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
HUD Housing ProgramsInternal Control / Segregation of Duties