Finding Text
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program Name: Housing Choice Voucher Cluster
Assistance Listing Number: 14.871/14.879/14.EHV
Federal Award Identification Number and Year: VA901; 2022-2023
Award Period: July 1, 2022 through June 30, 2023
Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion)
Criteria or specific requirement: The PHA must determine that the rent to the 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) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507).
Condition/Context: During our testing of 65 files for reasonable rent requirements, we noted the following in 16 files:
- 3 of 65 files were unable to be tested, as the Authority was not able to locate any documentation for the rent determinations.
- 5 of 65 files tested had a rent reasonableness determination performed after the effective date
- 11 of 65 files tested had an approved reasonable rent that did not agree to the contract rent listed on the HUD-50058 or the contract rent per the HAP Contract/HAP Contract Amendment.
The samples were statistically valid samples.
Questioned costs: $22,602
Cause: As a balance of state PHA, the Authority is responsible for ensuring the Housing Choice Voucher (HCV) program is administered in compliance with Federal regulations across Virginia. The Authority has partnered with 29 local housing agencies (LHAs) hroughout the state to administer the program. Due to the number of LHAs there are inconsistencies among agencies on quality control practices. LHA’s differ in size, staffing patterns, geographic service area, and overall capacity to operate the program. In addition to these differences, the Authority and its partner agencies are still recovering from the lingering impacts of COVID-19. Staff turnover and retention have contributed to challenges in quality control practices. The Authority has actively worked to improve the HCV Program by taking a methodical approach, making intentional decisions about program improvements while balancing the need to make changes quickly to ensure compliance with federal regulations.
Effect: The Authority is not in compliance with HUD’s reasonable rent requirements.
Repeat Finding: No
Recommendation: We recommend the Authority review their process over reasonable rent determination to ensure that it is done timely, and that the approved rent is properly carried forward to the HUD-50058 and HAP Contract/HAP Contract Amendment.
Views of responsible officials: There is no disagreement with the audit finding.