Finding Text
2024 – 006 – PBRA/MOD – Contract Rent Change
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program Title: Section 8 Project-Based Cluster
Assistance Listing Number: 14.195/14.856
Federal Award Identification Number and Year: MD004 (various funding increments active during period 7/1/23 - 6/30/24)
Award Period: July 1, 2023 through June 30, 2024
Type of Finding:
-Material Weakness in Internal Control over Compliance.
-Material Noncompliance (Modified Opinion)
Criteria: The PHA or owner applies or ensures annual adjustments to contract rents are applied. The HAP original term contract or renewal contract specifies the method to be used to determine rent adjustments. Adjustments must not result in material differences between rents charged for assisted units and comparable unassisted units except as those differences existed at contract execution. Special adjustments to contract rents, within the original contract term, may also be made to the extent deemed necessary by the PHA or HUD (24 CFR sections 880.609, 881.601, 882.410, 882.808(e), 883.701, 884.109, 886.112, 886.312(c) and Section 524 of Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA) Title V of the HUD Fiscal Year 1998 Appropriations Act, Pub. L. 105-65, as amended).
Condition: During our testing, we noted the Commission did not have adequate internal controls designed to ensure rent changes were properly applied.
Questioned costs: Unknown
Context:
Testing of 40 tenant files revealed the following 12 exceptions:
- 12 files where the rent on the 50059 did not match the approved rent schedules
Cause: The Commission does not have internal controls in place to ensure it is meeting program requirements over rent changes.
Effect: The Commission is not in compliance with program requirements over rent changes.
Repeat Finding: Not a repeat finding.
Recommendation: The Commission should implement processes to ensure that rent changes are properly applied.
View of Responsible Officials: There is no disagreement with the audit finding.