Finding Text
Housing Voucher Cluster - Reasonable Rent Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Federal Award Identification Number and Year: VA003, 2023-2024 Assistance Listing Number: 14.871/14.879/14.EHV Award Period: July 1, 2023 – December 31, 2024 Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: The PHA must determine that the rent to the 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% 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 (24CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). Condition: During our testing, we noted the Authority did not have adequate internal controls designed to ensure compliance over reasonable rent requirements was met. Context: During our testing of 120 files for rent reasonableness requirements, we noted the following: - 60 out of 120 files did not have a tenant-signed lease amendment that tied to the approved rental request form. - 53 of 120 files tested did not have a rent reasonableness determination form completed before the rent effective date. - 44 of 120 files tested did not have a rent reasonableness determination form completed. Questioned costs: None Cause: The Authority has had turnover in the staff who perform the rent reasonableness determinations, resulting in these processes being performed by less experienced and trained staff. Effect: The Authority is not in compliance with HUD’s requirements over rent reasonableness. This could have an impact on HAP calculations. Repeat Finding: Yes, 2023-005. Recommendation: We recommend the Authority review their process and internal controls for rent reasonableness to ensure compliance with HUD requirements and their administrative plan. Views of responsible officials: There is no disagreement with the audit finding.