Audit 410994

Finding Number: 2025-001 Assistance Listing (AL) Number and Title: AL # 14.871 - Section 8 Housing Choice Vouchers/Housing Voucher Cluster Federal Award Identification Number and Year: 2025 Federal Agency: U.S. Department of Housing and Urban Development (HUD) Compliance Requirement: Special Tests and Provisions, Reasonable Rent Pass-Through Entity: N/A Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2024-005 Noncompliance and Material Weakness- Rent Reasonableness 24 CFR § 982.158(f)(7) provides that the Public Housing Authority (PHA) must keep records, for at least three years, to document the basis for PHA determination that rent to owner is a reasonable rent (initially and during the term of a Housing Assistance Payment (HAP) contract). 24 CFR § 982.54(d)(15) provides the PHA administrative plan must cover policies on the method of determining that rent to owner is a reasonable rent (initially and during the term of a HAP contract). The Authority’s Housing Choice Voucher Administrative Plan, Chapter 8 provides the Authority will make a rent reasonableness determination at initial occupancy and whenever the owner requests a rent adjustment. The Authority’s Plan also acknowledges the obligation to make rent reasonableness determinations in accordance with 24 CFR § 982.507(a), under mandatory HUD requirements. While the Authority correctly outlines its duty to make rent reasonableness determinations, the Authority could not provide the reasonable rent forms showing the calculation for 5 percent of the current files tested for the Housing Voucher Cluster program. This is due to inadequate policies and procedures in completing and maintaining the required forms. The failure to document rent reasonableness could lead to future questioned costs, reduced future federal funding, and a requirement to repay HUD. The Executive Director and Housing Voucher Cluster employees should ensure all tenant files maintain the appropriate documentation and meet the requirements for rent reasonableness. Officials’ Response: See Corrective Action Plan.