Core Issue: The PHA failed to ensure compliance with rent reasonableness documentation for new leases and rent increases.
Impacted Requirements: This violates 24 CFR 985.507, which mandates that the PHA must determine reasonable rent before approving leases.
Recommended Follow-Up: Adjust procedures to guarantee all leases and rent increases include proper rent reasonableness documentation, with records retained for review.
Finding Text
2023-001 Condition: Deficiencies Noted in SEMAP Compliance
Assistance Listing #: 14.881
Questioned Costs: None
Criteria: 24 CFR 985.507 states that “The PHA may not approve a lease until the PHA determines that the initial rent to owner is a reasonable rent.”
Cause/Effect: The PHA did not have sufficient internal controls in place to ensure that each rent change or new move in voucher had a rent reasonableness documentation in the file. The Authority was not in compliance with rent reasonableness requirements.
Recommendation: We recommend the Authority adjust its procedures to ensure that all new leases and rent increases have a determination of rent reasonableness and the documentation is retained in the files for review.
Reply: We concur with this finding and the Auditor’s recommendation. We will adjust our procedures to ensure that all new leases and rent increases have a determination of rent reasonableness and the documentation is retained in the files for review. Management will implement procedures to clear this finding in FY 2024.
Categories
Questioned CostsHUD Housing ProgramsInternal Control / Segregation of Duties