Finding 1217313 (2025-002)

Reference Number: 2025-002 Program Name: 14.267 Continuum of Care Description: Special Tests and Provisions Criteria: 24 CFR section 578.51(g) states that when grant funds are used to pay rent, the rent paid must be reasonable in relation to rents being charged for comparable units considering relevant features. Condition: Previously the Organization had a rent reasonableness form that was filled out to ensure the rent paid by the Organization was allowable. However, during our testing of special tests and procedures, it was determined the Organization stopped filling out the rent reasonableness forms. The Organization did not have a control in place to ensure the rent paid was reasonable and allowable. Questioned Costs: $1,519,018. Cause: The Organization had significant turnover and this control was overlooked. Effect: Completing rent reasonability testing ensures the cost-effectiveness of funds and fair market practices of Continuum of Care funded housing. Identification of a Repeat Finding: This is not repeat finding. Auditors’ Recommendation: We recommend the Organization review their control procedures related to the lease signing. Views of Responsible Officials: See attachment for the Organization’s corrective action plan.