Finding Text
2024-001 - Rent Reasonableness
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program Name: Housing Choice Voucher Cluster
Assistance Listing Number: 14.871
Federal Award Identification Number and Year: FL071 - 2024
Award Period: 07/01/2023-06/30/2024
Type of Finding:
• Significant Deficiency in Internal Control over Compliance
• Other Matters
Criteria or Specific Requirement: The PHA 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 five 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: Of the tenant files provided, auditor noted one instance where the Authority could not provide a copy of the reasonable rent report to support the determination that the new rent was reasonable when compared to the market for the rent increase and two instances where the rent reasonableness was performed after the effective date and the housing assistance payment was paid before rent reasonableness was performed.
Questioned Costs: $1,012
Context: Out of 8 files, 3 files contained errors as noted above.
Cause: The Authority failed to provide adequate monitoring and oversight to ensure compliance with HUD rules and regulations, as well as their administrative policy.
Effect: The Authority does not have adequate procedures in place to ensure that rent reasonableness is performed for rent increases.
Repeat Finding: No
Recommendation: The Authority should designate an individual to review tenant files to ensure that rent reasonableness is properly performed before the effective date and maintained in the file.
Views of Responsible Officials: There is no disagreement with the audit finding.