Audit 370143

Federal Program Titles: Section 8 Housing Choice Vouchers Federal Assistance Listing Number: 14.871 Noncompliance – N. Special Tests and Provisions – Reasonable Rent Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Special Tests and Provisions Criteria: Reasonable Rent. The Authority must do the following: The Authority must determine that the rent to owner is reasonable at the time of initial leasing. Also, the Authority must determine reasonable rent during the term of the contract (a) before any increase in the rent to owner, and (b) at the HAP contract anniversary if there is a 5 percent decrease in the published Fair Market Rent in effect 60 days before the HAP contract anniversary. The Authority 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: Based upon inspection of the Authority’s files, there were newly leased units for which rent reasonableness evaluations were not able to be located at the time of examination. Context: There were approximately nineteen (19) newly leased Section 8 Housing Choice Voucher units. Of a sample size of two (2) newly leased units, rent reasonableness evaluations for two (2) could not be located for review at the time of examination. Our sample size is statistically valid. Known Questioned Costs: Amount is below the threshold of $25,000. Cause: The Authority did not keep copies of completed rent reasonableness calculations in order to demonstrate compliance with with the Section 8 Housing Choice Voucher Program requirements. Effect: The Section 8 Housing Choice Vouchers program is in non-compliance with the special tests and provisions type of compliance related to reasonable rent. Recommendation: We recommend the Authority maintain hard copies of rent reasonableness calculations which will demonstrate compliance with the Uniform Guidance and the compliance supplement.