Finding Text
Finding No. 2024-005: Reasonable Rental Rates – Significant Deficiency in Internal Control over Compliance Federal Program Name: Continuum of Care Pass-through Entity: All Federal Assistance Listing Number: 14.267 Criteria In accordance with 24 CFR §578.49(b)(1), Continuum of Care grant recipients must ensure that rents charged are reasonable in relation to rents for comparable unassisted units. Rent reasonableness determinations must be performed and documented at initial occupancy and when rents are increased, and must be supported by appropriate documentation, including comparable market data. Supporting documentation must be maintained in participant files to demonstrate compliance with program requirements. Condition Supporting documentation, including lease agreements and eligibility forms, within tenant files was not always sufficient to demonstrate compliance with program requirements. The rent reasonableness determinations lacked evidence of approval or audit trail to substantiate the timing or completion of the review. Questioned Costs Unknown. Effect Documentation supporting rent reasonableness determinations and tenant eligibility files was incomplete and not consistently maintained in a manner that clearly demonstrated compliance with HUD requirements, including evidence of timely performance and review of required procedures. Cause The Organization did not have formalized procedures to ensure consistent preparation, review, retention, and organization of rent reasonableness documentation and tenant file records, including clearly defined responsibility for maintaining complete and accessible documentation. Repeat Finding No Recommendation We recommend that the Organization implement formal procedures to ensure rent reasonableness determinations are properly documented, including identification of preparer and reviewer. In addition, the Organization should strengthen tenant file maintenance procedures to ensure all required supporting documentation is complete, current, and readily available, and that responsibilities for file maintenance and review are clearly assigned and consistently followed. Management’s Response/View of Responsible Officials Management agrees with this finding, see the Corrective Action Plan.