Finding Text
Housing Voucher Cluster – Special Tests - Reasonable Rent Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: VA003, 2025 Award Period: January 1, 2025 – December 31, 2025 Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: The PHA administrative plan must state the method used by the PHA to determine that the rent to owner is reasonable in comparison to rent for other comparable unassisted units. The PHA determination must consider unit attributes such as the location, quality, size, unit type, and age of the unit, and any amenities, housing services, maintenance, and utilities provided by the owner. The PHA must determine that the rent to the owner is reasonable at the time of initial leasing. Also, the PHA must determine reasonable rent during the term of the contract (a) before any increase in the rent to owner, and (b) at the HAP contract anniversary if there is a 10 percent decrease in the published Fair Market Rent in effect 60 days before the HAP contract anniversary. The PHA must maintain records to document the basis for the determination that rent to owner is a reasonable rent (initially and during the term of the HAP contract) (24 CFR sections 982.4, 982.54(d)(15), 982.158(£)(7), and 982.507). Condition: During testing, multiple instances were identified in which the Authority determined rent to be reasonable after the effective date of the HUD-50058 Family Report Form. Questioned costs: There are no questioned costs related to this test as all rent was determined to be reasonable. The finding is related to timeliness of the rent reasonableness determination. Context: During testing of 120 tenant files for rent reasonableness requirements, the following was noted: • 24 out of 120 files tested did not have a rent reasonableness determination form completed before the rent effective date. Cause: The Authority has had turnover in the staff who perform the rent reasonableness determinations, resulting in these processes being performed by less experienced and trained staff. Effect: The Authority is not in compliance with HUD’s requirements regarding rent reasonableness. This could have an impact on HAP calculations. Repeat Finding: Yes, prior year finding was 2024-005 Recommendation: We recommend the Authority review their processes and internal controls for rent reasonableness to ensure the reasonableness determination is completed prior to the effective date of the HUD-50058 Family Report Form. Views of responsible officials: There is no disagreement with the audit finding.