Audit 406527

Compliance requirements: Eligibility; Special Tests and Provisions – Reasonable Rent Determinations Identification as a Repeat Finding: Not a repeat finding Finding: The Authority’s internal controls over tenant files did not consistently prevent or detect and correct missing documentation or errors in Moving to Work Demonstration (MTW) program participants’ eligibility calculations or reasonable rent determinations. Sample Size and Population: We selected 25 Moving-to-Work Demonstration Program housing voucher tenants’ files for testing, out of a population of all participants in the program. Criteria: Public Housing Authorities are required to establish and implement policies and procedures to support compliance with applicable requirements of the Moving-to-Work Demonstration Program. For the special test and provision related to reasonable rent determinations, the 2025 Compliance Supplement requires the Housing Authority to have a reasonable rent policy in place and to implement that policy. Public Housing Authorities are also required to develop uniform Utility Allowance calculations for each unit type and then use that amount consistently across all MTW program participants, in accordance with their MTW Plan. Condition: The Housing Authority has adopted a policy for reasonable rent determinations and has implemented that policy during the year. The Housing Authority has also adopted a schedule of utility allowances for each unit type based on utility usage and updated utility rates in the region. However, the Housing Authority did not consistently follow these policies or schedules based on our testing: • 5 out of the 25 MTW program tenant files selected for testing had rent increases during the year for which reasonable rent determinations were not completed or documented in accordance with the Housing Authority’s established policy. Management subsequently re-performed the reasonable rent determinations for the sampled files and determined that none of the selected tenants’ rents were unreasonable. • 1 out of the 25 tenant files tested included an improperly calculated utility allowance, which resulted in a MTW program participant paying $14 per month in excess of 30% of their adjusted monthly income for five months of the audit year. Management has already contacted the tenant to process a reimbursement for overpayments collected. Cause: The Housing Authority’s tenant file review and monitoring controls were not operating consistently during the year. Although policies and procedures were in place, the review process did not identify all instances in which staff did not fully follow the reasonable rent determination policy or detect incorrect calculations in a tenant’s utility allowance. Effect: Because the Housing Authority did not uniformly apply its reasonable rent policy and did not identify a utility allowance calculation error through its review process, there is an increased risk that tenant files may contain incomplete, inconsistent, or inaccurate compliance documentation. There is also an increased risk that tenant rent calculations may be incorrect and could result in tenants paying more or less than the allowable amount. The reasonable rent exceptions did not result in identified material noncompliance because management re-performed the sampled reasonable rent determinations and concluded that the rents were reasonable. The utility allowance error resulted in a $70 tenant overpayment during the audit period. The error did not result in any known or likely questioned costs. Questioned Costs: None Recommendations: Management should strengthen its tenant file review and monitoring procedures to ensure that reasonable rent determinations and utility allowance calculations are completed, documented, and reviewed in accordance with the Housing Authority’s policies and applicable program requirements. Management Response: Management response is reported in the “Corrective Action Plan” at the end of this report. Contact Person: Lowel Krueger, Executive Director