Finding 1153049 (2022-002)

Material Weakness Repeat Finding
Requirement
N
Questioned Costs
-
Year
2022
Accepted
2025-09-15

AI Summary

  • Core Issue: There are significant gaps in documentation for rent reasonableness, leading to potential noncompliance with HUD requirements.
  • Impacted Requirements: Rent must be reasonable compared to similar units, and proper review and approval processes must be in place before disbursing funds.
  • Recommended Follow-Up: Ensure all rent determinations are documented and reviewed before approval; monitor tenant files for compliance.

Finding Text

Program Name – Continuum of Care Program CFDA Number – 14.267 Finding Type – Material Weakness and Noncompliance Criteria – Where 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 relevant features. In addition, the rents may not exceed rents currently being charged by the same owner for comparable unassisted units, and the portion of rents paid with grant funds may not exceed HUD-determined fair market rents. Condition – During the audit we tested 60 samples and noted: • For 7 samples no supporting documents were provided and we were not able to verify if the rent was reasonable. • For 1 sample the rent for comparable units at the same owner were lower than the assisted unit and there was no explanation why the rent was determined to be reasonable. • For 12 sample we could not verify evidence of review and approval of the rent reasonableness before the rent and the subsidy was approved. Questioned Cost – Unknown Identification of a Repeat Finding – This is not a repeat finding from the immediate previous audit Cause/Effect – There was a high staff turnover during the COVID-19 pandemic and staff responsible for the determination and the documentation was no longer available. As a result, we could not verify the reasonableness of rent payments. Recommendation – We recommend that all rent reasonableness determinations are properly documented. All records should be monitored in the tenant files to evidence the rent reasonable determinations. The documentation should be reviewed and approved before rents and rent subsidies are authorized and disbursed.

Corrective Action Plan

Michigan Ability Partners strives to maintain compliance with all HUD requirements, however due to the challenges of social distancing and the requirement of remote work during the COVID era, meeting in person with clients and landlords to obtain signed documents became much more difficult. Staff transitions also contributed to these challenges. The Voucher Manager position—responsible for verifying rent reasonableness and filling open HUD vouchers—was vacated in July 2022 after a brief tenure. Although the role was refilled quickly, the transition resulted in information gaps during lease renewal periods due to the disruption in continuity and knowledge transfer. To help support the growing difficulty of the work, a new position, Housing Administrative Team Lead, was created in November 2022 to have direct responsibility of the Voucher Manager, maintain compliance, and update systems and workflows. More recently, in August 2024, Michigan Ability Partners created an additional position, Sr. Manager of Programs to provide an additional level of review to ensure compliance. To recruit and retain qualified staff, the salaries for these three position have been adequately adjusted.

Categories

HUD Housing Programs Material Weakness

Other Findings in this Audit

  • 1153027 2022-002
    Material Weakness Repeat
  • 1153028 2022-003
    Material Weakness Repeat
  • 1153029 2022-002
    Material Weakness Repeat
  • 1153030 2022-003
    Material Weakness Repeat
  • 1153031 2022-002
    Material Weakness Repeat
  • 1153032 2022-003
    Material Weakness Repeat
  • 1153033 2022-002
    Material Weakness Repeat
  • 1153034 2022-003
    Material Weakness Repeat
  • 1153035 2022-002
    Material Weakness Repeat
  • 1153036 2022-003
    Material Weakness Repeat
  • 1153037 2022-002
    Material Weakness Repeat
  • 1153038 2022-003
    Material Weakness Repeat
  • 1153039 2022-002
    Material Weakness Repeat
  • 1153040 2022-003
    Material Weakness Repeat
  • 1153041 2022-002
    Material Weakness Repeat
  • 1153042 2022-003
    Material Weakness Repeat
  • 1153043 2022-002
    Material Weakness Repeat
  • 1153044 2022-003
    Material Weakness Repeat
  • 1153045 2022-002
    Material Weakness Repeat
  • 1153046 2022-003
    Material Weakness Repeat
  • 1153047 2022-002
    Material Weakness Repeat
  • 1153048 2022-003
    Material Weakness Repeat
  • 1153050 2022-003
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
14.267 Continuum of Care Program $168,663
64.024 Va Homeless Providers Grant and Per Diem Program $150,137
17.805 Homeless Veterans’ Reintegration Program $125,052
64.003 Education and Training of Health Service Personnel $99,468
14.218 Community Development Block Grants/entitlement Grants $62,749