Finding Text
Criteria: When grants are used to pay for rent for all or a part of a structure, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. As part of their internal control policies, the Organization requires that the following documents are included within the tenant file: signed sublease agreement between the Organization and member/tenant and signed master lease agreement between the tenant and landlord. Condition: We were unable to obtain both the signed sublease agreement and master lease agreement for 7 of the 21 tenant files selected for testing. Of those 7 files, there was 1 file where we were unable to obtain either the signed sublease agreement or master lease agreement. The Compliance Supplement does not specify that lease agreements must be examined to verify the rent paid is reasonable in relation to rents being charged in the area for comparable space. In addition, allowable costs/cost principles and activities allowed or unallowed is not applicable to the Continuum of Care Program. Therefore, no instances of noncompliance were identified. Cause: There was a change in personnel within the housing department. Also, the department relocated to a new building during a prior fiscal year and was still getting organized. Effect: While we were able to validate for our selections the rent paid was reasonable in relation to rents being charged in the area for a comparable space for the population tested, there is the potential that the amount being paid on behalf of the tenant is not in line with the agreed upon rate if lease agreements are not retained. Repeat Finding: Prior year finding 2023-006. Recommendation: The Organization should implement procedures to ensure that tenant files include all of the required documentation to support that the rent paid is reasonable in relation to rents being charged in the area for comparable space. Response: Beginning in FY25, the Organization implemented standardized housing compliance procedures, including the use of checklists during lease execution and annual recertification to ensure required master leases, subleases, and supporting documentation are obtained and maintained. Management has also strengthened document retention practices and periodic file reviews to promote complete and accessible tenant files.