Finding Text
Finding: 2024-025
U.S. Department of Housing and Urban Development
AL No. 14.871/14.879 Housing Voucher Cluster
Material Weakness in Internal Controls over Compliance/ Material Noncompliance for Special Tests and Provisions – Rent Reasonableness
Repeat Finding: Yes 2023-007
Condition
• For 3 of the 60 files tested, the amount documented as the reasonable rent was less than the rent to the owner noted on the HUD-50058.
• For 7 of the 60 files tested, we were not provided with proper documentation to determine that the rent comparability was performed.
Criteria
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 5 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).
Questioned Costs
Unknown.
Cause
The Authority did not sufficiently monitor controls to ensure compliance with reasonable rent requirements.
Effect
The Authority is not in compliance with federal regulations regarding the required reasonable rent requirements.
Recommendation
We recommend the Authority implements controls to ensure that the rent to owner is reasonable in accordance with their administrative plan.
Auditee Response and Corrective Action Plan:
Management agrees with the finding. Refer to the corrective action plan on current findings in this report.
Auditor’s Conclusion:
Finding remains as stated.