Finding 37533 (2022-002)

Finding No. 2022-002 ? CFDA 14.871 ? Special Tests and Provisions ? Rent Reasonableness CONDITION: The Authority failed to employ an effective methodology to determine and document the reasonableness of rents charged by owners to Housing Choice Voucher participants in accordance with its written Administrative Plan and HUD regulations. CRITERIA: PHAs are required to determine whether rents charged by owners to Housing Choice Voucher program participants are reasonable, with respect to comparable unassisted units; prior to entering into HAP contracts; when there is a 5 percent or more decrease in the FMR within 60 days of the HAP contract anniversary; and prior to approving any subsequent rent increases in accordance with 24 CFR 982.507. QUESTIONED COSTS: The amount of questioned costs could not be determined. CONTEXT: During audit fieldwork, 40 HAP contract files from a statistically valid sample were examined for compliance with rent reasonableness determination criteria. Of the 40 files examined, 6 files did not contain evidence to support that sufficient steps had been taken to determine that HAP contract rents paid to owners were reasonable. EFFECT: Failure to determine rent reasonableness provides no assurance that HUD funds are being used efficiently as it may lead to the approval of rents that are too high. CAUSE: The overall cause was a lack of management oversight and quality control over this program. RECOMMENDATION: The Authority should implement greater oversight over the Housing Choice Voucher program and provide additional training to staff on determining rent reasonableness in accordance with SHA?s Administrative Plan and HUD regulations. The Authority indicated in the 2021 Corrective Action plan they hope to have a process in place for this by October 1, 2022, after the conclusion of this period under audit.