Finding Text
Assistance Listing Number, Federal Agency, and Program Name 14.267, U.S. Department of Housing and Urban Development, Continuum of Care Program Federal Award Identification Number and Year M10171L5F061912, 2021; MI10171L5F062013, 2022; MI0616D5F062002, 2021; MI0616D5F062103, 2022 Pass through Entity Not applicable Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria Per 24 CFR 578.49, rent paid must be reasonable in relation to rents being charged in the area for comparable space. Condition Controls in place did not ensure the Organization verified rent paid is reasonable in relation to rents being charged in the area for comparable space. Questioned Costs $1,249 Identification of How Questioned Costs Were Computed Questioned costs consist of rent paid for which documentation does not support reasonableness. Context For one of the seven rent payments tested, we were unable to conclude if the rent was reasonable in relation to rents being charged in the area for comparable space as the documentation maintained did not contain information on the number of bedrooms in the rental unit. Further, in review of the other six rent payments tested, we noted information on the number of bedrooms was not readily available and management's conclusions for rent reasonableness was not documented. Cause and Effect Controls were not in place to ensure rent reasonableness. A lack of controls, could result in questioned costs. Recommendation We recommend management establish procedures and controls to ensure documentation reviewed for rent reasonableness is maintained and the related conclusions are documented. Views of Responsible Officials and Planned Corrective Actions The Project Heal department verifies rent reasonableness before submission for grant reimbursement and/or billing is made to the finance department. The Staff Accountant called landlords to verify space against rent amount to ensure the amount charged was reasonable and verified against billing. Continuing forward, the finance department will work Project Heal to ensure all rent is paid according to space and area.