Finding Text
Finding 2022 ? 003 ? Rent Reasonableness Federal agency: U.S. Department of Housing and Urban Development Federal program title: Housing Choice Voucher Cluster Assistance Listing Numbers: 14.871 and 14.879 Award Period: October 1, 2021 to September 30, 2022 Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Other Matters Criteria or specific requirement: The PHA must determine that the rent to 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 five 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(f)(7), and 982.507). Condition: During the testing of the Housing Choice Voucher Program tenant files, certain special provision compliance deficiencies were noted as summarized below: Number of Instances Finding 21 Where the rent reasonableness was not performed prior to the effective date 13 Where the Go Section 8 form for rent reasonableness could not be provided 7 Where the 50058 form was missing for the rent reasonableness performed. 10 Where the Go Section 8 form was not signed 7 Where the auditor cannot review the previous 50058 to verify if the rent increase was processed on current transaction. Questioned costs: Undeterminable Context: During our testing, we reviewed 120 tenant files that required a rent reasonableness; 29 tenant files contained errors as noted above with multiple tenant files containing more than one error. The sample was a statistically valid sample. Cause: The Authority failed to determine the reasonableness of the rent being charged before the effective date of the tenant file or failed to properly maintain the applicable forms to support the rent reasonableness performed. Effect: The Authority is not in compliance with federal regulations regarding the determination of reasonable rent. Inaccurate data could cause Authority to be paying an unfair rent to a landlord. Repeat Finding: This is a repeat finding from previous years. The finding numbers are 2017-003, 2018-003, 2019-003, 2020-003, and 2021-003. Recommendation: We recommend that the Authority designate an individual to review tenant files to determine if a rent reasonableness has been performed. Views of responsible officials: There is no disagreement with the audit finding.