Finding Text
Criteria HUD regulations require public housing authorities to determine and document that the rent charged to Housing Choice Voucher participants is reasonable in comparison to rents charged for comparable unassisted units in the private market. Rent reasonableness determinations must be performed before executing a Housing Assistance Payments (HAP) contract and whenever there is a rent increase request from the owner. The Authority must maintain documentation supporting the determination in the tenant file. Condition During our testing of Housing Choice Voucher tenant files, we noted that the Authority did not consistently perform and/or adequately document rent reasonableness determinations prior to approving Housing Assistance Payments contracts and rent increase requests. Specifically, of the 20 tenant files tested, 2 tenants had billing activity not recorded in the general ledger, and 3 files lacked sufficient documentation evidencing that a rent reasonableness review was performed and approved before the effective date of the HAP contract or rent adjustment. As a result, the Authority could not demonstrate compliance with HUD rent reasonableness requirements for these transactions. The exception rate identified during testing was 5 out of 20 files tested, representing approximately 25% of the sample selected for compliance testing. Cause The Authority's procedures for ensuring that rent reasonableness determinations are completed and documented were not operating effectively. Management did not maintain adequate supervisory review controls to verify that supporting documentation was completed, retained, and included in tenant files before approval of rental assistance payments. Effect Failure to perform and document rent reasonableness determinations increases the risk that the Authority may approve assistance payments for units with rents that exceed comparable market rents. As a result, federal funds may not be expended in accordance with HUD requirements.