Finding Text
Federal Agencies: Department of Housing and Urban Development
Federal Assistance Listing Numbers: 14.267
Program: Continuum of Care Program
Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187,
202210-00966, DA-202212-01319
Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-federal entities receiving
federal awards (i.e., auditee management) establish and maintain internal control designed to
reasonably ensure compliance with federal statues, regulations, and the terms and conditions of
the federal award.
Per 24 CFR §578.49(b)(1), “Where grants are used to pay for rent for all or a part of a structure or
structures, the rent paid must be reasonable in relation to rents being charged in the area for
comparable space. In addition, the rent may not exceed rents currently being charged by the same
owner for comparable unassisted space.”
Per 24 CFR §§578.49(b)(2) and 578.51(g), “When grants are used to pay rent for individual housing
units, the rent paid must be reasonable in relation to rents being charged for comparable units,
taking into account the location, size, type, quality, amenities, facilities, and management services.
In addition, the rents may not exceed rents currently being charged for comparable units, and the
rent paid may not exceed HUD-determined fair market rents.” “HUD will only provide rental
assistance for a unit if the rent is reasonable. The recipient or subrecipient must determine whether
the rent charged for the unit receiving rental assistance is reasonable in relation to rents being
charged for comparable unassisted units, taking into account the location, size, type, quality,
amenities, facilities, and management and maintenance of each unit. Reasonable rent must not
exceed rents currently being charged by the same owner for comparable unassisted units.”
Condition: For 14 out of 19 clients tested, a comparable unit analysis was not completed for updated
Housing and Urban Development (HUD) Fair Market Rates (FMR) or lease modifications prior to move
in.
Cause: LifeWire did not appropriately retain or produce documentation that rent reasonableness
was checked prior to move-in or at changes to lease terms in accordance with its policies.
Effect or Potential Effect: Insufficient retention or creation of rent reasonableness forms and
supporting documentation resulted in rent reasonableness controls not operating effectively to
appropriately identify rental amounts for LifeWire’s clients in need of rental assistance. LifeWire
could incorrectly charge expenditures to the federal program as a result.
Known Questioned Costs: $74,715
Likely Questioned Costs: $344,707
Context: This is a condition identified per review of LifeWire’s compliance with specified requirements
not using a statistically valid sample. Total costs subject to rent reasonableness were $516,407.
Identification as a Repeat Finding: Not a repeat finding.
Recommendation: We recommend that LifeWire enforce existing policies and procedures and
implement additional policies and procedures for maintaining and monitoring rental reasonableness
documentation to ensure compliance with HUD-determined FMR requirements.
Views of Responsible Officials: Management agrees with the finding that documentation was not
appropriately retained or produced regarding rent reasonableness. Management has modified its
policies and procedures to ensure completion of rent reasonableness to ensure compliance.