Finding Text
2024-002 Direct Program Department of Housing and Urban Development
FFAL #14.871
Section 8 Housing Choice Vouchers
Special Tests and Provisions: Reasonable Rent
Immaterial Instance of Noncompliance and Significant Deficiency in Internal Control over Compliance
Criteria: As a condition of receiving Federal awards, non-Federal entities agree to comply with laws, regulations, and the provisions of grant agreements and contracts, and to maintain internal controls to provide reasonable assurance of compliance with these requirements. The Housing Choice Voucher program requires that recipients must determine that rent to the owner is reasonable in comparison to rent for other comparable unassisted units.
Condition: Metro West Housing Solutions did not determine rent reasonableness for 2 tenants during 2024. In addition, Metro West Housing Solutions did not follow their internal controls in place to determine rent reasonableness for 3 tenants, and internal controls in place did not prevent the missing determinations on the tenants noted.
Cause: Controls over reasonable rent determination that are a part of special tests and provisions were not properly designed to ensure that comparisons were taking place.
Effect: As a result of the failure to determine reasonable rent for units leased under the Housing Choice Voucher program, there is an increased risk that Metro West Housing Solutions is overpaying landlords, which can result in noncompliance with HUD regulations.
Questioned Costs: None reported
Context/Sampling: We tested 60 out of a population of over 250 new leases during 2024 based on maximum risk of material noncompliance.
Repeat Finding from Prior Year(s): No
Recommendation: We recommend management revisit controls to ensure that reasonable rent determinations are conducted and documented in accordance with HUD requirements.
Views of Responsible Officials: There is no disagreement with the audit finding.