Finding 538189 (2024-002)

Significant Deficiency Repeat Finding
Requirement
N
Questioned Costs
$1
Year
2024
Accepted
2025-03-27

AI Summary

  • Core Issue: The Authority failed to perform timely rent reasonableness determinations, with 4 out of 100 files showing documentation dated after the effective date.
  • Impacted Requirements: Compliance with HUD's regulations on reasonable rent determinations, specifically during initial leasing and contract anniversaries.
  • Recommended Follow-Up: Review and improve processes for timely rent determinations to ensure compliance before rent payments take effect.

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.

Categories

Questioned Costs HUD Housing Programs Significant Deficiency Internal Control / Segregation of Duties

Other Findings in this Audit

  • 538184 2024-001
    Significant Deficiency Repeat
  • 538185 2024-001
    Significant Deficiency Repeat
  • 538186 2024-001
    Significant Deficiency Repeat
  • 538187 2024-002
    Significant Deficiency Repeat
  • 538188 2024-002
    Significant Deficiency Repeat
  • 538190 2024-003
    Significant Deficiency Repeat
  • 538191 2024-003
    Significant Deficiency Repeat
  • 538192 2024-003
    Significant Deficiency Repeat
  • 538193 2024-004
    Significant Deficiency Repeat
  • 538194 2024-004
    Significant Deficiency Repeat
  • 538195 2024-004
    Significant Deficiency Repeat
  • 538196 2024-005
    Significant Deficiency
  • 538197 2024-005
    Significant Deficiency
  • 538198 2024-005
    Significant Deficiency
  • 538199 2024-006
    Significant Deficiency Repeat
  • 538200 2024-006
    Significant Deficiency Repeat
  • 538201 2024-006
    Significant Deficiency Repeat
  • 1114626 2024-001
    Significant Deficiency Repeat
  • 1114627 2024-001
    Significant Deficiency Repeat
  • 1114628 2024-001
    Significant Deficiency Repeat
  • 1114629 2024-002
    Significant Deficiency Repeat
  • 1114630 2024-002
    Significant Deficiency Repeat
  • 1114631 2024-002
    Significant Deficiency Repeat
  • 1114632 2024-003
    Significant Deficiency Repeat
  • 1114633 2024-003
    Significant Deficiency Repeat
  • 1114634 2024-003
    Significant Deficiency Repeat
  • 1114635 2024-004
    Significant Deficiency Repeat
  • 1114636 2024-004
    Significant Deficiency Repeat
  • 1114637 2024-004
    Significant Deficiency Repeat
  • 1114638 2024-005
    Significant Deficiency
  • 1114639 2024-005
    Significant Deficiency
  • 1114640 2024-005
    Significant Deficiency
  • 1114641 2024-006
    Significant Deficiency Repeat
  • 1114642 2024-006
    Significant Deficiency Repeat
  • 1114643 2024-006
    Significant Deficiency Repeat

Programs in Audit

ALN Program Name Expenditures
14.117 Mortgage Insurance Homes $596.60M
14.U01 Government National Mortgage Association Mortgage Backed Securities Progam (note 4) $326.20M
64.114 Veterans Housing Guaranteed and Insured Loans $108.28M
21.026 Homeowner Assistance Fund $79.33M
14.871 Section 8 Housing Choice Vouchers $3.70M
14.879 Mainstream Vouchers $3.12M
14.169 Housing Counseling Assistance Program $835,889
14.856 Lower Income Housing Assistance Program Section 8 Moderate Rehabilitation $180,488