Finding 7970 (2023-004)

Significant Deficiency 2023-004 Special Tests and Provisions: Rent Reasonableness Federal Program – U.S. Department of Housing and Urban Development AL #14.871 Grant Award No. – MN107-Housing Choice Voucher Federal Award Year – 2023 Criteria or Specific Requirement – The Authority 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 – We tested compliance with the Authority’s rent reasonableness forms in 13 tenant files and found that one tenant did not have a rent reasonableness form for an increase in rent. The rent was deemed reasonable by the Authority once noted by the auditors. The error noted remained undetected after completion of a quality control worksheet, which functions as the Authority’s primary internal review process to ensure an annual certification, at minimum, was performed and appropriate tenant information is documented. Questioned Costs – None. Context – We reviewed a sample of 13 of the Authority's 125 tenant files for rent reasonableness requirements. Effect – Housing assistance payments could have been paid to a tenant where rent was not considered reasonable. Cause – Upon change in rent during the term of HAP contracts, the tenant file did not contain documentation comparing the rent of like-kind units. Repeat Finding – This is not a repeat finding. Recommendation – We recommend the Authority conduct a second part review of the file to ensure all appropriate documents are included. Views of Responsible Officials and Planned Corrective Actions – The Authority will have a checklist on annual certifications to ensure all appropriate documents are included in each tenant file.