Finding Text
Finding Number: 2025-001 Finding Type: Federal award finding Federal Assistance Listing No.: 14.267 Program Name: Continuum of Care Program Federal Agency: U.S. Department of Housing and Urban Development Grant Number: WA0361L0T082308 Federal Award Period: October 1, 2024 through September 30, 2025 Pass-Through Entity: Multnomah County Grant Number: JOHS-SVCSGEN-15516-2023 Federal Award Period: July 1, 2023 through June 30, 2025 Control Deficiency Type: Significant deficiency over compliance Compliance Requirement: Special Tests and Provisions Repeat Finding: Yes. Prior audit finding no. 2024-001 Criteria: The Uniform Guidance in 2 CFR 200.303 requires that non-Federal entities receiving federal awards establish and maintain internal controls that provide reasonable assurance that the subrecipient is managing the federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal Award. Per 24 CFR 578.51(g), “HUD will only provide rental assistance for a unit if the rent is reasonable. The recipient or sub-recipient must determine whether the rent charged for the unit receiving rental assistance is reasonable in relation to rents being charged for a comparable unassisted unit, taking into account the location, size, type, quality, amenities, facilities, and management and maintenance of each unit. Reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units.” Condition: Some of the rent reasonableness determinations were incorrectly performed. Cause: Internal controls are insufficient to ensure the rent reasonableness test is consistently calculated accurately and that appropriate supporting documentation is properly maintained. Effect: The organization may accidently provide rental assistance that is not in compliance with HUD guidelines. Questioned costs: Known and likely questioned costs are under $25,000. Audit Recommendation: We recommend the organization review and strengthen its written policies and procedures for rent reasonableness determinations. This should include ensuring consistent application of the methodology and maintaining complete supporting documentation for all rental assistance provided, in compliance with federal program requirements. In addition, we recommend that someone independent of the preparer perform periodic reviews of the rent reasonableness tests. Management’s Response: When placing a new participant in a HUD funded housing program, or upon relocation of an existing participant, Program Management will conduct a review of the staff prepared Utility Allowance and Rent Reasonable documentation to confirm calculations have been completed accurately and all supporting documentation is present. Program Management will indicate by signature on the File Checklist that they have confirmed all Utility Allowance and Rent Reasonable documentation is present and accurate. The File Checklist is submitted to fiscal prior to first payment for a new participant and upon relocation of an existing participant. Program Management will conduct a retrospective review of all current files to ensure Utility Allowance and Rent Reasonable documentation is completed accurately and all supporting documentation is present.