Finding Text
Federal Program Title(s):
ALN 14.267 – Continuum of Care Program
Federal Agencies:
Department of Housing and Urban Development (ALN 14.267)
Pass-Through Agencies: N/A
Award Numbers and Periods:
NM0056L6B012001 (7/1/2021-6/30/2022) (14.267)
NM0129D6B011901 (11/1/2020-10/31/2021) (14.267)
NM0129D6B012002 (11/1/2021-10/31/2022) (14.267)
Type of Finding:
Significant Deficiency in Internal Control over Compliance
Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the
nonfederal entity must establish and maintain effective internal control over the Federal award that
provides reasonable assurance that the non-Federal entity is managing the Federal award in
compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per
24 CFR 578.49(b)(1) - When grants are used to pay rent for all or part of a structure or structures, the
rent paid must be reasonable in relation to rents being charged in the area for comparable space. In
addition, the rent paid may not exceed rents currently being charged by the same owner for
comparable unassisted space. Per 24 CFR 578.49(b)(1) - When grants are used to pay rent for
individual housing units, the rent paid must be reasonable in relation to rents being charged for
comparable units, taking into account the location, size, type, quality, amenities, facilities, and
management services. In addition, the rents may not exceed rents currently being charged for
comparable units, and the rent paid may not exceed HUD-determined fair market rents.
Condition: During our testing, we noted that VSS internal controls surrounding fair market rent did not
comply with the program requirements.
Context and Questioned Costs: During our testing over the special provision for fair market rent, we
noted that VSS did not have an updated fair market calculation for 1 of the 5 tested participants.
Additionally, noted that the number in the household decreased and there was not an assessment of
the fair market rent allowable for the household size.
Cause: Lack of established controls and procedures over the program’s fair market rent requirements. Effect: Possible noncompliance with federal requirements and HUD program requirements.
Repeat Finding: N/A – New
Recommendation: We recommend that VSS reviews the current financial policies and procedures in
order to better serve the organization in documenting compliance with federal and grantor requirements
regarding the program requirements.
Views of responsible officials: VSS agrees with CLA and has updated our financial policies. We
have hired an accountant, in addition to our Finance Director and Finance Coordinator to create a
system of posting and review. Fair Market Rents will be reviewed along with the HQS worksheet and
Income Limits during annual recertification for active participants in the HUD program.