Finding Text
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program Name: Housing Voucher Cluster
Assistance Listing Number: 14.871/14.879
Federal Award Identification Number and Year: DC001VO - 2023
Award Period: October 1, 2022 – September 30, 2023
Type of Finding:
• Material Weakness in Internal Control over Compliance
• Material Noncompliance (Modified Opinion)
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 5 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/Context: Exceptions noted in 12 of the 35 samples selected for new tenants:
• For 6 of the 35 files tested, we were unable to determine that the rent was determined reasonable for the unit in accordance with the administrative plan.
• For 12 of the 35 files tested, we were not provided with proper documentation to determine that the rent comparability was performed prior to the effective date.
We were not provided documentation for 3 of the 10 files tested for contract rent changes during the term of the HAP contract.
Questioned Costs: Unable to determine.
Cause: The Authority did not sufficiently monitor controls to ensure compliance with reasonable rent requirements.
Effect: The Authority is not in compliance with federal regulations regarding the required reasonable rent requirements.
Repeat Finding: The finding is a repeat of finding 2022-007 in the prior audit period.
Recommendation: We recommend the Authority implements controls to ensure that the rent to owner is reasonable in accordance with their administrative plan.
Views of Responsible Officials: There is no disagreement with the audit finding.