Finding Text
2024 – 003
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster
Assistance Listing Number: 14.871
Federal Award Identification Number and Year: MD015VO - 2024
Award Period: July 1, 2023 – June 30, 2024
Compliance Requirement: Special Tests and Provisions – Reasonable Rent
Type of Finding: Significant Deficiency in Internal Control over Compliance
Other Matters
Criteria or Specific Requirement: The Authority must determine that the rent to 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 Authority must maintain records to document the basis for the determination that rent to owner is a reasonable rent (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507).
Condition: The Authority was unable to provide adequate supporting documentation and evidence of internal control over compliance for reasonable rent requirements.
Questioned Costs: Unable to determine.
Context: Exceptions were noted in 1 out of 60 files tested for rent increases. The reasonable rent determination was not completed prior to the effective date.
Exceptions were noted in 3 of 60 files tested for rent reasonableness of new tenants:
Documentation was not provided for 2 samples
The approved rent was lower than the effective rent for 1 sample
Cause: The Authority did not follow the established procedures in its Housing Choice Voucher Administrative Plan.
Effect: The Authority is not in compliance with rent reasonableness requirements.
Repeat Finding: Yes, see prior year finding 2023-004.
Recommendation: We recommend the Authority review their process and internal controls for rent reasonableness to ensure compliance with HUD requirements and their administrative plan.
Views of Responsible Officials: There is no disagreement with the audit finding.