Finding 51967 (2022-002)

Material Weakness
Requirement
N
Questioned Costs
-
Year
2022
Accepted
2023-09-21

AI Summary

  • Core Issue: The Commission failed to consistently document reasonable rent determinations before approving rent increases.
  • Impacted Requirements: This violates HUD regulations requiring documentation of rent reasonableness compared to similar units.
  • Recommended Follow-Up: The Commission should review and enhance their policies to ensure compliance with documentation for all rent changes.

Finding Text

2022-002 ? Reasonable Rent Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Housing Choice Voucher Program FALN: 14.871/14.879 Federal Award Identification Number and Year: MD023, 2022 Award Period: 1/1/2022-12/31/2022 Type of Finding: Material Weakness in Internal Control over Compliance Criteria or specific requirement: The PHA must determine reasonable rent during the term of the contract before any increase in the rent to owner (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). Per the Commission's administrative plan, before approving a rent increase, the HCHC must determine and document whether the proposed rent is reasonable compared to similar units in the marketplace and not higher than those paid by unassisted tenants. Condition: We noted that the Commission did not maintain consistent documentation regarding reasonable rent determination. Questioned costs: Unable to determine. Context: During our testing of 25 files for rent reasonableness, we noted the following: 7 out of 25 rent changes tested were missing a rent reasonableness form. Cause: The Commission did not follow established procedures in their Housing Choice Voucher Administrative Plan. Effect: The Commission is not in compliance with HUD requirements. Repeat finding: No Recommendation: We recommend that the Commission review their policies and ensure that rent reasonableness is determined and documented for all rent changes. Explanation of disagreement with audit finding: There is no disagreement with the audit finding.

Corrective Action Plan

2022-002 Housing Choice Voucher Program ? FALN No. 14.871 Recommendation: We recommend that the Commission review their policies and ensure that rent reasonableness is determined and documented for all rent changes. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Rent Reasonableness is an essential requirement for the HCV program, as it ensures that the rents paid by the program participants are fair and comparable to the market rates. The following actions have been implemented to ensure rent reasonableness calculations are being made and properly applied: ? Staff uses an automated system called ?RentEllect?, that captures data of unassisted units in the Howard County market area and uses it to determine rent reasonableness. ? Staff documents the rent reasonableness determination for each program unit using clear and concise language. The documentation includes the source of information, the comparison units, the method of calculation, and the final rent decision. The documentation is maintained electronically and is attached to the tenant file in HCHC?s Yardi Database. The HCHC uses Yardi Software to manage all HCV program transactions. ? The HCV department trained staff on the rent reasonableness process and procedures and provided appropriate tools, including ?RentEllect,? to ensure accurate data. ? Supervisory staff will review the rent reasonableness determinations periodically and update the procedures as needed, especially when there are changes in the Fair Market Rents (FMRs), the rent to the owner, or the unit condition. Name(s) of the contact person(s) responsible for corrective action: Paul Diggs, Director of HCVP Planned completion date for corrective action plan: December 1, 2023

Categories

HUD Housing Programs Material Weakness Internal Control / Segregation of Duties

Other Findings in this Audit

  • 51966 2022-001
    Significant Deficiency
  • 51968 2022-003
    Material Weakness
  • 51969 2022-004
    Significant Deficiency
  • 51970 2022-001
    Significant Deficiency
  • 51971 2022-002
    Material Weakness
  • 51972 2022-003
    Material Weakness
  • 51973 2022-004
    Significant Deficiency
  • 628408 2022-001
    Significant Deficiency
  • 628409 2022-002
    Material Weakness
  • 628410 2022-003
    Material Weakness
  • 628411 2022-004
    Significant Deficiency
  • 628412 2022-001
    Significant Deficiency
  • 628413 2022-002
    Material Weakness
  • 628414 2022-003
    Material Weakness
  • 628415 2022-004
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.871 Section 8 Housing Choice Vouchers $22.73M
14.879 Mainstream Vouchers $1.19M
21.023 Covid-19 - Emergency Rental Assistance Program $450,587
14.218 Community Development Block Grants/entitlement Grants $326,222
14.241 Housing Opportunities for Persons with Aids $250,315
14.896 Family Self-Sufficiency Program $67,165