Finding Text
Criteria: Where grants are used to pay for rent for all or a part of a structure, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. As part of their internal control policies, the Organization requires that the following documents are included within the tenant file: signed sublease agreement between the Organization and member/tenant and signed master lease agreement between the tenant and landlord.
Condition: We were unable to obtain both the signed sublease agreement and master lease agreement for 10 of the 21 tenant files selected for testing. Of those 10 files, there were 2 files where we were unable to obtain either the signed sublease agreement or master lease agreement. The Compliance Supplement does not specify that lease agreements must be examined to verify the rent paid is reasonable in relation to rents being charged in the area for comparable space. In addition, allowable costs/cost principles and activities allowed or unallowed is not applicable to the Continuum of Care Program. Therefore, no instances of noncompliance were identified.
Cause: There was a change in personnel within the housing department. Also, the department relocated to a new building.
Effect: While we were able to validate the rent paid was reasonable in relation to rents being charged in the area for a comparable space for the population tested, there is the potential that the amount being paid on behalf of the tenant is not in line with the agreed upon rate if lease agreements are not retained.
Recommendation: The Organization should implement procedures to ensure that tenant files include all of the required documentation to support that the rent paid is reasonable in relation to rents being charged in the area for comparable space.
Response: To ensure both subleases and master leases are obtained and properly uploaded to each tenant’s electronic file, a standardized checklist is now used at lease signing and annual recertification.
Monthly ROI (Release of Information) reports are reviewed to identify upcoming expirations and prompt timely recertifications. Recertification documentation is first reviewed by the Housing Administrative Supervisor for accuracy and completeness, following by final review and approval from the Director of Housing.