FAC Explorer

Finding 30872 (2022-001)

Material Weakness
Requirement
N
Questioned Costs
$1
Year
2022
Accepted
2023-06-25
Audit: 26858
Organization: Westerly Housing Authority (RI)
Auditor: Marcum LLP

AI Summary

  • Core Issue: The Authority failed to assess rent reasonableness for new admissions, violating HUD requirements.
  • Impacted Requirements: Rent assessments must be conducted before lease approvals and when specific conditions arise, as outlined in 24 CFR 982.507.
  • Recommended Follow-Up: Provide training on reexamination procedures and consider using a third party for rent assessments.

Finding Text

2022-001 ? SPECIAL TESTS & PROVISIONS: RENT REASONABLENESS Material Weakness/Material Noncompliance U.S. Department of Housing and Urban Development CFDA #: 14.871 ? Housing Voucher Cluster CRITERIA The PHA may not approve a lease until the PHA determines that the initial rent to an owner is a reasonable rent. (2) The PHA must redetermine the reasonable rent: (i) Before any increase in the rent to an owner; (ii) If there is a 10 percent decrease in the published FMR in effect 60 days before the contract anniversary (for the unit size rented by the family) as compared with the FMR in effect 1 year before the contract anniversary. (iii) If directed by HUD. The PHA may also redetermine the reasonable rent at any other time. At all times during the assisted tenancy, the rent to owner may not exceed the reasonable rent as most recently determined or redetermined by the PHA. (24 CFR 982.507) CONDITION We identified 5 instances in which the Authority was required to perform an assessment to determine if the rent requested by the landlord is reasonable for new admissions. In all five, the Authority did not perform this rent reasonableness assessment. CAUSE The Authority experienced turnover in the administrative department. EFFECT The Authority cannot ensure that HAP payments to landlords were reasonable. QUESTIONED COSTS Likely questioned costs - $4,724. CONTEXT We selected a sample of 20 from a population of 185. This was not a statistically valid sample. REPEAT FINDING This is not a repeat finding. RECOMMENDATION We recommend the Authority provide training for the performance of reexamination procedures and use a third party to conduct rent reasonableness. AUDITEE?S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.

Corrective Action Plan

2022-001 ? SPECIAL TESTS & PROVISIONS: RENT REASONABLENESS Material Weakness/Material Noncompliance U.S. Department of Housing and Urban Development ALN #: 14.871 ? Housing Voucher Cluster Auditee?s Response and Planned Corrective Action The Westerly Housing Organization hired the public accounting firm, MARCUM to perform and file the organizations 2022 annual required audit and financial statements required by HUD. We do not expect any further issues with performing an assessment to determine if the rent requested by the landlord is reasonable for new admissions. Due to a turnover in administration in the Housing Choice Voucher program, the new Housing Choice Voucher Coordinator was still in training when the audit was conducted. The coordinator had started reviewing the files and realized the rent reasonableness was not listed in all files and was informed by the auditor the files contained an outdated rent reasonableness form. At that time, the auditor forwarded an updated rent reasonableness form. The organization has since implemented a new written policy and submitted a new form provided by our auditor to enable assessing rent reasonableness for new admissions. The organization can ensure that HAP payments to landlords are reasonable by surveying several listings of available comparable unassisted units for rent throughout the local area on websites such as Apartments.com, Zillow.com, Turelia.com and reached out to area Real Estate companies. The organization will secure training for all housing authority program employees with necessary updates and HUD changes regarding rent reasonableness on an ongoing basis. The organization will consistently review the information for rent reasonableness standards required from HUD and make any necessary changes immediately. Planned Implementation Date of Corrective Action: May 2023 Person Responsible for Corrective Action: Lucienne Andrew, Executive Director

Categories

Questioned Costs HUD Housing Programs Special Tests & Provisions Material Weakness

Other Findings in this Audit

  • 607314 2022-001
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
14.871 Section 8 Housing Choice Vouchers $1.66M
14.850 Public and Indian Housing $359,765
14.872 Public Housing Capital Fund $255,555