unit, the lease exceeded the Fair Market Rent
An income calculation was not annualized properly, the income from all sources was understated by 25%.
Cause: The Organization uses an excel workbook to track and calculate the information needed to determine rent and utility shares for the participants in the COC programs. The forms are not being completed properly. Information is omitted or entered in the incorrect section of the workbook. There is no evidence in the workbook that it is being verified by someone other than the preparer.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program.
Recommendation: We recommend that written procedures addressing internal controls with respect to preparation of the workbooks be reviewed and should include that verification and approval procedures are evident to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-003 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization performed rent comparisons to the HUD fair market rent rates when determining if the rent was in excess of the allowable rents. If excess rent was calculated, the excess was used to determine the participants share.
Criteria: Per 24 CFR Section 578.51(g), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents charged for comparable units taking into consideration relevant features. In addition, the portion of rents paid with the grant funds may not exceed HUD-determined fair market rents for the current year.
Context: Of the 10 cases selected for testing using leasing funds, 3 tenant’s rents paid exceeded the published fair market rent allowed for 2023. Of the 10 cases selected for testing using rental assistance funds, 3 tenant’s rents paid exceeded the published fair market rates. The program operated using these calculations throughout the year. Prior to the close of the year, adjustments were made to correct the effect of the incorrect calculations.
Cause: The Organization is properly calculating the excess rent charge, however under the leasing program, the excess must be paid from other than HUD leasing funds.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates throughout most of the year.
Identification of a This is a repeat finding from the immediate previous audit, 2022-001.
Repeat Finding
Recommendation: We recommend that the Organization download and use the COC Program Rent Determination Worksheets for Leasing and Rental Assistance provided by HUD for each recipient. The leasing worksheet will determine the Non COC and leveraged portion of the rent if allowable. We recommend that the completed document be signed and dated by the preparer and the reviewer. Any subsequent changes or updates should be saved as a separate document.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-004 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization used rent calculation worksheets which had not been updated for the published utility rates for the area, or calculated based on HUD’s Utility Allowance Handbook.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: 20 cases from a total population of 39 were selected for testing. The utility rates were out of date on 2 of the worksheets. On 5 worksheets, the utility calculation was noted but the supporting worksheet was not included in the workbook presented for audit. The remaining files had updated utility information.
Cause: The Organization did not update their records and calculation worksheets for the change in the published utility rates or self- calculate the rates based on the Utility Allowance Handbook at the beginning of the year.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates. The calculation of the correct tenant’s portion impacts the balance paid by the Organization and subsequently charged to the HUD grants.
Identification of a This is a repeat finding from the immediate previous audit, 2022-002.
Repeat Finding
Recommendation: We recommend that written procedures addressing internal controls with respect to tracking changes in program requirements be implemented and that procedures to update any worksheets for the effect of those requirements be performed and verified to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-005 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization uses an electronic workbook to assist in the calculation of verified income, rent share of the participant, utility charges and allowances. Our testing of the workbooks found that several input errors were present but not detected and corrected in a reasonable time. There is no evidence of supervisory review in the document.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: Our review of the workbooks found:
10 of the 20 selected did not contain a date prepared or effective date.
A 2-bedroom unit was entered as a 3-bedroom unit, the lease exceeded the Fair Market Rent
An income calculation was not annualized properly, the income from all sources was understated by 25%.
Cause: The Organization uses an excel workbook to track and calculate the information needed to determine rent and utility shares for the participants in the COC programs. The forms are not being completed properly. Information is omitted or entered in the incorrect section of the workbook. There is no evidence in the workbook that it is being verified by someone other than the preparer.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program.
Recommendation: We recommend that written procedures addressing internal controls with respect to preparation of the workbooks be reviewed and should include that verification and approval procedures are evident to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-003 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization performed rent comparisons to the HUD fair market rent rates when determining if the rent was in excess of the allowable rents. If excess rent was calculated, the excess was used to determine the participants share.
Criteria: Per 24 CFR Section 578.51(g), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents charged for comparable units taking into consideration relevant features. In addition, the portion of rents paid with the grant funds may not exceed HUD-determined fair market rents for the current year.
Context: Of the 10 cases selected for testing using leasing funds, 3 tenant’s rents paid exceeded the published fair market rent allowed for 2023. Of the 10 cases selected for testing using rental assistance funds, 3 tenant’s rents paid exceeded the published fair market rates. The program operated using these calculations throughout the year. Prior to the close of the year, adjustments were made to correct the effect of the incorrect calculations.
Cause: The Organization is properly calculating the excess rent charge, however under the leasing program, the excess must be paid from other than HUD leasing funds.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates throughout most of the year.
Identification of a This is a repeat finding from the immediate previous audit, 2022-001.
Repeat Finding
Recommendation: We recommend that the Organization download and use the COC Program Rent Determination Worksheets for Leasing and Rental Assistance provided by HUD for each recipient. The leasing worksheet will determine the Non COC and leveraged portion of the rent if allowable. We recommend that the completed document be signed and dated by the preparer and the reviewer. Any subsequent changes or updates should be saved as a separate document.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-004 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization used rent calculation worksheets which had not been updated for the published utility rates for the area, or calculated based on HUD’s Utility Allowance Handbook.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: 20 cases from a total population of 39 were selected for testing. The utility rates were out of date on 2 of the worksheets. On 5 worksheets, the utility calculation was noted but the supporting worksheet was not included in the workbook presented for audit. The remaining files had updated utility information.
Cause: The Organization did not update their records and calculation worksheets for the change in the published utility rates or self- calculate the rates based on the Utility Allowance Handbook at the beginning of the year.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates. The calculation of the correct tenant’s portion impacts the balance paid by the Organization and subsequently charged to the HUD grants.
Identification of a This is a repeat finding from the immediate previous audit, 2022-002.
Repeat Finding
Recommendation: We recommend that written procedures addressing internal controls with respect to tracking changes in program requirements be implemented and that procedures to update any worksheets for the effect of those requirements be performed and verified to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-005 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization uses an electronic workbook to assist in the calculation of verified income, rent share of the participant, utility charges and allowances. Our testing of the workbooks found that several input errors were present but not detected and corrected in a reasonable time. There is no evidence of supervisory review in the document.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: Our review of the workbooks found:
10 of the 20 selected did not contain a date prepared or effective date.
A 2-bedroom unit was entered as a 3-bedroom unit, the lease exceeded the Fair Market Rent
An income calculation was not annualized properly, the income from all sources was understated by 25%.
Cause: The Organization uses an excel workbook to track and calculate the information needed to determine rent and utility shares for the participants in the COC programs. The forms are not being completed properly. Information is omitted or entered in the incorrect section of the workbook. There is no evidence in the workbook that it is being verified by someone other than the preparer.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program.
Recommendation: We recommend that written procedures addressing internal controls with respect to preparation of the workbooks be reviewed and should include that verification and approval procedures are evident to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-003 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization performed rent comparisons to the HUD fair market rent rates when determining if the rent was in excess of the allowable rents. If excess rent was calculated, the excess was used to determine the participants share.
Criteria: Per 24 CFR Section 578.51(g), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents charged for comparable units taking into consideration relevant features. In addition, the portion of rents paid with the grant funds may not exceed HUD-determined fair market rents for the current year.
Context: Of the 10 cases selected for testing using leasing funds, 3 tenant’s rents paid exceeded the published fair market rent allowed for 2023. Of the 10 cases selected for testing using rental assistance funds, 3 tenant’s rents paid exceeded the published fair market rates. The program operated using these calculations throughout the year. Prior to the close of the year, adjustments were made to correct the effect of the incorrect calculations.
Cause: The Organization is properly calculating the excess rent charge, however under the leasing program, the excess must be paid from other than HUD leasing funds.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates throughout most of the year.
Identification of a This is a repeat finding from the immediate previous audit, 2022-001.
Repeat Finding
Recommendation: We recommend that the Organization download and use the COC Program Rent Determination Worksheets for Leasing and Rental Assistance provided by HUD for each recipient. The leasing worksheet will determine the Non COC and leveraged portion of the rent if allowable. We recommend that the completed document be signed and dated by the preparer and the reviewer. Any subsequent changes or updates should be saved as a separate document.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-004 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization used rent calculation worksheets which had not been updated for the published utility rates for the area, or calculated based on HUD’s Utility Allowance Handbook.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: 20 cases from a total population of 39 were selected for testing. The utility rates were out of date on 2 of the worksheets. On 5 worksheets, the utility calculation was noted but the supporting worksheet was not included in the workbook presented for audit. The remaining files had updated utility information.
Cause: The Organization did not update their records and calculation worksheets for the change in the published utility rates or self- calculate the rates based on the Utility Allowance Handbook at the beginning of the year.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates. The calculation of the correct tenant’s portion impacts the balance paid by the Organization and subsequently charged to the HUD grants.
Identification of a This is a repeat finding from the immediate previous audit, 2022-002.
Repeat Finding
Recommendation: We recommend that written procedures addressing internal controls with respect to tracking changes in program requirements be implemented and that procedures to update any worksheets for the effect of those requirements be performed and verified to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-005 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization uses an electronic workbook to assist in the calculation of verified income, rent share of the participant, utility charges and allowances. Our testing of the workbooks found that several input errors were present but not detected and corrected in a reasonable time. There is no evidence of supervisory review in the document.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: Our review of the workbooks found:
10 of the 20 selected did not contain a date prepared or effective date.
A 2-bedroom unit was entered as a 3-bedroom unit, the lease exceeded the Fair Market Rent
An income calculation was not annualized properly, the income from all sources was understated by 25%.
Cause: The Organization uses an excel workbook to track and calculate the information needed to determine rent and utility shares for the participants in the COC programs. The forms are not being completed properly. Information is omitted or entered in the incorrect section of the workbook. There is no evidence in the workbook that it is being verified by someone other than the preparer.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program.
Recommendation: We recommend that written procedures addressing internal controls with respect to preparation of the workbooks be reviewed and should include that verification and approval procedures are evident to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-003 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization performed rent comparisons to the HUD fair market rent rates when determining if the rent was in excess of the allowable rents. If excess rent was calculated, the excess was used to determine the participants share.
Criteria: Per 24 CFR Section 578.51(g), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents charged for comparable units taking into consideration relevant features. In addition, the portion of rents paid with the grant funds may not exceed HUD-determined fair market rents for the current year.
Context: Of the 10 cases selected for testing using leasing funds, 3 tenant’s rents paid exceeded the published fair market rent allowed for 2023. Of the 10 cases selected for testing using rental assistance funds, 3 tenant’s rents paid exceeded the published fair market rates. The program operated using these calculations throughout the year. Prior to the close of the year, adjustments were made to correct the effect of the incorrect calculations.
Cause: The Organization is properly calculating the excess rent charge, however under the leasing program, the excess must be paid from other than HUD leasing funds.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates throughout most of the year.
Identification of a This is a repeat finding from the immediate previous audit, 2022-001.
Repeat Finding
Recommendation: We recommend that the Organization download and use the COC Program Rent Determination Worksheets for Leasing and Rental Assistance provided by HUD for each recipient. The leasing worksheet will determine the Non COC and leveraged portion of the rent if allowable. We recommend that the completed document be signed and dated by the preparer and the reviewer. Any subsequent changes or updates should be saved as a separate document.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-004 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization used rent calculation worksheets which had not been updated for the published utility rates for the area, or calculated based on HUD’s Utility Allowance Handbook.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: 20 cases from a total population of 39 were selected for testing. The utility rates were out of date on 2 of the worksheets. On 5 worksheets, the utility calculation was noted but the supporting worksheet was not included in the workbook presented for audit. The remaining files had updated utility information.
Cause: The Organization did not update their records and calculation worksheets for the change in the published utility rates or self- calculate the rates based on the Utility Allowance Handbook at the beginning of the year.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates. The calculation of the correct tenant’s portion impacts the balance paid by the Organization and subsequently charged to the HUD grants.
Identification of a This is a repeat finding from the immediate previous audit, 2022-002.
Repeat Finding
Recommendation: We recommend that written procedures addressing internal controls with respect to tracking changes in program requirements be implemented and that procedures to update any worksheets for the effect of those requirements be performed and verified to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-005 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization uses an electronic workbook to assist in the calculation of verified income, rent share of the participant, utility charges and allowances. Our testing of the workbooks found that several input errors were present but not detected and corrected in a reasonable time. There is no evidence of supervisory review in the document.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: Our review of the workbooks found:
10 of the 20 selected did not contain a date prepared or effective date.
A 2-bedroom unit was entered as a 3-bedroom unit, the lease exceeded the Fair Market Rent
An income calculation was not annualized properly, the income from all sources was understated by 25%.
Cause: The Organization uses an excel workbook to track and calculate the information needed to determine rent and utility shares for the participants in the COC programs. The forms are not being completed properly. Information is omitted or entered in the incorrect section of the workbook. There is no evidence in the workbook that it is being verified by someone other than the preparer.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program.
Recommendation: We recommend that written procedures addressing internal controls with respect to preparation of the workbooks be reviewed and should include that verification and approval procedures are evident to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-003 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization performed rent comparisons to the HUD fair market rent rates when determining if the rent was in excess of the allowable rents. If excess rent was calculated, the excess was used to determine the participants share.
Criteria: Per 24 CFR Section 578.51(g), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents charged for comparable units taking into consideration relevant features. In addition, the portion of rents paid with the grant funds may not exceed HUD-determined fair market rents for the current year.
Context: Of the 10 cases selected for testing using leasing funds, 3 tenant’s rents paid exceeded the published fair market rent allowed for 2023. Of the 10 cases selected for testing using rental assistance funds, 3 tenant’s rents paid exceeded the published fair market rates. The program operated using these calculations throughout the year. Prior to the close of the year, adjustments were made to correct the effect of the incorrect calculations.
Cause: The Organization is properly calculating the excess rent charge, however under the leasing program, the excess must be paid from other than HUD leasing funds.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates throughout most of the year.
Identification of a This is a repeat finding from the immediate previous audit, 2022-001.
Repeat Finding
Recommendation: We recommend that the Organization download and use the COC Program Rent Determination Worksheets for Leasing and Rental Assistance provided by HUD for each recipient. The leasing worksheet will determine the Non COC and leveraged portion of the rent if allowable. We recommend that the completed document be signed and dated by the preparer and the reviewer. Any subsequent changes or updates should be saved as a separate document.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-004 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization used rent calculation worksheets which had not been updated for the published utility rates for the area, or calculated based on HUD’s Utility Allowance Handbook.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: 20 cases from a total population of 39 were selected for testing. The utility rates were out of date on 2 of the worksheets. On 5 worksheets, the utility calculation was noted but the supporting worksheet was not included in the workbook presented for audit. The remaining files had updated utility information.
Cause: The Organization did not update their records and calculation worksheets for the change in the published utility rates or self- calculate the rates based on the Utility Allowance Handbook at the beginning of the year.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates. The calculation of the correct tenant’s portion impacts the balance paid by the Organization and subsequently charged to the HUD grants.
Identification of a This is a repeat finding from the immediate previous audit, 2022-002.
Repeat Finding
Recommendation: We recommend that written procedures addressing internal controls with respect to tracking changes in program requirements be implemented and that procedures to update any worksheets for the effect of those requirements be performed and verified to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-005 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization uses an electronic workbook to assist in the calculation of verified income, rent share of the participant, utility charges and allowances. Our testing of the workbooks found that several input errors were present but not detected and corrected in a reasonable time. There is no evidence of supervisory review in the document.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: Our review of the workbooks found:
10 of the 20 selected did not contain a date prepared or effective date.
A 2-bedroom unit was entered as a 3-bedroom unit, the lease exceeded the Fair Market Rent
An income calculation was not annualized properly, the income from all sources was understated by 25%.
Cause: The Organization uses an excel workbook to track and calculate the information needed to determine rent and utility shares for the participants in the COC programs. The forms are not being completed properly. Information is omitted or entered in the incorrect section of the workbook. There is no evidence in the workbook that it is being verified by someone other than the preparer.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program.
Recommendation: We recommend that written procedures addressing internal controls with respect to preparation of the workbooks be reviewed and should include that verification and approval procedures are evident to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-003 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization performed rent comparisons to the HUD fair market rent rates when determining if the rent was in excess of the allowable rents. If excess rent was calculated, the excess was used to determine the participants share.
Criteria: Per 24 CFR Section 578.51(g), where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents charged for comparable units taking into consideration relevant features. In addition, the portion of rents paid with the grant funds may not exceed HUD-determined fair market rents for the current year.
Context: Of the 10 cases selected for testing using leasing funds, 3 tenant’s rents paid exceeded the published fair market rent allowed for 2023. Of the 10 cases selected for testing using rental assistance funds, 3 tenant’s rents paid exceeded the published fair market rates. The program operated using these calculations throughout the year. Prior to the close of the year, adjustments were made to correct the effect of the incorrect calculations.
Cause: The Organization is properly calculating the excess rent charge, however under the leasing program, the excess must be paid from other than HUD leasing funds.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates throughout most of the year.
Identification of a This is a repeat finding from the immediate previous audit, 2022-001.
Repeat Finding
Recommendation: We recommend that the Organization download and use the COC Program Rent Determination Worksheets for Leasing and Rental Assistance provided by HUD for each recipient. The leasing worksheet will determine the Non COC and leveraged portion of the rent if allowable. We recommend that the completed document be signed and dated by the preparer and the reviewer. Any subsequent changes or updates should be saved as a separate document.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-004 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization used rent calculation worksheets which had not been updated for the published utility rates for the area, or calculated based on HUD’s Utility Allowance Handbook.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: 20 cases from a total population of 39 were selected for testing. The utility rates were out of date on 2 of the worksheets. On 5 worksheets, the utility calculation was noted but the supporting worksheet was not included in the workbook presented for audit. The remaining files had updated utility information.
Cause: The Organization did not update their records and calculation worksheets for the change in the published utility rates or self- calculate the rates based on the Utility Allowance Handbook at the beginning of the year.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program with respect to Special Test Requirements for Reasonable Rental Rates. The calculation of the correct tenant’s portion impacts the balance paid by the Organization and subsequently charged to the HUD grants.
Identification of a This is a repeat finding from the immediate previous audit, 2022-002.
Repeat Finding
Recommendation: We recommend that written procedures addressing internal controls with respect to tracking changes in program requirements be implemented and that procedures to update any worksheets for the effect of those requirements be performed and verified to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.
2023-005 Compliance and Significant Deficiency in Internal Control over compliance with Special
Tests and Provisions
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: The Organization uses an electronic workbook to assist in the calculation of verified income, rent share of the participant, utility charges and allowances. Our testing of the workbooks found that several input errors were present but not detected and corrected in a reasonable time. There is no evidence of supervisory review in the document.
Criteria: Per 24 CFR Section 578.77, the share of rent allowed to be charged to the tenant takes into consideration household income, size of the family and a credit for utilities included in the lease.
Context: Our review of the workbooks found:
10 of the 20 selected did not contain a date prepared or effective date.
A 2-bedroom unit was entered as a 3-bedroom unit, the lease exceeded the Fair Market Rent
An income calculation was not annualized properly, the income from all sources was understated by 25%.
Cause: The Organization uses an excel workbook to track and calculate the information needed to determine rent and utility shares for the participants in the COC programs. The forms are not being completed properly. Information is omitted or entered in the incorrect section of the workbook. There is no evidence in the workbook that it is being verified by someone other than the preparer.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program.
Recommendation: We recommend that written procedures addressing internal controls with respect to preparation of the workbooks be reviewed and should include that verification and approval procedures are evident to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 15 - 16.