Audit 413701

2025-002 – Significant Deficiency – Internal Control over Compliance Criteria: The PHA administrative plan must state the method used by the PHA to determine that the rent to owner is reasonable in comparison to rent for other comparable unassisted units. The PHA determination must consider unit attributes such as the location, quality, size, unit type, and age of the unit, and any amenities, housing services, maintenance, and utilities provided by the owner. The PHA must determine that the rent to the owner is reasonable at the time of initial leasing. Also, the PHA 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 10 percent decrease in the published Fair Market Rent in effect 60 days before the HAP contract anniversary. 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: The Authority was unable to provide documentation of appropriate evaluation of rent reasonableness procedures for 3 of 22 selections made. The 3 selections specifically were instances where the evaluations were during the term of the contract when the circumstance indicated an evaluation should be completed. Cause: The Authority did not properly ensure documentation was maintained for rent evaluation reasonableness during the transitions from physical files to digital file maintenance. Effect or Potential Effect: Because documentation could not be located we were unable to determine if the evaluations of rent reasonableness was appropriately completed for 3 of the 22 selections tested. Recommendations: We would recommend the Authority implement a process to ensure all rent reasonableness evaluations are completed as required, and documentation to support the evaluation process and conclusion is appropriately maintained within the tenant and/or property files. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding outlined and is working to implement necessary changes to ensure compliance and appropriate internal controls are operating effectively.