Finding Text
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Continuum of Care Program Assistance Listing Number: 14.267 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Internal controls should be in place to maintain rent documentation that supports the contracts are being paid consistently with established rent reasonableness. Condition: In a sample of 25 tenant rent records, one instance was noted where the Housing Assistance Payment (HAP) received exceeded the annual contract subsidy amount. Questioned Costs: None. Context: The Organization did not properly update the amount charged to the grant based on the annual contract for 1 of 25 tenant rent records reviewed. Cause: The error occurred due to a failure in updating the tenant’s subsidy amount in accordance with the annual contract terms. This may have resulted from a lapse in internal review or documentation procedures. Effect: The Organization paid a higher subsidy than permitted under the annual contract, resulting in noncompliance with HUD’s rent reasonableness requirements. Repeat Finding: No. Recommendation: We recommend that management strengthen internal controls to ensure timely updates of tenant subsidy amounts based on the contract terms and implement a review process to verify that HAP payments align with the most recent annual contract documentation. Views of Responsible Officials: Management of the Organization agrees with the above finding and recommendations and has established a system of internal control monitoring and review.