Finding Text
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Housing Voucher Cluster Federal Assistance Listing Numbers: 14.871 and 14.879 Noncompliance – N. Special Tests and Provisions - Reasonable Rent Non Compliance Material to the Financial Statements: Yes Material Weakness in Internal Control over Compliance for Special Tests and Provisions Criteria: Reasonable Rent. The Authority must do the following: The Authority must determine that the rent to owner is reasonable at the time of initial leasing. Also, the Authority 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 5 percent decrease in the published Fair Market Rent in effect 60 days before the HAP contract anniversary. The Authority 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(f)(7), and 982.507). Condition: Based upon inspection of the Authority’s files and discussion with management, there were newly leased units for which the evaluation of rent reasonableness was not performed. Context: There were approximately one hundred fifty-three (153) newly leased units. Of a sample size of fifteen (15) newly leased units, four (4) units' documentation of reasonable rent was not available for examination. Our sample size is statistically valid. Known Questioned Costs: $7,383* * Represents HAP attributable to four (4) new move-ins for which the Authority could not demonstrate compliance with the rent reasonableness requirements. The questioned costs do not represent amounts determined to be ineligible but rather costs associated with the new move-ins that may not have been housed in compliance with the rent reasonableness requirements. Cause: There is a material weakness in internal controls over the compliance for the special tests and provisions type of compliance related to reasonable rent. The Authority has not maintained and monitored a system of internal controls that reasonably assures the program is in compliance. Effect: The Housing Choice Vouchers Program is in material non-compliance with the special tests and provisions type of compliance related to reasonable rent. Recommendation: We recommend that the Authority implement a process whereby Authority personnel are hired and trained on performing the appropriate rent reasonableness procedures that will reasonably assure compliance with the Uniform Guidance and the compliance supplement.