Finding Text
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program Titles: Section 8 Housing Choice Vouchers Program
Federal Assistance Listing Numbers: 14.871, 14.879, and 14.EHV
Noncompliance – N. Special Tests and Provisions - Reasonable Rent
Non Compliance Material to the Financial Statements: No
Significant Deficiency in Internal Control over Compliance for Special Tests and Provisions. Criteria: Reasonable Rent. The Authority must do the following: The Authority must determine that the rent to owner is reasonable at the time of initial leasing. Also, the Authority 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 5 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 (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: Based upon inspection of the Authority’s files and discussion with management, there were newly leased units for which the evaluation of rent reasonableness was not performed.
Context: There were approximately 821 newly leased units. Of a sample size of forty-two (42) newly leased units, one (1) unit's documentation of reasonable rent was not available for examination.
Our sample size is statistically valid.
Known Questioned Costs: $16,685. Cause: There is a significant deficiency in internal controls over the compliance for the special tests and provisions type of compliance related to reasonable rent. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that reasonably assures the program is in compliance.
Effect: The Housing Voucher Cluster is in non-compliance with the special tests and provisions type of compliance related to reasonable rent.
Recommendation: We recommend the Authority design and implement internal control procedures that will reasonably assure compliance with the Uniform Guidance and the compliance supplement.
Authority Response: The Authority has recognized the significant deficiency in the Housing Voucher Cluster and will implement internal control procedures that will ensure compliance with federal regulations.