Audit 368854

2024 – 001 Federal Agency: U.S. Department of Housing and Urban Development Federal Programs: Housing Choice Voucher Cluster Assistance Listing Numbers: 14.871 and 14.879 Federal Award Identification Number and Year: MA003 – 2024 Award Period: January 1, 2024 – December 31, 2024 Compliance Requirement: Special Tests – Rent Reasonableness Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: The PHA must determine that the rent to the owner is reasonable at the time of initial leasing. The PHA must maintain records to document the basis for the determination that rent to owner is a reasonable rent (initially and during the term of the HAP contract) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). Condition: 7 of the 21 tenants selected for testing, the Authority was unable to locate the rent reasonableness determination that was performed prior to the effective date of the certification. Questioned Costs: None. Context: Rent reasonableness determinations were not appropriately documented. Cause: Procedures are not in place to ensure that rent reasonableness is performed and properly retained in the tenant files. Effect: Failure to perform rent reasonableness determinations prior to executing leases for new tenants may result in the Authority approving rents that exceed market rates and result in noncompliance with HUD requirements. Recommendation: We recommend the Authority implement internal controls to ensure that the rent reasonableness is properly determined prior to certification and that all required documentation is maintained in tenant files. Views of Responsible Officials: There is no disagreement with the audit finding.

2024 – 002 Federal Agency: U.S. Department of Housing and Urban Development Federal Programs: Housing Choice Voucher Cluster Assistance Listing Numbers: 14.871 and 14.879 Federal Award Identification Number and Year: MA003 – 2024 Award Period: January 1, 2024 – December 31, 2024 Compliance Requirement: Special Tests – Utility Allowances Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: The PHA must maintain an up-to-date utility allowance schedule. The PHA must review utility rate data for each utility category each year and must adjust its utility allowance schedule if there has been a rate change of 10 percent or more for a utility category or fuel type since the last time the utility allowance schedule was revised (24 CFR section 982.517). Condition: The Authority did not perform a utility allowance review in the prior two years. Questioned Costs: None. Context: Utility allowance reviews are not being performed. Cause: Procedures are not in place for the Authority to ensure that the Authority is reviewing utility allowances properly. Effect: Failure to perform the required utility allowance review may result in the continued use of outdated or inaccurate utility schedules, which can lead to incorrect housing assistance payments. This may cause tenants to receive either excessive or insufficient subsidies, resulting in noncompliance with HUD regulations and potential financial exposure for the Authority. Recommendation: We recommend the Authority implement internal controls to ensure that the utility allowances are reviewed in accordance with the HUD requirements. Views of Responsible Officials: There is no disagreement with the audit finding.