Finding Text
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Housing Voucher Cluster Assistance Listing Number: 14.871 Federal Award Identification Number and Year: LA003, 2022 Award Period: 10/1/21-9/30/22 Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or Specific Requirement: The PHA?s administrative plan must state the method used by the PHA to determine that the rent to owner is reasonable in comparison to rent for other comparable unassisted units. The PHA determination must consider unit attributes. such as the location, quality, size, unit type, and age of the unit, and any amenities, housing services, maintenance, and utilities provided by the owner. The PHA must determine that the rent to 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) (2 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). Condition: During testing, it was noted that the Authority did not have adequate internal controls designed to ensure compliance with reasonable rent requirements. Questioned Costs: Unable to determine. Context: During testing of a sample of 25 tenant files, it was noted that 6 files did not comply with compliance requirements. The sample was a statistically valid sample. ? 5 instances where the comparison/determination of reasonable rent was missing, or the report was for a different amount requested. ? 6 instances where the determination of reasonable rent was done after the effective date of the 50058. ? 2 instances where the worksheet and Certification of Rent Comparability form was missing the signature of housing specialist or housing authority representative. ? 5 instances where the landlord and/or tenant was not notified of the rent increase. Cause: The Authority did not have internal controls to ensure compliance with the reporting requirements over reasonable rent requirements. Effect: The Authority is not in compliance with federal regulations regarding determining reasonable rent for units. This could potentially effect determination of HAP funding. Recommendation: We recommend that the Authority reviews its procedures to ensure controls over the reasonable rent process. Views of Responsible Officials: There is no disagreement with the audit finding.