Finding Text
Finding Number 2023-001 (Significant Deficiency - ASSISTANCE LISTING #14.267)
U.S. Department of Housing and Urban Development
Grant number NY1135L2C002104 / NY1135L2C002205
Grant period July 1, 2022 through June 30, 2023 / July 1, 2023 through June 30, 2024
Condition: The rents charged to beneficiaries, who receive rent assistance through the program, must be reasonable in relation to rents being charged for comparable units. The Organization is required to establish the reasonableness of the rents charged by the property owner for comparable unassisted units. Out of 40 program beneficiaries selected for testing, the Organization had a documented rent reasonableness assessment for only 13 of the selections.
Criteria: The Organization is required to establish the reasonableness of the rents charged by the property owner for comparable unassisted units as specified in the N- Special Tests and Provisions compliance requirement.
Cause: The Organization did not have a process in place to establish rent reasonableness for the entire reporting period.
Effect: The Organization had not met the program requirement in establishing the reasonableness of rent charged to program beneficiaries for the entire reporting period.
Context: Out of 40 program beneficiaries selected for testing, The Organization had a documented rent reasonableness assessment for only 13 of the selections. This sample was not statistically valid as a haphazard selection method was utilized in identifying the sample.
Recommendation: Management should implement a system and internal control process to ensure the proper reasonableness assessment is being made for each program beneficiary.
Management’s Response: Policies and procedures have been established to properly meet the recommendation. During 2023, the U.S. Department of Housing and Urban Development had performed their own audit of the program and identified this same matter to management. After management was informed of this deficiency, they took direct action during 2023 to implement procedures to prevent this issue in the future.