Finding Text
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program Name: Housing Voucher Cluster
Assistance Listing Number: 14.871/14.879/14.EHV
Federal Award Identification Number and Year: VA901; 2023-2024
Award Period: July 1, 2023 through June 30, 2024
Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters
Criteria or specific requirement: The PHA must determine that the rent to the 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: During our testing of 100 files for reasonable rent requirements, we noted the following in 4 files:
- 4 of 100 files tested had a rent reasonableness determination performed after the effective date
The samples were statistically valid samples.
Questioned costs: $40,800
Cause: As a balance of state PHA, the Authority is responsible for ensuring the Housing Choice Voucher (HCV) program is administered in compliance with Federal regulations across Virginia. The Authority has partnered with 26 local housing agencies (LHAs) throughout the state to administer the program. However, due to the number of LHAs, inconsistencies have arisen in quality control practices. These variations stem from differences in agency size, staffing structures, geographic service areas, and overall program capacity. To address these challenges, the Authority has taken a methodical and intentional approach to improving the HCV program while balancing the need for timely compliance with federal regulations. As part of these efforts, quality control plans have been implemented to enhance program oversight. However, these plans were introduced after the audit review period and, therefore, were not applicable to the 100 files reviewed by the audit team.
Of the 100 files reviewed, four contained rent reasonableness determination documentation dated after the effective date. While this remains non-compliant, Virginia Housing views this as a positive indication of progress compared to previous audit findings. This improvement reflects the successful implementation of enhanced quality control measures, which have increased LHA file reviews and improved the correction of deficiencies.
Effect: The Authority is not in compliance with HUD’s reasonable rent requirements.
Repeat Finding: This finding is a repeat finding in the immediate prior year. Prior year finding number was 2023-002.
Recommendation: We recommend that the Authority reviews its process over reasonable rent determination to ensure that it is performed timely (before the effective date of the rent payment) and that the approved rent is properly carried forward to the HUD-50058 and HAP contract/HAP contract amendment.
Views of responsible officials: There is no disagreement with the audit finding.