Finding Text
Finding 2025-008: Special Tests and Provisions (Material Weakness) Federal Program: Continuum of Care Program Assistance Listing Number: 14.267 Criteria: Per 2 CFR Part 200 and HUD program requirements (Compliance Supplement, Special Tests and Provisions), when grant funds are used to pay rent for all or part of a structure or individual housing units, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted units. Documentation supporting these determinations must be maintained. Condition /Context: For 60 rental transactions tested, there was a lack of documentation demonstrating that rents charged under the Continuum of Care Program did not exceed rents charged by the same owner for comparable unassisted units. Our sample was not, and was not intended to be, statistically valid. Cause: Management did not implement procedures to obtain or retain documentation verifying that rents charged were consistent with those for comparable unassisted units owned by the same landlord. Staff were unaware of the specific documentation requirement, and supervisory review did not identify the omission. Effect or potential effect: Without documentation, compliance with HUD requirements regarding reasonable rental rates cannot be substantiated. This increases the risk that federal funds may be used for rents that exceed allowable limits. Questioned Costs: None Repeat Finding, if applicable: This is a repeat finding. Recommendation: Management should establish and enforce procedures requiring documentation that rents paid under the program do not exceed rents charged by the same owner for comparable unassisted units. Acceptable documentation may include copies of leases for unassisted units, rent comparison worksheets, or other contemporaneous evidence. Staff should be trained on this requirement, and supervisory review should confirm compliance before approving rental payments. Views of Responsible Officials: Camillus House acknowledges the finding and concurs with the auditor’s assessment. Management recognizes the importance of maintaining documentation to substantiate that rents charged under the Continuum of Care Program are reasonable and comply with HUD and federal requirements. Management has implemented corrective measures to strengthen internal controls and compliance procedures for rental payments.