Finding Text
Application of Rent Reasonableness Standards Significant deficiency U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT ALN # : 14.267 Federal Award ID #'s: CO0083L8T042315, CO0083L8T042416, CO0110L8T042312, CO0110L8T042413, CO0061L8T042316, CO0061L8T042417. Condition: Rent was charged in excess of what was charged for other comparable units. Criteria: 2 CFR 578.51(g) requires that rents charged under the Continuum of Care Program not exceed rents currently being charged by the same owner for comparable unassisted units. Condition: Rent was charged in excess of what was charged for other comparable units. Questioned costs: $547. Context: As a result of audit procedures performed over rent reasonableness determinations, auditors identified 4 instances out of 37 clients tested in which the Organization’s rent reasonableness standard was not applied appropriately as amounts charged to the agency exceeded HPP's documentation of what was charged for other comparable units. Cause: While the Organization established controls to ensure amounts did not exceed HUD FMR's, they did not perform and maintain documentation over established rent reasonableness standards when evaluating comparable units. Effect: Amounts could be charged to the grant agreements that exceed what is charged for other comparable unassisted units, leading to questioned costs. Recommendation: Auditors recommend that management strengthen its review of rent reasonableness assessments to ensure that comparable unit data, market analyses, and approval steps support compliance with applicable program standards and documentation is maintained, and that such reviews be performed, where feasible, by an individual independent of the preparer to promote consistency and oversight. View of Responsible Official and Planned Corrective Action: Management agrees with the finding. See corrective action plan.